September 27, 2012
We thrive as a great university because of the hard and excellent work of many people: our staff (without whom the lights don’t come on, and so much more of what we do just won’t work), our students (who are our reason for being here), and our alumni (who change the world and then give so much back to their alma mater). It takes an ecosystem to perform our mission, and I want to thank all of you for what you do.
The last two years have been especially challenging for our staff, so I want to give our staff special thanks. You have been superb. And I want to give special thanks to our faculty. In my last State of the University Address I said that, whatever challenges we face, our faculty is not the problem. Our faculty is the solution. That’s still true. Thank God for each of you, and to each of you, thank you! And thanks to all of you who are here today or are watching on the Longhorn Network.
Each year around UT’s birthday it is my privilege — and my obligation — to report on the state of our university: where we are, where we need to go, and what we need to do to get there. Last year, I referred to the Book of Job to make the point that we need to answer these questions with the unvarnished vision of experience and reality, not with preconceived ideologies and dogmas: on the one hand, “All universities are inefficient,” or, on the other, “We have a public mission, so we don’t need to worry about sound business practices.”
My friend and former dean of the Austin Presbyterian Theological Seminary, Michael Jenkins, wrote a wonderful book on Machiavelli. Poor Niccolo Machiavelli. He has come to stand for political manipulation and intrigue, so the word “Machiavellian” is used as a pejorative. In reality, he was a founder of political science as a social science, insisting — as did the so-called “author” of Job — that we should be guided by an unvarnished view of reality, not by ideological preconceptions. We simply make better progress that way.
Dean Jenkins observed that mission-driven non-profit institutions (not just educational institutions) often struggle for one of two reasons. The first is that their leaders think the nobility of the mission will automatically carry the day. No need to worry about mundane things like return on investment, labor costs, and administrative structures. The problem with that view is that the people who provide the revenue streams — whether they are donors, taxpayers, or users (in our case students and their families) — expect better stewardship of their resources. And we live in a very competitive world. If we don’t use our resources well, our competitors will win the race. The second reason institutions struggle is that the leaders focus solely on what might be called business issues and forget the mission.
Just last month, Fred Heldenfels, chairman of the Texas Higher Education Coordinating Board, made a similar point. Quality without productivity is an empty vision, but productivity without quality is pointless. I would add productivity without quality is not just pointless; it is wasteful. If you’re planning a road trip from Austin to Laredo, you can air up your tires, change your oil, and get your engine perfectly tuned, but if you then head toward Waco, all of your effort will be counter-productive.
The art of leading any large institution, including a university, is melding these two tasks — increasing productivity and defining the right mission and increasing quality. That was Michael Jenkins’ point, and it will be mine today. So with your indulgence, I’d like to talk about our “business plan.”
Let me start with the implementation side of the equation. Heaven knows, we want to be as efficient as we possibly can be, so that we can keep the cost to our students and their families as low as possible, so that we are good stewards of the taxpayers’ money, and so that we can compete more effectively with other great research universities to attract and retain the best faculty and students. So where do we stand on efficiency?
By any measure, UT is one of the most efficient flagship universities in America. If you combine state general revenue, tuition revenue, and revenue from the Available University Fund, we perform our mission at the lowest per-student, per-year cost of any university in our 12-school peer group. It would take an addition of more than $5 million per year to make us tied for number 11. It would take $77.6 million to get us to the median. It would take $491 million to tie us with North Carolina at number 1. We simply do more with less.
And we do a lot. Last year we produced 9,000 bachelor’s degrees, the most in the State of Texas. Based on state support and tuition, our funding per bachelor’s degree is the lowest in our 12-school peer group.
Other indicia show the same thing. U.S. News and World Report says that we are 26th in terms of reputation (6th among public universities), even though we are 80th in terms of financial resources. (In fact, we were actually up this year in terms of reputation, but down one spot overall because of an even greater drop in financial resources.) Indeed, two international rankings this year listed UT Austin 35th and 30th in the world. Taxpayers provide 13 percent of our overall budget, down from 17 percent just six years ago. This means that their investment is leveraged by a factor of 7.7 times, the highest in the state. An investment in UT has a great return.
Last year professor and associate dean Marc Musick did a multivariable analysis of our efficiency that showed we are the second-most efficient tier-one research university in America. And our tuition has risen 40 percent more slowly than the average of our national comparison group.
