President John T. Casteen, III
April 10, 2003
Let me welcome you to this 2003 State of the University Address.You should have received on your way in today the customary annual handout that summarizes the basic data that will not be covered in the oral presentation of this Report. We have attempted over the years to move toward a presentation that avoids the obvious temptation to deal with a given year's most pressing issue and to give a kind of moving image of the University over time. In consequence of that, you'll see in the booklet that there is an increasing amount of material having to do with faculty accomplishments, with student accomplishments, with the ongoing academic life of the University. It's difficult not to address the most recent year's financial crisis or some similar issue, but at the same time we think that the longer-term record really requires that there be the human record of accomplishment that you will find embedded in part there and in part in these remarks.
I want also to introduce to those of you who have not previously met him our new Rector, Gordon Rainey from Richmond, who is seated here, I want to thank you for coming, Gordon. Mr. Rainey is the first Rector to serve under a modification of the statute that describes the functions and operations of the Board of Visitors. The Board requested a set of modifications designed largely to bring our statute into conformity with the statutes of other institutions. The major change is that the Rector now has a term of office. The term is two years. There's a designated Vice Rector who is presumptively to follow the designated Rector at any given time, and the calculation of terms is such that typically there will be three different persons with the perspective of the Rector serving on the Board because of the expectation that the immediate past Rector, in most instances, would also remain on the Board. I think that's a change that will give the Board a good bit of policy capacity, a good bit of historical perspective on what it does. I see it as a very positive change, and I would urge you in working with Mr. Rainey to do so with the understanding of the changed mission that he has, partly in that he is preparing from the very beginning for orderly transitions to following generations of Rectors.
Jefferson wrote in 1820 a statement about the University, some parts of which almost all of us could quote. It's in a letter to one of his correspondents with whom he refined the concept of his University, and it was during the period when he was struggling to persuade the state of Virginia that it had some need for a university or indeed for public education generally. You recall that by 1820 the University was well into its founding By 1820 Jefferson's Statute for the Universal Enlightenment had been pending passage in Richmond for something like 46 years. It was probably beginning to be apparent to him by that time that something unusual would be necessary to create the system of public education that he saw as being essential. The letter says, “This institution of my native state, the hobby of my old age, will be based on the illimitable freedom of the human mind to explore and to expose every subject susceptible of its contemplation.” That language is really where the concept of the university in the modern sense comes into American usage, and that language has a great deal to do with the University's scope, with its range, with its intention to address essentially all of the ponderable aspects of existence on our planet.
I was reminded in thinking about these remarks of T.S. Eliot's observation in “Little Gidding” about the cyclical nature of human endeavor. He writes there, “The end of all our exploring will be to arrive where we started and know the place for the first time.” That seems relevant to me because in this year of 2003 we have seen yet another major adjustment of state policy toward its colleges and universities. In many respects the financial situation, the mandates the institution actually has, its relationship to the rest of education, could be said to resemble more today the situation Jefferson saw in 1820 than at any time in our history. You know the numbers from the newspapers. Something like 9% of the aggregate budget now comes from state appropriations. The only significant action by the state in the course of the last 13, 14 years with regard to facilities in its colleges comes in the form of a pair of General Obligation Bond bills passed by the voters by a margin of three to one and yet not followed by the adoption of any orderly process for capital planning on the state's part. Indeed, the closest we've come to an orderly planning process for facilities is embedded in the bond bill, the assumption that the state will adopt the six-year cycle of expenditures of the revenue from the bonds, and that there will be some systematic way to determine needs, to determine allocations, resources, and so on. I was also struck in working on this year's address by the fact that many American universities have at various times been described in language adopted from the gospel of Matthew that has to do with a city on a hill, the notion that there is within the university a kind of mandate to better the world around it, to serve as a kind of example, to be highly visible, and in many other ways to adopt some of the characteristics associated through a couple of centuries of commentary on that text of the notion that there are better places where in some ways people are freer.
There's a sense in which in modern times we really are a small city. We used to describe ourselves as a town. We occupy, throughout the state in various ways, something in excess of 3,300 acres. We have here on the University's Grounds in Charlottesville almost 600 buildings. Of them, 61 are over a hundred years old and 299 were completed prior to 1960. Those numbers are important because they have to do in part with the challenges we face as we deal with a new environment for state support. To own the largest collection of antique buildings in the possession of any American college is a fine and good thing. To pay for them and to use them properly and to maintain them as places of public access, to see to it that people can visit these buildings and learn from them something about the way we have shaped settlement in this place, is a different matter, very expensive, very complicated, a challenge that in some respects, if you were starting with a blank sheet of paper or a blank piece of land in building the University of Virginia from scratch, you would never have to face.
There's also a sense in which the 299 buildings completed prior to 1960net of the 61 that are over a hundred years old are in fact a more complicated problem. You've watched us work with Peabody Hall. You've watched us not work with Miller Hall, the discovery that the building was simply not salvageable, and as you know, we deal constantly with the difficulty of how to address the condition of buildings constructed under very different building code, with very different technological requirements. Maybe the best symbol of the problem we face with those buildings is going to be something like New Cabell Halla massive technical problem when we think about how to reuse that building, what to do with it--one that's resulted, as you know, in a consensus within our Board and within the College's Foundation Board that the building ought to be removed rather than being in some way recycled.
We resemble a city also in human scale. A relatively large staff, something like 11,220 employees with 2,000-plus of those being full-time instructional research personnel. We are very heavily committed to people in the way we spend our money. About 60% of the budget is now spent on salaries and benefits in the University generally and in the Medical Center, a lower factor because of the higher material costs of providing for patient care. The College at Wise with a very different budget situation, a slightly larger percentage of its budget committed to salaries and benefits. Altogether we issued something like 26,000 W-2 forms this year. Essentially what that says is that something like 22,000 people depend on the University in some way for their livelihood.
The total salary expenditure this year is $797 million. There are some ironies embedded in that number. It's a very large number. This is a large payroll. On the other hand, it is not what it ought to be. It's short by probably 10% to 15%, which represents simply the accumulated costs of the 14 years of the past since the last time the state of Virginia fully funded its own formulas for the salaries paid to faculty and other formulas for the salaries paid to classified personnel and to the other types of employees, so there is an accumulated unmet cost that staff and faculty and others in a sense accommodate within their family budgets and indeed in their lifetime financial planning. That's one of the major issues that we face as an institution.
