State of the University Address

by Bill Powers, President

September 15, 2010

Thank you all for being here today as we celebrate UT's 127th birthday. I want to take this occasion to reinforce the role of higher education — and our University — in fulfilling the American Dream. I also believe that we need to reinvent some of the things we do to improve our effectiveness. And we need to take stock of some very serious challenges that lie ahead.

There's no doubt that we do face very serious challenges. We have already made budget cuts to account for 5 percent of the general revenue we receive from the State, and we've been asked to formulate plans for cutting an additional 10 percent. The State faces budget deficits that are projected to be as high as $18 billion, so we need to be ready.

In addition, we are confronted with more long-term, tidal forces. People ask whether a college education is still worth it and whether America's colleges are still serving the public interest. Communication technologies are rapidly changing, and our students understand them better than we do. The state's demographics are changing. The cost of higher education is rising faster than the consumer price index, even faster than the cost of health care. There is a growing crisis of public confidence in American universities, and these forces are not going away any time soon. If we are to prosper, we need to face them by being more productive and controlling costs. We'll have to reinvent many of the ways we do things. That will be my central theme today.

We will have to make these changes with a focus on what is truly valuable and noble about our mission: educating students to be future leaders and doing cutting-edge research for the benefit of society. So as we celebrate our 127th birthday, we need to remind ourselves, and others, of the critical contributions UT makes to Texas and to the nation every day. We need to reinvent, but we need to do it in a way that furthers our core mission. As Mark Taylor, a professor of religion at Columbia, said in his recent book, Crisis on Campus: "I am suggesting not that we replace the old with the new but that we use the old to help us understand and appreciate the new and use the new to foster innovations, while at the same time supporting those aspects of traditional education that continue to be effective."

One hundred twenty-seven years is a long time, and during that time The University of Texas has fostered the American dream. It has provided opportunity. It has supported our democracy. It has driven our economy. And it continues to do that today. I believe there is no more important mission.

American universities have been our best pathway for upward mobility. An entire generation, aided by the GI Bill, came back from World War II and built better lives for themselves and their families, and they built a better state and country. Today, more than ever, first generation students come to UT and make better lives for themselves and their families, and they make a better Texas. Just this fall we enrolled more than 7,200 new students. Seventy-two hundred people who have the opportunity to pursue the American dream.

This year's freshman class is the most diverse in our history, so we are providing opportunities to more students who in earlier generations would have been shut out. In fact, we welcomed the first entering class that does not have a white majority, which should come as no surprise. Texas became a minority majority state in 2004. Fifty-two percent of our freshmen are minority students, including 23 percent who are Hispanic. More students than ever are first generation college students. We just opened admissions centers in East Texas and in West Texas to better recruit students from rural areas and small towns. If the American Dream means opportunity, UT is providing that opportunity today.

Thomas Jefferson once said, "Light and liberty go together." Democracy is not possible without broadly educated citizens and well-educated leaders. The problems we've faced in the last decade, from Enron to the recent economic crisis, have involved moral, cultural, business, and legal issues, not just technical issues. We have a critical need to understand the cultures, languages, history, economics, and politics of others around the world. We can't succeed as a democracy without a keen awareness and understanding of our global neighbors and their cultures. Universities create, analyze, and transmit the knowledge that preserves our democracy and shapes our policies.

We live in a knowledge economy. That's almost a cliché now, but it's true. Just look at the transformation of the Texas economy in the last 30 years. Look at Austin and Central Texas. UT has played a major role, indeed the major role, in that transformation. Look at the most economically prosperous regions in America and you will see great research universities. Every dollar spent at UT generates $18 in the Texas economy. There is simply no more effective economic development program than UT. As President Obama recently said on our campus, "Education is an economic issue."

We continue to drive the economy. Our researchers had a record year by earning $642 million in new research grants, a 7.7 percent increase over last year. We're second only to MIT in external research funding among universities without a medical school. Berkeley is third, and we're now $75 million ahead of them, doubling the gap in a single year. I salute our faculty, staff, and students who are responsible for this enormous achievement.

UT's Austin Technology Incubator supported 32 companies this year. They employed 183 people and supported 35 student internships last year, and they had an economic impact of $35 million. And our greatest transfer of intellectual property each year takes place when we bestow 12,000 degrees on our graduates. Where would Texas be without this highly educated workforce?

Creating opportunity...supporting democracy... generating economic growth — our work is critically important. Great things happen on this campus every day, and all because of our talented people. You saw but a hundred of them in the awards video a few minutes ago. There are thousands every day who bring distinction to our University. I want to congratulate all of you for your outstanding work.

