= UCF UNIVERSITY OF CENTRAL FLORIDA 1 Office of the President PRESIDENT PO. Box 160002 ‘Orlando, FL. 32616-0002 PRIORITY ABC __ May 17, 2016 MAY 18 2016 Dr. Burns Hargis REFER TO Office of the President big To Oklahoma State University ae 101 Whitehurst Hall Stillwater, Oklahoma 74078 Dear President Hargis: As you and your Big 12 colleagues consider options for the future, I want to be sure you have the Jatest information about the University of Central Florida, including the growth potential of our Orlando market and our popularity with high school students. UCE commissioned the enclosed independent report to analyze the growth prospects for the Orlando area and two other markets. The report projects that the Orlando area’s population will grow by about 500,000 over the next 10 years. That’s six times the projected growth of the Cincinnati area and 500 times the expected growth of the Hartford region. The report concludes that Orlando is “the fastest-growing city of the 30 areas that have an employment base of at least 1 million jobs” in the United States. have also enclosed relevant pages from a new report that shows UCF is the top choice of high school seniors in a 12-state southeastern United States region. ‘The findings are based on more than 1 million students who register annually on the Cappex.com website, which links students with scholarships. Additionally, UCF’s athletic profile fits well with the Big 12. For instance, we can expand our 45,000-seat Bright House Networks Stadium to approximately 65,000 seats, and construction can take place in between footballl seasons. ‘Thank you for taking the time to review the enclosed materials, and please feel free to contact me if you have any questions.93% “Orlando is the fastest-growing ofthe country’s 30 GRADUATION largest regions.” SUCCESS RATE for STUDENT-ATHLETES ~U-5. Consus Bureau, March 2016 kkk km Florida's rich football recruiting ground produced the second-most 3-, 4- and S-star recruits in the country from 201145. #6 in NCAA DIVISION I FBS GRADUATION SUCCESS RATE GRADUATION SUCCESS RATE ALUMNI for PUBLIC wT Over 125,000 of the UNIVERSITIES more than 250,000 UCF alumni live and work in the Central Florida region,UNIVERSITY OF CENTRAL FLORIDA IN THE BIG 127 A SUMMARY OF ECONOMIC GROWTH: PAST, PRESENT, AND FUTURE By: Arduin, Laffer & Moore Econometrics May 2016UCE - Big 12 Economic Summary - 2016.05.16 Arduin, Laffer & Moore Econometrics OUR CHARGE In Mareh 2016, the University of Cental Florida requested an independent study examining the historical economic land demographic growth \ends in the geographic areas surrounding UCF, the University of Cincinnati and the University of Connecticut In adaition to examining historical data, the study was to draw upon Arduin, Laffer & Moore Econometrics’ expertise in Understanding the implications of economic policies and tends to make grow forecasts [Arduin, Laffer & Moore Econometrics advises federal, state and municipal leaders; political candidates; and private sector clients on economic, fiscal and state policies. The firm analyzes the Impacts of policy upon marke, identifies ‘wend and opportunities, and informs strategy that optimizes performance. EXECUTIVE SUMMARY ‘This report provides an analysis of the historical economic performance and growth prospects for tee cities ‘encompassing three potential Big 12 conference entrants: Orlanda (Universit of Canta Flavia), Cincanati (University ‘of Cincinnat), and Harford (University of Connecteut Various county and state level economic mets are alsa offered to provide adsitional context. Here is a summary ofthe key findings at each level (city, county and stat): Metzopolitan Statistical Area (MSA\ + Population: Oriando's population grew at the fastest rate among all three MSAS, ata rat of 355% betwoen 41970 and 2014. Hantford's populaton grew ata rats of 188% and Cincinnati's population grew at arate of 28.8% during this same period ‘2 10-Year Forecast: Based on historical trends, Orlando's population growth is expected to be 500,000 over the next 10 years, which is 6 tes the expected population growth of Cincinnat and 500 times the expected population growth of Hartford + Employment: Orlando's employment growth was the fastest among all tee MSAS, growing at arate of 99.4% between 1970 and 2015. Cincinnati's employment growth was 22.9% and Hartlord's employment ‘growth was negative at-3.4% over the same period,UCE - Big 12 Economic Summary - 2016.05.16 ‘Arduin, Laffer & Moore Econometiics © 10-¥oar Forecast: Based on historical trends, Orlando's employment growth is expected to be £373,000 over the next 10 years, whichis 2.2 times the expected employment growth of Cincinnat and 7.3 times the expected employment growth of Hartford ‘Gross Domestic Product (GDP): Orlando's 10-year GDP growth rate of 