Of course, this doesn’t end the matter. It is still critical that we get better. But it does set the context for discussions about efficiency — UT is among the very best in terms of efficiency, of doing more with less.
Even so, the world changes. Our students change. Technology changes. Cost structures and revenue streams change. Workforce needs change. Family finances change. And we need to be out in front of these changes. We can’t just sit back. As we say in my own Presbyterian religious tradition: reformed and always reforming. We have been doing that here at UT for 129 years.
One example of this is that, 20 years ago, we recognized that the tenure system is vital, but it isn’t necessary or economically feasible to have every class taught by a tenured professor. So we began to augment our tenured faculty with lecturers. Then we recognized that many of them stayed on, so we developed professional career paths and promotion programs. The result was a significant cost savings and increase in institutional flexibility. And these faculty provide extremely high-quality teaching and leadership.
In 2002, as the University approached its 125th birthday, there was a sense on the campus that we were a great institution, but we needed to focus our strategic plan. President Larry Faulkner, to his everlasting credit, met the need head-on by convening the Commission of 125 to develop a road map. In 2004 their work culminated in a thoughtful and bold report that had two big ideas: we should revitalize our undergraduate curriculum, and we should set a more demanding standard for, and give more authority and support to, leaders of our academic departments and research centers. These, after all, are where the real work of the University occurs.
So we set out to implement these reforms. We selected leaders who wanted to shape their departments strategically, not merely manage them administratively. We gave them more flexibility and authority. And these changes have paid off in departments and research centers across the campus with creative, strategic leadership.
And we began revitalizing our undergraduate experience. As dean of the Law School, I chaired the task force that began the process, and as president I have made this effort a centerpiece of my administration. We established the School of Undergraduate Studies, both to be a champion of continuing undergraduate innovation and to be an early home for students who have not decided on a major, a home where they can get the advising and support to progress in a timely way toward a degree. Our inaugural dean, Paul Woodruff, led the school for six years with superb skill and vision. Paul, thank you for all you have done.
We instituted the Signature Courses to give every freshman an experience with an established member of the faculty that focuses on writing, critical thinking, and big issues. I teach one. We established a system of course “flags” so that the curriculum systematically gives students exposure to important areas, such as writing, critical thinking, and the diversity of global and domestic cultures. We’re working on pathways, or “streams,” through the curriculum to provide students with opportunities in important areas of the workforce and graduate programs. We’re establishing a new university-wide career center, and we’ve implemented a freshman research program in the College of Natural Sciences where students work in real labs on real research. Today, 89 percent of all undergraduate students and 94 percent of seniors participate in some type of research while at UT. Going forward, this effort is still a vital part of our agenda.
On a related front, vice provosts Gretchen Ritter and Harrison Keller lead more than 50 researchers and support staff in discovering new approaches to delivering undergraduate courses. We are already implementing these in a multiyear effort we call “course transformation.” For the past 20 years or so, we have recognized that our relatively high student-faculty ratio led to too many large lecture courses. Today’s undergraduate ratio of more than 19-to-1 is two students higher than the average for the 50 research universities we often use as a benchmark. We have tried to lower the ratio, but the unvarnished truth is that funding has made this a significant challenge. We will never make the University into a huge collection of only small classes. But we can change the nature of the large class. Technology has helped us do that, and that is what the course transformation project is about.
We’ve redesigned our large, entry-level courses in statistics, biology, and chemistry using new classroom models that radically increase student interaction with teachers and other students. In short, we’re creating a new classroom culture at Texas, even in the largest classes, that puts students at the center of the experience.
The new model is more interactive, more social, and more collaborative. We’re using the power of online presentations and testing to make sure students are learning the material at the deepest level and staying with the class between meetings. There is robust in-class discussion, video modules to supplement readings, team-teaching models, and immediate student feedback.
This isn’t just making students feel better about their experience, it’s improving their performance.
- In biology, the passing rate is 12 percentage points higher in these courses than in regular biology courses.
- In chemistry, the average course GPA rose more than half a letter grade compared with previous classes taught by the same instructors.
- In statistics, only 15 percent of students are now dropping or failing, down from 22 percent previously.
- And in psychology, class attendance is up 23 percent from the previous semester.