So as we face the serious challenges that lie ahead, we need to do more than just balance a difficult budget. We need to do it with our eyes always on the beacon that shows us what is truly valuable and noble about higher education, and what it is that intertwines our work with the American Dream. But we do face very serious challenges, and we must face them head on. In his State of the System Address a year ago, Chancellor Cigarroa asked: "In our time, what is ours to do?" That is our question: what is ours to do?

To put it bluntly, we will have to reinvent how we do things in order to become more efficient and effective, or in economic jargon, to become more productive. That has been the way every form of human enterprise has advanced in difficult and changing circumstances. Those who change and become more effective in new environments survive and prosper; those who don't, don't.

The term productivity seems to be a banal one that is not appropriate for the academic enterprise. True, too many people think of higher education as a mere commodity to be cranked out on an assembly line like automobiles, a mentality that can focus on narrow and short-sighted metrics that don't capture quality and the true value of higher education. Metrics like degrees and student credit hours are important, but they fall far short of measuring the richness of our true "output." But the problem is not with the ideas of productivity or increased effectiveness; it is just with narrow and short-sighted conceptions of what we are trying to accomplish.

We have always worked to increase what I am calling productivity. When we invested in the Lonestar and the Ranger supercomputers, we made our research scientists more effective. When we reorganized and then invested in the Institute for Computational Engineering and Sciences, we brought computing power and research modeling together in a more productive way. When we began UTeach, first in Natural Sciences and then in Liberal Arts and Engineering, we organized our efforts to increase and improve outcomes for our public schools. When we established the Signature Courses in our undergraduate curriculum reform, we improved our students' critical thinking, problem solving, and writing, skills that are vital for America's work force. When we take the lead of the Commission of 125 and transfer authority from the Tower and colleges to the departments and organized research units, we increase productivity by putting decisions into the hands of people who know what they are doing. When we attract better faculty and students, we increase our productivity. We have always advanced by increasing our research and educational productivity.

So we will need to find new ways, large and small, to do more with fewer resources. We may have battles about the criteria we use to evaluate our productivity, but we won't win those battles by refusing to confront deeper issues about how we deploy our resources in pursuit of our mission.

This will take hard work, just as it has during the last year. The work will need to be consultative and iterative; involving faculty, students, and staff as we reinvent ways we do things. It will require thinking about strategy and policy, not just about budgets and bookkeeping. We won't be able to do this alone. It will require work by our System and Board, our elected officials, and our alumni and friends, and I'll call on each group. But our campus must take the lead.

So let's start with our campus. There is no single solution, so we'll need to invent scores of new approaches. I call on everyone on campus to think of better ways of doing things, even using the Ideas of Texas website when appropriate.

Do we have too many administrators? Are our business processes too cumbersome? Does every unit need its own business or IT staff? Are we using our resources in sustainable ways? And so on. We need to continue to ask these questions in every portfolio. We've already reorganized Information Technology Services along these lines to save several million dollars.

But we can achieve only so much through these efforts. We're already about one-half the state average in administrative costs. So I want to focus here on two broad, central strategies we'll need to use.

First and foremost, we'll need to be even more strategic and disciplined about how we invest the resources we do have. We won't be able to do everything. We'll need to make very difficult choices to identify those activities that make the most significant contributions to our mission. In economic terms, we need to be extremely disciplined in allocating our resources to areas that have the highest return, judged against an enlightened view of our educational and research mission. The tendency is always toward spreading our resources equally. We simply don't have that luxury.

Educating our students and conducting high-impact research must be at the core. We'll need to focus on the basic, core courses that are essential for our students to succeed-math, history, chemistry, English, biology. We'll need to focus on the core skills our students need: critical thinking, written and oral communication, problem solving, and research. We'll need selectively to focus on graduate programs that have demonstrated success in placing students in high-impact areas of American universities and in the private sector, rather than using graduate programs to staff undergraduate teaching. The Commission of 125 gave us that advice, but we've been slow to heed it. And we'll need selectively to focus on research programs that have the most impact on advancing knowledge in core areas.

In short, we will need to support our most critical and successful areas. We need to do it in decisions made in the Tower, in the Schools and Colleges, and in the Departments and organized research units. Our Provost and deans have made great progress on this task over the last year, so we're well poised. But this will continue to be very hard work. But we simply must drive our resources into our most critical and effective programs.