38.1% exceeded the 10-year GOP ‘growth rates of Cincinnati and Hartford, which grew at 347% and 27%, respectively. County Level Migration of Households and Income, + Not Migration of Housoholds: Orange County, FL hat the largest net inflow of households among al three counties, with a net inflow of 11,167 households between 2003/04 and 2013/14. Tolland County, CT had the smallest positive net inflow (2,686) and Hamilton County, OH had a net outflow of 32,742 households, + Net ligration of Aggragate Adjusted Gross Income (AGI): Orange County, FL had the largest net inflow of aggregate adjusted gross income among al three counties, with a net inflow of $1 billion between 2003/08 and 2013/14. Tolland County, CT had the smallest postive net inflow of total income, $0,004 billion, and Hamilon County, OH had a net outfiow of almost $3 billion + Net Migration of Average Household Income: Orange County, FL, was the only one ofthe three MSAs in hich the average income of households moving into the county exceeded the average income of households ‘moving out ofthe county botween 2003/04 and 2013/14 ($38,993 vs, $37,006), ‘State Level Economic Performance + Grose State Product (GS Florida's GSP growth was the fastest among all vee states, growing 31.7% between 2004 and 2014, Ohio and Connecticut had GSP growth of 27.8% and 26 respectively, between 2004 and 2014. The U.S. average among all states was 41.2%. + Personal Incom: Florida's personal income growth was the fastest among al three states, growing 43.4% benween 2004 and 2044. Connecticut and Ohio had personal income growth of 41.7% and 34.8%, respectively, between 2004 and 2014. The U.S. average among all states was 48.1%, + Population: Florida's population growth was the fastest among al three state, growing 14.2% between 2004 ‘and 2014, Connecticut and Ohio had population growth of 2.9% and 1.2%, respectively, batwaan 2004 and 2014, The US. average among all states was 8 9%. + Employment: Florida's employment growth was the fastest among all three states, growing 11.6% between 2004 and 2014. Connecticut and Ohio had emplayment growth of 4.5%6 and -2.4%), respectively, between 2004 and 2014. The U.S. avarage among all sates was 5.7%,UGE - Big 12 Economie Summary - 2016.05.18 ‘Arduin, Laffer & Moore Econometrics + State & Local Tax Revenue: Florida's growth in state & local ax revenue Was the lowest among al thee slates, growing 28.1% between 2004 and 2013. Connecticut and Ohi had state & local tax revenue growth 0f51.7% and 26.3%, respectively, between 2004 and 2013. The U.S. average was 44%, + Unemployment Rate: Florida and Ohio had unamployment ats af 4.9% as of February 2018. Connectict had an unemployment ate of 5.5% as of February 2016. The U.S. average among all states was 4.7%, INTRODUCTION ‘This report provides an analysis of the historical economic performance end growth prospects for thee cites ‘encompassing tree potentia Big 12 conference entrants: Orlando (University of Cental Florida), Cincinnati University ‘of Cincinnati), ané Hartord (University of Connecticut). When a decision is being made as to which university to add to the Big 12 conference in order to enhance the prestige, viewership and community participation of the conference as a whole, regional economic growth trends are important variables to conser. Several key economic indicators will be used to analyze short and long-term growth trends forthe city thats home to each prospective Big 12 member. To provide additonal contx, the economic performance ofthe states in which these universes re located is assessed, 1s state economic performance can have a large impact on the funding and operation of pubic universities, METROPOLITAN STATISTICAL AREA (MSA) ECONOMIC PERFORMANCE Population Growth ‘There is perhaps no beter nccator of how regon's economy is performing than population growth, whether positive cor negative. Postve population growth isa clear sign thatthe publ views a given region's economy as a desirable location in which to lve and work; while negative population growth isa clear sign of the opposite. Regardless of whether population growth is positive or negative, the longer the trend is sustained, the greater the trend indicates the public's perception ofthe health ofthe region’s economy. “The three universes vying fora pace in the Big 12 conferonce al reside in cites with unique short-term and long- term historical population growth trends. Whatis immediately visible isthe consistently booming growth witnessed in Orlando compared to both Cincinnati and Harford (see Figure 1). Over the last four decades, Orlando's population has increased dramatically, from around 600,000 to just under 2.5 mon. In contrast, Cincinnati saw its population increase from around 1.7 millon ta litle over 2.1 millon, and Heriford's population