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Last Lecture

My Last Lecture
by George M. Dennison, President

The University of Montana
Missoula, Montana

6 May 2010

Good evening.  I want to thank Mortar Board for the re-establishment of this fine tradition for The University of Montana.  As with many traditions we have celebrated over the years, this one remained vibrant for a time but then faded.  The Mortar Board Chapter decided to revive it and invited me to deliver the inaugural “Last Lecture” for the new era.  Because I strongly believe in this tradition, I agreed.  Thank you for coming this evening and showing your support.  I hope you will find my lecture appropriate for the occasion and sufficient to make your evening worthwhile.

However, I must begin with a caveat.  I have neither the compelling case, nor the keen sense of humor, to make this evening as inspiring and enjoyable as Professor Randy Pausch did at Carnegie Mellon University two years ago.  The book exploring portions of his “Last Lecture” received rave reviews.  Truth in advertising requires notice that this lecture will not rise to that level.  I think I received the invitation largely because of my pending retirement from the Presidency, and it therefore makes sense to talk about my experience of twenty years in the Presidency.  Can I distill some lessons for the campus community that might prove useful?  Perhaps the changes on the horizon for public higher education mean that my experience holds little of value or relevance for those who must manage in the so-called “new normal” conditions.  I will explore that possibility during the time I have available.

Nonetheless, I do so understanding that others may disagree with my claim that my experience holds interest and insight for those seeking guidance.  In that regard, I remember well the comment of one of my mentors when I mentioned that I might accept a presidency.  Anticipating my acceptance, he urged me to shun the practice of all too many new presidents who use the initial position as the launching pad for a career of moving from place to place, staying long enough to create problems and then moving to another venue, leaving the problems for others to resolve.  At the very least, I can claim to have followed his advice, since I stayed put and tried to deal with the problems I created.  In addition, I managed to avoid what happened to Clark Kerr who served as President of The University of California from 1958 until his termination in 1967.  As he put it, he left the Presidency exactly as he entered it:  “Fired with enthusiasm.”  But more importantly for my purposes tonight, I must identify a theme that will inform and unify what will otherwise appear as disparate reactions to external events beyond anyone’s control.  In what follows, I will try to persuade you that I have something of interest and value to offer.

I

I arrived on this campus twenty years ago when people had circled the wagons and hunkered down to ward off further damage.  During some very difficult years financially, the University had undergone program elimination and reductions in force to balance the budget.  Wrenching decisions removed some fine programs, with the School of Pharmacy still on the block for further review.  In addition, the last major construction had occurred in the mid-80s, and a large list of deferred maintenance projects went unattended.  The campus had no IT backbone or network, and most people denied the need for this modern technology.  Enrollments were volatile, and the number of degrees granted each year had dropped, especially at the graduate level with 12 to 15 doctorates awarded annually.  Externally funded research, the engine that powers graduate education, generated less than $7 million annually.  Average salaries ranked last among similar institutions across the country.  In fact, some faculty members resigned tenured positions and then competed to fill the resultant vacancies just to get salary increases.  While people sought to maintain their balance, it did not require a rocket scientist to recognize low morale.

As I began to familiarize myself again with the campus culture I had known as a student in the early 1960s, it became clear that the faculty and staff remained committed to the University and its mission.  People took pride in the shared governance tradition, strained somewhat by the financial problems.  However, few people talked much about fulfilling the University mission, so preoccupied had they become with survival.  In search of a strategy to overcome the inertia, I reviewed the origins of the University for insight.  The chartering legislation of 17 February 1893 had purposefully “established in this State at the City of Missoula an institution of learning under the name and style of ‘The University of Montana.’ [H. G. Merriam, The University of Montana:  A History (Missoula:  University of Montana Press, 1970), 183-5, at 183.]  The charter also contained a specific charge:  “The University of Montana shall . . . provide the best and most efficient manner of imparting to young men and women, on equal terms, a liberal education and thorough knowledge of the different branches of literature, science, and the arts, with the varied applications. . .  .”  [Ibid., at 184.]  Those statements provided the theme that guided my strategy as President.

As an early official act, I requested that everyone henceforth refer to the institution as “The University of Montana.”  Many people misunderstood the purpose of this simple action, reading it as evidence of unfounded arrogance.  They viewed the deliberate insertion of “The” in the name as an intention to claim an exalted position.  Actually, I intended to suggest pride of place and status with the change, but not invidiously with regard to other institutions.  Instead I hoped with a change of style dating from the founding to begin the process of altering the mind set on campus.  At the same time, I emphasized the graduate research, undergraduate, and service missions of The University of Montana, stressing the responsibility to discover as well as disseminate and apply knowledge.  I stated as a fact the impossibility of fulfilling the mission in graduate education and research without attracting external resources to support the graduate students, programs, and research projects.  To make the point, I cited the famous quip of Dr. John Slaughter, former President of The University of Maryland and Director of the National Science Foundation:  “Research is to teaching as sin is to confession.  Unless you participate in the former, you have nothing much to say in the latter.”  In addition, I committed to do everything possible to provide the infrastructural support essential to achieving the objectives.  Finally, I explained that together we had to develop revenue streams sufficient to enable the University to fulfill its mission.

