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State of the University

Presentation to the Faculty Senate
September 20, 2005

Let me begin by recognizing the many students, faculty, staff and alumni who have volunteered their time, their resources, and their hearts in the recovery effort after Hurricane Katrina. Virtually all are unsung heroes who have demonstrated by their deeds that we are a caring, compassionate community. We all should be proud that every school has reached out to help so many in dire need.

Today I want to speak to you about our future. I am going to speak candidly and in some detail about the prospects of our University.

I have been highly impressed by the quality of the senior leadership, faculty, and programs I have visited during the initial months of my listening tour. So far I have met with 35 of 36 department chairs and center directors in the Medical Center. During the fall semester I will meet approximately the same number of department chairs and center directors in the College and the counterpart leaders in Eastman, Simon, and Warner. In the spring I look forward to meeting with the faculty or appropriate faculty representatives from each department of each school or with the full faculty of those schools that do not have departments. There are parallel meetings occurring with the Board of Trustees, student organizations, and the Rochester community.

One dominant impression from these visits is how talented this University's faculty is. I am learning a great deal about the high quality of research, the extraordinary teaching and caring for students here. This is profoundly inspiring. Outstanding research and teaching are two of the cores of a great University. But talent alone is not enough. A great university also requires sufficient resources. With respect to our resources, the picture is a more mixed one.

As all of you know, we have begun a strategic planning process across the entire University. Institutions must begin strategic planning with an honest assessment of their current position. We will have to be honest with ourselves about the serious consequences of attempting to support some schools within our university with insufficient financial resources. Real solutions to long enduring financial challenges will require us to consider bold solutions. You have heard me say that "everything is on the table," which euphemistically means that I encourage those engaged in strategic planning to consider all reasonable options as to how their schools can best achieve their full potential. As part of this analysis, each school will need a sustainable financial plan. To be clear: In some instances, we may not effectively address our real financial challenges unless we adopt far reaching new approaches.

An academic institution cannot be analyzed solely in financial terms. Finances are best viewed as means to objectives. Our most important challenge in the Strategic Planning process is to reach consensus on our objectives. The University of Rochester is an institution that has a long history of academic excellence. We are an institution that has made a fundamental commitment to diversity. These are the type of objectives, I anticipate, that will be considered in each School's and the Medical Center's strategic plans. I also have been impressed by the collaborative nature of many of our professors and departments. We have an unusual ability to pursue interdisciplinary work at our University and many Schools and programs may choose to enhance this strong tradition.

Our ultimate challenge is one of vision. We have enormously talented faculty and programs. We have financial problems that are significant, but I am convinced, these can be effectively addressed. Will we aim high enough? The purpose of Strategic Planning is to step back from the year to year pressures of producing a budget and ask where do we really want to proceed during the planning period, which typically is five years.

To be sure, at the beginning of most Strategic Planning, there is a sense of inertia. We have done this before. Or, it won't work. Or, we do not have time to seriously plan. Make no mistake. This time it is for real. I will settle for nothing less than the very best that can be achieved here. This is a great university. I will not rest, I will not compromise in efforts to strengthen the University of Rochester and to communicate how very good this institution is.

A core value of the University of Rochester has been decentralization. I am a believer in decentralization. I agree that most problems are best solved locally. I know that central administrations, including this one, on many issues will not possess the expertise to fully grasp the consequences of centralized solutions. But I also am a pragmatist. Decentralization is not the solution to all of our challenges. In some areas, such as development and communications, there was a strong consensus before I arrived that a more centralized approach was necessary. There are a few other areas where greater centralization is appropriate. I will talk later about master facilities planning. I want to stress, at the outset, however, the Hegelian nature of the centralization versus decentralization process that has occurred for decades at this and many other universities. Universities often gravitate from one polarity to the opposite with respect to decentralization in a short period of time. That, in essence, is what has occurred here. My intent is not to centralize any more than is necessary. What I am seeking is an appropriate synthesis. To arrive at this synthesis, I will involve many aspects of the University in discussions so that we can all feel confident that any new approach is in our mutual best interest. I am aware that there was much history here before I arrived that I intend to carefully review to help find the best balance in those areas where there will be greater centralization. I take history very seriously. I take institutional culture very seriously as well, but the basic criterion we should remember at all times is: What is the best interest of the University? Change is sometimes wise and sometimes necessary. We should not resist appropriate change when it is in the University's best interest.

