Good afternoon, fellow faculty members and colleagues. It is a pleasure, as always, to speak to you and present my annual State of the University report.
Good afternoon, fellow faculty members and colleagues. It is a pleasure, as always, to speak to you and present my annual State of the University report.
This is the fifth such report I have given, and I want to start by briefly reviewing the main themes of the previous four. In my inauguration speech, I described a new commitment to the academic core of the university and the kinds of key investments we needed to make both to sustain and enhance it. My second speech, in 2008, dwelt on the rapid progress we had made in realizing this vision.
However, within weeks of this speech, the full fury of the global recession began to be felt, and large cuts, now approaching $100 million in total, began to be made to our state funding as the government struggled with a major decline in revenues. Other changes no less dramatic began to be felt.
As we worked strenuously in response to these grave circumstances, I said in my third speech that we would seek, in fact, to take advantage of this situation and strengthen the academic core of the university by continuing to recruit excellent faculty when others were no longer doing so, and continuing to build when construction costs were at record lows. This called for us to begin the process of scrutinizing and renewing the academic structures and programs of the university through the establishment of the New Academic Directions Committee.
In my address to you last year, I tried to take stock of all these tumultuous events and a rapidly changing higher education landscape by describing the Principles of Excellence, since endorsed by the IU Trustees, which would guide us in all that we do in future years and which provide a roadmap for ensuring we will remain Indiana’s flagship institution of higher education and one of this country’s finest universities.
In all of these addresses, I have stated clearly and unequivocally our unwavering commitment to the central importance and value of education and research at Indiana University. What we have done for the past nearly two hundred years, we will continue to do: provide excellent education and conduct research that changes our world. All of this is based on a shared set of fundamental beliefs: beliefs in open debate and scrutiny of ideas, in the power of logic, in scientific reasoning, in deliberative analysis, and in decision-making derived from facts and evidence.
These enduring values form the core of the academy. These are the values that I learned when I joined the academy, and these are values that all of us learned and exercise every day as members of this noble profession.
These are the values that the public has empowered us to exercise on their behalf. For two hundred years, Indiana University and the citizens of Indiana have been unified in a great partnership. For two hundred years, the public has trusted us with land, with resources, and with their most precious trust: the education of their children. We have returned that trust by building a community of dedicated scholars that immeasurably enriches this state and this nation. This partnership is, in fact, reflected in the very nature of the governance of Indiana University where ultimate responsibility for the university is vested in the Trustees, a lay board that holds all of the resources of the university in trust for the people of Indiana and that is responsible for them.
Together we can extend that partnership over the next two hundred years, but in doing so, we must continue to move forward as an institution that is unified in purpose and in action. I referred earlier to these being tumultuous times. The events of just this year bear this out, and they show no sign of abating. Thus, as we look towards the future, we face a complex and difficult set of issues, including a decline in state funding, concerns over rising tuition and student debt, our role in the life of the state, and questions about the basic value of higher education. In confronting these issues, we must work together to mobilize those beliefs that have guided us throughout our history and are fundamental to the academy: beliefs in the power of reasoning, logic, debate, analysis, and evidence.
Ultimately, all of these issues lead us to ask: What does it mean to be a public university in the 21st century?
I would like to address each of these issues in turn.
The question about what it means to be a public university is especially relevant in relation to state support for IU Bloomington, which has decreased by 30 percent in constant dollars over the last two decades, and where the proportion of all of IU’s revenue coming from state funds has fallen dramatically over the last two decades. Of course, this decline does not diminish our gratitude to the taxpayers and citizens of Indiana and their legislators for their support. They have been faced with increasingly difficult funding decisions over the past few years as a result of the economic downturn.
But consider that for the current budget year about 18 percent of our funding will come from the state of Indiana, compared to about 50 percent two decades ago. In fact, if state funding continues to decline at this rate, and IU’s non-state revenue increases at just the rate of inflation, it will fall to under 10 percent not long after IU’s bicentenary in 2020.
This year, for the first time ever, the state provided no funding for repair and rehabilitation of our buildings for the current budget cycle. That decision put us in a very difficult situation. For the safety of today’s faculty, staff, and students and to ensure the life of these facilities for future generations, the Trustees, in line with their responsibility to the people of Indiana, approved student fees on all campuses to help address the $600 million backlog in maintenance and repair that we face.