Identifying the initial tactic for implementation of the strategy proved simple, but assuring its success presented the challenge.  Everyone agreed that funding to protect the accreditation of the School of Pharmacy demanded immediate attention.  We really had no choice, for failure to act meant the loss of the Pharmacy program.  In my initial State of the University Address in September 1990, I pledged to maintain the accreditation of all University programs subject to accreditation.  Then, in January 1991, we requested and received from the Legislature a base appropriation of $400,000 to support Pharmacy, and I subsequently reallocated another $400,000 of institutional funds for that purpose.  In late Spring 1991, the Dean of Pharmacy, Provost, and I attended a meeting of the Pharmacy accrediting board in Chicago and came away celebrating reaccreditation.  We had achieved our first success.

II

Nonetheless, funding, infrastructure, staffing, and enrollments presented daunting challenges.  Initially I had no inkling of the magnitude of the infrastructure and facility deficits or of the funding challenges.  All through the decade of the 1990s, we struggled with finances and facilities, and we made incremental progress.  I must say straightforwardly, however, that students and their families made most of the progress possible, as they agreed every year to tuition increases in order to sustain the quality of and access to education.  In 1990, tuition revenue to the University paid about ¼th of the cost of delivering the educational programs, with the remainder coming from State funds in an educational budget of about $40,000.000.  Nonresident tuition remained relatively low by comparison to other states, with the result that Montana subsidized the education of nonresidents as well as residents.  While the diversity of the student population enhanced the quality of the education provided to all students, I concluded that Montana lacked the capacity to subsidize the education of students from other states.  Something had to change.

Consequently, I persuaded my colleagues and the Regents to set resident tuition at 25 percent and nonresident tuition at 100 percent of the cost of the education, minus any scholarships awarded.  I estimated that this change assured sufficient funding to support the educational programs.  However, continuing tight State budgets led to erosion of the percentage of the cost for residents subsidized by the State, even though the actual dollars appropriated increased, with the result that residents assumed a larger percentage of the cost very year.  This cost shifting actually began across the country in the 1980s as the pressures on state funds from health care, k-12 education, welfare, prisons and policing, aging infrastructure, and economic development escalated, and continued unabated so that in the first decade of the 21st century the balance for The University of Montana between State funds and tuition revenue had nearly reversed, with tuition covering 64 percent of the $140,000,000 total, compared to 25 percent in 1990.  The educational budget more than tripled during the intervening years, with the tuition percentage of the total very nearly following suit.  Only the willingness of parents and their families to accept the cost shifting allowed the University to make progress.

As the funding balance for the operations budget shifted, new sources of revenue increasingly supported other functions of the University.  Beginning in 1991, the faculty researchers of the University became increasingly adept in competing for external grants to fund the research and graduate programs.  As the dollars for direct support of  research increased, including stipends and tuition for graduate students, the so-called “indirect cost reimbursements” or “recoveries” for the overhead costs of conducting the research – heat, lights, space, access to library materials, administration, and the like – rose as well.  In 1989, the State of Montana had adopted legislation introduced by Representative Dave Brown (Butte) leaving the indirect cost recoveries after 1990 with the campus generating them to fuel the research enterprise.  Prior practice had reduced the State appropriation as indirect cost recoveries increased, thus making funded research a zero-sum activity with no incentive to participate.

This new State policy immediately stimulated funded research at the two graduate research universities in Montana.  The volume of funded research grew significantly into the 21st century, with the result that by 2009 The University of Montana’s funded research budget rose to $68 million, with some $6 million of indirect cost recoveries, a respectable level for a graduate research university.  Incidentally, the new College of Health Professions and Biomedical Sciences housing the School of Pharmacy emerged as a leading research center on campus and ranked 7th nationally among Schools of Pharmacy for attracting NIH research funding.  Consider the contrast to its difficult situation in 1990.  This welcome development allowed the implementation of new graduate programs to meet State needs, also increasing the capacity of the University to compete for funds.  By 2001, the University awarded at least 50 doctorates in at least 15 fields annually, the number necessary to sustain its Carnegie Classification as a graduate research university, although it has not even today attained the balance of doctoral programs across the disciplines, most noticeably in the humanities and social sciences, to claim mature status.  [See Jonathan R. Cole, The Great American Research University:  Its Rise to Preeminence, Its indispensable National Role, Why It Must Be Protected (New York:  Public Affairs, 2009), passim, esp. P. 335.]  Nonetheless, these successes altered the perception of the University on and off the campus.