The Medical Center, recognized in recent days in an unusual way, is by any assessment a large, somewhat separate corporate entity. Our Board of Visitors is in today's language a holding company. It holds one part of the enterprise--the academic institution directly--and Gene Block and those who work with Gene, supported by Leonard Sandridge and those who work with Leonard, in a sense are the operating entity, the company that the Board of Visitors holds as its primary business. Then there are two other operating companies suspendable of the holding company. One is called the University of Virginia Investment Management Company, created about five years ago for the specific purpose of maximizing the return from the University's endowments. One of the most successful investment management enterprises in the country, happily. It's an enterprise that has in the last couple of years produced one of the three or four highest total returns on large endowments in the country and in one of those years, the second highest. That's not to say that it's a total return that's going to excite anybody, because the market in that period has been producing negative total returns. These have been positive, but in truth, it is a very, very successful operating entity.
The other is the University Hospital operated by way of a hospital operating entity that is itself also a subsidiary of the Board. So we have essentially a holding company with three operating entities beneath it. That's an unusual way to think about universities, but frankly ten years ago no one thought about the need to manage large endowments for public institutions. What's happened here has happened in various ways at Texas, at Michigan, at California at Berkeley. It's happening at UCLA. It represents on the financial side one of the necessary conditions of operation to protect the cash flow that sustains the work. On the hospital side, our model represents one that is not brand new. It's been done several times in other states, but it's the alternative to selling a hospital of this kind if one's core purpose is to support health care and at the same time to build a kind of firewall between the medical venture with its various operating risks--clinical hospitals quite often lose money--to protect the two sides of the house from intermingling of funds or commingling of funds or obligations. One does not want a bad operating year in the hospital to force us to lay off faculty in the Department of English, so the Board strategy has to been to isolate entities that need to stand on their own bottoms and to see to it that the Board has adequate central reserves and resources but at the same time that the operating components of the University operate in real economies. It is not a real hospital economy if the recourse at the end of the year is to go over and raid the academic budget. It's something else, and so the Board's logic has been to put that into place.
One national assessment of the quality of health care and communities that I saw in the newspapers this past week seems to rate the hospital's catchment area, its market area, as the second-best-served region in the country. In that particular ranking I think that Rochester, Minnesota, may have shown as being somewhat better served, but after one moves away from Rochester and other places of that sort, I suppose that have unreal medical economies [inserted] into the real economy, what remains is that Charlottesville and the University Hospital, the surrounding areas, have developed an extraordinary system of health care. I won't go through all the numbers but I would say to you that the scale of it is vast. Almost 600,000 people had outpatient procedures in the course of the last year. The move toward ambulatory care is one of the reasons why the system works as well as it does.
I should note also that we had well over a thousand volunteers working in the hospital. If you take the aggregate hours--they come in at 69,000 hours this past year--and try to figure out the number of full-time employees who would have to be added in order to compensate for the loss of volunteers, I think it becomes apparent very quickly that you can't run this kind of hospital as well as this one is run without this kind of volunteer effort. And it's all kinds of people--it's high school students, it's our own students, people in elder care facilities--a vast range of people, some of whom are maintaining full-time lives and careers of their own and then going into the volunteer part of their lives at some personal expense.
A word about our students. In the national rankings of universities, two entities stand out among the four or five or seven that get ranked in the various rankings as the great treasures. One is the student body, commonly assessed nowadays as the most talented such group in the country in a public institution and one of the eight or ten strongest in the entire country. The other is the faculty. I'll talk about the faculty separately in a moment. The statistical report first.
Something over 19,000 students enrolled on the Grounds this year. We are slowly growing under the growth policies that the Board enacted first in 1989 and has reenacted as recently as this past weekend. The slow growth theoretically would net to about a hundred students a year. As you know, there is tremendous pressure from the state because of the lack of state planning to deal with the number of new in-state students expected to enroll in the state's public colleges in the course of the next six or so years. The numbers are always afloat, but the current working estimate is 38,000 more, and the folk who do the research say that the real number is something like 50,000. The state has not appropriated money to add buildings or faculty, to provide financial aid or in any other way to provide for those students and, in fact, has not provided for increased enrollments since 1990, so all of the state's colleges face the situation we face with regard to the possibility of sudden unplanned growth as a part of the immediate future.
I need to emphasize that the year 2010 is not very far away if one is talking about a scale of increase like the one that seems to be out there. You probably read news reports of the substructure of the problem. For example, in the current year, double the anticipated number of new students showed up when the colleges opened, and double the proportion expected in the community colleges showed up in community colleges, and the state does not know what will happen to those students as they complete their community college study. They may come here. They may want to come here. They may go to George Mason, which is filled to the seams now. They may go to VCU or to Old Dominion or to Radford--institutions that could absorb more students if the state provided its fair share of the cost of taking them. They may on the other hand be directed by state policy toward institutions that are thought to be wealthy enough to absorb them without the state's making its normal commitment, in which case William & Mary and the University of Virginia and Virginia Tech and probably JMU and ironically George Mason, which again this year appears to be the most significantly stressed of our institutions, may well be ordered at some point to absorb substantial numbers of students beyond those for whom we have facilities, faculty, and so on.
We maintain the ratio that has existed in recent years between in-state and out-of-state students. The growth, incidentally, since 1990 has been almost entirely within the in-state student population. We actually have 1,100 more in-state students now than we had in 1990 when the state stopped paying for growth, so we have absorbed a substantial number of new in-state students already and paid for their educations, as you know, by charging more than a hundred percent of cost to out-of-state students, by using the assets that now come to us from the endowment, from private gifts, and frankly also by failing to spend in areas where we really ought to spend, so there are a lot of compromises already built into the system.
This year Mr. Blackburn and the admissions staff have offered admission to some 5,661 high school seniors. With the customary yield rate, that will generate a class in the range of 3,000 students. That class is likely to be, in a very crude calculation, two-to-one in-state. It is likely to look somewhat like classes in recent years, although as you know, the mathematics qualifications of our students continue to creep up. One of the great ironies about curricular change in this institution and two or three others in the same situation is that a major motive to rethink curriculum is that a vast majority of students entering nowadays don't need the kinds of courses that had to be required back in 1969 when the curriculum last underwent a major revision. It is now the case that AP scores and other kinds of evidence make very clear that we can and probably should, from the students' point of view, make more rigorous kinds of demands of first-year students.
