Editor's note: This is the second in the "SIU at the Crossroads" occasional series of stories examining the future of SIU through a variety of different lenses.
CARBONDALE – Every fall, Carbondale churns to life again as students return to campus by the thousands. The start of a new school year is like watching a darkened factory crank up in the morning as the ceiling lights flash on row by row.
Carbondale moves to a slower rhythm when the students go home in large numbers for the summer and other breaks. Upon their return, they pump new energy into the atmosphere – as if an old black-and-white movie suddenly sprang to life in color on a high-definition television.
Sure, there may be a few annoyances that go along with the sudden influx of students. The limes run low at the grocery store. For a few weeks, drivers must be on high alert for the confused freshmen barreling the wrong way down a one-way street. Noisy house parties in residential neighborhoods can bleed into the early morning hours.
But the bottom line is that SIU is a major driving force of this region’s economy – affecting not only Carbondale but all of Southern Illinois. There are other employers that make up the region, and some come and go.
But in recent history, SIU has been the steadfast barge upon which everything is riding up the river. That’s been the case despite the perennial drama – leadership shakeups, faculty strikes, student protests, plagiarism scandals, political battles and the like – that comes with the territory of operating a diverse institution of higher learning with all the inner-workings of a small city.
To sum it up: As SIU goes, so goes Southern Illinois’ economy.
'Lifeblood of our local economy'
“I think business owners and leaders in our community understand that SIU is the lifeblood of our local economy,” said Les O’Dell, executive director of the Carbondale Chamber of Commerce.
That means businesses benefit when enrollment and activity at SIU is up, and they share in the hurt when SIU’s enrollment is down. “Any time there is a decrease in enrollment, they feel that,” O’Dell said of business owners.
“Now, I think a lot of them are wise enough to not place blame solely on SIU and its leadership,” O’Dell continued. “Certainly, the state budget issues of the last 24 months have had a huge impact on all sorts of things in our community. How that trickle down has affected the university has affected the business community.”
At the time this publication went to press, SIU had not yet released the enrollment numbers for the fall 2016 semester that many in the business community are anxiously awaiting.
It is anticipated that SIU will release those numbers today – Tuesday afternoon.
Still, SIU leaders have been saying for a while now that enrollment on the Carbondale campus will be down again this year and no one has given any indication that’s changed.
Further, SIU’s enrollment has been steadily declining for years, long before the protracted budget fight involving Gov. Bruce Rauner and Democratic legislative leaders began in Springfield.
Over a 15-year period, from 2002 to 2016, enrollment has dropped about 20 percent from about 21,873 students to 17,292 students.
Economic impact far and wide
There are the obvious businesses that are buoyed by the students, such as those revolving around food, services and entertainment. For example, Doug Fischer, director of operations for Domino’s Pizza’s Carbondale store, said the number of hot pies flying out of the oven increased dramatically around the Aug. 22 start of classes. A competitive edge for Domino’s, operated by franchisee Southern Illinois Pizza, is that it delivers until 3 a.m., feeding the late-night cravings of students pulling all-nighters in front of their books or the bar.
“It makes an immediate impact,” Fischer said of the return of students. “Just this past week was the busiest we’ve been in six months.” Fischer estimated that about 40 percent of the store’s business is tied to SIU.
And SIU’s economic impact extends far beyond pizza. It affects nearly every corner of the Carbondale and regional economy.
“It’s good and bad thing,” said Carbondale City Manager Gary Williams. “SIU is by far the biggest economic driver in not only Cabondale but the region. The bad part of that is we don’t have a really diversified economy to counteract enrollment declines and loss of jobs occurring at SIU. The good part is we love that they’re here and it’s a symbiotic relationship. One’s success or failure affects the other.”
Williams said the biggest concerns he’s hearing from business leaders in the community is that people are having a hard time knowing what to think.
“What I hear a lot in the community, it’s more about the uncertainty, not just from SIU but the state budget issue overall,” he said.
That has some prospective developers taking a wait-and-see approach to new projects, renovations or expansions.
“What the banks are telling me is that there is a real reluctance from the business community and from investors in moving forward with projects in Carbondale right now given the uncertainty of SIU and the uncertainty with the state,” Williams said.
SIU is region's largest employer
One major factor in SIU’s economic impact is that the university employs thousands of people in jobs that provide, comparatively, healthy pay and benefits. In addition to administrators and faculty, that also includes support service workers who prepare food, clean, maintain the grounds and perform a host of other jobs. The campus operates a health clinic, utility plant and police department, each employing people in specialty roles, just to name a few examples of its city-like operations.
