State of the University 2008

I am pleased to report on the State of the University as we conclude the 2007-08 academic year.

Strong Fiscal Position

Willamette continues to enjoy a strong financial position. New gifts to the University, effective management of the operating budget, and a prudent and conservative debt management program for capital projects have allowed us to continue to move forward on several important initiatives during the last three years:

Created faculty reinvestment program to increase faculty salaries and development;
Launched a six-year program to expand CLA faculty by 20% and reduce teaching loads;
Planned and funded a new digital arts academic building to open fall 2009;
Nearing completion (June 2008) of a major renovation of Carnegie Library to accommodate a new Law Center for Civil Justice;
Planned and funded renovation of Kresge Theatre to begin this summer;
Established and funded four new academic centers of excellence and reconstituted and re-energized the existing public policy center;
Established professional business management programs in Portland and Salem;
Opened the first of four undergraduate residential commons in 2006 and began planning the second;
Purchased strategic parcels of land west and east of our campus footprint;
Began process of National Council for Accreditation of Teacher Education (NCATE) accreditation for School of Education; and
Made significant investments in technology infrastructure.

Despite these investments, there is always more that we would wish we were able to do, if we had sufficient resources. No doubt, many of our academic and administrative operating budgets have not kept pace with our programmatic aspirations and we have unfunded facilities needs at both the undergraduate and graduate schools.

The 2008-09 budget ($ 75.8 million) reflects a 4% or $3,000,000 increase over the current year. As you know, the 2008-09 budget includes 4% and 3% salary pools for faculty and staff, respectively. The budget-to-budget expenditures also include $440,000 in additional fringe benefit costs. Next year's tuition increases are 6.3% for the College of Liberal Arts, 4.5% for the College of Law, 8% for the Atkinson School and 4.5% for the School of Education.

We have tested the limits of our operating and capital resources, having used each effectively and efficiently. This is as it should be: maximizing our financial resources and aligning our budgets with strategic initiatives.

Strong Enrollment Growth

Our enrollment programs have been very robust to date and suggest positive outcomes. The admissions outlook for the College of Liberal Arts, which accounts for three out of every four dollars of annual gross tuition revenue, is very promising:

Applications for admission total 4,201, a 35% increase over last year: both the percentage increase and the total number set new records for Willamette;
The selectivity is the best in our history;
Multicultural applications are up over last year;
Our applicants come from 48 states and 19 countries; and
The academic credentials of admitted students are strong with a median SAT 630 Critical Reading, 630 Math and 620 Writing; a 28 ACT; and a 3.83 median GPA.

Madeleine Rhyneer, Vice President for Admission and Financial Aid, reports that despite these very encouraging numbers, there are a few cautionary notes. The national landscape in admission is highly competitive, with most institutions reporting record numbers of applications and improved selectivity. Although the number of high school graduates remains high, it seems clear that many of us are, as it were, chasing the same high-achieving students. These students and their parents are very savvy about the admission "game" and are leveraging their credentials to get the best possible deals.

The admission landscape is more challenging than ever. Families continue to be highly price-sensitive and may be unwilling or unable to make the financial sacrifices necessary to afford a Willamette education. This is particularly true in a year of declining home values and economic uncertainty. The mortgage meltdown, talk of recession, and instability in the student loan market dampen the public's confidence about financing their student's education.

The good news is that our fund-raising campaign has added more than $23 million in scholarship dollars and another $32 million to the endowment in the past six years, thereby reducing pressure on the operating budget to fund financial aid and permanent programs. However, Willamette is not the only institution of higher learning in our peer and aspirational group engaged in intense fund-raising for similar purposes. Moreover, as you know from news reports, the wealthier and more selective colleges and universities have replaced loans with institutional grants and set limits on individual family contributions based upon income, making those institutions even more desirable in a very competitive market.

Law School year-to-date applications, which are roughly the same as the previous year, are consistent with national trends. Nationwide, a smaller applicant pool has generated less than a 3% increase in applications over last year. Both applications and applicants are down in the Northwest region. However, the quality of the academic profile of those applying to the Law School remains very strong.

Atkinson Graduate School of Management's (AGSM) two-year Early Career MBA program continues to receive a record number of applications and is maintaining a 38% increase over 2007. The profile of these admitted applicants, which includes several Fulbright and AMID EAST fellows, remains very strong. Additionally, the MBA for Professionals program is on track to exceed enrollment goals for May. Students who begin the program on May 5th will join existing cohorts in Portland and Salem.

Though applications to the School of Education are running slightly behind last year, I am confident that the School's new marketing plan and progress towards national accreditation status will yield more prospective students and a steady increase in enrollment going forward.