Now, you might look at these statistics — grades up, attendance up — and simply assume that we’ve made the courses easier. If anything, these classes are more rigorous than traditional lecture classes. One of the students surveyed after her biology class wrote: “It totally transformed the way that I studied, the commitment I had to all my other classes, the ability to recognize what I didn’t know versus what I know — which is invaluable. I can say that now. But in the beginning, I was ready to walk out.” It wasn’t easier. It was just better.
When classes are getting more demanding and yet students are doing better, you know you’re onto something big. We’re taking these successes and scaling up to include introductory economics and English classes — affecting more than 10,000 students each year. This project, too, is a central part of our agenda going forward.
Critically, the real work of innovation and reform is coming from the bottom up. It’s coming from the faculty. They are the ones who know how to do it. We can create the environment for innovation and provide support, but the innovation itself has to come from the faculty.
We’re working with other universities and community colleges around the state and across the nation on these questions. We’ve brought together 11 Texas universities in a consortium to work on these issues, and to work on college readiness and on onramps into our universities from high schools and community colleges. We’ve been assisted by the Lumina Foundation, who helps us share ideas and discover best practices in higher education. Two years ago, we began conversations with other national public flagship universities within the Association of American Universities about this reform agenda. Today the Public Flagship Network, which includes 11 national universities so far, is a reality, and we are working together to improve educational productivity.
We’ve developed interactive entry-level course materials in math, English, and computer science under the Texas OnRamps initiative.
At UT’s Center for Open Educational Resources in Language Learning we’ve created open educational resources and testing tools for language instruction that are used by teachers and students around the world.
We’ve developed multimedia content and interactive assessments in math and science through the Quest Learning and Assessment System that is used by 48 colleges and universities, and by more than 900 high schools nationwide.
In a partnership with the Open Learning Initiative at Carnegie Mellon we’ve created free, online course materials in introductory psychology.
And we’re working with EdX, Coursera, and MyEdu to bring technology to bear on a variety of education issues.
Moving forward on these agendas is part of our blueprint for the coming year.
Improving success for all students is the goal of our effort to raise UT’s four-year graduation rate. Even in the last six years, we have raised our four-year graduation rate from 48 percent to 52 percent. But that’s not enough. Last year I set a goal of raising that rate to 70 percent in the next five years. It starts with orientation, and I charged New Student Services with redesigning that experience. They have done a great job in these past few months by making orientation more meaningful and making academic planning Job One for incoming students. People from across campus pulled together to make these changes in a short amount of time and to help students feel they are not just UT freshmen, but belong to the Class of 2016. This too is an important part of the agenda moving forward.
I’m also glad to report that one of the University’s most successful professors and administrators, chemist David Laude, has accepted my invitation to be our senior vice provost for enrollment and graduation, or, as I call him, our graduation champion. Professor Laude has already set about changing the culture on campus to make four-year graduation the assumption and the norm. To lower the cost of a UT degree for students and their families, nothing will do more than graduating in four years.
And we should explore other ways to help families cope with the cost of higher education, even by giving them more predictability so they can plan. This is the thrust of Governor Perry’s ideas of locking tuition rates on a rolling four-year basis. It can also encourage students to earn their degrees quickly. I am heartened that this has become a statewide conversation. Of course, predictability and planning are also important for our campus, so the State should also show its own commitment by providing predictable revenue streams for the same four years. Predictability aids planning, and planning promotes efficiency.
We have redesigned many of our business policies. One source of inefficiency in any organization, and especially decentralized educational organizations on a cash-based budget, is that programmatic planning is often divorced from budget decisions, and both tend to be short-term and ad hoc. Moreover, budget decisions tend to look only at the cost and benefits of a particular project, rather than comparing the project globally to other ways resources might be deployed, what businesses would call a comparative internal rate of return. Moneyball is partly about applying this approach to a non-traditional enterprise. On my first day as president, I asked all the deans to read Moneyball.
With the provost’s leadership, we have totally overhauled our budgeting process. In what we call D Packs and V Packs, every academic college or school and every administrative portfolio does long-term, integrated budget and strategic planning. We are a Moneyball campus. And we have developed data and management tools to help make the right decisions. I want to thank our provost, deans, and vice presidents for leading this effort.
