Jan. 15, 2004
(As prepared for delivery)
Good afternoon and thank you for the opportunity to speak to you today.
In particular, I would like to thank Rick Karp and the Faculty Senate for making time available at this afternoon’s regularly scheduled Senate meeting for this important message.
As expeditiously as possibly, I am going to link for you our current budget environment with the critical need to engage in serious academic planning. After today’s address, I will carry this message to students and staff, hoping that some of them, as well as other faculty, will also access this message by Webcast on video.
Just over a week ago, the Cincinnati Enquirer insisted on reporting on my first 100 days at UC.
Today, however, I would much rather focus on what you have accomplished in the last 100 days.
When I first decided to accept the job at the University of Cincinnati, I knew that I was lucky to be coming to a university with such a wide array of programs, distinguished faculty and researchers, a dedicated staff, a diverse student body, such a vast pool of alumni, and deep connections to the community.
Now that I have been here for just over three months, I realize I was only half-right, because the University of Cincinnati is so much more than even I expected. What a treasure, this university and this city.
Again, the past 100 days are living proof of our collective capacity:
- A record freshman class.
- Annual research funding topping $309 million.
- A new UC Genome Research Institute.
- A grant of $25.2 million from Ohio's Third Frontier Project for Computational Medicine.
- Another grant of $9.6 million from the NIH for a Breast Cancer Research Center.
- Oh yes, an invitation to join the Big East.
- Economic impact topping $3.5 billion and 51,000 jobs in Uptown alone.
- Number 1 national rankings for Architecture and Interior Design.
- A record year for patent income – which ranks us 27th in the nation.
- And thanks to our General Education Coordinating Committee, notification of full approval from the North Central Association.
Given these extraordinary accomplishments, I want to make sure, as we look to the university’s future, that we can continue our progress, that we have an ambitious plan for our future and that we have the pocketbook to accomplish that plan. I will start first with the pocketbook issue, and then, the very necessary Comprehensive Academic Planning Process.
I know it seems like a strange mixture of topics, but because of the first – our economic circumstances – we need now more than ever to pursue the second, academic planning.
Both topics, although they might elicit opposite emotions, nonetheless will require a similar sense of cooperation, collaboration, creativity, hard work and resourcefulness – from all of us in this room today as well as other faculty, administrators, staff and students across the university as well as members of the community.
Turning now to the first of these two topics, the budget, the University of Cincinnati today faces a serious situation. We are confronting what may be termed an economic “near-perfect storm.” I have been cautioned about this literary reference (which you will not find in any official budget memos!). But I use it here to illustrate a budget environment triggered by a set of variables not unlike those encountered by the Andrea Gale. At least I add the modifier “near”. Given the financial picture presented by our neighboring Kentucky this week, where no modifier was added to the storm metaphor, we may be a bit better off. I might add as well, as author Linda Greenlaw observes, “some boats were aware of the storm and came back to port.” While we are on a significant launch at UC, and not likely to return to port, today we must heed the financial warnings that require us to get our financial house in order before we venture further.
Let me review the key conditions contributing to our financial challenge:
No. 1: Ongoing declines in state support for higher education shifting in recent years from flat funding to actual cuts in support.
At the state level, the failure to place a priority on higher education funding continues to create economic pressures for all of us. Our State’s Share of the cost of Instruction (also called the SSI) has dropped from just over 34 percent of our budget in 1985 to just over 19 percent in fall 2003. Ohio now stands at No. 43 among all states in support for higher education.
Since fiscal year 2001, actual state support to UC has dropped from $160 million to $141 million, for central campus alone. This fall, for the first time in our history as a state university, tuition and fees provide more of our budget than does the state.
Ohio’s apparent policy strategy is that tuition (that is, the cost of college for our students and their families) must make up for gaps in state support. That may be a short-term solution to the state budgetary conundrum. But it is short sighted from an economic development perspective. Higher education is an investment in the future that brings big returns. We are already living in a state that is undereducated, and turning that around is key to turning our state budget problems around. Let me turn to the second “climate” condition.
