The State of The University of Tulsa Spring 2009
Friday, January 09, 2009
I traditionally present a State of the University address as part of Convocation ceremonies each fall. Last August, I set aside that report as we used our time together to celebrate the life and legacy of Fulton Collins, who served as chairman of The University of Tulsa Board of Trustees from 1997 until his death last July.
Given the shocking deterioration of the economy over recent months, some portion of what I would have said last August would, by now, have become obsolete. Consequently, on January 8th, I took advantage of time set aside for our annual all-faculty workshop to discuss the current state of TU with a large component of our TU family. The timing and location of that presentation made it impossible to host the entire campus community, so we turn to our Web site to provide the following text of my talk, with embedded links that will display presentation slide images.
As you can read below, TU remains strong, stable, and advancing in all key strategic areas. With continued economic uncertainty on the horizon, however, we are implementing a number of conservative fiscal and operating measures to help us meet the challenges of the coming months.
We are truly fortunate that we face the future from a position of strength – the result of TU’s dramatic development over the past decade and the abundance of friends and allies who have made that progress possible. I have every confidence that 2009 will be another banner year for TU.
As you know, the past year has been brutal for the financial markets, and investments of all kinds took a beating. To set some context, note that the Dow Jones Industrial Average lost roughly a third of its value last year.
Our endowment looks good by comparison, but even so, it lost 21.5% as measured in early December – a stark decline, but not as severe as the losses experienced by many other organizations.
These declines are not just on paper; endowment earnings provide 20% of the University’s annual operating dollars. This decline translates into a real $10 million loss of operating income.
Fortunately, however, the University is not fully exposed to this loss all at once. Our endowment earnings distributions are based on a 12-quarter moving average. This animation is not drawn to scale, but it illustrates the concept of a floating average. The average rises and falls, but not as dramatically as the individual quarterly numbers. Our quarterly earnings distribution depends on the longer-term average.
The good news is that this method dilutes the impact of a weak quarter. But of course, this is also the bad news – because any dips in the market will be reflected in our average for three years.
The ultimate question, of course, is how many bad quarters lie ahead. A prolonged run of weak quarterly returns would significantly drag down our 12 quarter average, and adversely affect the amount of money we have available to run the university. Obviously, we continue to monitor these conditions very carefully.
Of most immediate note, we are on budget for the current fiscal year, which ends June 30, 2009. And we are in what I am calling "OK shape" with our budget for Fiscal 2010, which begins July 1st, 2009.
I know you have questions, so here are the some of the key highlights.
First, we are not planning any layoffs at this time. We are, however, in a hiring slowdown. As I announced in November, we are only filling vacancies after careful review, and then only in response to the health and safety needs of our students and staff, and for strategic academic purposes. If the current recession turns into a prolonged economic downturn, we may have to reconvene and review our options, but for now we are stable, and protecting our people remains my top priority. Salary savings that we recover from vacant positions will help offset some of the decline in endowment earnings.
We realize that families may be wary of private school costs in the current climate, so we are being conservative in our enrollment assumptions and generous in our financial aid commitments. We are planning to announce modest tuition increases, and we will adjust our housing rates upward to compare more closely to the overall rental market. These changes will not be drastic, however.
We also need to be disciplined about discretionary spending, purchasing only those things that are essential, and making do wherever we can.
We are providing a 3% merit salary increase pool this year that will become available on January 1, 2010. Vice presidents and deans will have discretion as to how this pool is distributed through their organizations.
As I’ve previously indicated, we are postponing large capital projects. We have made excellent progress in our capital campaign, but many of our recent gift pledges are scheduled to be paid over several years.
Ordinarily, we would borrow money on a short term basis to fund our capital projects, then retire the debt as pledges are paid. But in the current financial climate, we will not be taking on the risk of additional borrowing. We need to wait for the credit markets to stabilize.
We do have funding in hand for several smaller projects, and we will proceed with these this spring. Specifically, we will work on realigning the streets and relocating utilities in preparation for construction of the Lorton Performance Center. We have additional work to do around the Physical Plant perimeter and on pedestrian sidewalks that are the final part of the project to create a new front door for TU.