grow slowiy from 4 milion to 1.2, rilion during the same 44-year periodUCF - Big 12 Economic Summary - 2016.08.16 ‘Arduin, Laffer & Moore Econometrics Should future population growth in each city also reflect recent growth trends, each cy will continue ta display remarkably different population growth trends. Using a simple regression analysis based on the last fve years of Population inthe three cities, we project that the population of Oriando wil increase by about $00,000 people between 2016 and 2026, which dwarfs projected population increases in Cincinnati of 84,000 people and Hartford of less than +,000 people Fur Historca and Projcted Population Loves by MSA'# onl, etre 8702044, Prete 20162028) sone 2stomi0 oon aenoc00 gone cen vsonin 20000 ‘onan soon 0.00 °s 2 @ 2 @ 3 eS 2 a z” b € 8 € € € € & & 8 8 cnet ts == ccna soecton ions TIE heeds pecon = esse IIT Shaw use peptn Employment Growth |i adudtion to population growth, its essential to evaluate how each MSA is performing in its ably to add jobs and increase employment opportunities. In order to both measure and compare relative increases in total employment and sroMth rates, we have indexed employment levels of each respective MSA, the MSA's stale, and the U.S. average to "Source: Buren of Boome Anais = Fexecalcaeltns by gn, Laer & Moore EconometiUGF - Big 12 Economic Summary - 2016.05.16 ‘Acduin, Laffer & Moore Econometrics 100 at the trough of the Great Recession, which is defined by the NBER as June 2009. We also looked at MSA ‘employment as a share of total slate employment, as well as each state's ranking over the last six publications in the ALEC-Laffer state ranking, which i published annually in tne ALEC-Laffer State Economic Outlook and serves 3s & ‘measure of each state's competitiveness based upon equal-weighting of a state's standing in 15 policy variables. Cf the three MSs, Orlando isthe only one fo outperform bath its state—Flariso-and the U.S average in employment ‘growth since the trough ofthe recession sng fom a indexed bate of 100 in June 2009 ta 119n March 2016, refectng 8 foal increase in employment of almost2 milion, Orlando's employment has also continued to represent larger and larger potion of overall Florida employment, rising trom arcund 13.6% to 14.4% of total employment over the course of the same period Cincinat, onthe other han, has ether underperformed or remained at par with Ohio's employment growth since the trough ofthe Great Recession, and more recantly both Cinclonai and Ohio have underperformed relative to the US average wit regards to employment growth, Since June 2008, Cincinnati has eeen its indexed employment rise from 4100 to 109, ora total increase in employment of about 90,000. Cincinnati's employment as a share of overall Oia employment has also just recent reached levels witnessed at the trough of the recession, increasing only 0.1% beeen June 2009 and March 2016 rom 19.5% 0 19.6%, representing minimal growth onthe MSA level compared to state level employment Since the trough ofthe recession, Hafod has witnessed the lowest growth in employment out ofthe the MAS, and has consistently underperformed relaive lo the U.S. average for employment growth, rising from an indexed base of 4100 to just 104 a of March 2016, In txms of otal employment, this growth translates into an increase of only 22,800 jobs. Like Cincinatis relationship with Ohio, HarVord's share of total Connecticut employment has also increased ‘minimally, growing from 33.8% in June 2008 to 93.9% in March 2016.UGE - Big 12 Economic Summary - 2016.05.16, Using a regression analysis of recent annual historical employment trends, we have calculated projected increases in ‘employment over the next 10 years, or from 2016 to 2025, for each ofthe three MSAS (Figure 2). Again, Orlando ‘demonstrates substantial increases in employment growth compared tothe other two cites, with projected increases in employment over the next len years totaling 373,000, or 2.2 times the projacted employment grow of Cincinnati and 7.3 times the projected employment growth of Harford 100 0 Figue2 ‘Acduin, Laffer & Moore Econometrics Historical and Projected Employment Levels by MSA™ (Anal, storia 1880-2015, Projeciod: 2016-2025, 000s of persons) a a ors sa, Hoes 5 Sour: Bureau of Economie Anais (EA) * Frccastclealaons by Au, Lal & Moore Economie 8 2o18 ams anda MSA Poet ncn MS Prjcton Harte MSA Projection 1400 +0Ucr - Big 12 Economic Summary - 2016.05.16 Arduin, Laffer & Moore Econometrics To demonstrate a full picture of employment conditions within each of the MSAs, we also provide a historical comparison of unemployment rates from January 2000 to February 2016 (Figure 3). Over this period, Orlando experienced more vote shifs in unemployment compared to both Cincinnall and Hartford, jumping as high as 