Challenges Ahead

Though the past five years have been, by almost any measure, a remarkable period of planning and growth, there are challenges that threaten our resolve, especially at the undergraduate level.

Access

As I have previously reported, the greatest growth in high school graduates demographics will be students who are the first in their family to attend college, ethnic minorities and families with low incomes. The overwhelming majority of the parents of these new students will not have attended college. Many of these students will come from families who have not traditionally selected liberal arts colleges.

The U.S. Department of Education reports that up to "80 percent of these new students will be minorities and students of color, many from low-income families, … many [of whom] will not have taken a demanding high school curriculum and will need supplemental help to enroll, persist and succeed."¹

As such, "as the demographics continue to shift in favor of minority and low income students, liberal arts colleges … are going to have greater and greater difficulty recruiting students who are both able to pay their price and interested in the product they are offering." ²

Competitive Market

Willamette's share of the higher education market is very small: of the almost 4,000 non-profit colleges and universities in the nation, only 286 are classified as "baccalaureate colleges - arts & sciences." Schools in this category enroll a mere 3% of the nation's college and university students.

In addition, while there will continue to be substantial growth in high school graduates for the next decade or so, the total number of high school graduates in the West - which accounts for 6 out of 10 of our undergraduates - will be essentially flat.

Affordability

According to the latest data from the General Accounting Office, three out of five undergraduates attend institutions where the average annual in-state tuition and fees is less than $4,750. Willamette's tuition is in the top 7% of all institutions nationwide, and in the top 22% of private institutions. While the average annual tuition at a four-year private college in 2006-07 was a bit more than $22,000, Willamette's tuition was almost $30,000.

Only three out of every 100 students attend institutions where the average annual tuition and fees exceed $25,000, even though for the neediest students the actual out-of-pocket tuition at a private college is likely to be less than that of a public university.

Accountability

Access, affordability and accountability are very much on the minds of the public and Congress, who increasingly view these three as comprising the cornerstone of America's post-secondary educational future. At the same time that the underinvestment of state and federal government in higher education has eroded affordability and threatened access for prospective students and their families, Congress is turning up the heat on colleges and universities to measure performance and demonstrate mission-driven outcomes.

The report of the Commission on the Future of Higher Education, undertaken on behalf U.S. Secretary of Education Margaret Spellings, urges colleges and universities to "become more transparent about cost, price and student success outcomes, and … willingly share this information with students and families."³ In the last Congressional session, legislation was proposed - but not passed - that would require colleges and universities to report and justify tuition increases that exceed the consumer price index and to spend annually at least 5% of their endowments as a means of holding down tuition increases. (In an early draft of the Higher Education Act - the legislation that authorizes funding for post-secondary education - there was language that would have required colleges and universities to index their annual tuition increases to inflation, effectively capping tuition growth.)

At Willamette we continue to seek equilibrium between tuition pricing and discounting, academic profile and operational effectiveness. Nudge any one of these and the other three are affected: decreasing the tuition discount too much jeopardizes enrollment goals and academic profile; increasing tuition discount too much reduces the operating budget dollars available to support core academic activities.

What does this mean for Willamette?

In this environment and with these significant challenges, how do we ensure that our tuition pricing and financial aid programs are competitive and aligned with our enrollment goals without eroding our ability to fund institutional priorities? How should we respond to the increasing pressure on Willamette to be accountable for measurable outcomes, not only to accrediting and governmental agencies, but also to the parents and prospective students who are increasingly driven by demonstrable evidence that their "return on investment" has been worthwhile?

I offer an incomplete list of some of things that I believe we will need to do in order to compete in this environment:

Innovation

Foremost, given the increasingly competitive market in which we vie for students, resources and visibility, we will need to differentiate Willamette through innovation.

We need to develop a culture of sustained innovation that will strengthen the faculty's already considerable commitment to excellence. Of course, the development of innovative programs that distinguish us from our competitors must grow out of or be related to existing or latent faculty academic interests. Incentives - carrots rather than sticks - are more likely to produce the best outcomes.

Thus, I propose that we seek to establish a Fund for Innovation that in a five-year period would award grants on a competitive basis to interdisciplinary, intercollegiate or cross-functional (i.e. faculty/administrators) teams to develop academic programs that consolidate or enhance the synergy of existing efforts and that differentiate Willamette from our peers. The Dean's Council, in consultation with the faculty governance committees, will determine the criteria and grant award levels of the Fund.