I want to emphasize that the University is strong and stable. The measures we are taking are meant to maintain our current solid footing. Our conservative and prudent approach will see us through the current economic and credit crises. We remain totally committed to our overall vision to become one of the nation’s top 50 doctoral universities.
We intend to move forward aggressively on our strategic priorities, which include program development, research, student recruiting, and faculty development. In support of these priorities, we will continue to focus on the fundraising goals of our current "Embrace the Future" campaign. As of November, we had raised $277 million toward our campaign, which breaks down this way:
- $112 million pledged...
- $141 million already received...
- And $24 million in deferred gifts, primarily planned estate gifts.
This funding supports a broad range of initiatives, including student scholarships, faculty endowments, and strategic capital projects. Among those many items, we have so far secured permanent endowment support for 21 faculty positions and more than 275 new scholarships.
Our "Embrace the Future" campaign grew out of a series of investigations and discussions we held in late 2005 and early 2006. That process culminated in a unanimous vote from our Board of Trustees to proceed with the campaign around a clear set of priorities [Slide]. These initiatives build on the University’s recent progress and will continue to move TU toward Top 50 status.
- First: We want to continue to recruit and retain top students – those with the focus and drive to participate actively in the classroom and in campus life, and to persist until graduation.
- Second: We want to align TU’s programs with key international trends. Globalization will remain a major force throughout the 21st century, and we owe it to our students to enhance these opportunities.
- Third: The challenges our nation faces right now demand innovative solutions. By expanding our research and graduate programs, we can advance TU’s academic profile and position the University as a strong partner in economic development.
- Fourth: We need to ensure that our library and computing resources keep pace with the needs of our students and with changing technology.
- Fifth: We want to reinforce our status as a respected NCAA Division I-A competitor. TU’s presence in this division brings us important exposure and credibility as a major university on the national stage.
- And sixth: We will continue to build on a century-long legacy of service to Tulsa, both as an economic catalyst and as a contributor to the quality of community life.
We have made encouraging recent progress toward these priorities.
Recruit and Retain Top Students
When we were planning our campaign back in 2005, we began by benchmarking TU’s performance against that of the U.S. News Top 50 schools. That exercise gave us a clear baseline to measure our progress, and I am pleased to say that in many key U.S. News ranking criteria, we are already seeing notable progress.
This year, 64% of our incoming freshmen graduated in the top 10% of their high school classes, up from 62% in 2005. Looking at the range in green, you can see that in 2005, the Top 50 schools showed anywhere from 60% to 79% on this measure. So we are edging deeper into Top 50 range on this metric.
Likewise, TU’s freshman ACT scores also have climbed since 2005, and are moving squarely into Top-50 levels. This score range represents the middle-performing 50% of students, omitting the top and bottom 25%."
This also was a record year for National Merit Scholars at TU. We welcomed 77 new scholars among our entering freshman class, for a ratio of 1 in 9 students. 77% of our National Merit Scholars are from outside Oklahoma, proving that we are extending our reach as a destination of choice for the nation’s most ambitious students.
We don’t yet have comparison data for this year, but last year TU ranked 12th in the nation in per-capita National Merit Scholars among entering freshmen.
We should be taking every opportunity to remind people that, student for student, TU features one of the most academically accomplished student bodies in the nation. It is equally impressive that TU has been able to achieve such high student quality while greatly increasing admission selectivity. Since 2005, we have lowered our admission rate from 75% to 46% -- a level much closer to the Top-50 average of 38.3%, as reported in 2005.
We still have room for improvement, but I think you’ll agree we have made outstanding gains.
Within the U.S. News ranking formula, the single most heavily weighted factor is graduation rate. A critical step in driving our graduation rate is to increase our retention of students from the freshman to the sophomore year. Over the past three years, thanks largely to the work of our Division of Enrollment and Student Services and the academic deans, we have achieved a 6-point increase in student retention from the freshman to the sophomore year. This progress breaks TU into the Top 50 range, though we want to keep building that number.
This is clearly a move in the right direction, which bodes very well for our continued rise in the rankings. Students will stay and succeed when they have a supportive and engaging campus environment.
Just 15 years ago, only about 40% of TU undergraduates lived on campus. This graphic is drawn proportionately, so you can see how lopsided our residency was. TU’s low residency rate limited our students’ access to resources like the library, computer labs, and tutoring support. It also reduced participation in campus organizations and special events.