As of fall 2015, the Carbondale campus employed about 3,258 employees. That’s 425 fewer employees than the university employed five years ago, in the fall of 2011, according to statistics provided in SIU’s “FactBook 2015-16.”
When the SIU School of Medicine is included (the medical school and Carbondale campus are under the same budgetary umbrella), the number increases to 5,057 employees. The School of Medicine has educational and research facilities in Springfield and Carbondale, a clinical campus in Springfield and regional patient care and residential training in Springfield, Carbondale, Decatur and Quincy.
In total, SIU estimates it pays out more than $308 million in salaries to employees located primarily throughout Southern and central Illinois (this is not counting the Edwardsville campus). Most of those employees, almost 3,000 of them, live in Jackson County, and earn a combined $125 million.
But many others call other surrounding counties home. Here’s a sampling (based on fall 2015 estimates)
• 820 employees live in Williamson County and earn $37.6 million combined
• 174 employees live in Union County and earn $7.9 million combined
• 204 employees live in Franklin County and earn $4.2 million combined
• 151 employees live in Perry County and earn $6.5 million combined
The ripple effect of Southern Illinois’ largest employer is wide.
“SIU reaches much beyond Carbondale,” said Herrin Mayor Steve Frattini. “Here in Herrin we have a lot of folks who live in Herrin and work at SIU or in the support industry to SIU. So there’s obviously economic gain and benefit from that in itself. That’s probably the biggest thing.”
But it’s not the only thing as far as economic development is concerned, Frattini said.
At SIU, resources abound
Frattini said that SIU and John A. Logan College are critical in terms of drawing employers given how much both institutions bring to the table with regards to workforce development and other resources. He also noted that the Small Business Development Center at SIU has aided in the creation of jobs by helping people navigate the layered process of turning an idea, hobby or invention into a business.
Further, Frattini said he was really excited to recently discover an SIU asset that he never realized had a link to economic development: Morris Library.
During a tour of the library earlier this summer, Frattini said library officials talked about their ability to research and profile businesses and industries worldwide. That information can help economic developers “do a better job at targeting prospective employers to our region,” Frattini said.
Some of SIU’s impact on the regional economy is difficult to measure though certainly has an impact. Those things include the culture and diversity it weaves throughout the campus and region that can be a draw for people and employers, and the service and outreach platform it provides.
An economic turbo-engine
Yet, the prowess of SIU’s economic turbo-engine is based on more than anecdotal stories. Five years ago, a study pegged SIU Carbondale’s contribution in activity to the Illinois economy at $2.3 billion.
“The Economic Impact of Southern Illinois University Carbondale in the Region and the State of Illinois” study was authored by Subhash Sharma, professor and chair of the SIU Department of Economics, then-graduate student in economics Aboubarcar Diaby and Kyle Harfst, executive director of the Southern Illinois Research Park.
Though that total figure would be different today because enrollment, employment, research dollars and other figures have changed, Harfst said the study is still valid in that it shows the widespread economic impact of SIU Carbondale. The study concluded that for every $1 appropriated by the state to SIU, the university generates $7.72 of economic activity annually in the state.
Further, it stated SIU contributes about $859.1 million of total economic activity in the southern 23 counties of Illinois.
Harfst said the economic model used in the study to estimate the economic activity SIU generates does not allow a simple reversal of the numbers. In other words, it is not possible to assume that for every dollar the state takes away from SIU that would equate to a loss of $7.72. A footnote in the study points out that the study was estimating economic contribution and not answering a hypothetical question of what would be the loss if SIU did not exist.
But Harfst said he believes it is fair to assume based off the study that every dollar lost equates to an economic hit that is greater than that dollar.
Additionally, the study estimates that every student enrolled at SIU spends in excess of $10,000 during the course of nine months on living expenses in addition to tuition and fees. Williams said that’s the figure that the city of Carbondale used to estimate a roughly $100,000 municipal sales tax dip. That would account for roughly 1,000 fewer students on campus, though Williams noted the city’s approach was to play it on the conservative side because it’s always easier to later realize more money is expected in the city coffers rather than less.
All eyes on SIU's future
Throughout the community, business owners say SIU’s future is on their minds.
Carbondale Trophy Company, located on North Illinois Avenue, has been in business for 40 years, thanks in large part to its business relationship with SIU, said owner Ruth Gullett.
SIU accounts for roughly 75 percent of her business, she said. Other customers include K-12 school districts and churches, but SIU is by far the biggest.
The business supplies the school with trophies and plaques commemorating various achievements, as well as name tags and small signage, such as room signs and directional signs on campus.