At the same time as our state support has declined, the desire and demand for increasingly detailed administrative and legislative oversight of all aspects of our operations has increased, particularly as lawmakers seek to protect the interests of their constituents who are, themselves, facing financial challenges and want to send their children to public universities like IU.
The challenge for us in the future, then, is how do we attain greater freedom of action as an institution in the face of what seems an inevitable decline in state funding, while at the same time preserving IU’s role as the premier provider of comprehensive higher education to the sons and daughters of Indiana?
Human history shows that regulation can either unleash or suffocate growth, efficiency, and entrepreneurship. The challenge will be to ensure that regulation is commensurate with the support provided and that the university has the necessary freedom to adjust to a rapidly changing economic and educational environment.
A particular concern often heard is whether we are using our resources efficiently. This is an area where the Trustees, again in line with their responsibility to the people of Indiana, have been engaged and committed. And the IU Principles of Excellence state that we must be excellent stewards of the resources entrusted to us, and this is what it means to be a public university.
By any measure, we have made great strides in the hard work necessary to become more efficient in response to state budget cuts. And efficiency has been of central importance to us in the past. Let me say that I deeply appreciate all that faculty and staff right across the university have done to do more with less.
The facts of the matter are that over the past two years, we have succeeded in reducing our ongoing base budget by $36 million.
We also believe that IU can better manage existing health care spending by partnering with IU Health and other medical providers to enhance the delivery of clinical services to our employees, retirees, graduate students, and their families. Later this week, we will announce a pilot program in Bloomington that will start January 1. We anticipate expanding these clinical services to all seven campuses.
We generate an additional $40 million in savings each year through continuing innovative software licensing agreements that allow faculty, staff, and students to access essential computer applications at greatly reduced cost. This continues to be a hallmark of information technology at IU and goes back to IU’s path-breaking agreement with Microsoft in 1998, the first of its kind in the country, that has since saved IU tens of millions of dollars.
A few years ago, our credit rating was upgraded to AAA, which has significantly lowered the cost of servicing our debt over this period, so far saving the state more than $30 million. And a recently offered early retirement plan will save the university nearly $10 million.
Altogether, our operating costs, per full-time student, were up less than 1 percent in the 2010-2011 academic year as compared to the previous year.
Indeed, a recent benchmarking study found that our human resources and payroll departments, in particular, provide services at significantly lower cost than our peer institutions and are considered world-class even when compared with for-profit companies. Based on this study, we are also currently restructuring both IU marketing and student services to increase efficiency. We are looking for further efficiencies, combining functions where we can without harming our core missions. But fundamental changes may be necessary, and appeals to narrow interests cannot be accepted. Ultimately, we have to recognize that we cannot conduct business as usual.
Now let me turn to tuition and student debt. The demand for administrative and legislative oversight of higher education has focused, in part, on the public debate over the combined issues of tuition levels and student debt. It is the sad but inevitable fact that reductions in state funding mean that the financial burden of higher education has been passed, in part, from the state as a whole to individual students and their families. Universities can and must do all they can to ameliorate that transfer by being more efficient, as I have just described, but that strategy ultimately has its limits, especially if quality is not to suffer.
For those of us in the academy, tuition and student debt are both serious issues that have the potential to threaten the very foundations of public higher education. Not only could higher tuition rates price students out of a first-class education, but they could also price first-class education out of existence as the public increasingly turns to lower cost and lower quality options. And the specter of student debt can be life-changing, tracing a trajectory of impact from the institution where students choose to study, to where they work upon graduation, to what they are able to give back to the university as alumni. In short, excessive debt can turn the promise of higher education upside down: instead of being the road to greater opportunity, it could become a burden that reduces options.
The reality is that many of our in-state students pay far less than advertised tuition rates as a result of significant scholarship and grant aid. In fact, three out of four in-state students at IU Bloomington receive some form of financial aid. The average net cost of undergraduate tuition and fees for those students this year is under $2,600 at IU-Bloomington, which is less than last year. This matches the average net cost that IU students paid nine years ago.