Following a decade of intensive campus development, today 73% of undergraduates live on campus, where they share in a more vibrant and meaningful campus life.
Internationalize the Curriculum
Another priority where we have achieved recent progress is our effort to internationalize our curriculum. With the languages we teach, we want to equip our students to participate fully in the worldwide economy.
As of 2005, our language portfolio covered only 61% of total global commerce. In the age of the globalization and the growing interdependence of world economies, that gap represented a disadvantage for TU students.
Since 2005, we have added Portuguese and Chinese to our language lineup, expanding our reach to nearly 80% of world economic production. With longer-term plans to add additional languages, we can bring TU’s language coverage up to 92% of the global economy. That is a much more competitive position during a time when students are increasingly looking for schools that can prepare them for success in an international context.
Research and Graduate Programs
I also am pleased to report clear progress in our research and graduate programs.
First, it appears that we are on pace for a very strong year in Ph.D. production. At last month’s mid-year commencement we graduated 18 Ph.D.s, compared to 18 for all of the 2007-08 academic year. Depending on our spring doctoral count, we may be looking at a record year.
On the research front: In 2005, we identified several areas of interdisciplinary research potential. At that time, we apprised the Board of Trustees of these opportunities, and in 2007, the Office of Research and Sponsored Programs followed up by soliciting formal proposals from the faculty for the establishment of research institutes. As a result, last year TU established seven new interdisciplinary research institutes:
- Information Security
- Alternative Energy
- International Entrepreneurship
- Bioinformatics and Computational Biology
- Individual Differences
- Trauma, Abuse and Neglect
A recent annual review of these institutes by the University Research Council shows that most are thriving and are hotbeds of new interdisciplinary research on campus.
Library and Computing Resources
We also are making key enhancements to our library and computing resources. With so much of our information now online, computing resources are fundamental to teaching and research. These resources include paper and online journal subscriptions, workstations, servers, and infrastructure for security and data backup.
In February, we expect to bring our McFarlin Library Computing Annex online. The annex will consolidate the library’s computer resources and will return space to the library for reading rooms and other traditional uses. In addition, we are raising funds for a permanent endowment that will support key acquisitions.
NCAA Division I-A Athletics
Division I-A Athletics is an important factor in TU’s national visibility, student experience, community engagement and alumni pride. TU has received more than 90 hours of national TV exposure since joining Conference USA four years ago.
To give you some idea of the value of that exposure, consider that the air time we received during this year’s Conference USA Championship alone was valued at nearly $1.2 million and reached more than a million viewers. By extension, we can say TU has received tens of millions of dollars worth of exposure in recent years because of our competitive athletics program.
TU stands out as a school that values both parts of the "student athlete" equation. TU is one of only three universities in the country that can say 1 in 10 students is a student athlete, AND 1 in 10 is also a National Merit Scholar. (The other two are Rice and Stanford.)
But as the smallest NCAA Division 1-A competitor, we face unique challenges and needs. These include attracting and retaining both student talent and coaching talent.
Our Embrace the Future Campaign addresses many of these needs – most notably coaching endowments and student-athlete scholarship endowments.
Service to Tulsa
We also are seeing exciting progress in our ongoing service to the Tulsa community. The TU-Tulsa partnership goes back a century. You can see the 1907 Tulsa Daily World headline announcing Tulsa’s success in purchasing Muskogee’s Henry Kendall College from the Presbyterian Church. The deal was valued at $200,000.
Four years ago, the Tulsa World reported the results of an economic impact study by TU Professor Steve Steib finding that TU contributed more than $300 million in annual economic activity here in Tulsa.
That juxtaposition illustrates both the depth and complexity of the partnership that TU and Tulsa have built over the years. It also challenges us to imagine where this partnership could take us over the next hundred years.
Our Embrace the Future campaign does just that, by incorporating a number of key projects and priorities that will help us advance Tulsa’s economic and cultural interests.
And I am excited about TU’s Service Learning Initiative that is the subject of the next segment of our meeting this morning. It, too, will deepen our commitment to Tulsa and its citizens.