No. 2: The proposal to repeal part or all of the 1-cent state sales tax increase could bring us face to face with even more dire circumstances than we are experiencing right now. Thus, we face the threat of additional cuts in state funding as the legislature and governor wrestle with the continued fallout of recession.
No. 3: The cumulative effects of a decade-long enrollment shortfall, with its accompanying loss of tuition income. Ten years ago, the University experienced a mild enrollment decline. For a couple of years, it was not clear whether this was a blip or a trend. The University budgeted for a blip and discovered it was something much more; in short, a significant downward trend. Each year, the University assigned a $3.5 million, one-time cut while waiting for an enrollment turnaround. We may be getting close to this turnaround, if we continue our coordinated efforts to improve recruitment and retention.
As I’ve mentioned earlier, this fall we enjoyed an 11-percent increase in first-year student enrollment. This was accomplished through the efforts of a great number of people across the university who contributed to the Every Student Counts recruitment efforts, which helped to attract new students to UC. As a result, we’re better off than we would have been. But one year’s efforts cannot resolve a decade-long trend.
No. 4: The rapid escalation in the cost of health care for our employees, particularly in the last four years, when double-digit increases ranged from 10.6 percent per year to 14.6 percent per year. Approximately $120 million of UC’s total budget goes toward employee benefits each year.
We have worked hard to hold down the growth of health care costs, through re-bidding and negotiation. Over the past few years, we had little choice but to defer some of these costs while dealing with cuts in state support, but we knew deferment was a temporary strategy.
Our outside auditors and agencies that set our bonding rates accepted our plan, but they are now pressing for a permanent solution.
Throughout these lean budget years, the university has maintained a generous benefits package, including dental, health, retirement, vacation, sick pay and other benefits, plus tuition remission.
Not until recently have we asked our university employees to share in the cost of health coverage. In the future, employees may be asked to share an even greater portion of those costs. This year we must match the rates we currently pay for benefits. We must catch up fast and stay even with these costs.
No. 5: The challenge of our ongoing need to revisit assumptions about staffing and programming required to meet ambitious academic plans.
So where does this leave us for this fiscal year, the next fiscal year and over the long-term?
We face a combined shortfall of 6.6 million dollars for the current fiscal year. That translates into a 3 percent budget cut for this year. This is a permanent cut, because we must make significant progress toward a balanced budget before going into the next fiscal year. Still, in the next fiscal year, an additional cut of 4 to 8 million dollars, or 2 to 4 percent, will be needed. In both cases, the administrative cuts will be higher than those on the academic side of house.
I know these budget reductions are significant and will not be easy for us to make. I would like to again thank you in advance for the creativity, painstaking effort and collaboration that will be needed to implement them.
In addition to these reductions, we are pursuing additional strategies to help stabilize our voyage for the long-term:
- We must keep working to increase enrollment, not just among first-year students, but among transfer students and non-freshmen, going forward.
- For the long-term, we must develop a more diversified revenue base, as state revenues continue to dry up.
- I have also established a new President’s Budget Committee that will work to ensure that budgetary decisions will be driven by academic needs, first and foremost. The committee includes:
- Me (the president
- The Senior Vice President and Provost for Baccalaureate and Graduate Education
- The Senior Vice President and Provost for Health Affairs
- Their CFOs.
- Both the Vice President and Associate Vice President for Finance
- Chair, Faculty SenateChair,
- Deans Council.
In addition, I have been working with increased frequency with Provosts Tony Perzigian and Jane Henney to ensure that academic concerns drive our revenue preferences.
As we strive to make the budget process
As we strive to make the budget process more open and more transparent, I have already spent significant time with the Council of Deans and the Cabinet of the Faculty Senate, listening to their concerns and using their insights to pose key questions for our newly formed President’s Budget Committee.