Let me briefly comment about change itself. I was asked to come here to accelerate the progress of a very strong institution. In some instances, I will be a change agent. Precisely because change requires careful planning, much consultation, and consideration of new or different ideas, it can be scary. Many of us much of the time are comfortable with the world as it is. Appropriate change takes time. This can add to either unrealistic expectations or unnecessary anxieties. Both usually prove exaggerated. Change will occur here, but academic institutions are conservative by nature. Any institution with tenure must be. Let me highlight two basic points about the process of change during my time here.

Any significant change at this institution will not be abruptly announced by fiat. I intend to engage in wide ranging conversations both to fully appreciate institutional realities and to try to arrive at the wisest course of action. And I will insist upon one fundamental constraint. I will not cut or insist upon cuts in academic programs. Let me be precise about what this means. I do not intend to state to any school you must shrink by X percent. I reserve the right to say to a school you have a specific budget challenge and we need to work to address this. I strongly believe there will often prove to be solutions involving resource enhancements that will provide much or all of the solution. And, of course, each School can choose to reallocate resources if in the School's analysis this is wise.

Now let me turn to specifics. In my first three months, I have begun to address seven separate challenges. The first five of these derive directly from the Presidential Search White Paper. They were identified as "the next president's most visible tasks."

First, Resource Development: According to The Presidential White Paper, "The University's total endowment urgently needs to grow, particularly the College portion."

Almost from the day it was announced in December of 2004 that I would be the president, this has been a priority. Working with many others at the University, we began a search to hire the best Senior Vice President for University Advancement we could find. A national search led to the selection of Jim Thompson as the Senior Vice President for University Advancement. It was of particular consequence to me that he had overwhelming support from the 25 or so internal senior leaders who spoke to the finalists and unanimous support from the four Board members who advised me on this choice.

Creating a system of advancement as good as we will need to launch the largest capital campaign in our history is a complex task. Among other elements, Jim is now engaged in hiring his senior staff and has in recent weeks made several hires, including Andy Deubler, who led the Medical Center's efforts, and Rob Gibson, who led development at the equivalent to the College at Washington University.

In the next several months, the hiring of senior staff will accelerate. We are arranging for a search firm to help Jim with the selection of several other advancement senior leaders.

A few weeks ago a Request for Proposal for a new Information Technology system for development was circulated after careful review within this University and by outside experts. The implementation of a new IT system will take place over a period of years. Virtually every successful major capital campaign in recent years has found an effective IT system essential for the recordkeeping and data consolidation necessary to deal with a huge alumni base, which in our case, numbers approximately 100,000 individuals.

Our prospect pool, which is particularly consequential for any successful capital campaign, today is thin. We have less than one half the number of prospects we anticipate that we will need, and more importantly, there has been relatively little personal contact with many of them.

To put it simply, in many aspects of our development infrastructure, we are weaker than our peers.

I will offer in subsequent visits to the Faculty Senate, progress reports on advancement, and I anticipate you will want to hear from Jim as well. Let me note, however, that there are a couple of realities about development efforts which are unique among university programs. They are not inexpensive to do well, but unlike most expenditures at the University, they tend to generate far more dollars than they cost.

We have a long way to go in this area. It will be several years before we can publicly announce our capital campaign, although I anticipate a meaningful increase in annual giving long before the announcement date.

Our challenge in development is also an opportunity. Our alumni are eager to speak to us in many instances, but these relationships have not been properly nurtured. In my visits to a fair number of alumni leaders in recent months, there is an eagerness, indeed a hunger, to see the University of Rochester receive sufficient support so that it can become the stronger University that all of us seek.

