Economic Impact of Public Libraries in Florida
The above economic analysis is static in that it ignores the economic effect public libraries have on other economic sectors over time. In the prior 2004 study, an econometric input-output model (REMI) covering 169 sectors for the State of Florida was applied to Florida’s public libraries by the Center for Economic Forecasting and Analysis at Florida State University. This second analysis extended the economic contribution of libraries beyond the actual users of the libraries to yield a set of direct, indirect, and induced effects to the State of Florida and its communities. The present study uses a different version of the REMI model to analyze the economic contribution of libraries not only at the state level, but at the county level as well.

REMI Model
There are several types of models typically used to calculate economic impacts. Input-output models use financial flow data generated from businesses’ accounting data, and spending patterns for households of particular income levels, to describe the economic linkages that exist within a regional economy. These models begin with US government-generated county level data on business purchases and receipts in order to model the inputs that are used from across the many sectors of the economy in the production of particular goods and services. The level of geographic and commodity detail can vary from production of printing ink, to storage batteries, to banking services in a geographic area as small as a zip code or as large as the national economy. The most commonly reported and useful level of detail is county-level geography at the 1 to 6 digit North American Industry Classification System (NAICS) level of commodity detail, whereas the previous 2004 report was conducted with the 1, 2, and 3 Standard Industrial Classification (SIC) code level of commodity detail. Examples of these models include the RIMSII modeling system from the U.S. Department of Commerce and the IMPLAN modeling system from MIG, Inc. of St. Paul, MN.

Econometric simulation models combine the sector detail and geography detail of input/output models but provide for functioning economic linkages between sectors and regions over time. The current study uses REMI PI+, Version 1.1.9 (Regional Economic Models, Inc.), in a 67 region (one for each county) structural econometric model of the state of Florida to calculate the impact. It incorporates the basic input/output linkages, but also uses econometrically estimated county-specific parameters (for example, interregional migration in response to changes in economic opportunities) in generating impact results. Because of these between-sector linkages, the model incorporates general equilibrium tendencies as the economy responds to shocks over time. That is, changes in spending in a region affect not just conditions in that market, but also in other markets within the region (economists term this a “general equilibrium”) and outside the region (via trade and also via migration in response to changes in economic opportunities). This is in contrast to traditional input-output models that are both static (all effects are assumed to occur simultaneously, so there is no adjustment path over time) and partial equilibrium (e.g., changes in employment do not change wage rates) in nature. This describes the phenomenon whereby, for example, a new financial services back office call center opens in a county, and bank managers throughout the county find they have to give staff a raise in order to keep them from leaving to take a job at the new call center. A traditional input-output model description of the economic impact would have held everything else fixed (including bank wages across the county) and simply documented the employment and job creation effects resulting directly at the new call center and indirectly via businesses in its supply chain, as well as household spending induced by the new income flows.

A simulation model such as REMI captures not only the spending effects flowing from the call center and its local suppliers and employees and owners, but also the spillover effects into other markets as wages and prices change due to competition for the same employees and other resources. These are the general equilibrium (equilibrium across all markets simultaneously) tendencies of the model. It also simulates the adjustment path over time of these market responses, using historical parameters estimated specifically for that county (the dynamic component). A rule of thumb is that the smaller the spending change being considered, the more appropriate it is to use the traditional input/output model. However, the general equilibrium and dynamic characteristics of an economic simulation model are particularly important when considering “large” changes. The presence or absence of over $668 million in government spending on public library systems in Florida is a “large” change, because spending of this magnitude is likely to have spillover impacts in other markets not directly in the public library related supply chain.

One other benefit of using an economic simulation model is particularly important when considering large spending flows. In an input-output model, impacts are usually measured as gross impacts, or additions to the area’s economy without consideration of the extent to which, for example, a project’s use of labor force may make labor more expensive to other businesses, or require additional infrastructure investment. The use of REMI attenuates this problem and so comes closer to an estimate of net, rather than gross, economic impacts because of the feedback effects present in this simulation model.

Methodology
The approach used in this simulation study examined two funding scenarios. Scenario 1 simply removes government spending for libraries and provides a basic value of that spending within the state of Florida. This scenario assumes that the tax monies spent on libraries are not collected and thus provides no tax cut or redirection of spending. Scenario 2 mimics the analysis done in the 2004 study by redistributing library revenues to other state and local government agencies, thus providing an economic comparison between governmental spending for libraries versus spending on other government functions.

Information for each of these scenarios was entered into the software at the county level, permitting results to be viewed not only statewide, but for each county as well. Dollar outputs are converted from the fixed year 2000 dollars used by REMI in its model output to 2008 dollars for reporting purposes.

Model Assumptions
As in the 2004 study, this report provides estimates of only the direct, pecuniary/financial benefits (or “return”) generated for the public sector as a result of the “investments” that the public makes in libraries via federal, state and local appropriated funds. This analysis excludes “returns” to the federal, state and local economies that are not financial benefits (these are known as “non-pecuniary/non-market” or “intangible” benefits such as cultural and other quality of life enhancements, higher levels of educational attainment, greater productivity through enhanced job placement or investment decisions, and so forth). Hence, the assumptions used to estimate the economic return to the state through its investments in libraries in this report can be characterized as conservative.