That figure is considerably lower at our regional campuses, with an average net cost to undergraduates of just over $1,000 ($1,071, to be precise) per year. If we take that number and consider the number of educators, health professionals, and other community leaders who graduate from our regional campuses and remain in their communities, we can begin to comprehend the extraordinary value of an IU education to communities across the state.
Over the past five years, we have quadrupled institutional aid to students to more than $88 million this year university-wide.
In recognition of our efforts, for the second year in a row, Kiplinger’s Personal Finance magazine included IU Bloomington in the top thirty schools on its list of the “100 Best Values in Public Colleges,” a ranking that compares more than 500 public institutions.
As to the concerning issue of student debt, we have been very proactive under the direction of Vice President Neil Theobald in helping our students and their families manage debt issues and avoid long-term difficulty. That includes providing financial literacy programs at orientation and in freshman classes, online cash management tools (called Cash Course), enhanced entrance and exit loan counseling, and other efforts.
To a great extent, our ability to keep costs low to students stems from the remarkable generosity of our alumni and friends, and let me say that, especially during this economic downturn, IU’s supporters have continued to support the university magnificently with a level of generosity that one ordinarily associates with private institutions.
Nearly a year ago, we celebrated the successful conclusion of the Matching the Promise Campaign for IU Bloomington, which reached a goal of $1.1 billion and provided $338 million for scholarships and fellowships.
The next night, we launched the public phase of the Impact IUPUI Campaign. This afternoon, it is my great pleasure to announce that the Impact IUPUI Campaign has surpassed the $1 billion mark with 22 months left to go. Already $61 million has been raised for scholarships and fellowships. This shows the value that our alumni, donors, and friends place on higher education and the great momentum we have generated towards achieving the highest fundraising goal in the history of Indiana University: $1.25 billion. Again, we are deeply grateful to our supporters for their remarkable generosity. This generosity directly addresses the potential indebtedness of IU students. Our efforts to provide a first-rate education at an affordable cost are paying off in a multitude of ways, but I will give you just one example from the students we welcomed this fall.
More students than ever before are being educated at IU, with a record total of over 110,000 students enrolling in the fall semester. Nearly 85,000 of those students are from Indiana. Let me repeat that: nearly 85,000 Hoosiers are attending IU this fall.
We set new enrollment records at IU Bloomington, IU Northwest, IU Southeast, IU East, and Indiana University–Purdue University Fort Wayne. Over the past year, every campus has set enrollment records or records in total credit hours taken. The people of Indiana have spoken: they understand that an IU education is more valuable than ever before.
And it is not just numbers of students. The quality of preparation of incoming students is increasing across the board, which means that Indiana is keeping its best students in the state to build the communities and the economy of tomorrow. This year, we welcomed our most accomplished class of in-state freshman students at IU Bloomington, including IU’s largest class of National Merit Scholars. Eighty percent of in-state students graduated in the top quarter of their high school class and forty percent in the top 10%, including a record 128 valedictorians this year. This cohort of students also earned the highest average SAT scores in the campus’ history.
IU students also reflect the demographics of tomorrow. The student body is becoming steadily more diverse, with students from underrepresented groups at a record high 14%. Indiana can only prosper if the future is owned by all.
These students will have unequaled opportunities during their years at Indiana University. They will join record numbers of IU students who are studying abroad every year. Nearly 25% of our students at IU Bloomington and increasing numbers on other campuses graduate with international experience. They will be taking classes with a record number of international students who are attending Indiana University. They will have opportunities for service and engagement unparalleled by other schools. Their educations will extend well beyond the classroom.
And upon their graduation, they will join IU’s 558,000 living graduates. In fact, just last spring, IU graduated a record number of students across the state with a record 19,017 degrees awarded, which is roughly equal to the number of degrees awarded at both Purdue and Ivy Tech Community College combined. Of these, over 80% of the in-state students can be expected to stay and settle in Indiana, contributing their skills, education, innovations, and energy to the Indiana economy and broader society.