This is not very visible to the outside world, but it has transformed our campus. We’re spending our money on the most important long-term projects. And the contribution this effort makes to efficiency far exceeds the savings we can get in general and administrative costs. As just a few examples, this is the process that freed up the money for our Signature Courses, our course redesign efforts, and our focus on student success.
We have addressed other business practices, such as dramatically overhauling our approach to information technology and certain back-office business functions. I’m extremely proud that in the last 15 years, we have cut our per-square-foot usage of fuel nearly in half. I want to thank our executive director of utilities, Juan Ontiveros, as well as Vice President Pat Clubb, for that frankly amazing feat.
In terms of efficiency, all of these efforts have allowed us to cut $46 million per year out of our budget to respond to the statewide economy.
And we can always do more. Last spring, I appointed 13 leaders in business to form a Committee on Business Productivity. Chaired by Stephen Rohleder of Accenture, they are currently analyzing a range of operations, from our organizational structure to our purchasing practices to how we use our assets to how we go about commercializing our inventions. They’ll submit their report to me this November, and we will continue the process.
So to repeat, we are a very efficient campus, and we continue to adjust and reform our practices.
So now let me turn to the other side of the equation. Where are we going? This is the critical question.
As I said earlier, you can tune your car to be as efficient as possible, but if you turn the wrong way on the freeway, you’re going to waste gas, and more importantly, you’re not going to get where you want to go.
Any effective business has to ask this question: What is our mission? What do we do that adds special value? I have spoken about this many times before by asking, what is the soul of a great public teaching and research university? In stark business terms, what is our market niche? This question is critical for traditional businesses. It is equally critical for a great university. If a business strays from its core competencies, it will struggle in the market.
UT adds value to Texas and America, in the long run, by imparting to the next generation of leaders a certain kind of education, and by advancing our understanding of the world we live in by creating a certain kind of knowledge. Any sound “business plan” has to start with this fact. So what is that kind of knowledge and education?
When it was announced this summer that the elusive Higgs boson particle had finally been discovered, UT physicist and Nobel laureate Steve Weinberg wrote in the New York Times, “On a longer time scale, the advance of technology will reflect the coherent picture of nature we are now assembling. At the end of the 19th century physicists in England were exploring the properties of electric currents passing through a near vacuum. Although this was pure science, it led to our knowledge of the electron, without which a large part of today’s technology would be impossible. If these physicists had limited themselves to work of obvious practical importance, they would have been studying the behavior of steam boilers.” At UT, we advance the frontiers of basic knowledge.
A few months ago, a professor from Pennsylvania was invited to join one of our faculty members at a reception in my office celebrating three different faculty members who had won the three highest prizes in mathematics, all this year: Ivo Babuska, who won the Steele Prize for Lifetime Achievement; Luis Caffarelli, who won the Wolf Prize, and Bjorn Engquist, who won the Birkhoff Prize. Our visitor from Pennsylvania was awestruck. Welcome to UT.
UT astronomy professor and former department chair Don Winget developed a technique to detect extra-solar-system planets when they are in front of their star and diminish the star’s brightness. Applying this technique to pairs of stars that orbit around each other, he has detected very small decreases in the orbital period, meaning they are getting closer together and losing energy by emitting gravitational waves. That, in turn, has given us a better picture of how gravity and general relativity affect the structure of the universe. By the way, he is helped in this work by our graduate student J.J. Hermes, who began on the Forty Acres as an undergraduate and as editor-in-chief of The Daily Texan. Why are gravity waves and general relativity important? They are important in their own right. And GPS systems wouldn’t work if we didn’t understand them.
Our petawatt laser, in the basement beneath RLM, studies matter in the most dense energy field in the universe. The world’s third-largest telescope at McDonald Observatory studies dark energy and dark matter, something we know virtually nothing about but that makes up 70 percent of our universe. The Institute for Computational Engineering and Science is transforming the very foundations of how science is done. The Ransom Center is the envy of Europe and, indeed, the world. The Miro Quartet and Anton Nell are taking music performance to ever greater levels of virtuosity. The Blanton Museum is advancing our understanding of art.
I could give example after example in business, architecture, psychology, literature, film, and law. And along the way, creating this knowledge provides opportunities to solve more immediate practical problems, and to pursue entrepreneurial commercial opportunities. Critically, we leverage this environment of research to better educate our students.