If we make better and more disciplined decisions in investing the resources we do have and get 5 percent better results, we will increase productivity by $100 million in a $2 billion budget. That utterly swamps any "traditional" cost savings we might obtain. If we don't focus on how we deploy our resources as a campus, as a System, and as a state, we are not serious about increasing efficiency and effectiveness in higher education. And we can't ask our System or our State to exercise this discipline if we don't take the lead.

The second big area is undergraduate teaching and improving our students' pathways to graduation. We need to continue our commitment to undergraduate teaching. Much of the growing crisis in American higher education is based on public perception that America's great research universities are not committed to undergraduate education. I am proud to say that UT has a good record here. Following the advice of the Commission of 125, we restructured and revitalized our undergraduate experience, beginning with a signature experience for our freshmen the moment they step on the 40 Acres; with the Freshman Research Initiative in the College of Natural Sciences; and with the First-year Interest Groups and Bridging Disciplines programs; just to name a few.

But we need to do more across the board. Students are still detained by core bottleneck courses like calculus and chemistry. Four-year graduation rates at UT are the best in the state among public universities, but not at the level of our peers around the country. We have made steady progress in the last eight years, but we need to do more. We simply have to do a better job of getting students from admission to graduation more effectively.

Some people think the solution to more efficient teaching is simple: just add to the faculty teaching load. In fact, that would reduce productivity by taking faculty away from other important tasks and would mean we could no longer recruit and retain the best faculty in an extremely competitive world. Diminishing the quality of our faculty would be the single most destructive thing we could do for our overall productivity.

But there are still ways to increase efficiency and effectiveness in education. We need to be more creative in using lecturers. (Similarly, in the research area we can reduce long-term costs by using non-tenured research scientists in certain types of research projects.) We are blessed in this effort by having a high quality and professional group of non-tenure track faculty, and we have improved the structure of their career paths. We will have to continue to explore ways of reducing our teaching costs in these ways. Reducing lecturers may seem to be an easy way to reduce teaching costs in the short run, and we've done that, but in the long run that tactic may very well increase our teaching costs and actually diminish efficiency.

Students who are not college ready for certain courses don't succeed in them, take longer to graduate, and use more resources. We are using new specialized assessment testing, which measures students' skills and places them in appropriate courses, which helps students succeed and avoid curriculum bottlenecks. Developing more granulated admissions standards for specific programs can also help. And so can our having a more effective engagement with high schools regarding what it really means to be "college ready" at a major research university.

We need to do a better job helping students find the right academic track quickly, pursue it successfully, and reach their goal of graduating. Students who frequently change majors often delay graduation and use more resources. Better advising can help, which is well along the way in the School of Undergraduate Studies and elsewhere. Students are often delayed in graduating because necessary courses and prerequisites are not available. We need to correct that. And some nominal four-year degree programs are, by design, impossible to complete in four years. We need to make changes there, too.

And, critically, individual courses can be made more efficient and effective. We live in a world with greater understanding of cognitive processes and vastly changed technology for delivering information, along with students who grew up with this technology. Some would urge a quick fix by simply putting all of our courses online, losing what is truly valuable about critical engagement. But surely we can develop thoughtful ways to use technology to improve our courses and pathways through the University.

This can't be done merely from the top down. Redesigning courses will work only if it is done in departments and by the people who know how to do it, our teachers. Fortunately, there is a great deal of activity and energy here in Math, Chemistry, English, Government, foreign language instruction, and many other areas. This has been a long-time passion for David Laude in the College of Natural Sciences, and of many other people. One current project seeks to improve unacceptable failure rates in pre-calculus and calculus. We can't do this as a mere overload or volunteer effort. We need to invest in it.

We can't just leave these issues to others to solve, and then claim they don't understand higher education. We and other leading research universities have to be on the forefront of designing better, more modern, and more effective approaches. In this effort, we're already working closely with Berkeley, Illinois, and other peer institutions-along with the Lumina Foundation. The call for more effectiveness in teaching in this new environment will not go away. We will either lead change or have it dictated to us. As in all we do, we need to create the national model.

So these are the two critical strategies we will need to use: being more disciplined and selective in deploying our resources where they get the best return, and improving our students' pathways through the University. But these are not the only things we can do.

Much of our research can be commercialized. UT System is ranked third in the country in commercialization, and UT Austin is a big reason. But we can do even better. Our Regents have changed rules to make commercialization of our intellectual property easier, and we recently hired Dr. Richard Miller, an accomplished researcher, oncologist, and biotech entrepreneur, to help revamp our methods of bringing ideas to the market. The Cockrell School of Engineering is creating new entrepreneurial vehicles to do the same thing, and new and significant collaborations between the Cockrell School and the McCombs School are helping this effort. Through the creation of an entity called a "proof of concept fund," we will nurture new ideas during the early stages when venture capital is not an option-a stage that is sometimes called the "valley of death." These endeavors have the potential to generate much needed income streams. But more to my point, they will represent significant gains in our productivity by increasing the impact of work in engineering and applied sciences for our economy.