We are educating more Hoosier students than ever by providing an accessible, affordable education to all of those who qualify. Our alumni and friends provide generous support to help all students attend Indiana University, and we as an institution also support those students. This represents yet another aspect of our deep commitment to the people of this state.
And again, all of this illuminates the fundamental question of what it means to be a public university. It means being, as we are in such an exemplary way, the door of opportunity for thousands and thousands of the best students in the state of all income levels and of all races; it means well-educated and trained graduates contributing to the growth of the Indiana economy; and it means citizens engaged in the betterment of their communities and their state.
Let me now discuss some further aspects of IU’s role in the life of the state. At the same time that state funding for public universities is declining across the nation, expectations that public universities should contribute to the life of their states are increasing.
This is an expectation that IU has been meeting superbly for nearly 200 years. The core of an IU undergraduate education is a liberal education in the depth and breadth of human knowledge. I have spoken to university presidents around the globe, and in these conversations it is clear that the American liberal education remains the envy of the world because of the creative, flexible, and adaptable graduates it produces.
And the contributions to the state of our professional schools is immense and far-reaching. Our clinical schools—Medicine, Nursing, Dentistry, Optometry, Social Work, and others, many of which have programs across the state, as well as units on our regional campuses such as the School of Health and Human Services at IU Northwest—provide a substantial number of the health professionals in their fields in the state and their local communities, and the transformative research they do touches and improves hundreds of thousands of lives.
Our Schools of Law have trained some of our state’s—and this nation’s—finest lawyers, judges, and legal scholars; and our Schools of Education have trained award-winning teachers and educational leaders across the state. There is the Kelley School and the other schools of business; the Jacobs School of Music, and the Hope, Herron, and Raclin art schools. The graduates of all of these schools, and many others, have made a transformative difference in a myriad of ways and fields in the life of the state.
And for the first time in IU history, expenditures on research at IU performed by you, the faculty, staff, and students at the university, and supported over recent years by record amounts of grant funding, have exceeded the $500 million mark in a single fiscal year. This figure represents an economic impact of over a billion dollars in the state of Indiana and thousands of jobs. Once again, I want to congratulate everyone responsible for this outstanding achievement.
One of the most dramatic but underappreciated ways in which IU has an impact on the state of Indiana is through the IU Health hospital system. IU Health was formed in 1997 as a not-for-profit joint venture between IU and the Methodist Church through a merger of our hospitals and other services with theirs. It is also a partnership with the IU School of Medicine and the other IU clinical schools. It was originally called Clarian Health Partners but earlier this year changed its name to Indiana University Health. This change is having an immense impact by making much clearer the extraordinary scope and scale of the impact that Indiana University has on the state of Indiana.
IU Health has grown under the superb leadership of Dan Evans to be the largest hospital system in Indiana with hospitals or other medical facilities in nearly every part of the state, as well as being one of the largest hospital systems in the country. It is ranked in the top 50 programs by U.S. News and World Report. Its impact on the well-being of the citizens of the state is, in short, colossal. In the last year it treated over 100,000 Hoosiers, and nearly 2 million people made outpatient visits. It has gross patient revenues of over $7 billion and employs around 22,000 people.
As an academic health center, IU Health works in partnership with the IU School of Medicine to train physicians. Last year more than 1,000 residents and fellows received training in IU Health hospitals. It is also central for research conducted by faculty from the school. At the end of 2009, 4,200 patients participated in more than 2,600 research studies led by 700 investigators within IU Health facilities, with the promise of new breakthroughs in ensuring better health and the treatment of disease.1
In fact, IU, which employs around 18,000 people, and IU Health are collectively the largest employer in the state of Indiana, with combined revenues of over $10 billion.
Another example of how IU has an impact in the state is through the incubation of new companies and businesses. One example of such impact is the sale of Marcadia Biotech to Roche earlier this year. The pioneering research behind Marcadia took place in the Chemistry Building in Bloomington and has created significant new wealth in the state—ultimately worth over $500 million—all of which was imported from Switzerland and has generated substantial new tax revenue for Indiana.
Over the course of the last three years, seventeen start-up companies have been established based on Indiana University faculty research, with seven in the last year alone. Of those seven, one is a healthcare IT company, two are green energy—wind and solar—and four are life sciences, one of which provides help for children born with a congenital heart disease that is the leading cause of death from birth defects in the first year of a child’s life. This is the transformative difference that IU research can make.