Tuition and Financial Aid

We need to evaluate continually our tuition pricing and financial aid structures. Financial aid at the wealthy and most competitive private colleges and universities is based on need only, not merit - though some of these institutions are very adept at disguising merit financial aid awards under the rubric of need. At many of the wealthy colleges, income from the endowment accounts for 40 - 50% of the operating budget revenue and at the very wealthiest institutions, financial aid is completely or nearly completely funded through endowment income. At Princeton, for example, 85% of the financial aid budget is fully endowed.

By contrast, at Willamette less than one in five of our institutional financial aid dollars is supported by endowment income. This has two significant consequences: we must devote a larger fraction of our operating budget to fund financial aid than wealthy colleges and universities; and because we fund financial aid from the operating budget, we must rely more heavily on tuition to fund programs. Thus, we under fund or "gap," to use financial aid jargon, many admitted students, relying on them and their families to meet the remaining portion of their demonstrated need. Our ability to meet financial need of students is further limited by our strategic use of merit financial aid to attract and enroll students that are most likely to meet the interests, abilities and academic profile that we seek in each entering class.

Though we already have several strategic merit aid programs in place that yield very good results, we may need to develop creative ways to better leverage our financial aid budget to increase our competitive position. For instance, we might wish to provide enhanced tuition discounts to siblings who attend Willamette; or forgive loans to students who enter certain professional fields after graduation, such as public service; or establish nationally competitive scholarships for students in certain academic areas where there is high industry demand or national need, such as science and math.

Outcomes

There will be increased pressure for liberal arts colleges to develop and publicize outcomes that are clear, compelling and relevant to the "real-world" and professional aspirations of our students.

While a third of Willamette undergraduates will enter graduate school directly out of college, the remainder will enter the world of work. A third of these graduates will pursue graduate school at some point in their lifetime.

Recently, the Association of American Colleges and Universities (AAC&U) commissioned a survey of 301 business leaders nationwide who urged colleges to find ways to assess a student's ability to apply college learning to real-world settings.

Assessments that employers hold in high regard include evaluations of supervised internships, community-based projects, and comprehensive senior projects. Employers view faculty-evaluated internships, individual student essay tests, electronic portfolios of student work, and comprehensive senior projects as valuable tools both for students to enhance their knowledge and develop important real-world skills, as well as for employers to evaluate graduates' readiness for the workplace.

In other words, employers value the curriculum and pedagogy of liberal arts colleges like Willamette.

However, it seems very likely that the students from the emerging demographic groups that I mentioned earlier will have new and evolving expectations about their educational experience - expectations that diverge somewhat from our traditional messages about liberal learning. I believe that these students and their parents will especially value real world and applied-learning educational approaches. And while it is important that we remain steadfast in our commitment to the core values of the liberal arts, we may also need to acknowledge in our curriculum and academic programs their application and relevance to the "real-world," as it were, and to the competencies that employers say that they are looking for in 21^st century college graduates.⁴

Marketing

It goes without saying that our capacity to deliver on the educational outcomes that we believe characterize well-educated persons will contribute to academic excellence, thereby strengthening our market position.

However, strengthening academic excellence - no matter how noble - cannot alone improve our market position.

I both recognize and appreciate that some faculty are skeptical of the concept of marketing in the academy. After all, college and universities differ from businesses in several important respects. Our customers [i.e., students] are also our product. Our core "workforce," if I may use this phrase, is comprised of highly intelligent and independent minded women and men, two thirds of whom have life time contracts and whose "training" is characterized more by their allegiance to an academic discipline or field of study rather than to an organization.

If we are going to continue to attract the very best students and faculty to Willamette, we need a focused and integrated marketing strategy that effectively communicates who we are and the value of obtaining a degree from our institution. We have relied too heavily on the cookie cutter liberal arts "brand" to enhance our value in a highly competitive market, believing that if we "out shout" our competitors about the same core values, then we will somehow distinguish ourselves from all of the other schools who might look very much like in the market place. Until recently, our marketing did not sufficiently emphasized academic quality. Moreover, we have never done a very good job of connecting a Willamette education with outcomes that students, parents and employers desire. This strategy has not strengthened our value in the marketplace, but rather has worked against us in a region of the country where public universities and low price are highly valued.

The marketing study that is being conducted under the leadership of Madeleine Rhyneer will undoubtedly shed light on many of these issues as well as provide useful marketing strategies for us to consider.

Facilities

We need to make substantial investments in our facilities so that they support rather than detract from our educational purposes and market position. There is an urgent need to enhance and create the "amenities of place"⁵ that our consumer-conscious students and families expect at institutions like Willamette.

