Item B: Arts & Economic Prosperity IV (AEP4)

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Input-Output Analysis A system of mathematical eeluatiow thal c+umbines statistical methods and economic theory in an area economic study called econometrics. Ecunornists use this model (occasionally called an inter -industry mode[) to measure low many times a dollar is re -spent in or "ripples" through, a community before it "leaks out" of the local economy by being spent non - locally (see Leakage bclow). The model is based on a matrix that tracks the dollar flaw between 533 finely detailed industries in encii voymmunity. It allows researchers to determine the economic impact of local spending by nonprofit arts and culture organizations cn jobs, household income, and government revenue. Leafage The money that community members spend outside of the local economy. This non-local spend ing has no econonue impact within the community. A ballet compan purchasing shoes froth a non -local manufacturer is an example of leakage. If the shoe company were lvral, the expenditure would remain within the ccantmimity and create another rotund of spending by the shoe company. Multiplier (often called Economic Ar,11vity - Multiplier) An estimate Hof the number or times that a dollar changes hands within the community before it leaks Out of the community (for example, the thm -ter pays the actor, the actor spends money at the grocery store, the grocery sure pays its cashier, and so on). This estitnate i:s quantified as one number by which all expenditures are multiplied. For example, if the Arts are a $10 trillion industry and a multiplier of three is used, then it is estimated that these ails organizaLions have a total economic impact of $30 million. The ccnvcnicnce of at multiplier is that it is one simple number; its shortcoming, however, is its reliability. Users rarely note that the multiplier is developed by making gross estimates of the industries within the local economy with no allowance for differences in the characteristics of those industries, usually resulting in an overestimation of the economic impact. In contrast, the input- output rnodeI employed in 4rts & Economic Prosperity Ift is a type ofeconotnic analysis tailored specifically to each comm tin ityr and, as such, provides more reliable and specific economic. impact re suits . Resident Household Yn+eome (often called Personal Income) The salaries, , wages, and entreprenourial income residents earn and "so to pay for food, mortgages, and rather living expenses. It is important to note that resident household income is notiust salary. When a business receives money, for example, the owner usually takes a percentage of the profit, resetting in income for the owner. Revenue to Local and State Government Local and state government revenue is not derived exclusively from income, property, sales, and other tars_ It also includes license fees, utility fees, user fees, and fling fees. Local government revenue includes funds to city and county government, schools, and special districts. 22 Ads & aggomr g Prosperity ib I AMeFicans for dho Arts