So the first task of any viable “business plan” is identifying the unique place where we add the most value. And for us it is creating this certain kind of knowledge and providing this certain kind of education for our students. This is not the only critical need in higher education, but history shows that having someone do it is critical to our state and country in the long run.
Any good business plan has indicators to determine whether it is working. What would ours be? One is that success breeds even more success. A prime example this year is that, based on previous success, our Texas Advanced Computing Center won a $51.5 million award from the National Science Foundation to create Stampede — which could result in an investment of more than $100 million if the project is renewed. Stampede will be one of the most powerful computer systems in the world. It will in turn provide a competitive advantage in attracting additional funding to Texas researchers for computational science, and it will help attract more leaders in science and technology to UT.
TACC is not unique. We’ve also won an $18.5 million grant over the next five years from the National Science Foundation to create and lead the NSF Center for Nanomanufacturing Systems for Mobile Computing and Mobile Energy Technologies. We will develop innovative nanomanufacturing, nanosculpting, and nanometrology systems that could lead to versatile mobile computing devices such as wearable sensors, foldable laptops, and rollable batteries. This is the first time UT Austin has been selected by the NSF to lead a prestigious and highly competitive engineering research center and the first time since 1986 that any Texas university has been selected to lead one.
Last year we generated $628 million in new outside research funding, up 14.4 percent over a year ago, and up 35.5 percent over the last six years. In peer-reviewed federal support for universities without a medical school, we rank third behind only MIT and Georgia Tech, and ahead of Berkeley. This is a key indicator that our business plan is working.
Success also attracts philanthropic support. Six years ago, we embarked on an audacious project to lay the foundations for the 21st century. We set an unprecedented goal of raising $3 billion, and we gave ourselves eight years to do it. We are on the cusp of the $2 billion mark, a milestone I am extremely proud of, especially given the historic recession that has coincided with this campaign.This, too, is a key indicator our business plan is working.
Before I go on, I want to thank the many alumni, friends, corporations, and foundations who helped us reach this point. It’s a testament to your commitment to the work we’re doing: educating leaders and creating knowledge for tomorrow.
The gifts you have made so far are already working to change the University in dramatic ways:
- More than 1,000 new endowments have been created to support our students, our faculty, and their research.
- Nearly 2,500 undergraduate and graduate students have received direct support from 500 new scholarships and fellowships.
- New buildings and facilities are transforming our campus, including the Liberal Arts Building, the Belo Center for New Media, and the Bill & Melinda Gates Computer Science Complex and Dell Computer Science Hall.
While we should take a moment to celebrate, we have a long way to go. What remains to be raised is equal to the entire goal of the “We’re Texas” campaign of the 1990s. This remainder is not a comment on our ability, but only our audacity. We need your help more than ever to reach our goal and accomplish our priorities, like our new engineering building, a new MBA building, continued support for scholarships and fellowships, and direct support for faculty — which is more important than ever if we want to recruit and retain the best.
We’re entering the fourth quarter of the game. The final two years of the Campaign for Texas will show the world what UT Austin is made of. Help us win. If I can be so crass, go to giving.utexas.edu, click the button on the left that says “Make a Gift,” and enter the highest number you can. I don’t mind being crass when it’s for a good cause, and UT Austin is a good cause. Twenty-nine percent of our alumni have supported the campaign so far. This is a percentage we can be proud of, but it’s still a minority. I challenge all alumni to make a gift. This is your university. Make a gift!
On the teaching side, a key indicator of our “business plan” is the number of undergraduate and graduate degrees we confer each year. We confer more PhDs each year than any other university in America except Berkeley. The 9,000 undergraduate degrees we confer every year make up 8.5 percent of all the bachelor’s degrees conferred in Texas, and more than any other single four-year university in the state. More than one quarter of our undergraduate student population gets a degree each year, which means that we are highly productive. In the aggregate sense, we are already on a four-year graduation rate. And these degrees are high-quality, which is consistent with our mission.
A final critical indicator is that, with the kind of education we offer, we are still overwhelmingly where top students and their families who can choose wherever they want to go actually do choose to go to college. This year we had 35,430 applications, up 20 percent from five years ago. Our yield rate is up from 47 percent last year to 49 percent this year. More students apply to UT than any other college in the state. Something is working.
