A cut of $20 million to NAU's budget in the next five months won't just affect NAU, say two university economics professors.

"Clearly the impact will be felt in all areas of the greater Flagstaff community," said Professor Ronald Gunderson.

And loss of state funds could be even greater in the next fiscal year starting July 1.

Gunderson and faculty colleague John Eastwood have created studies in the past that look at the impacts NAU has on Coconino County, which has Flagstaff at the center of economic strength.

The two economists look at the industries present in northern Arizona — like NAU — and how much residents involve themselves in those industries. The result is a term called a multiplier, which takes into account "additional impacts" to the community, Eastwood said.

In essence, Gunderson said that if NAU employees, students, visitors, retirees and alumni spend a certain amount of money in the Flagstaff economy, a certain amount of additional money will be generated.

Gunderson calculated the multiplier for the Flagstaff area to be that for every $100 spent by NAU, another $48 is generated in the greater Flagstaff economy.

Gunderson also calculated that for every 100 jobs that exist at NAU, another 39 additional jobs related to NAU's presence, estimated at $42,000 a job, are created in the greater Flagstaff economy.

The cut proposed to NAU from the Legislature, 15.25 percent of $134.7 million from the three state universities, would not just affect the university to the tune of $20.5 million.

Gunderson said the multiplier must be taken into effect for the greater Flagstaff community, which would amount for an additional $9.8 million for a total $30.3 million impact from the cut.

The largest part of the NAU budget is payroll, Eastwood said. According to university estimates, about 58 percent ($234 million of $401 million) of NAU's budget is devoted to salaries and benefits.

Cuts to NAU payroll, Eastwood said, will directly impact the greater Flagstaff economy because NAU employees and staff will not be spending as much in the community.

A loss of the equivalent of 100 jobs at NAU would mean the loss of an extra 39 jobs in the Flagstaff economy, he added.

A budget cut impact of $30.3 million (multiplier included), in terms of job loss at $42,000 a job, roughly equates to about 722 jobs.

In a 2003 study created by the two men and another colleague, estimates were that NAU directly employs about 10 percent of the total county workforce at about 6,434 jobs. Using the multiplier, that number jumped to more than 14 percent, or 8,902 out of 61,850 jobs. As a result, NAU was either directly or indirectly responsible for one in seven jobs in the greater Flagstaff economy.

Gunderson and Eastwood agreed that the employment percentages have likely not changed too much in the five years since the study because NAU has grown as the local economy has grown.

Possible negative impacts to greater Flagstaff's economy of the proposed cut possibly could not be as severe if, for instance, a decision were made to close a distance campus, Gunderson and Eastwood said.

Gunderson went on to say that consumer confidence, which continues to be shaky given the current economy, will continue to dwindle. People will buy fewer cars and goods, eat out less. More businesses will go out of business.

And as people and businesses are negatively impacted and spending dwindles, sales taxes on the city, county and state level will also be affected, Gunderson added.

Other findings in "The Economic Contributions of Northern Arizona University to the State of Arizona in 2003":

— Total direct spending by NAU was $423 million. With the multiplier, total NAU impact on the county was estimated at $610 million.

— Personal income of county residents rose by nearly $247 million as a direct result of NAU operations, and $350 million once all side impacts were included.

Larry Hendricks can be reached at 556-2262 or lhendricks@azdailysun.com.

By the numbers

— For every $100 spent by NAU, another $48 is generated.

— For every 100 employees at NAU, another 39 jobs are generated in the greater Flagstaff area as a result of the university's presence.

— One out of every seven jobs is directly or indirectly the result of NAU's presence.

— A proposed $20.5 million cut at NAU, would mean an additional loss of nearly $10 million to the local economy.

— Source: Professors Ronald Gunderson and John Eastwood, Northern Arizona University