The University has developed a 15-year facilities planning model of proposed new and renovation projects. The model estimates that we have the capacity to debt finance up to $100 - 110 million of capital projects over the next decade. Beginning this year, the Board of Trustees, in partnership with the administration and faculty, will review and prioritize the several building projects that have been identified through the campus facilities planning process.

One future

We are less than two years away from completing our $125 million fund-raising campaign, The Campaign for Willamette. Before the campaign is concluded, we will begin a process to engage the Willamette community in renewing a vision of our future, identifying the key components and initiatives that will bring our best ideas to life.

This "visioning" process necessarily will be informed by the full engagement of the Willamette community. However, as a prelude to this process the Deans and I have already had several conversations with faculty and staff about their perspectives on Willamette's future. When asked, "What will it mean to be an educated woman or man in the first quarter of the 21st century," there has been much agreement. In addition to the variety of subjects that students are expected to know, such as world and national history, quantitative skills, foreign languages, political theory and systems, natural and life sciences, literature and fine arts and the like, each group identified sustainability, globalism and technology literacy as components currently absent from our stated mission. The conversations also identified other competencies that our students should develop or strengthen at Willamette: the capacity to be comfortable in a multi-cultural environment, moral compass and ethical discernment, the ability to work collaboratively, and the capacity to adapt to fast changing environments.

During the course of the next year, I will work with the Board of Trustees, senior administrative leadership and faculty governance groups to design a strategic planning process that will enable us to chart a course for our future.

One person's vision of the future

As we look towards the future, I see a University in which teaching, learning and research - our core commitments - are fully supported and remain the principal drivers of our strategic planning efforts. The academic centers, having increased in number and budget support, will continue to invigorate intellectual life by sponsoring conferences, lectures, and research grants for faculty and students.

The diversity of our faculty, especially in CLA, will have grown substantially, as will our commitment to a comprehensive internationalization of the University. Not only will international and intercultural dimensions be integrated in our teaching, learning, research, and service, but the Atkinson and the Law School will have established revenue generating academic and research centers in Asia and elsewhere.

We will have made major investments in facilities, including the full implementation of the residential commons program; significant renovations to support interdisciplinary undergraduate science teaching and research; expansion of the Hatfield library footprint; upgrades and expansion of Atkinson and the College of Law; the School of Education will have relocated to a larger facility; substantial upgrades of athletic facilities, including a new fitness center, will have taken place; a new or substantially renovated admissions center will have opened; and all or partial funding for a new performance arts center will have been secured.

Willamette will be nationally recognized for its innovative academic programs. Certain aspects of the CLA liberal arts curriculum will be integrated with programs and activities that have application to what companies and businesses are looking for in their newest employees. The number and significance of joint college and school academic programs will have grown substantially. The professional programs will have put in place a continuous strategy to redesign and renew innovative programs that attract students with diverse backgrounds and interests. Experiential and community based learning, highly valued by all of our schools and colleges, along with project based learning, will have an increased presence in the curriculum, at both the undergraduate and graduate schools.

I believe that the strategic plan that inspired our fund-raising case for support as well as our operating and capital budget planning has served us well. We now enter an era in which our investments in our core commitments of teaching, learning and research need to be sustained - even strengthened - as we embark on substantial capital improvements and the development of innovative programs that will make us stand out from a very crowded and competitive market.

I look forward to talking to you about these ideas.

Lee Pelton
April 2008

¹ Quoted in Public Policy Paper Series: Ten Public Policy Issues for Higher Education in 2005 and 2006, Association of Governing Boards of Universities and Colleges, 2005, p. 10.

² Lapovsky, Lucie, The Economic Challenges of Liberal Arts Colleges in Liberal Arts Colleges in Higher Education: Challenges and Opportunities, American Council of Learned Societies, ACLS Occasional Paper, No. 59, 2005, p. 51.

³ A Test of Leadership: Charting the Future of U.S. Higher Education: A Report of he Commission Appointed by Secretary of Education Margaret Spellings, September 2006, p. 14

⁴ See How Should Colleges Assess and Improve Student Learning? Employers Views on the Accountability Challenge: A Survey of Employers Conducted on Behalf of: The Association of American Colleges and Universities, Peter D. Hart Research Associates, Inc. January 9, 2008

⁵ Urban planners often talk these days about "amenities of place" to describe those elements that attract so-called knowledge employees to cities, such as quality architecture, green spaces and green-minded development, community gathering spaces, support for the arts, diversity and so on. Prospective students and their families have similar amenities of place expectations. There is evidence to suggest that Willamette does not score high marks in this area.