It's a class, by the way, that is likely to produce leaders of various kinds in the course of its four years here. I want to acknowledge that this has been an extraordinary period for student achievement. Not the same prizes every year. There are many more prizes out there than there used to be, but the range of excellence is something. The Harrison Research Awards have been one way to be recognized in this case, 26 extraordinary students. John Kiess, who is a college graduate from 2001, is the first recipient for us of a George J. Mitchell Scholarship. This program is intended to encourage American graduate study in Irish universities and with a related program vice versa, and Mr. Kiess is to study comparative ethnic conflict at Queens University in Belfast. Kathleen Hamm and Sean Driscoll, both of whom will finish the College next year and are Political and Social Thought majors, have been named Truman Scholars for 2003. This gives us a total of 22 Truman Scholars in the course of that program's life span. If that's not the largest number of Truman Scholars at any one institution it's got to be within the three or four largest totals.
The faculty has grown over the course of recent years, although sometimes it feels as though we never have enough people to do the work needed, but the comparison I think is worth making. The aggregate faculty in 1990 came to 662 persons; this year the same cohort is 2,004. There are always calculated tradeoffs. We have struggled, as you know, with how to meet emerging demand for lower division and some upper division enrollment bulges in Spanish. I use that only as an example of the problem because it's so very visible, but the number of students seeking that language has doubled or quadrupled in the course of the last ten or fifteen years. Everyone I think at this point understands the importance of having large numbers of college graduates fluent in Spanish. The struggle to maintain adequate faculty cohorts there, while still growing in enrollment and not receiving the state appropriation that supports the growth, is obviously a major issue.
Faculty accomplishments occupy quite a lot of space in the booklet you have. I do want to acknowledge that we have again this year seen faculty members receive the highest award that the state gives for faculty excellence, the State Council's Award. Barb Brodie, who is the Madge Jones Professor in Nursing, and Dan Hallahan of the School of Education are this year's winners. Charles Wright, the Souder Family Professor of English, said by many to be one of the three or four most significant poets currently writing in our language, was elected a Fellow of the American Academy of Arts and Sciences. Philip Zelikow, the White Burkett Miller Professor and the Director of the Miller Center, has been appointed director of the National Commission on Terrorist Attacks upon the United States, the President's Commission, and is now working part-time with us and part-time with that Commission. Doris Kuhlmann-Wilsdorf, Material Sciences, the University Professor of Applied Science, delivered the 2002 Campbell Memorial Lecture to the Annual Meeting of the American Society of Materials and was also the plenary speaker at the 15th International Congress on Mechanical Engineering. That type of excellence, as you know, is not unusual.
We had the occasion the other night to read through brief biographies of faculty lives and work in connection with the annual retirement dinner that the Board gives for faculty. It is striking to look at a given cohort of faculty at the point of retirement and realize the ways in which essentially every one has made dramatic impacts on a discipline, on multiple disciplines, on communities, on the University, on other institutions. This year's performance I think is simply a consistent demonstration of what the faculty does.
We do face the problem that the faculty salaries paid within our peer group of institutions continue to move ahead of those paid anywhere in the state of Virginia. I was looking at the tabulation of salaries paid in AAU institutions, the most important peer group because that's where we hire faculty, and wanted simply to read you a list of numbers to indicate the size of the issue that we see with faculty salaries. Staff salaries and other salaries would track the same set of issues. Duke's rank in the group is 9th; California-Berkeley is 11th; UCLA is 13th; the endowed colleges of Cornell University are 19th. U.C.-San Diego is 20th; Brown University is 21st. We are 23rd in the AAU listing. This is 60 institutions. North Carolina is 30th; Michigan is 31st; Vanderbilt is 34th. Now, to some extent, the variation represents different costs of living in different places. Salaries in the southeast, like the cost of living in the southeast, tend to be somewhat lower, but even with those numbers normalized, the salary problem is apparent by the fact that we are no better than slightly above the middle of the pack in the pack that really matters, and I think this is one indication of the scale of the problem that the Board and others who are looking at the next capital campaign really have to address.
2002-03 data come next month. My expectation is that our rank will go down somewhat. That's not advanced mathematics. That's what happens when you take a zero increase and apply it to the salary base and that's what we've had to do for the last two years.
Between 1989 and 2001 the average ranking for our instructional faculty fell from 18th in the AAU group to about 23rd. That may not sound like much of a change, but it's important to realize how very complicated the competition among those institutions is and how serious even a one place change is in indicating where you compete within the marketplace. Average faculty salary for the last academic year, the last one for which we had numbers, has dropped to the 36th percentile. Recall that the state's policy is that it will fund salaries at the 60th percentile. Institutional research believes that the 28th percentile is where we'll fall this year and that when next year's numbers are calculated, we will drop again.
The good news, I think, is that the deans and others who've worked with faculty to attempt to protect our interest in maintaining top people have had an extraordinarily good year. The Board of Visitors authorized the creation of a fund that originally amounted to $6 million to let us deal with that kind of challenge with unusual opportunities, with other issues that would arise in the course of what was expected to be a biennium of serious hardship, and it has been. Four million dollars came from the endowment, and we are anticipating repaying that money to the endowment by way of increased contributions and hopefully somewhat higher total return.
Two million dollars came from enterprises that are not academic at all--the bookstore, the Athletics Department, Housing, Student Health, Parking & Transportation. To be very blunt, what happened is that Leonard went in and raided their reserves and we moved those reserves over to the academic budget to allow us to defend ourselves against the loss of personnel we think would be essential. It's also been an interesting period for faculty hiring. I think all of us know that when the state hiring freezes went on last spring we were in the process of extending offers to faculty who did not in the end receive offers because we could not hire, and that in the changeover between the old system of deregulated hiring and then the regulated system, we lost, we believe, about five significant African-American faculty members. I'm told that in the course of the year using these special funds and using the dean's own funds, we have hired enough personnel to say that the total number in the relevant categories has gone up somewhat. It remains, I think, one of our major problems that we have not made adequate progress with regard to hiring, mentoring, promoting, retaining African-American and other minority faculty, but at the same time the fund is obviously working to some extent.
I wanted to mention also other significant hires in the period. Dell Upton who's come to us as the David A. Harrison III Professor of Historical Archeology has joined both the College and the School of Architecture and will be professor of both anthropology and Architectural History. Jack Goldsmith, who has served on the faculty before and has most recently been at the University of Chicago, a leading scholar on international and foreign relations law, is returning to us. I should tell you also that, of immediate interest in terms of the day's news, Mr. Goldsmith has served as Special Counsel to the General Counsel in the Department of Defense.