The Lorton Performance Center will be a major step forward for the arts at TU, and it will fill an important niche in Tulsa’s arts venue lineup.
Over the past year, we have made considerable progress toward funding this project – which will be the single largest, most ambitious facility in TU history. Thanks to a substantial leadership gift by TU Trustees and Alumni Bob and Roxana Lorton, we are well on our way to meeting our goal. This is, however, one of the capital projects that will be on hold until the current economic situation stabilizes.
Any discussion of the TU-Tulsa partnership should also include our plan to redesign our MBA program. Last year, Dean Gale Sullenberger worked with the faculty in close partnership with Fulton Collins to assess the MBA program against the needs of area employers. The review was a months-long process that reached out to local executives and produced the program plan that you see here.
After taking an enhanced core of courses that includes training in communication, leadership, ethics and team building, students can specialize in one of six MBA tracks, or they can remain in a "general" track. Employers are very much looking for leadership in specific functional areas, which makes the track structure a smart direction for us. Other key parts of this plan include substantially increased scholarship support, enhanced faculty support, and new resources for career planning and placement.
We are proud to report that Walt Helmerich stepped forward to join Fulton in co-sponsoring a $15 million matching gift, which represents half of this initiative’s $30 million price tag.
Several other friends have responded with key early gifts – including the Williams Foundation, the Mervin Bovaird Foundation, the Chapman Trusts, the Bartlett Foundation, Mike Wiley, Dave Lawson, and Margery Mayo Bird. We are very excited about this plan and the support it is receiving.
As you know, TU’s partnership with the City of Tulsa to manage Gilcrease Museum officially began July 1. Since then, Director Duane King and his team have worked with others throughout the University to achieve several major milestones.
Through the new Gilcrease Council structure, our Institutional Advancement team has raised more than $13 million in new gifts and commitments to support Gilcrease.
Gilcrease has introduced a new membership model, which includes a Charter Member program that has drawn more than 2,000 new members to the museum.
Visits to Gilcrease are up 17% over last year.
We are also planning a new interdisciplinary graduate program in Museum Science and Management to begin in Fall 2009.
In addition, we are currently developing guidelines for a Resident Scholars Program that will be implemented in 2009.
Finally, In recent months, the Museum has filled three full-time curatorial positions and has active searches underway for a senior curatorial position and a chief conservator. The strength of the professional staff translates directly into the quality of museum exhibits, programming and scholarly publications.
This partnership remains an area of great potential, and we look forward to making more strides in the coming year.
In conclusion, I would like to leave you with a few parting thoughts.
First, the future holds challenges for everyone. Uncertainty is a fact of life for universities, corporations, non-profits – all of us. But here at TU, we have the advantage of moving into that future from a position of strength.
Just consider all the improvements we have made in the past few years alone – assets that will help TU provide a top-tier educational experience.
Think of how fortunate we are that we could complete so many campus improvements before the economy weakened. These include:
- Chapman Commons and Tucker Drive
- Residential villages with first-class amenities
- Bayless Plaza
- Collins Hall, graced by the Genave King Rogers Fountain
And H.A. Chapman Stadium, with its new press box and stands, Skelly Field, and Thomas Brothers Plaza, which join the Case Athletic Complex at the north end zone for a truly outstanding venue. I am pleased to note that we sold out Chapman Stadium twice this season.
The same resolve and teamwork that made these projects happen will propel us to even greater achievements in the months and years ahead.
As a key part of our strong foothold, we are fortunate to have a large and talented group of leaders and friends. Most notably, our Board of Trustees continues to guide the University with remarkable vision and effectiveness. That same kind of dedication extends down through the College and program levels, as well – through the various advisory and friendship boards that exist here at TU.
In addition, our alumni base is becoming more active – not just here in Tulsa, but across the nation, as well. Along with increased participation in the Alumni Association, our alumni are giving to TU in record numbers.
And finally, TU’s future is bright, because "We are TU." The collective talent and determination of our faculty, staff, and administrators have always been our pivotal assets, and they will remain the key to our success in the months ahead.
We have a clear set of goals in front of us, plenty of encouraging momentum behind us, and a great deal of work to do.
I am grateful to be here with you working together so productively to secure a strong and stable future for this wonderful university.