Our impact on the state also manifests itself in over half a billion dollars of construction or renovation underway or completed across the university of buildings and facilities essential to research and education at IU. With the support of the Trustees and under Vice President Tom Morrison’s leadership, we have continued construction and renovation during the recession to take advantage of historically low costs, as I noted before.
Over the past year, we dedicated the Glick Eye Institute and Joseph E. Walther Hall at the IU School of Medicine; Harper Hall in South Bend; and in Bloomington, the IU Cinema, the newly renovated Theatre and Drama Facilities, and the Union Street Center for residential housing.
IU Northwest has developed space for their Fine Arts and Performing Arts Programs on Grant Street near their campus, which has strengthened their partnership with the community. IU Kokomo has opened a new nursing simulation laboratory in conjunction with the community, and IU East is well advanced in fundraising for a new center to support on-campus student life. At IU Southeast, the five student housing lodges are at 100% occupancy for the third year in a row, and at their last meeting IU Trustees approved the construction of a sixth lodge.
In October, we will be dedicating the new Cyberinfrastructure Building at Tenth and the Bypass here in Bloomington. We are also making great progress on the IU School of Music Studio Building at the corner of Third and Jordan, and the IU South Bend Education and Arts Building renovation is underway and will provide that campus much-needed space.
Momentum is building in the implementation of the Old Crescent plan, which will transform those magnificent iconic buildings back into a vibrant hub of student and academic life, day and night. The first major project there will start within months.
Every single one of these projects in some way contributes to our fundamental goals of excellence in education and research. And let us not forget that they also represent jobs across the state. Collectively they represent our commitment to the partnership we have formed with the people of this state as a public university.
At the most fundamental level, each of these issues revolves around the value of higher education in today’s society and the definition of a public university. The fact is that, in challenging economic times, many people are forced to view education from a narrow financial perspective. From that perspective, every institution that offers advanced degrees at a reasonable cost becomes an option. This has given rise to stiff competition for the hearts, minds, and wallets of students and their families among a host of institutions, including community colleges, online programs, and for-profit universities. In fact, aggressive competition has become a central fact of life among institutions vying for better rankings, top-notch faculty, first-rate students, and dwindling research funding.
How, then, do we convince an increasingly skeptical public that what we have to offer is worth their investment?
At the heart of the matter is what makes IU different. And the answer to that question is you.
You, our outstanding faculty and staff, are the reason over a half-million students accomplished what they did. Hours with you in the classroom, the lab, on stage, in the practice room, transformed them into the leaders that they ultimately became. The knowledge that you create has transformed our society by generating new industries, improving public health, raising our standard of living, enriching our cultural lives, and improving society and the world in multiple ways. Work with you—as career counselors, advisors, tutors, and mentors—has helped guide those students towards their futures. For both faculty and staff, the hours you have spent with students have forged bonds that will last for lifetimes, and the impact of your research, education, and support is not confined within one state’s borders. As Indiana benefits, so does the nation and often the world.
When we look at all of this evidence—increased efficiency, increased financial aid to support more Hoosier students, increased contributions to the life of the state, and the increased value of an IU education—through the clear lens of logic, the conclusion is simple. Our university community is actively engaged in and deeply committed to extending our longstanding partnership with the people of this state.
These efforts are not just reactions to the current economic situation. They are our collective and ongoing efforts to define what it means to be a public university with a dual responsibility to the people of the state and to the academy.
And together we ask, what more can we do?
Drawing on our dual commitment and on our expertise in public health, we seek to establish two new distinct Schools of Public Health that promise to have a significant impact on the health of people of Indiana. Leveraging our outstanding reputation in scholarship and research on countries, cultures, and regions around the globe, we are moving to develop a School of International Studies that will further strengthen this area and offer Hoosier students even more opportunities for the global education so necessary to their future success. Based on our internationally acclaimed Center on Philanthropy, we are also moving to establish a full-fledged School of Philanthropy. Marshalling our expertise in information technology and new pedagogy, we have established an Office of Online Education that will oversee the development and coordination of online education at IU.