We've seen new degrees added. There are other hires also, but I thought it was important to say that we've been able to hire at different levels including the very top of the academic professions. We've added a new Master of Public Health degree, simply recognizing that Virginia has done little or nothing to provide for advanced education in public health or research in public health and that the region faces substantial issues. If you can imagine only the ecology of public health in, let's say, southwest Virginia and Fairfax County, it'll be obvious that these are huge issues that have to be addressed academically. The MPH is a way to do that.
The School of Engineering has added a new Bachelor of Science degree in biomedical engineering, another step in the collaboration between engineering and medicine. It's also added M.S. and Ph.D. degrees in computer engineering. The curriculum evolves. We have dropped something like seven programs over the course of a decade or so. We're adding programs also as they make sense academically and in terms of larger needs.
A few words about rankings. The great irony about the rankings is the obvious one. On the human measures--quality of faculty, quality of students, reputation of institution, and so on--we fit typically in the top 10 or 12 in a given listing. On the financial rankings, which this year have us at 66th overall in financial resources, the figure is essentially the same whether you're looking at resources per faculty member or resources per student. On the financial measures, you see the factor that explains why such a strong faculty, such a strong student body, an institution of such a reputation is ranked not 10th or 12th or 13th in the country but instead 23rd. The newspapers noted, with concern that I share, the fact that the rankings that were recently released on graduate and professional programs clearly show the impact of state financial actions taken in 1999 and 2000. You will see if you watch carefully that there are typically slips of one or two spaces. That's likely to continue until we move vigorously enough in the next capital campaign to demonstrate that we're becoming adequately self-sufficient to replace state money in the base budgets as necessary when the state does not meet its obligations.
The situation we face today is very similar in style, in type, in seriousness to the one we faced in 1990 when the state decided to stop counting students and stop attempting to provide the kind of funding that it had pledged in its funding formulas. The state's revenue shortfall for the current biennium is now set at some $6 billion , or 27% of the anticipated tax revenue on which the budget was based when it was first passed. We suffer, as do other components of government, when that happens. You hear constantly little reports of what's going on. A colleague of mine lost her driver's license night before last. Went yesterday to get a new one and found DMV closed. That sort of cutback in public accommodations tends to get addressed because closing the DMV is a big deal, and I understand that they'll be back in business at some point, but the truth is that since 1990 the higher education component of the state's budget has been cut so dramatically that it's obvious that that was the fund of last recourse. The bad news is they did it. The support at this point is about half of what it was in 1990. The good news is there's not much more to take and that when you get down in the range of 7 to 9% dependent on a single cash source and you have demonstrated capacity to raise money from other sources, the issue is to calculate how long it takes as opposed to saying, do we remain open, do we remain where we are?
We are going to go through a period of intense work. We've done this before. It worked before. It is working now, but the truth is the work itself is going to be an enormous challenge. I should say also, as I will say at the end of these remarks, that I believe it is also going to be an enormous reward for all of us to have accomplished this in our time.
The total reduction in our appropriation this year is about $26 million. They're taking another $34 million next year. There were additional cuts--$17 and $19 million. We have made up something like half of that reduction largely out of increased tuition, surcharges, and that sort of thing, but in the course of two years that's $96 million out of the institution's budget. That, by the way, is five-and-a-half times the total budget of the College at Wise. I mention that only because the smaller institutions have also taken very deep hits, and you can imagine the effect on their budgets of reductions of the scale of these when they don't have endowments. They have relatively modest tuition revenue and they are attempting to maintain very expensive services for their regions.
By the end of about 2004 we think the total appropriation will be no better than something like $116 million, possibly $114 million. The reduction, if you apply it on a per-student basis looking only at in-state students, is about one-fourth of the state support disappearing in six months. The total support for individual students is now something like $9,700. It'll be slightly than the $8,800 next fall assuming that the budget is not again reduced.
In this context, it's probably not surprising that state officials are now telling us they don't want to hear what other states appropriate per student. I have replied that from time to time when the emperor shows up with no clothes on someone says that, but in any event, it's important to understand that we are competing on a field in which the competitors have somewhat different base circumstances. You've seen the numbers, but the appropriation at Chapel Hill is about $22,500 per student after the reductions they took earlier this year. The appropriation at Berkeley is something above $22,000; at Ann Arbor, something above $19,000; at College Park, about $17,000. The difference is always, first of all, the capacity to manage dollars effectively and second, the availability of other kinds of resources.
The effects of the cuts you know--fewer sections available in many departments, various kinds of reductions in services in the libraries, not all of them, I think, bad reductions. I was surprised to discover in the course of working out library budget issues that we had fallen into the custom of giving free copies in unlimited numbers to anybody, and that particular benefit is gone at this point. People pay for most of their copies.
The hiring freeze has been recently lifted. The effect of that was disparate, but one effect that interested me a good deal was that several years ago the state created and insisted that we and Virginia Tech operate the Southwest Virginia Center for Continuing Education in Abingdon. We lost the director of the Center because of a scheduled retirement during the period of the hiring freeze and ironically we are not yet allowed to fill that position, so we're trying to operate the center the state told us to operate without being allowed to maintain the leadership that it needs in order to do its business.
We anticipate a 2.25% salary increase for all employee categories distributed in different ways in different categories late in this calendar year. I think the effective month is now November. This increase needs to be understood in a couple of contexts. One is that faculty salary increases are determined on the basis of merit assessments that have to be done by the department heads and the deans, so whether faculty or indeed administration, no one who is in the faculty category can automatically anticipate any particular percentage of increase. The other is that the increase is and isn't [an increase] because there was a 2.25% bonus payment in place of an increase last year, and so the 2.25% increase which goes to the base in effect simply carries forward a major part of last year's bonus. The lack of salary increases has become more and more evident to the deans as they've gone forward with faculty recruitment. It's important to register that the world knows what goes on because The Chronicle of Higher Education, the New York Times, and similar publications that people read report very specifically on this kind of salary history.
Now, all of this I think says that we have additional structural changes to make. We streamlined operations very successfully in the early '90s. You recall at one point we were able to pull about $35 million out of support that became part of the academic base budget. We will go through that again. There are probably limits to efficiencies that can be achieved. I think most of us would say that we've seen all the efficiencies we want and would like to see a little inefficiency in the form of departmental travel budgets and adequate budgets for departmental copying and that sort of thing.
There is a kind of value in leanness. It is an enormously beneficial quality when one goes to attempt to persuade donors to invest their money in faculty work. It's a major reason for the successes we have in raising endowments for faculty chairs. At the same time, there's a point of balance.