Lately, Gullet said she’s felt the slump tied to SIU’s downsizing. She said it’s difficult to pinpoint exactly to what degree because she knows she’s also facing increased competition with online retailers that some student groups may look to for their needs.
But Gullet remains bullish on the school’s future. SIU has been a wonderful partner over the years, she said, allowing this niche local business and countless others to enjoy a decades-long life in Carbondale.
“I think it will come back as soon as the economy comes back,” she said. “It’s always been kind of up and down. This is probably the worst it’s been but I think things will come around. I don’t see SIU not being around.”
SIU President Randy Dunn and Chancellor Brad Colwell said in a recent interview with The Southern Illinoisan that SIU’s future is solid – it’s going to be around for a long time to come. But some tough conversations are going to have to take place on campus in the next few years, they said.
The SIU of the future may be a smaller one, in terms of students and employees, and Dunn said that’s not necessarily a bad thing if SIU settles into a sweet spot that provides for a consistent and vibrant campus. But Dunn and Colwell added that they hope to gain some distance from the state’s budget crisis before beginning those conversations and determining what would be an ideal student enrollment number for the campus.
That’s because the uncertainty regarding state funding is making it difficult to differentiate what portion of SIU’s enrollment decline is tied to that versus other market forces and past administrative decisions that have been changing the shape of the university for years now.
“There is a sweet spot and I don’t think we know it yet,” Dunn said. “I’d love to say it’s 20,000 for the jobs and economic development those students bring to the area and to absorb the capacity we do have.”
He continued, “We still run a campus for 20,000 when we’re sitting at 17,000. That can’t go on forever. But there is that sweet spot. We talk about holding the core together in terms of the services and academic programs and trying to keep doing what we do. I’m trying to have us buy enough time to see what that settling out number is.”
So far, most employees spared
Despite the sizable state cuts and uncertainty beyond the six-month stopgap measure approved on June 30, SIU has laid off only a handful of employees at this stage – two civil service employees and five continuing non-tenure track faculty. That’s somewhat surprising given how much of the university’s budget is tied up in salaries – upwards of 80 percent – and Colwell has warned that could change depending on what happens in the months ahead in regards to enrollment and the state budget. At this point, the university is leaving 155 positions unfilled, which has a trickle-down effect on the local economy.
“We went that direction because the pain is a little less on the human side of things,” Colwell said, acknowledging the importance of SIU as an employer in the region. But eventually, Colwell said, tough decisions will have to be made: “At some point, it will be people,” he said.
And that’s what’s devastating about this ordeal to people such as Jim Henshaw, owner of Priority Sports and Francis Murphy, general manager, of the Neighborhood Co-op Grocery.
Both of these business men said that undergraduates make up only a small fraction of their sales. But the specialty shoe store, and specialty grocery store, respectively, both count on the business of SIU employees, and those employed by businesses affected by SIU – and the job security of those employees is tied to the undergraduate student population.
“What I will tell you I know after 35 years here on the corner is that the university affects everyone,” Henshaw said.
“For my business, let’s say that if there aren’t as many students here, that means they’re not buying as much gas. That means they’re not buying as many groceries. If the check-out clerk doesn’t get as many hours that lives here, they don’t have as much disposable income to buy shoes. It’s the snowball effect.”
With uncertainty, spending drops
Murphy called the Neighborhood Co-op the “canary in the coal mines” when it comes to the impact of declining SIU enrollment and a shrinking employee headcount. Just the uncertainty of what’s going to happen at SIU has people spending more conservatively, he said. That’s historically been the case, he noted.
Murphy said sales that had been increasing about 12 percent year-over year but flattened in 2010 and 2011 as employee contract negotiations heated up, then-Chancellor Rita Cheng ordered employees to take four furlough days, and the SIUC Faculty Association members went on a six-day strike in November 2011. Once the faculty contract deal was inked, business picked right back up again, Murphy said.
He said he really felt the pinch again earlier this year as the budget battle raged on in Springfield. The store’s extension of its hours has cushioned some of the fallout, and sales also have picked up better than he expected this summer, he said. Murphy attributes that to the stopgap budget deal that provided some ray of hope.
“It was better than really bad news and these days that counts as good news,” he said.
But in terms of the capital improvements that Murphy would like to implement at the store – increased freezer capacity, a larger meeting space and a redesign – the co-op, like many other area businesses, is going to let a little more time pass in hopes of gaining clearer insight about the future of SIU, and therefore the region’s economy.
“If there were any signs of a more golden tomorrow I would love to make additional investments in this business,” he said. “But with no clarity as to what the future holds, the tendency is to hold cash and see what happens.”