Economic Impact numbers

First, a bit on economic multipliers

Figuring the real economic output impact from any project or business is never an exact science. An economic multiplier is some number used to determine how many times each dollar of output from a business or project (like the Daycare) is recycled, or spent again, in the regional community. For instance, if the multiplier for wages is 3.2, that means each dollar the daycare pays out in wages is spent, or multiplied, an average of 3.2 times in our community.

Some organizations throw around big numbers (usually 6 or 7) as output multipliers for economic develpoment projects. A lot of research I’ve seen proves those numbers are way to big. The multipliers I’ve used below come from a 2005 study completed by the University of South Dakota and Citibank. They are specifically for figuring the economic impact of daycare facilities in South Dakota communities.

The multipliers used

Here are the numbers we’re using (based on the USD study):

fees and fundraisers = no multiplier (1)
wages = 3.2 multiplier
federal grants/subsidies = 2.78 multiplier
other spending = 1.43 multiplier

The result

Numbers are figured based on the financial records kept by the City of Montrose from September 1, 2005 through September 16, 2006 (financials from 2005 have been audited).

From Sept. 2005 – August 2006 the Montrose Community Daycare made an economic impact of $292,077 on our regional community.

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