11.4% in March 2010 following the Great Recession, but since then leveling out to 4.4% as of February 2016—the lowest of the three MSAs Fowe 3 Unemployment Rato* (Moni, Per Ja-00 10 Feb6) 12% 28 10% oo ms om ox % ” % Es P22RREPEERR REEL EEE Bes) se 4 88 eee ees se Gross Domestic Product (GOP) ‘The growth rate of @ region's GDP is perhaps one of the best and most widely used metrics in evaluating economic success and potential because ofits abilly to both quickly and accurately depict the state of an entire economy. In this section, we have calculated the GDP growth rates for each MSA over one-year (2014), five-year (2009-2014) and ton- year (2004-2014) periods (Figure 4).UGE - Big 12 Economic Summary - 2016.05.16 ‘Arduin, Laffer & Moore Econometrics (Over the last ton years, Orlando outperformed both Cincinnati and Hartford, with GDP growing at a rate of 38.1% compared to 34.7% and 27 respectively. This picture changes when evaluating the GOP growth rate over the last {ve years, during which we found that Gincinnai experienced greater groth at 21% compared to Orlando's 16% and Hartford's 3.5%. When evaluating GOP growth rate fora one-year period covering the most recent year that data is ‘avalable, 2014, Orlando again outperforms the other two MSASs, growing ata rate of 5.6%, while Cincinnati grew at a rate of 4.1% and Hartford grew at arate of 2.3%, Floue 4 Gross Domestic Product Growth by MSA Cacti srconmeeer om son os 45% Cincinnati — | 48% stant o* i = _ an ‘198 om sm ai B ia 7 al om ,, — aa “ar COUNTY LEVEL MIGRATION OF HOUSEHOLDS AND INCOME ‘The IRS publishes migration data basod on the year-to-year address changes listed on individual Income tax returns. ‘Those data are avaible for every county and state in the United Stats. The data show the number of retums fied, \whic san approximate representation ofthe number of households tha esde ia a given location fora given tax year, ‘85 well a5 the amount of total adjusted gross income (AGI) for each county and state. The long-term migration of households and income, whether to or sway fom a eaunly andlor state i, in our opinion, a robust measure of the stength of economic policies in @ given region. While city-speciic data are unavailable, we use the county-level data associated with each MSA in our analysis in order to provide an in-depth laok at the pattern driving these relativeUCF - Big 12 Economic Summary - 2016.05.16 ‘Arduin, Laffer & Moore Econometrics 198 the tree different ites. ‘The information provided increases or decreases in population and household income: is key to understanding which ofthese three cites will continue to grow in the coming years The migration data paint a clear and distinct picture for each of the three MSAs as they relate tothe migration of, household income (see Figure §). Orange County, where the University of Central Florida is located, has experienced 2 considerable netintow of households litle over 11,000 households between 200804 and 2013/14. On the other tend of the spectum is Hamiton County (OH), whore the University of Cincinnati is located, which experienced a considerable net outflow of housshelds-—almost $8,000—botween 2003/04 and 2018/14. In between fs Toland County (CT, where the Unversity of Connecticut is fcated, which has experianced a smal net infow of household, ‘and also demonstrates much lower inflow and outflow levels compared to ether ofthe other two counties in this study Figure 5 Migration of Households by County! (2003104 ~ 2013/14) county Per ee Overt eet en Hamiton County (OH) 32742 109.208 202.040 (orange County (FL) 11,87 459,543 440,70 Tollané County (CT) 2685 43.050 40904 Given that Orange County outperformed the other two counties in net household flows, itis no surprise that Orange County algo outperformed the other two counties i its abiliy to attract substantial aggregate income into its economy. ‘Aggregate Adusted Gross Income (AGI) refers tothe total gross income, excluding deductions, thats ether entering orleaving each respective county over the referenced period. Overall itis clear that Orange County (FL) is inthe best positon of the three counties with a considerable net influx of income (over $1 bilion) between 2003V04 and 2013114 In Orange County, both inflows and outows of income were much higher than the inflows and outflows of other two counties (Figure 6). Hamilton County (OH) experienced a net negative outiow for the county of almast $3 bllon and Tolland County (CT) had a net postive inflow of total income of around $0.004bilion between 2003/04 and 2013/14UCF - Big 12 Economic Summary - 2016.05.16 ‘Arduin, Laffer & Moore Econometrics Figure Migration of Aggregate Adjusted Gross Income (AAGI) by County’ (20034-20134) OO et Tey (coer Yee rr ery ERC ee on Hamiton County (OH) 2.932.089 738,399, 0770402 (Orange County (FL) 11950.429 17945237 16,592,008 Tolland County (CT) are 2,148,595, 2.144209 We determined the average income of migrants fawing info and out of each county by diving goregate adjusted income by the number of households. The average household income for each county is depicted in Figure 7. The county that has fared the best over the fiscal period under consideration is Orange County, whichis the only county of the three in which the average income of households entering the county was greater than the average income of households leaving the county. Hamilton, onthe other hand, witnessed a sharp decine inthe overall average spending power ofits migrant ulation, with the average income leaving Hamilon about $7,000 greater than the average income entering the county over the time perio. Figure? Average Household Income of Migrants? 200204 - 20134) Ce aelU) CE eee} Inflows (into) | _Outflows (out of Hamiton County (OH) 48,200 52,208, range County (FL) 38,393, 37,008, ‘Tolland County (CT) 49,228 52.346 ‘STATE-LEVEL ECONOMIC PERFORMANCE Moving from MSA and county-evel analyses on to state level, we used several key economic mettcs in order to demonstrate Florida's growth relative to Conns jut, Ohio, and an equal-weighted U.S. average, evaluating each "GF - Big 12 Economic Summary - 2018.05.16 Arduin, Laffer & Moore Econometrics tates growth over the most recent ten-year period that data is available, 2004-2014, as well as each state's relative ranking compared tothe 60 US. states. Startng with gross state product, Florida grew at arate of 31.7% between 2004 and 2014, ranking 28° among the 50 US, states, and outperforming both Connecticut, which grew ata rate of 26% and ranked 46%, and Ohio, which grew ata rae of 27.8% and ranked 45%, Howaver, al three states underperformed relative to the U.S. average growth rate 041.2% forthe ten-year period Simitaly, lrida outperformed Connecticut and Ohio in terms of personal income growth, which is defined as th total eatnings oF compensation ina given region and is an essential driver of consumer consumption. In Florida, personal Income grew ata rate of 43.4% between 2004 and 2014, ranking 29" among states, while Connecticut grew at a rate 41.7% and ranked 34%. Ohio grew ata rate of 34.8% and ranked 47 during the same period In terms of population, Florida grew at a considerably higher rate than the other two states, achieving @ 14.2% growth rate over the referenced 10-year period, making the state 13" in the nation in terms of population growth. Over the ‘same period, Connecticut reached only a 2.9% growth ale, ranking 41%, and Ohio reached an even lower rate—1.2%— ‘winging it to 47 among the 50 U.S, states in terms of population growth Florida's growth in employment over the last ton years also grew substantially compared to Connecticut, Ohio, and the U.S, average, From 2004 to 2014, Florida achieved 11.8% growth ints employment, bringing itto 5" among the U.S, states in tems of employment opportunites. Comparativaly, Connecticu's 10-year growth in employment reached 4.5%, ranking it 26%, and Ohio's witnessed a -2.4% growth in employment, ranking it 48 overall Looking a state and ocal ax revenue, which includes propery taxes, sales and gross receipts taxes, individual income taxes, coporate income taxes, and motor vehicle oense taxes, over the most recent nine-year porod (2004-2013), the picture changes. Connecticuts tax revenues grew at a rato of 51.7%, or 14% highest among all states, culperforming Florida, which grew at arate of 23.1% oF 49" highest among states. Ohio grew at arate of 28.3%, or 47" highest among all states.UGE - Big 12 Economic Summary - 2016.05.18 Arduin, Laffer & Moore Econometrics Finally, we also provided the most recent unemployment rates for each ofthe thr states, as wel as the U.S. average, 18s of February, 2016, Florida and Ohio tied with an unemployment rate of 4.9%, ranking them 90% inthe U.S., while Connecticut's unemployment rate remained considerably higher at 5.5%, making the slate 36 in the nation. CONCLUSION ‘Alter evaluating the historical and projected performances of the key economic metrics contained within this report it Is claar that the Orlando area not only outperforms Cincinnati and Hartford in its abilty to attract population, femployment, and income, but also much ofthe U.S. as well. In 2015, Orlando added more jobs than any other MSA in the US,, creating around 52,000 jobs and achieving a 4.6% employment growth rate, making ithe fastest-growing ‘iy ofthe 30 areas that have an employment base of atleast 1 milion jobs.° Orlando has proven that its capable of attracting and sustaining ecenomie growth, making tan ideal candidate for Joining the Big 12 Conference. © “oviando led nation. in je gronth in 2015, revised fgues show, Cltando Ausiess Joumal March 16, 2016. 13