We have several building projects under way, and more are planned. Some question this at a time of austerity, but in my view they are critical. For one thing, building and bonding costs are extremely low. Investing now will save millions in the long run. For another, our biggest pressure is on our recurring budget-we do have some sources of one-time funds, including philanthropy and the Permanent University Fund, to complete construction projects.

These projects also provide significant gains in our overall productivity. Increased lab space significantly and directly increases research, including much needed external funding. Classrooms that can take advantage of technology will help in making our student pathways more effective. Nearly every productivity gain in American history has come not by people just working faster, but by making capital investments that make them work better.

The upcoming computer science complex is an example. The Computer Science department is scattered across campus in ways that limit collaboration, and its outdated set of buildings hinders the best use of technology. Both factors are tremendous drains on the productivity of a critical department. And we have been able to leverage our investment with very sizable gifts from Michael and Susan Dell and from Bill and Melinda Gates, making the rate of return on our own investment even higher.

In economic terms, the strategy must be to invest our one-time assets in ways that increase ourrecurring overall productivity.

Again, we will continue to look at every administrative function and service to see if it can be done more efficiently. Do we need to print all of our internal magazines and brochures, and are they really cost-effective? Are some of our back office and technical functions too scattered across the campus, requiring duplication of effort and constantly reinventing the wheel? Is a trip or an event really serving our mission?

There is no single, silver bullet. But in every way we will need to continue to ask this question: Which of our endeavors has the most impact, and how can we organize them most effectively?

In all of these efforts, we need to keep one additional point in mind. As I have noted, discussions about increased productivity often focus on narrow and short-sighted output metrics. We have to revisit this. We need to be mindful in this effort that a university education is an investment in the long-term health of our economy and democracy. Narrow and short-term metrics can point us in the wrong direction in such central and critical areas as in the arts and humanities and in the basic sciences.

Santayana rightly said, "Those who cannot remember the past are condemned to repeat it." Businesses often complain that our students don't understand the cultures and speak the languages of the people we deal with in a global economy and in geo-politics. We rail against breakdowns in ethical conduct in our business and social institutions. We complain that so few of our young people truly understand our form of government and the vision of our founding fathers.

These are questions for the humanities and the social sciences. The fact that they have longer-term effects that are harder to measure with simple metrics makes them no less important to the future health and vitality of our state and nation. The humanities have been hardest hit by dwindling public funding for higher education because there are fewer external research funds in those disciplines. We need to make sure they flourish.

Basic science is in better shape, but it has challenges of its own. Society expects quick and economically tangible results, again as a symptom of our tendency to focus on, so to speak, next quarter profits rather than long-term growth.

Consider just two examples. In the early part of the 20th century, no one would have thought that work in quantum mechanics or relativity would ever have any economic value. Today they are central to a wide range of technical and commercial advances that we take for granted. The same can be said for Watson and Crick's work on the double helix in the 1950s, without which many of our advances in genomics and medicine would be impossible. None of this work would pass many of the metrics suggested by some to measure productivity today. Who will do this work, or work in the humanities, if not great research universities? The American Dream has to be sustained for the long term, not just through the next economic or political cycle.

In all of this, we need to take the lead on our campus. But the responsibility is not ours alone. Others also have a responsibility to work for a strong system of higher education in Texas, including supporting our two existing national research universities.

One group is our already generous and loyal alumni and friends. We closed the year with $299 million in new gifts. Despite a rocky economy, total contributions increased by 3.3 percent over last year. We received 150,000 gifts, a 2 percent increase. Twenty-three percent of our alumni have participated in the campaign thus far. Perhaps most encouraging, 37 percent of donors made a gift to UT for the first time. We are now 41 percent of the way to our goal of $3 billion, having raised $1.2 billion. I am very grateful to all our donors for their generosity - and their willingness to support the University they love. And I applaud our development officers, deans, and unit leaders for their efforts.

Nevertheless, we are behind schedule, which isn't surprising in this economy. The future of UT will depend increasingly on the generosity and commitment of our philanthropic friends who, like us, know that the future of Texas depends on education and research. As grateful as we are, I challenge every one of our alumni and friends to give something, or to give more. It can be a current gift, an endowment, a future pledge, or a planned gift. These are hard times, but we need your help now more than ever, so I implore you to help.