I want to report some very good news about finance. You may recall that in the early '90s the rating agencies that put values on commercial papers--bonds and that sort of thing--took away the AAA ratings of all public institutions because in the early '90s the rating agencies made the judgment that the states were not behaving responsibly with regard to their institutions, so Texas, California, Michigan, and we lost the historical AAA ratings. We are the only institution I know of that currently has all three of the major rating agencies at AAA or equivalent. We're the second one to be awarded the AAA through Standard & Poor's. Texas did this a little before we did. There are some enormous ironies about the ways in which the rating agencies explain the ratings. As you know, there's a published report on each rating. They now rate low state support as an asset, if you've been able to survive the cuts and to come out of them strong. They now rate substantial capital fund-raising campaigns in public institutions as an asset. They look at the quality of faculty, the quality of students, and frankly, at the way in which the University is governed, at our Board and those who report to the Board, and they rate those people and those activities very highly because they see them as demonstrating that we can in fact continue progress towards self-sufficiency. Fitch's and Moody's have previously given us the AAAs. I realize that not all of us go to bed every night worrying about AAA ratings.
Leonard does. And I want simply to acknowledge that the AAA ratings are the result of enormously hard work that Leonard and Alice Handy, and others have done, simply because without those ratings we cannot efficiently do the borrowing we do when we have to borrow to build dormitories or to build other kinds of facilities, so there is a value to everybody in the quality of work that they do, and I am personally grateful for it. The savings on one set of bonds that we're looking at--this is the set to support all of our units when they use bonded funding--comes to about $800,000 a year over the life of the debt. If you run that out through the life span of the current fixed debt, it's a $7 million savings there, so it converts to money you can spend on the academic enterprise.
Let me talk first of all about plans to build the University's financial strength in the future. First of all, we need to continue forging the new relationship with the state. This is not a new beginning. We've been doing this now systematically for over a decade. The state is now very distinctly the minority stakeholder within the University. There were substantial strides on what's called “decentralization” in the state's bureaucracy language in the current year. We had 12 proposals; 11 of them passed this time. Essentially what we're trying to do is capitalize on the best that is there because of the relationship with the state, but at the same time permit the Board and the Board's various functions to assume more and more responsibility for the University and for its operation and financing.
I don't think that anyone who's serious about this argues that this ought to be a private institution. It's extremely difficult to imagine this University of all universities wanting to sever its links to the public. Again, however, Jefferson made the judgment in his time, as I think our Board has made it in our time, that despite the inadequate level of support, that state link is absolutely essential to the identity of the institution and the work that it does. Enormously strong public tradition here. That, among other things, accounts for the periodic scraps with legislators who have some way to modify the University that will help them get reelected the following November. The University is a political issue in essentially every part of the state. So is education in every sense. We do need to look very carefully at how we educate Virginians, at the issues involving in-state and out-of-state enrollment, at how we measure our performance and at the scale of the enrollment.
As you know, decentralization is well advanced in some parts of the University. The Law School and the Darden School will become, in a financial sense, self-sufficient in the next academic year. The McIntire School is beginning now to look to me to be a very obvious candidate for something like the same situation. We have any number of centers--the Miller Center and so on--that have minimal financial reliance on the University and quite often the reliance takes the form of provisions for the much reduced state match under the old Eminent Scholars program. Other schools and other centers rely on the Board of Visitors and its budgets and on their own foundations to support most programs.
There are, I think, reasonable examples of schools that ought not to be expected to stand on their own bottoms in the long run. I don't know a case of a liberal arts college, a college of arts and sciences within a large university that is completely self-sufficient. I do know a couple of people who have the cash balances to make us self-sufficient and have spent a fair amount of time in recent months discussing the general proposition that there might be a major endowment committed to support the College. That's not the College's fault. That's a reflection of how the larger economy works.
The Nursing School, thought years ago to be not capable of raising money, is clearly more than capable under Dean Lancaster's leadership. I've got a lot of interest in the situations at the School of Architecture and the School of Education. Architects and teachers, to take two types of graduates of those schools, are not highly paid persons in the current economy. You don't generally find enormously wealthy people wanting to commit money to those schools. That does nothing to relieve the University's general obligation toward those schools. Instead it simply says that we have an obligation not unlike Cornell's to operate an enterprise with different financial assumptions lying behind different parts of it. The system itself helps to keep us honest because, in the end, all of the salaries go into the same calculation when you start calculating the adequacy of support for faculty work or for staff work.
On the extreme end, the model that's emerging is that some of the schools are to collect and retain as operating revenue 100% of the tuition they collect and also their direct costs including salaries and benefits and so on. In exchange for that, they give up claims, generally speaking, on central University operating revenues. In the cases of those that have substantial Virginia enrollments, there's going to be some subsidy that simply has to do with the special obligations to in-state students. It's currently about $2,500 a year. State general funds, by the way, provide that particular subsidy. I think the Law School and the Darden School are going to struggle for a number of years with regard to how they maintain their commitments to in-state students with modest negligible support from the state and yet they know they have to do something to maintain that commitment. They're moving toward a somewhat lower differential between in-state and out-of-state charges than we have in the University generally. The Darden School is there now with a $5,000 differential. The Law School should be there by about academic year '05. They also contribute 10% of their revenues, the tuition revenues, to the central accounts of the University. It's an indirect cost payment and what it does is subsidize the salary accounts primarily in the College, so we've worked out in effect a cross-taxation scheme with these schools that are more self-sufficient.
Second, we need tuitions that are reasonable and consistent with the market, and we need also a financial aid program to guarantee that cost does not deter qualified students from coming here. Next year in-state full-time undergraduate students will have a tuition bill of $5,964 and required fees added to that. Out-of-state undergraduates will have something that's slightly under a $22,000 tuition bill. In-state graduate students--who are, interestingly enough, a lower priority for a state that says that its top priority is to encourage research in its universities-- will face about a 22% increase to $7,656; out-of-state graduate students, $19,965. Tuition charges at the College of Wise, which serves a population from counties where the average family incomes are very modest, will go to $9,700 with out-of-state students paying $18,638. When you put in tuition, room, board, the usual charges, the budget for an in-state student this coming year is about $11,500; for an out-of-state student undergraduate, about $27,500.