Second, Communications: The Presidential White Paper wrote about the University's national recognition: "While the University is ranked within the top institutions of its kind in the nation, its visibility has not matched its achievements. Its outstanding research faculty, creative curricula, and excellence in many fields offer the opportunity to bring its national prominence to a higher position among tier-one research universities."

Virtually everyone to whom I spoke either within the University or on the Board of Trustees urged that we need to do more to communicate the University's identity and accomplishments.

Before I began in July, I asked the University to hire Fred Volkmann as a consultant. Fred is a former colleague from Washington University and is widely regarded as the dean of university public relations gurus. He has conducted approximately 70 reviews of universities. Fred subsequently produced a detailed confidential report based upon review of the past year's University of Rochester communications and interviews of approximately 50 members of our community.

The first step in addressing communications was to begin a search for a new Vice President for Communications who ideally would have experience with a university program that had more successfully mastered such topics as branding, media relations, internal communications, and communicating the quality of our schools, faculty and students.

In the past few weeks, I asked Doug Phillips, the Senior Vice President for Institutional Resources, to chair such a search committee, which includes representatives from each of our schools and the Medical Center. We have hired an outstanding outside search consultant and a few days ago the search committee held its initial meeting.

Our aim here is to find a leader who can develop as effective a system of communications as this University deserves. The Volkmann Report made 14 other categories of recommendations. Most of these will be reviewed in Universitywide conversations once the new Vice President for Communications is in place. The same type of answer may not be appropriate in all instances. For example, it is clear that we do not have a consistent University brand. Just examine the business cards from a few programs or schools within this University, and you will appreciate how little commonality there is. There will be a Universitywide committee to agree on common standards for brands and logos. This is a process that virtually all of our peers have addressed and indeed at an earlier point in our history, the University of Rochester itself attempted to address.

There are other aspects, however, of communications where absolute commonality makes less sense. For example, the Medical Center and the Eastman Music School have unique communications challenges which require a significant staff focusing on these particular challenges. A major task for the new approach to communications will be to effectively recognize the unique attributes of each school as well as how best to present the University as a whole.

Third, Senior Leadership: The Presidential White Paper addressed the need for the recruitment of effective senior leaders. We are currently engaged in searches for the Vice Provost and Dean of the Faculty of Arts, Sciences, and Engineering; the Vice Provost and Chief Information Officer, and, the Vice President for Communications. I will have more to report on these searches in the months to come.

Fourth, Community Relations: To address the Presidential Search Committee's fourth priority, promoting strength in Greater Rochester, I have reached out to several business, political, civic, educational, and arts and cultural leaders, including Mayor Bill Johnson, County Executive Maggie Brooks, corporate chief executive officers such as Kodak's Antonio Perez, Bausch & Lomb's Ron Zarrella, and Xerox's Anne Mulcahy, as well as religious leaders such as Bishop Matthew Clark.

During my second week, I drafted a letter reaffirming the University's commitment to the Brooks Landing development project, which is the potential hotel, restaurant, and office building project across the Genesee River in Rochester's 19th Ward. Tom Jackson committed the University to occupying 14,000 square feet in the office building. I am pleased to report that this project recently received state approval. Groundbreaking will occur soon after federal approval is secured.

Our University has a leadership role to play in community economic development and social engagement in the city of Rochester and surrounding areas. This role inevitably will grow in the years to come as higher education and our Medical Center relatively become more important in our community and stronger economic and social links are forged to Rochester.

Fifth, Diversity: The Presidential White Paper characterized diversity as one of the top five priorities of this presidential administration.

Diversity is important to all of us in this University. We, more than many other segments of society in this country, are keenly aware that we are involved in a competitive, multicultural world in which knowledge itself knows no boundaries. We would be naïve not to recognize the painful and difficult history of efforts to address racial and gender diversity at this University and indeed at universities generally throughout our country.

