MSBA Releases Study on Economic Impact of MSBA Investments on MA Economy

July 24, 2014

The MSBA partnered with the Dukakis Institute at Northeastern to issue a report measuring the impact that the MSBA has had on the economy since our inception. We have helped create 10,000 jobs annually over the last 10 years and added $7.8 billion to the Massachusetts economy. The study, “The Economic Impact of MSBA Investments on the Massachusetts Economy,” assessed the direct and indirect economic benefits that have flowed to the state and its workers as a result of MSBA construction between 2005-2014 including state gross domestic output, employment, income, and state tax revenue. Noted economists Barry Bluestone and Alan Clayton Matthews co-authored the report.

Article in Boston Globe - West  |  by Jennifer Fenn Lefferts:


Agency cites role in state’s economy

School construction work added 95,000 jobs, report says

By Jennifer Fenn Lefferts | GLOBE CORRESPONDENT
JULY 24, 2014

In the 10 years since the Massachusetts School Building Authority was created, the agency has distributed $10.5 billion to help build and renovate hundreds of schools to improve the quality of education around the state, but the funding also has played a significant role in creating jobs and generating tax revenue, a new report shows.

The economic impact was particularly meaningful during the recent downturn, which hit the construction industry hard, according to the report, written by Alan Clayton-Matthews and Barry Bluestone of the Northeastern University Dukakis Center for Urban and Regional Planning. The building authority commissioned the report to find out what kind of impact its investments have had on the state’s economy.

“Taxpayers have a right, when they spend money, particularly $10.5 billion, to say how are you doing, what happened, what are your results,’’ said state Treasurer Steve Grossman, who serves as the chairman of the authority’s board of directors. “People need to be reassured that we are on the right track for how we are doing the taxpayers’ business. We have schools, roofs, and boilers, but in addition, it’s about jobs, taxes, revenues, and economic impact.’’

The report, released last month, suggests that between fiscal year 2005 and the year that ended June 30, the spending by the authority led to the creation of nearly 95,000 jobs and generated $4.5 billion in total employment earnings. The boost to the economy also led to approximately $411.9 million in additional state revenues — $296.3 million in personal income taxes, $67.1 million in sales taxes, and $48.5 million in business taxes — the report says.

The report also states that the estimates pertain only to the state funds allocated to cities and towns for their school construction projects, and do not include the local funding contributed by each community for the construction, renovation, and repair work.

“That much of this investment occurred while the economy was suffering the effects of the Great Recession suggests that MSBA activity played a significant role in boosting what otherwise would have been even more dire economic straits, putting unemployed workers to work, increasing consumer spending power, and augmenting the state treasury,’’ the report states.

Grossman said the authority is regarded as one of the most efficient programs in state government, and the report confirms what many officials had suspected about its economic impact.

“When it was created, that wasn’t the specific intent, but during so many of the years that have intervened, this MSBA has been a lifeline to people in the construction trades,’’ Grossman said. “The MSBA has been a powerful engine for job creation.’’

Frank Callahan, president of the Massachusetts Building Trades, said the school building program has helped generate a consistent source of good jobs for workers, especially when the economy turned and few jobs were available elsewhere.

“It’s been welcome work,’’ Callahan said. “That, combined with the accelerated bridge repair program, has provided quite a bit of work for those who were otherwise unemployed.’’ 

Not only has it provided jobs, Callahan said, but it has been a well-run program with a consistent funding source.

The agency was created in 2004 to administer and fund a new program to provide assistance to cities, towns, regional school districts, and independent agricultural and technical schools to finance construction and repair and renovation projects. The authority has a designated revenue stream from the state sales tax, and each year the agency invests about $500 million on projects.

The grant program places emphasis on planning, due diligence, and prioritization of agency resources. The authority approves new projects through a competitive process that stresses need and urgency, and reimbursement can range from 31 to 80 percent of eligible project costs.

Since the program was created, the agency has spent $10.5 billion to fund 428 projects that had been on a waiting list for funding, pay off much of the debt from the former construction program, and support the 300 projects currently in the program’s pipeline.

Jack McCarthy, the agency’s executive director, said it decided to commission the report after several board members asked whether there was any way to estimate the economic impact of its grants. The agency spent $25,000 on the report. 

“There was a belief when the economy was really low that we were the only construction going on in the state,’’ McCarthy said. “We knew the mission was good and we had quality schools, but some board members said we have another benefit by contributing to the economy, and this report shows that. This gives taxpayers a feeling that they’re getting more bang for their buck than they realize.’’