The financial aid piece of the puzzle is this. Out-of-state students pay a surcharge or a premium above 100% of our cost to educate them. A good bit of that goes into financial aid that is paid back to out-of-state students. They're also subsidizing in-state students in essentially every kind of expenditure. That's one of the sources of financial aid dollars. The endowment, and a particularly unrestricted endowment, is a major source of scholarship dollars. Departmental funds, research funds, indirect cost recoveries--all of these types of funding figure into the larger puzzle when you put together graduate and undergraduate students. We are in the midst of a renegotiation of the indirect costs factor. The results so far look optimistic. I think the situation will improve somewhat in the course of the next year or so as the federal government changes some of its formulas that apply to cash flow for these purposes to a university.
We committed ourselves several years ago to attempting to provide 100% of the financial need that undergraduate students have. You never get quite to 100%, by the way. There's a statistical glitch that always has you be about a semester behind. A hundred percent funding for graduate students is a reasonable goal. We are not there, obviously, and we see that as an issue that we've got to continue to address in fund raising.
The Jefferson Scholars program has taken on graduate fellowships in the last couple of years. Good results. Very solid program. Ed Ayers has done a good bit to work with them to make it an academically sound program. We're looking to spend about $1.8 million more next year for graduate fellowships coming out of the tuition increase that's been required there, and we also have had a number of accommodations in the negotiations between the Governor and the General Assembly. For example, we had a surcharge in the second semester this year. We were allowed to double that to annualize the surcharge in the base calculation of how much we can increase tuition next year. I should tell you that, under the law, the Board of Visitors sets tuition. That's all the law says about it, but the budget bill always overrides statute law in Virginia and accordingly what we're having occur here is an annual ad hoc way of balancing up costs so that they are not politically embarrassing, and that has been the situation as you know for something like eight years now.
The Governor sent down an amendment, which was adopted by the General Assembly on April 2, that allows the Governor to permit tuition increases if additional budget reductions are required during the current biennium as a result of the state's cash situation. That's one of the most important concessions made in the entire period since the state changed its policy on funding its colleges, because it says that the salary cost that we actually incur can begin to be a basis for a change in the calculation and it gives the Governor the authority to do that type of change directly. We're also allowed to use increases to cover the non-general fund portions of health benefits and salary increases, always a hard point.
Third, we're moving forward with the capital campaign that we've discussed in prior iterations of this speech. We believe that by about the year 2010 the University is going to need to derive on the order of 20 to 21% of its operating revenues from its endowments and from gifts, and that to do that we need to generate an endowment with a market value of about $10 billion. If you put together the various types of endowment that the Board controls directly or indirectly, the current endowment is worth something like $2.5 billion give or take, say, $100 million, with about $900 billion of that sitting in foundations--Law School, College, and so on. That's an enormous asset. We started this attempt to become self-sufficient with a base endowment that was estimated at about $400 million. In effect, by relieving pressure on the endowment during the years of the last capital campaign we allowed internal growth within the endowment to generate a great deal of the value that's there today.
We're both planning and conducting what's called the “silent phase” fund raising now. We announced various components of that at the last Board meeting. The first really major capital contribution to the work of the Virginia 2020 Fine Arts Commission will be announced at some point later this month. We're beginning now to see the dollars materialize for those projects. The Board is working with a target in the range of $3 billion as the goal for this campaign. That would be larger than any capital campaign that has ever been run anywhere successfully. Bob Sweeney and I have continued to work these numbers. We had a total of $255 million in private funds raised last year. If you assume that the function of a campaign is to double your level of giving--the last campaign actually increased it by a factor of four--but if your purpose is to double it, which is the rule of thumb in the business, the prospects of achieving the $10 billion endowment with any kind of market performance at all are quite good, and I think we should feel encouraged about it.
At the same time, we need to be able to say that you can't simply announce what you want money for and have people mail it in. A vast majority of our donors remain somewhat more interested in buildings than in operations, and yet our needs are at this point beginning to be better defined in terms of operations. The need for a massive endowment for salary support for the College, for example, is a very obvious element of thinking about the future of the College, and yet the College is necessarily involved right now in massive physical building projects. It's not the College's capacity really to change the readiness of the donor community to do something at this point. It takes some time, but we are still seeing a larger proportion of all our gifts come in with restrictions than without restrictions. There are ways to deal with some of that, including a practice that some places have of simply saying that no matter what the gift is designated for, a certain portion has to be unrestricted to go into the Board's accounts and used for the general purposes of the institution.
We are not mature enough, I would say, to do that at this point, but that's not an unusual way among the list of 10 or 12 ways to accomplish that purpose.
To give you a report on building projects--the only real complication of our building projects' physical changes is that we don't know precisely the dates on which the Governor will release money from the GOB [General Obligation Bond]. This GOB is not to be released all at once as projects are ready. That's what has always been done in the past, but instead the money is to be released over about six years so you have some information in a handout, not in the booklet but in the separate handout, to give an indication as to what's happening there.
Enrollment projections--I think we've covered that sort of thing pretty thoroughly. It is important to understand that if we had suddenly some massive change in our scale, say the state said you get 5,000 more students over the next two years, then libraries, classrooms, faculty capacity, course offerings, access to recreational sport, almost every aspect of the University--parking--would feel sudden pressure because of that increase. We believe that slowly planned growth is better. The public crisis is that the state has not done the planning and so we are likely to find ourselves dealing with some part of the large state problem.
Many of you have been involved in recent weeks in attempting to understand the changes in the University's internal culture that have led to a series of incidents that reflect at very best what I guess one would have to call in a labor situation the emergence of a hostile climate that involves the well-being of African-American students and very possibly others. We have been vigorously pushing discussions of this issue with alumni groups ever since the first events were reported.The first one that we began to use as the substance of discussion with alumni groups was the blackface incident that was reported back at Halloween time.
I'm interested in the fact that the alumni reaction almost to a person is simply, “We thought we solved that when we were students.” In the course of one week describing the report of the assault on Daisy Lundy to alumni in Florida I kept notes because I thought that in the course of the week I was probably going to hear the names of all five preceding African-American presidents of Student Council--and indeed I did. That is, alumni believe in any given era that this problem got solved in their time.
I had a meeting with the African American Parents Organization just at the end of the spring break. They came to the house and spent an afternoon talking about strategies that might be used, and one of the issues that got discussed was, where's the next problem? The next problem turned out to be in one instance in a parking garage; in another instance, in a cartoon published in The Cavalier Daily, but the incidents continue to occur. One of the parents said, in truth, the next incident that is a significant incident in the sense of change in the culture is likely to be perpetrated by some 14-year-old who's in middle school someplace now, and the observation made is that one never finishes the job of educating a community with regard to human dignity, the importance of maintaining a culture of respect, mutual respect, the importance of that culture even in terms of academic discourse.