Ultimately, our goal is to stop playing catch-up and to stop chasing targets to resolve the budget. We are at a turning point where we must begin to more proactively plan for our future. As state revenues continue to diminish, it becomes even more imperative that we pursue an ongoing academic planning process, and for the long term, we must develop a more diversified revenue base.
I wholeheartedly believe that the long-term solution to our budget problem lies in better and more creative planning – academically and financially, and with regard to our physical environment.
Now more than ever, we need to craft our vision for the future, adopt a set of principles and pursue strategies that will bring that vision to life. It is my hope that this strategic planning process will chart our own course for the 21st century rather than wait for outside forces to decide it for us by default.
Let me spend a few moments speculating about the 21st century a bit. We don’t have a “Megatrends” sequel, but here are five trends that might get us started:
1. Population: The United States is expected to have astounding population growth and largely from very demographically diverse groups. We expect tremendous Hispanic growth and larger influxes of immigrants from Latin America, the Caribbean, Africa and Asia. By 2030, approximately 40 percent of Americans will be minorities and by 2050, the U.S. may not have a majority ethnic group. Universities will experience profound pressure to deliver on the increasing demand for education from new and expanding populations.
Perhaps it’s time for some new iteration of the GI bill to help us meet this challenge, to help continue to build our nation and bring about a prosperous future, just as the GI bill did for the last half of the 20th century.
2. Health care disparities. More and more people lack adequate health insurance coverage and African Americans, Hispanics, Asian Americans, and Native Americans are less likely than whites to have health insurance, have more difficulty getting health care and have fewer choices in where to receive care. This is a challenge that perhaps our Medical Center’s Millennium Plan can help tackle as well as some of our professional schools and A&S as we strive to meet the demands for a healthy society.
3. Cities. By the year 2025, 75 percent of the world’s population will live in cities. This begs all the problem-rich environmental issues that institutions like the University of Cincinnati are well equipped to deal with. UC can really be a leader in this area, surely in urban education and neighborhood development, public safety, the arts and culture. Our work with our own neighbors already gives us an edge in this area.
4. Intellect. We’ve all heard time and again that our knowledge-based economy will, more and more, demand lifelong learning. Job changes, career changes and the need to continuously seek knowledge suggest that lifetime education is more crucial than ever. Students must be adaptable, critical thinkers, possessing a fundamental knowledge base that will allow them to adapt and change. Sounds a lot like a liberal arts education, doesn’t it?
5. Citizenship. Paul Loeb, author of “The Soul of a Citizen: Living with Conviction in a Cynical Time,” is a human billboard for good citizenship and a convincing advocate of the belief that we can all make a difference in the world, no matter how tough the odds. The world has always needed, and will continue to need, dedicated people willing to tackle the real-world, thorny issues of our age. UC’s pioneering co-operative education program, our commitment to service learning and civic engagement, and our desire to realize global competence all suggest that citizenship may be a natural strength upon which to build.
I am sure that you and other participants in the academic planning process will have many other trends to suggest. Clearly, the key questions are: What will society face in the 21st century? What role will universities play in realizing the most preferred future? And what implications does such a futures scenario hold for the University of Cincinnati?
I firmly believe that higher education is a driving force that shapes the future and with the rapid change the world has experienced in the last 15 years, universities are uniquely positioned to serve our transforming society.
To that end, I have derived from the comments of many a theme for our academic planning process: “UNIVERSITY OF CINCINNATI: Leading in the 21st Century.”
In the words of Duderstadt and Womack:
“It is time to move beyond simply analyzing the forces driving change in higher education and to focus instead on strategies that will enable our public universities to serve a rapidly changing America.”
I i my hope that we can bring Dr. Duderstadt to campus this spring.