These key indicators of success stem from first identifying our mission goals and focusing on them. What is it that we do well to add value to Texas and America? How we go about it is important, but focusing only on how we do it without knowing what we are trying to accomplish puts the cart before the horse.
Michael Rooney, the head of marketing for the Wall Street Journal, recently told me that newspapers, like universities, are facing challenges from dynamic shifts in customer tastes, new technology platforms, and changing funding streams. Those who succeed focus on their core competency. In the case of the Wall Street Journal, this is as a producer of high-quality content and analysis. They use new platforms, but they focus on creating content no one else can duplicate. They focus on their core competency. Enterprises that focus first on new implementation strategies and platforms and who have strayed from their core competency have struggled.
UT is a high-quality content provider, in both discovery and teaching. Of course, we need to use new technology — like computers and online delivery models — just as we have been using new technology to make discoveries. But our business plan needs first to focus on our ability to produce the high-quality content.
So what are the challenges in doing that? What needs to be our agenda? Just as the President’s Policy Advisory Committee identified six years ago, we are behind our peers in our financial ability to attract and retain the very best faculty, graduate students, and undergraduate students in a “business” that is extremely competitive for talent. We compete, after all, with Berkeley, and Michigan, and Stanford, and Princeton. This has been true for a long time. Texas has historically invested less of its GDP in higher education than other leading economic states. As I have said, in our own 12-member peer group of public research universities, we are dead last in combined per-student, per-year funding. If Texas wants a “business plan” to compete in the 21st century, it will have to address funding for higher education. On our own campus, we need to focus the resources we do have on attracting the best faculty and students, including providing the facilities to do research and learn.
We need to have better tools at all levels of Texas’ higher education administration to develop long-term and comprehensive plans for capital funding. Ad hoc, short-term, decisions create an inefficient environment. We need to think about how we fund operations across the state. Formulas that fund mainly student credit hours and fund to averages tend toward mission homogenization, which itself is a substantial source of statewide inefficiency. The creation of Western Governors University is a welcome step the other way, offering Texans a more diverse set of options, not a more homogenized set.
Current formulas that fund primarily student credit hours also create obstacles to reform. They are like giving someone driving to Chicago a gasoline credit card rather than a stipend on arrival. With a credit card, they don’t have an incentive to choose an efficient route. I applaud the Governor for raising this issue. And we need to look at our total asset balance sheet, including the value of our West Texas lands, and not just the PUF, to decide how we are going to invest in our institutions. Our Regents have already started this in their creative support for a medical school. These are all just sound business practices.
We need to continue to educate our students to work in an increasingly diverse world. We now face a challenge to those efforts in the Fisher case. I reaffirm our commitment to a diverse campus. Our campus needs to be a more inclusive community that welcomes all people regardless of their race, religion, family status, and sexual orientation. UT is a place where everyone should feel welcome. And we need to provide all of our students an educational environment that prepares them to work in an increasingly global and diverse world.
And at UT Austin, we need a medical school. It would offer dramatic new opportunities for our students and our faculty, and, critically, it would advance health care in Central Texas. We have worked on this for more than six years, making sure that the funding model would not diminish our academic programs. The initiative has moved in large part due to Senator Kirk Watson, and I want to thank him publicly for his creative enthusiasm for this epic undertaking. I also want to thank Provost Steve Leslie for his leadership, Dean Sue Cox from UT Southwestern Medical Center, our Board of Regents, who have provided funding, and the Seton Healthcare Family for committing $250 million for a new teaching hospital. All of this moves us closer than ever to our goal.
So as I stand before you today, this, in broad strokes, is the state of our university. We have challenges and we have opportunities. Our goal to be the best public university in America is one we proclaim as a matter of school and state pride, but more importantly as a vision for our children and grandchildren. We believe that the State of Texas — not California, not Michigan — should be home to America’s number one public university. Texans should not have to have to leave our state to go to an internationally acclaimed university.
In UT, Texas has a treasure. It has a rare chance that comes along perhaps only once in a lifetime to put its flagship university at the very top — to be number one without any of the qualifiers. Yes, we have challenges and headwinds. But I believe the Roman poet Horace, who would have made a good Texan, and who said “No ascent is too steep for mortals.”
We all have a role to play in making UT Austin the very best. Thank you all for playing yours.