The IU Foundation has also restructured itself to further strengthen our efforts to support key university priorities through four new committees focused on obtaining transformative naming gifts for schools and academic units, gifts for buildings and facilities, gifts to support study-abroad activities, and continuing gifts to fund scholarships and fellowships. The Foundation’s efforts in women’s philanthropy, too, have been path-breaking.
Let me express my gratitude, and I am sure the gratitude of everyone here, for the magnificent contributions and support that the dedicated and passionate members of the board of the IU Foundation are giving and have given over so many years.
The high quality research and education that sets great public universities apart (and which I described above) is the basis of our value and the core of our mission. In all that we do, IU must not only respond to, but take advantage of, the opportunities that new technologies provide to educate, research, and operate in more efficient and effective ways. We must embrace the changing needs of students and faculty in an increasingly globalized world, with opportunities, competition, and expectations that simply did not confront previous generations.
And we are doing just that.
The New Academic Directions report for the Bloomington and Indianapolis campuses and the Blueprint for Student Attainment for the regional campuses both map out new developments and even new futures for Indiana University. Together with university reports on online education and benchmarking and campus reports on teaching and learning, these take on the essential task of looking to the future. The recommendations in these reports have my broad support, as well as that of the Board of Trustees.
The major reports of the past year position IU to re-imagine teaching and learning for 21st century students, faculty, and staff; to streamline our processes so that they are more efficient; and ultimately to redefine ourselves as a public university. They position us, that is, but they do not complete the job.
The hard work of implementation now begins. This will be the focus of our efforts this year. While there is, undoubtedly, low-hanging fruit to be harvested, the great strength of these reports is that they are not limited to low-hanging fruit. They call on us to re-examine and re-engineer the way that we do our work.
I have charged Executive Vice Presidents Karen Hanson, Charles Bantz, and John Applegate to work with faculty, staff, students, deans, and other administrators, as appropriate, to form implementation teams to develop more detailed responses and implementation plans for the recommendations of these reports. I expect that these teams will receive full and active support.
Much is underway; much is being considered. Just as I charged the committees I established last year to produce these reports to be bold in their thinking, I have asked all involved to look beyond what works now or what is familiar or what is convenient, and instead look towards what will make IU stronger in the future. Where there are opportunities to avoid duplication, to leverage the scale of a large university, and to share resources, we must take them. This will not always be easy, and it will not always be comfortable, but it is necessary.
I am not one who believes in change for its own sake. As I mentioned at the outset, our commitment to the value of the education and research we produce at Indiana University will never waver. This commitment is our enduring strength. But we live in exceptionally challenging times, and the technologies, academic and administrative structures, and processes that served us well in the past will not necessarily serve us well in the future.
In all of this, we need your help and support. These are difficult times. Much that has been accepted about the world of higher education is being challenged for economic or other reasons. We must strongly defend all that is great about universities that has helped them endure for over a thousand years. But we must show a willingness to adapt where this enables us to provide better and more educational opportunities for our students and to pursue new and uncharted fields of research, scholarship, and creativity.
At the close of his first year of service as president of Indiana University, Herman B Wells described the challenges the university faced, including, among others, the current budget and what he called inadequate or outmoded procedures and organizational patterns.
He spoke of this at the Indianapolis Alumni Club saying, “Our problems are many and great, it is true. But they need not overwhelm us, for our resources are likewise great; a forward-looking Board of Trustees; a large, enthusiastic, vigorous group of alumni; an excellent faculty—sincere, loyal, distinguished; a student body composed of healthy, wholesome American youth second to none in the country. With the cooperation of these four groups, anything can be accomplished.”2
Today, we face similar challenges, and we can also still draw upon the great resources that President Wells described: our forward-looking Board of Trustees; our generous and accomplished alumni and friends; our students, including our growing and talented international student population; and you, our outstanding faculty and staff. But I would add a fifth great resource: the people of Indiana with whom we have worked in partnership for nearly two hundred years.
With all of us working together, anything can be accomplished.
With all of us working together, we can shape our response to that fundamental question about what it means to be one of the best public universities in the 21st century.