Let me highlight that certain initiatives have begun in this area and where we are today.

Before I arrived, the Board of Trustees Personnel Committee began a review of University staff appointments. That review is ongoing. In January of this year, Stan Byrd was hired to be our new Human Resources Manager of Multicultural Affairs and Inclusion. I have asked to see data with respect to staff appointments by way of preparing for a conversation with the Personnel Committee when it meets in October.

At many universities the most complex questions with respect to racial and gender diversity involve the faculty. I intend to make a statement on faculty diversity in the spring. Before then I will consult with senior leaders throughout the University and others with an interest in this issue.

But I want to leave no one in an artificial state of suspense with respect to my views on this vital subject. I believe with my heart and soul that diversity and academic excellence will go hand in hand in any successful 21st century university. This does not mean we will adopt quotas, which are unconstitutional. It does mean that we will often need to cast a wide recruiting net to effectively recruit the best available individuals, focus hard on preparing persons of all races and both genders to succeed, and creating a supportive and welcoming community for all. We do some of this quite well now. I had lunch last Friday with our McNair Scholars, who include extraordinarily impressive minority undergraduates and students of any race who are the first in their family to attend college. The McNair Scholars are being prepared to pursue advanced degrees and potential academic careers. In other areas, in contrast, we can and must do better.

Sixth, Strategic Planning: Earlier in these remarks I talked about a philosophy of strategic planning. Let me now articulate several operational aspects of what this process is likely to involve in the months to come. To date each school has been asked to begin a strategic planning process. I have encouraged the deans to address four core topics:

  1. What should be our objectives?
  2. What is the strategic plan to achieve them?
  3. How do we measure if we have achieved our objectives?
  4. How much will the plan cost?

A well developed plan will also take into account the environment in which a program operates, including its competitive position and the rationale for the objectives that were selected.

Each strategic plan must reflect the aspirations of the faculty of the relevant school or the Medical Center. Students, administrators, staff, and alumni are also consequential to the planning process and each school and the Medical Center should devise the best means to involve these pivotal constituencies.

In the months to come I look forward to meeting with deans and others in strategic planning groups to review initial drafts of plans. The review process will require input from the University's chief financial officer on questions of budget feasibility and review from the University's general counsel if there are legal dimensions to a plan.

In December I have scheduled a deans' retreat at which the deans or senior leadership teams will present the first draft of plans in a more formal way to me and other members of the senior leadership team of the University. The purpose of the retreat will be to pose questions about the ambition and feasibility of the school and Medical Center strategic plans.

In March there will be a separate retreat involving our Board of Trustees Strategic Planning Advisory Committee, which I anticipate will review the plans for the Medical Center and the Simon School. Later other plans will be reviewed by this Committee. All plans ultimately will be reviewed by the University Board of Trustees.

It is important to highlight that strategic planning that originates in the schools will address part, but not all of what our University Strategic Plan will be. There are other more general questions such as what size the University should be, should we consider adding new schools, how do we best support interdisciplinary programs, and how do we support international programs. These overriding questions will require thoughtful discussion within the University at both the central and school levels, as well as discussion with the Board of Trustees.

In the course of initiating strategic planning, it became apparent to me that the University does not have a master facilities plan. During the 1990s the River Campus and the Medical Center prepared iterations of facilities plans. They are dated and there is no overall facilities plan for the University as a whole, which also, for example, should take into account to what extent we want to focus on the development of retail property contiguous to our campuses or how we would allocate space if we choose to expand the size of our University or the number or size of our schools. I have asked the Facilities Committee of the Board of Trustees working through a subcommittee to work with our Chief Financial Officer Ron Paprocki and representatives from the schools and the Medical Center to review existing facilities, in part to comprehensively identify deferred maintenance and renovation challenges and to develop options that can be considered in the strategic planning process.