Jefferson's various dicta about such things as allowing any error to exist so long as reason is free to combat it ought not to be misread as an excuse for racist talk. It ought not to be misread as a basis for using ad hoc or ad hominem attacks to drive someone out of the dialogue within the community.
If you think about the community tragedy that's involved in the racial incident toward the end of the student elections, there are some awful ironies. We say and we practice this, that our purpose is to teach students to govern themselves. We encourage our students to run for office. We encourage them to take leadership roles. So here is a student who, in the course of running for office, is threatened and harassed on the telephone, who goes through reasonable and proper steps to reveal to the proper authorities that she's receiving these threats, who is ultimately assaulted by someone who uses racial insults as a way of saying why she should not be president of the Student Council. The entire system of values on which we build the faculty relationship with students is threatened by something of that kind.
I see people as I look out at this group who have been central in the efforts we've taken in trying to address this issue, but let me make clear that if you teach students in this place, whether you're a classroom teacher or a research faculty member or a hospital staff member who has contact with students, this is not my issue, it's not Paul Gaston's issue, it's not Pat Lampkin's issue, it's not an issue for any one person, it's our issue. In order for the free exchange of ideas to occur, the culture has got to support the aspirations of students who seek to do exactly what we tell them to do and that is govern themselves, so I see this is as a fundamentally and profoundly important threat to a way of life. I do think the students need help in working their way out of a quandary. Both the Student Council and The Cavalier Daily have recognized that in recent days. I think the quality of discourse in the student newspaper has set a very high standard this year. If there were Pulitzer Prizes for student newspapers my guess is The Cavalier Daily might get one this year because of the way in which it has presented a balanced and fair picture of a degenerating situation.
We're now at a time in which both the Board and I believe that we need to go through the process of educating one another that's involved in special focus on this issue. Mr. Rainey created a special Board Committee on Diversity. He did this at his first session as Rector. Warren Thompson, who is to chair that [committee], has spent a lifetime working on issues having to do with the desegregated workplace and how it works. He brings tremendous talent and commitment to this particular exercise.
We thought seriously about simply using an existing University entity such as the Equal Opportunity Committee or the retired but still available and came to believe that it is important on some kind of cycle, every four to five years, to reopen these issues. Paul Gaston's essay on the historical process by which this desegregation occurred here, which we've posted on the web and which will be the first of a number of educational resources available to students and faculty and others, if you have not read, you should. Paul's essay is a fascinating record of events that if you're my age you will remember when you read the quotations from newspapers and the other factual matter that he covers in that essay. We felt it was important to ask Paul to write the essay simply because in talks with students, including African-American students, we discovered that there is no memory, that one has to teach the history to explain the fragility of a community of respect in a place that wants to teach students to live by codes of honor and to govern themselves. That's one step in the right direction, but we as faculty, as staff members, also have to understand the same history. Even those of us who worked in that era and on those issues find ourselves to some extent surprised by the complexity of the process that Paul describes in the essay and I think also by the extraordinary human determination by which the process of desegregation, or for that matter the parallel process of coeducation, actually came about.
Major stakeholders in this community represent hard-won gains and those are not gains to let go simply because of a few racists' wish to use a student election or to use a student party as an occasion to demonstrate whatever it is they choose to demonstrate with regard to their feelings. I'm asking the Commission on which faculty, staff, students, and others will serve--there'll be community representatives, there'll be alumni, there'll be some parents--to examine what we do and how well we do it, to give us grades on it, to look at what is done in other places. We've already commissioned a thorough study of diversity-related enterprises in other AAU and category one universities, and we will go pretty far afield to do that as a resource for the commission.
We need to identify gaps in programs--What do other places do that we don't do?--and frankly to get through a lot of the rhetoric by which most places describe their reactions to crises not unlike ours. I've been fascinated by how elegant many of the programs my colleagues whom I meet at AAU President meetings, for example, how elegant their solutions sound when they describe them, usually in the year before they retire, and by how very difficult it is to invent solutions that actually work over time, and maybe the problem is expecting them to work over time. A lot of you have worked with us on substance abuse issues, on other kinds of challenges to the well-being of the student community. I don't think that anybody expects even the wonderful programs that were developed after that task force worked on alcohol abuse and drug abuse in the community, I don't think anybody expects that to last forever. We will reach a point when there'll be different challenges, different issues. The 14-year-old now in middle school will have matured and brought some other kind of problem with her or with him.
We're going to try in the end to develop a best practices model, essentially using a business strategy to attempt to find a way to manage the efforts that we make, and at the same time we're going to continue to take what I would describe as a moral posture as an institution that I ask you individually to embody in your own behavior, a posture that says we don't tolerate that because what it does is destroy this community as a place for learning--it's that simple--and that that level of intolerance is the appropriate reaction of a thoughtful and moral conscience to the challenge we face. It's not just a student issue. I am concerned by the fact that so many of my colleagues in describing this see this as something the students need to fix. The truth is the students can't fix it. The truth is that if we are silent in our personal actions, our statements, the way in which we teach issues that involve the complexity of our population, we convey by our silence a value system that I think we don't really believe. And speaking out, I think, is a crucially important part of what it takes to be an ethically straight academic in this context.
There's a great deal of work going on in regard to curriculum. The work will not be finished this year. The College has the most complex task. Dean Ayers is really the expert on that. I would make this observation about what I'm hearing from virtually all the schools. What is lacking is a coherent philosophical statement of what we're trying to accomplish in the curriculum that's driven partly by what students are when they come here and partly by what we as faculty anticipate that students will be when they leave here. We aren't going to change their basic personalities, but if we do what we're doing or attempting to do well and properly, we are going to change reasoning capacities, the base of knowledge, their ability to address complex problems and so on.
If you look at the elegance of Rosovsky's philosophical rationale for the curriculum reforms at Harvard in the late '70s--some of you have discussed this with him before--the elegance of that rationale still strikes me as a commanding thing. A first year devoted to achieving a common and high threshold of accomplishment in the core disciplines necessary to succeed in the program. A second year dedicated to using those threshold-level skills in complex ways. We have examples of that now. For example, a common course that Michael Smith and Jim Childress taught--perhaps are teaching now-- puts together a number of different ways to analyze modern culture. The example Rosovsky uses is simple and clear. Teach a course on the economics of the European community. Teach it in French and have the students do their work in French. The point he makes is that it involves advanced mathematics and it involves elementary economics; it involves the language. It puts together the threshold skills.