Three months ago to this date, at the invitation of the All?University Faculty, I presented the general outlines of a process to develop an Academic Plan to guide the university’s evolution over the next decade or so. Since then I have:
· Consulted widely with various constituent groups on and off campus, and then on December 8, a listening session was held with faculty, students, the Cabinet and deans. That retreat, led by a facilitator, generated a preliminary discussion of where UC stands and what it aspires to become.
Taking their advice, what will happen next and what will the academic planning process look like?
During late January, we will begin a series of Town Hall Meetings, sessions similar to the December 8 listening session. These Town Halls meetings will involve more than 150 people, more than three times the number of people involved in the December meeting. These participants are being invited to serve from among our key stakeholder groups including full- and part-time faculty, staff, students, administrators, alumni, local corporate partners, civic and non-profit leaders, neighbors, and others.
Each Town Hall Meeting will convene for four hours, twice monthly, wherein we will discuss the challenges and opportunities facing us in the 21st century.
· Simultaneously, we will convene a series of Input Sessions. Colleges and administrative units alike will hold at least two of these sessions between January and April. They will focus on three questions:What is your vision of UC’s Leadership in the 21st century?
What strategic steps and resources are required to realize that future?
What outcomes should we hold ourselves accountable for in realizing this vision for UC?
There will also be Input Sessions for our Board of Trustees and the UC Foundation, and breakfast meetings are being planned with donors, prospects and business leaders. In turn, I will be soliciting input and ideas from alumni nationally.
The President’s Cabinet will serve as the steering committee for this Comprehensive Academic Planning Process. A small operational group is coordinating the logistics for the entire process.
Assisting will be a team from the College of Education, Criminal Justice, and Human Services. I would like to take this opportunity to thank Dean Larry Johnson for stepping forward with much-needed help in this all-important, yet labor-intensive, process.
In manner befitting the prototypically 21st-Century university – we are using technology to make the process as accessible as possible. We have established an Academic Planning Web site that is just one click away from UC’s homepage, where the entire university community and the community at large can participate in the process, find information on conducting Input Sessions, review information as it is generated and submit questions and comments. The Web site’s direct address is: www.uc.edu/academicplan and I would like to try to show it to you now, if our 21st century technology will cooperate!
The site will be under ongoing construction – just like much of our campus – but it also includes a feedback mechanism for submitting comments and questions that will become part of the overall data being considered as the process moves forward.
One thing I keep asking myself is: What do we really want out of this process?
First, a strong vision of our future. We don’t want to dream “scrawny”. There will be room for big, hairy, audacious and exciting ideas that are both innovative and bold but also generate revenue.
Secondly, we must end up with a set of strategic actions that can be adhered to and implemented, rather than added to a list of plans that sit and gather dust.
Thirdly, we must have measurable outcomes, simultaneously re-assessing our vision and taking steps to continuously improve.
My hope is that our academic planning process will truly be university- and community-wide.
It will be a dynamic process with a beginning, but not necessarily an end. This first phase in the process began in earnest in December and will last through May, but ultimately, systemic planning will be part and parcel of the University of Cincinnati going forward.
There are plenty of opportunities to become involved in the process. If you are not a participant in the Town Hall Meetings, there are ways to participate at your college or unit level, as well as through the Web site. Please encourage your colleagues to take part.
Given the hand-in-glove relationship of our revenue profile to our academic aspirations, we must work diligently in the short term and for the long haul.
For the short term, we must rely on our creativity and our willingness to make hard choices. All of us must pitch in to tighten our belts, and unleash our creativity to find new revenues.
At the same time, we need to begin to look to the long-term and envision our university as a leader in the 21st century.
This is an important moment in time for the University of Cincinnati. It will require great courage and significant leadership from all of us. But we will weather this storm, and I believe be stronger for it. We will be:
- More focused in our academic aspirations.
- More integrated in our academic, financial and physical planning.
- More unequivocal in our aspirations to become a premier university for the 21st century.
- And we will continue to plan for a better tomorrow for the University of Cincinnati.