And our future will depend critically on decisions made by our Board and by our elected officials. We have a terrific Board and a wonderful Chancellor. They have helped enormously over the last year by allocating very significant resources from the Available University Fund to help us through this difficult period. They have made protecting our flagship a top priority, and I am grateful.

But they, too, will need to be guided by the principle of directing resources to those activities that have the highest return. Investing in a student on our campus has a higher return because that student is far more likely to graduate. Investing in research on our campus has a much higher return in generating external research funding. Even in philanthropy, investing in our fundraising efforts has a much higher multiplier effect, and by a large margin. UT Austin is at or near the bottom in Permanent University Fund allocations on a per student basis among the component institutions of our System. Increased productivity should require that resources be invested in institutions that provide the highest rate of return.

The State and our elected officials face difficult times, and I don't envy the hard choices our legislators will have to make. But some simple facts are telling. Forty-one percent of the State's savings from the 5 percent budget cuts earlier this year was borne by higher education, even though higher education accounts for only 11 percent of the state budget. UT Austin now receives only about 14 percent of our budget from state general revenue, compared to 47 percent in 1984. Since 1990, state support for UT's academic budget has grown by only about 1.9 percent annually, which has not kept up with the overall consumer price index. For all the trouble and budget cuts in California, it is shocking to realize that UCLA and Berkeley are still far ahead of UT Austin in budget and financial resources.

The best way to support research in Texas is the Research University Development Fund, which the Legislature created in 2007. I call on our Legislators to support it. It only makes sense that any call for more productivity in higher education includes a plan to invest in our most productive institutions. Otherwise we are just paying lip service to idea of productivity.

We must ensure that average Texans can afford to attend college so that the promise of the American Dream is not just for the wealthy. This is especially true in difficult economic conditions when Texas families are hard pressed. It is true that public colleges-including UT-are no longer virtually free, as they were a generation ago. As state support has decreased, we have transferred more of the cost of higher education to students and their families.

But public higher education in Texas, and at UT, is still a great value. Our tuition is 8th among our 12-member national comparison group. The average amount of student debt is relatively low, and we continue to be listed as a good value by Kiplinger's and other publications. Our administrative costs as a percentage of overall budget are about half the state average, and next to the lowest in the state. The growth in our administrative costs is also near the lowest in Texas. The bottom line is that UT is providing high-value, reasonably priced opportunity to tens of thousands of Texans every year, and that is what is allowing them to pursue the American Dream. Notwithstanding claims that higher education is bloated and an undue drag on state resources, UT Austin has simply not been the culprit.

The regulatory costs on higher education are enormous. It may actually be our biggest drain on productivity. On our campus, we have compliance requirements with over a hundred regulatory structures, often requiring duplicative and inconsistent reports. The costs are in the tens of millions of dollars. One indicator is that over twenty years the time required of a principal investigator on bureaucratic tasks has increased from 10 to 40 percent. This means that our most productive people are diverted from the role of production.

These requirements come from the federal government, the State, the System, and the campus. We simply must reduce these costs. Higher education is drowning in them.

* * *

Let me close with a story and a comment. Texas Representative Sylvester Turner tells a story about his pastor, who was in a discussion with his congregation about what they valued and cherished. His pastor said, "Show me your checkbooks for the last year, and I'll tell you what you value and cherish." We can ask the same question about whether we Texans really do value and cherish education and higher productivity. If we claim to value education, are we supporting it? If we claim to support increasing productivity in higher education, are we allocating our resources to our most productive universities? If we're not, we don't really cherish these values.

And the comment. It is about attitude. In times like this it is easy to get discouraged and to lose our optimism. We can become resigned to lower expectations and grow complacent. We can't let that happen. Our challenges are real. What is ours to do is vast. But those of us who spend our days on this campus also know that, every day, we have spectacular successes in the classroom, in the laboratories, and in the research libraries and archives. That is due to the talent on this campus: our faculty and students and staff. Every day it is still true, "What starts here changes the world." We can't lose sight of that.

We need always to keep our eye on excellence. B plus will always be our biggest enemy. We must always strive to be the very best at what we do, and collectively to be the very best public university in America. How we perform now will have more impact on that than how we perform in easier times. Indeed, we need to be the best public university in America in the very task of navigating these changing and difficult times.

The work ahead will be hard, but I am optimistic that we are up to the challenge. We can take pride in this work as we build a better University of Texas.

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