Seventh, Two Special Budget Challenges: It is no secret to anyone in this room that not all of our schools have done equally well with respect to financial resources in the recent past. Two schools, The College and the Simon School of Business, currently are significantly overdrawing their target endowment payouts. While I do wish to stress that this University is an academic institution, not a business, money matters. To be sure, both the College and Simon have experienced considerable success in developing academically outstanding programs when finances were extremely tight. But sufficient resources are pivotal for providing the basis for an appropriately compensated faculty, for expanding departments or programs when it is wise to do so, and for consideration of new programs, among other topics.

With respect to the Simon School, the Board of Trustees some time ago organized a workout committee to address that School's financial challenges. I look forward to working with Dean Zupan and the Simon School as well as that committee. I want to be unequivocal. Neither the Simon School nor any other school at this University is going to fail during my time here. No great university could afford such a failure. The challenge for Simon is to strategically plan how to address an environment in which national MBA applications are significantly down. Many other universities have responded with considerable success to this challenge, in some instances by implementing or expanding undergraduate business programs or through other programs. The Simon School has not finished its strategic plan, but I do want to emphasize that as the Simon School considers a range of strategic options, every option but one is on the table. It will not be allowed to fail.

I have separately begun a conversation with Dean Olmsted and others about the College's budget. I view this conversation as having several dimensions. I want to help support a College that is not merely holding its own financially, but one that is making significant progress. The most fundamental aspect of addressing the College's finances will focus on ways to enhance revenue, which may include addressing the size of the student body, and will include expanding the endowment and annual giving.

The financial challenges of the College are serious ones. It is not merely a question of reducing an endowment payout from a current level of over 8 percent to a target of 5.5 percent, but generating sufficient resources so that faculty salaries are fully competitive; there is the ability to add programs when it is appropriate to do so; and providing for appropriate deferred maintenance and IT expenditures.

As my grandmother would ask, "how much is that in dollars?" I cannot give you a definitive answer yet. But it is real money. The College has an annual core budget of approximately $140 million and, for example, to reduce the endowment payout to 5.5 percent would cost approximately $10 million. No one on the Board of Trustees or elsewhere expects this to occur in a single year.

Will this mean that increasing the size of our undergraduate student body is inevitable? No such decision has been made to date. I am keenly aware of the great progress made by Tom Jackson and the College in the past decade in improving undergraduate quality by reducing the size of the College's undergraduate student body. In the circumstances in which that decision was made, I strongly believe that was the right decision.

But circumstances change. Undergraduate enrollment nationally increased by 9 percent between 1990 and 2000 and according to the Chronicle of Higher Education is likely to further increase 15 to 20 percent between 2002 and 2014. On the table now is not simply the question of increasing enrollment, but whether we can increase enrollment and add or expand academic programs so that we can both improve student quality and our net revenues. Many of our peer institutions today are increasing enrollment and using new net resources to add programs that make their universities academically stronger.

A decision to increase undergraduate student body size, if made, will be a serious one, which will have to take into account an analysis of all of the costs involved, including expenditures for such facilities as new classrooms and dormitories, and the impact of a larger student body on our institutional culture. I will not support any plan to increase student body size that deteriorates academic quality. It is also important to appreciate that besides net revenue enhancement, there may be other advantages of increasing student body size, which notably may include the ability to increase the size of the faculty.

I am confident that the budget challenges at Simon and the College will be addressed.

Our real challenge is a broader one. I invite the faculty and senior academic leadership of each academic program at the University of Rochester to participate in an effort to define what type of University we will be in the early 21st century. Each time a serious effort at strategic planning is begun it provides an opportunity to recharacterize ourselves, to stretch the frontiers of our research, improve the quality of our teaching and scholarship, and develop the type of pathbreaking programs that have long distinguished this University. We are blessed at the University of Rochester with extraordinary talent; our challenge now is one of vision. With plans that excite and inspire our alumni and friends, I am confident that we will be able to galvanize the resources to dramatically move this University ahead.

I would be delighted to answer any questions you may have.