As stated in 2004, [i]t is important, however, to recognize that the benefits to the state of Florida associated with these intangible benefits of libraries are significant. The amenity values or benefits to the community by having a library present (and enhanced by the multi-faceted activities of libraries) can also be significant. Libraries provided access to financial information, job and career resources, computer technology and services, business resources, educational support for the community and support for public services. (McClure, Charles R., B.T. Fraser, T.W. Nelson, and J.B. Robbins. 2001, Economic Benefits and Impacts from Public Libraries in the State of Florida. Information Use Management and Policy Institute, School of Information Studies, Florida State University.) (quotation from A Study of Taxpayer Return on Investment in Florida Public Libraries, 2004.)

The model assumptions are:

1) The base model assumes a constant rate of growth for the economy over a thirty-two year (2008 to 2040) time horizon.
2) The models use actual FY2008 library revenues of $661.5 million.
3) It was assumed for each scenario that the absence of libraries would either mean that tax dollars would be redirected or not collected under Florida’s revenue schemes. No tax cut was built into any of the scenarios.
4) REMI results were expressed in terms of impacts on Gross Regional Product (the value of all goods and services produced in Florida), employment and personal disposable income.

Results of the REMI Analysis

Statewide
In Scenario 1, government spending that would have been directed to public libraries was redirected to other government spending activities. In Scenario 2, tax dollars are not collected and public library spending is redirected to consumers. Results are presented in 2008 dollars. Discounting analysis using a rate of 5% was used to present the economic impacts for years 2008 through 2040. Results for both scenarios are presented in Table 2 in comparison to results from 2004.

In Scenario 1, Gross Regional Product increases over $7 billion as a result of public library spending in Florida. This library-generated rise in state output increases wages by $15.2 billion and the number of jobs by 189,500 over the period. This in turn creates higher wage and salary earnings.

Table 2 - Results of REMI Analysis

The “benefits” to the State of Florida from a conservative perspective are defined as the total dollar amount leveraged by the investment in libraries based on all public funding sources. The “costs” to the State of Florida are defined as the initial public funding investment assumed to be redistributed to alternative government spending activities. Thus, if the funding for libraries were reallocated across Florida’s government sectors (Scenario 1), the state economy would see a net decline of $21.8 billion in terms of wages and 189,500 jobs in the 33-year period considered.

• Benefit to the state (in terms of wages) = $21.8 billion
• Cost to the state (in terms of public funding dollars and user time) = $2.9 billion
• B/CREMI = 7.5
Or:
• Benefit to the state (in terms of GRP or output) = $14.9 billion
• Cost to the state (in terms of public funding dollars and user time) = $2.9 billion
• B/CREMI = 5.1

The results of the economic analysis using the REMI model indicate that Florida public libraries contribute significantly to the Florida economy. The economic benefits from the expenditures made by the public libraries extend to job creation, generation of GRP and personal income. These benefits are substantially greater than the federal, state and local investment cost in public libraries.

To place the full value of public library spending in context, the $622 million of public library spending that occurred in 2008 generated over $1 billion in GRP. This amount was larger than the annual GRP of 26 of the 67 Florida counties.

Table 3 - Comparison of Public Library Generated GRP with Florida Counties

County Level ROI and REMI Modeling Results
Using statewide per capita averages and the individual county REMI results from Scenario 1, the following reports show both an estimated ROI for each county’s libraries, as well as economic impact results for these libraries’ spending in each Florida county. The ROI figures range from $2.58 for each dollar invested in Lee County to $30.35 for each dollar in Holmes County. It must be emphasized that these are rough estimates only, and each individual library or library system would have to be studied separately in order to refine these figures. It should also be noted that these ROI figures do not necessarily reflect upon the efficiency of library operations in that a lower number is “bad” and a higher number “good.” Instead, they demonstrate that even a small investment that keeps a library in existence within a community, no matter that community’s size, yields an extremely high value to that community. As stated in Are You Worth It? What Return on Investment Can and Can’t Tell You About Your Library, “For ROI library metrics, the point isn’t that putting more and more money into libraries will yield ever increasing returns. The point is to show that libraries are providing value for the money that is invested in them. Those investments should be commensurate with the needs of the communities they serve.” Essentially libraries are a public service that, when provided with the right amount of resources and investment, produce significant returns to their community.

In terms of economic impact, the economic impact results reflect a positive net economic impact of libraries on the individual county economies for 66 of the 67 counties. The sole exception is Suwannee County. While the libraries there return $7.40 for each dollar invested, the structure of county economy in the REMI model is such that a redistribution of library spending to other government sectors does not result in decreased GRP.

It helped my husband find his current job. Helped us find a workable budget for our home use. Our children have spent countless hours borrowing books and DVDs. The library helped us feel a part of the community.
Escambia County Library User

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