And then something that is a fundamental challenge to the way we've done business for years is what Rosovsky calls “sum cumulative learning in depth,” a major. The challenge has to do with the fact that a long generation ago our faculty made the judgment that the best way to educate our best students was not explicitly to require sum cumulative learning in depth, so the Echols program was structured on the basis of no requirements. Now the Echols program is a sound and important part of the University, but we've got to come to terms with the notion that the requirements of sum cumulative learning in depth are in some way antithetical to what the best students might achieve here.
And finally, Rosovsky said there ought to be capstone experience. The capstone experience ought to pull all of this together in the form of a thesis, an advanced research project, or whatever. The chief influence in the community on curriculum change is the students. To put it very, very simply, they do not bring with them the needs that my generation of students brought in the early '60s or that the students in 1969 brought. They have taken two or more years of calculus and succeeded. They've had six or seven years of modern language, in many instances. They do not come here needing the kind of remedial attention that frankly we needed in 1961. My crowd was expected to undertake a first-year mathematics course that was two years beyond the cut-off level in the required Virginia high school curriculum, so we all bought copies of Math Made Simple and got to know the library. We memorized the book. That's not the situation. Students come here with tremendously diverse academic backgrounds. They expect to be pushed or challenged, and the curriculum needs to do that. It needs to see to it that they graduate from here with the most extraordinary set of capacities and accomplishments that any young person leaving any institution of our kind can hope to achieve.
I think the key issue for the coming year is going to be how to respond to what I'm sensing is accelerating student demand, the student interest in research programs, the student interest in the capstone experiences, the student interest in Michael Smith's and Jim Childress's courses. Those are the significant pushers that I see, and I'm convinced that the first response has got to be a philosophically coherent description of what undergraduate education is. Once we've done that we can talk about quantitative skills. We can talk about verbal skills and so on, but the consensus needs to develop around the fundamental issue of how one defines “educated.” In terms of what we say at the end--“I welcome you to the company of educated women and men.”--what do we mean by that and how do we apply that in what we do in the classroom in order to cultivate that level of education?
Finally, a few word about transitions. This year has seen a number of retirements. We had an extraordinary group, as I mentioned, last weekend at the Board's dinner for retirees. These retirees include people who've really shaped our faculty over the years. I won't begin to try to read an entire list, but this is the year for the retirement of C. Ray Smith. There's a sense in which the Darden School is his extended shadow. It's the year of the retirement of Barb Brodie, whose impact on nursing I think is something that all of us understand. Walter Ross from music. Bob Epstein from the hospital anesthesiology. Sharon Hostler from the Children's Rehab Center. It's been a year in which members of our community have died and we have lamented their passing. At the same time, it's a year in which we really ought to acknowledge their importance. Julian Bishko, who moved us into the tier of internationally prominent institutions in the study of European history, who by himself created a center of excellence that simply didn't exist before him. Cecil Lang, described by the European newspapers at the time of his death as the “prince of editors.” In a department that had built its excellence on bibliographical or hard scholarship, Cecil was the exemplar of the great professor/scholar/teacher. Champ Clark, 20 years or so an extraordinarily productive member of the faculty teaching and then for eight years the distinguished member of our Board of Visitors, remarkably sympathetic and kind in the way in which he used his faculty background as a Board member to address student issues and faculty issues. The list is a long one, but just listen to the names. Jeffrey Hadden, Lionel Rebhun, Charles Vandersee. Each of those names represents a body of accomplishment that in some way we as a faculty have an obligation to recognize and to acknowledge, in a sense to preserve.
This year has struck me as a significant one, to go back to the observations with which I began, because it is a time of notable endings and beginnings. No one expects the state's practices in distributing its money to go back to what they were in the '80s. The actions of this year with regard to the future are very clear. No one expects the state at this point to acknowledge the cost of educating additional students. That. at this point, is simply unfinanced expense that the colleges eventually will have to face.
At the same time I should say that no one expected the University of Virginia to be what it is today when this process began in 1990. The prediction was that we would topple as did our peer institutions. We did not, and we did not because of faculty determination. If you go back and dig out your old copies of U.S. News and watch the disappearance of all other public institutions from the top tier in that period, what you see in every case is a loss of will power within the faculty. The slow return of those institutions--not nearly as many now as there were in 1990--is one clue as to the eventual payoff of what faculty have done. We work largely in a context of hope. We work because of the conviction that our work is important. I think we work because of the conviction that students are important, that the patients, the students, the public who rely on us have the right to expect a very high level of excellence in the work that we do.
[Henri Gide]André Gide, not all of whose dicta I've been able to apply to my own life, did have this observation that's been in my head as we thought about this speech. It was, “Work and struggle and never accept an evil that you can change.” I think that is the fundamental rule that in some way is built into the work that our Board, faculty, staff, and indeed students, alumni, have done over the course of the years in which the state has moved away from the practice of providing core support for its institutions.
We all have been through a major capital campaign now. We have all seen what happens as a result of succeeding in it. We know the hard parts, the easy parts. We know the things you can calculate, the things you can't calculate. We also know the level of commitment that's required to succeed. This has been a time of tremendously talented deans, of faculty leaders, who had convictions about their work that became basic rules for existence. It's been a time when even the hardest issues, issues involving racism, for example, have been issues that students and faculty and alumni and our Board have wanted to acknowledge face on and to address as essential evils that had to be confronted, digested, corrected within the community.
A university is never finished. It evolves. Its founder never expected it to be finished. You and I should not [either]. But the issues for our time and for the immediate future I think are at this point well spelled out. I thought at one point about saying that they're starkly spelled out. I don't see it as stark. It's not always the case that we can beat all of the odds on every ranking. It's not always the case that the people who rate paper, who rate institutions, will say, yeah, there's that problem, but overall you're this. It is the case that we learn that diligence and hard work and good will, commitment, ethical standards, carried us through a very difficult time. They are carrying us through this time also.
I look forward to the work that we will do together as we move through this next phase of what we are as an institution. I look forward also to that next group of 3,000 or so young students whom Jack Blackburn and his colleagues will bring in the fall. There are tremendous human rewards that drive much of what we do. The time now, however, is to go beyond the human rewards and realize that there are also material necessities, that the salary issues, the other core financial issues, won't go away, that 14 years of watching the emperor walk around without the uniform is long enough and that the next step is to build the kinds of Board-controlled resources, basically endowment resources, to use tuition in ways that will let the Board address the issues, and then build the sort of financial integrity that we need for the future.
Thank you all for coming.