As anticipated, the rising graduate research stature of the University made it more attractive to new faculty members.  As a direct result, faculty numbers increased while the faculty profile changed significantly.  For example, the proportion of female faculty members increased from 15 to about 42 percent by the early part of the 21st century.  In addition, more minority faculty members accepted invitations to join the University.  The total number of faculty went from 389 in 1990 to 590 in 2000 to 663 in 2010.  As mentioned, average salaries had lagged most of the nation in 1990, but they improved over the course of the 1990s largely because of three related developments.  First, the faculty union, students, and administration adopted a “win, win” approach to negotiate the agreement covering the years from 1993 to 1997 – referred to as the “4-plus-2 plan” because of the stated willingness to extend it for two more years, pending successful implementation – that resulted in market and inversion adjustments for current faculty members.  (See “Collective Bargaining Agreement . . . University Teachers’ Union, University of Montana And The Montana University System,” July 1, 1993 Through June 30 1997, signed 7 October 1994.)  The students agreed to significant tuition increases to support the salary increases that averaged above 6 percent per year for the four years of the agreement, with the State providing only 67 percent of the amount needed to cover 2.5 percent increases in salaries.  Second, the rising volume of funded research provided funding for more faculty positions, who accepted the offers only at competitive salaries determined by the academic market.  And, third, I initiated in the early 90s a successful effort in cooperation with the faculty union to address the salary inequities of female faculty members.  As result, while salaries remained an issue into the 21st century, average faculty salaries increased by some 93 percent over the two decades.  Staff salaries took longer to address, and administrative salaries remained below peers by double digit percentages into the 21st century.  Most recently, because of declining State revenues and the unwillingness to raise tuition during difficult economic times, salaries have stagnated.  However, all parties have agreed to address the issue as soon as economically feasible.

III

By the mid-90s, I recognized that the University had to have additional and appropriately configured space to continue the progress.  The first construction focused on undergraduate students and their needs.  Funded by a generous gift from a private donor, the University occupied the Davidson Honors College in 1996, a magnet that attracted more outstanding students each year.  In addition, another donor had provided funds in the late 1980s as a match for State funding of a new School of Business Administration facility.  However, it took three sessions to obtain the State funds to build and occupy the Gallagher Business Building in 1996.  Even then, the University had to furnish and equip the Building with generous contributions from a prominent furniture company and a technology vendor.  The technology vendor continues to provide ongoing support for the facility.

The University financed the next wave of construction by issuing revenue bonds approved by the Board of Regents, using a conservative approach requiring the identification of revenue sufficient to cover 125 percent of the annual debt payment.  With this funding, the University constructed the first new residence hall in nearly a half century, much needed family housing, and a new facility for Printing and Publications and the Division of Continuing Education and Summer Programs.  In addition, we renovated existing residence halls and the University Center, and paid attention to the campus environment, making certain to protect and improve the ambience that attracted students and their parents.  Finally, with assistance from a State appropriation and a new student fee approved specifically for the purpose by the students, the University issued revenue bonds and renovated all the classrooms built before 1970.  As the projects progressed the campus community developed a new sense of pride and place, and the campus became a source of positive community conversation.  Late in the decade, the students also approved a fee that supported a bond issue for the construction of the Student Recreation Center, open to faculty and staff as well who paid the required monthly fee.

Research space became increasing critical, as the faculty researchers searched for room to do their work.  Relying on donations, government grants, indirect cost recoveries, special fees approved by the students, and some State appropriations, the University renovated existing or built new space as a competitive edge for faculty researchers requesting external funds.  Perhaps the most extensive renovation and expansion occurred within the Skaggs Building housing the College of Health Professions and Biomedical Sciences, finally completed after 2000.  The generous donations from a private foundation and a corporation alone made that work possible.  As mentioned, the State provided some funding for strictly educational projects, such as the renovation of the Chemistry Building late in the decade of the 90s.  However, the significant State funding provided early in the 21st century to upgrade the utility tunnels benefitted all sectors and functions of the University.  The last research construction project undertaken during the period, the Interdisciplinary Science Building – paid for entirely by revenue bonds defrayed by contributions from indirect costs, student fees, and Intercollegiate Athletics (a little known fact about the role of Athletics on this campus) – remains unfinished on three floors awaiting the occupation by researchers who will generate the funds to finish the space as needed.  Operation and maintenance costs of research space even today comes from indirect cost recoveries and other unrestricted University funds, since the State pays only for strictly defined educational space.

This construction and renovation, extending to the entire campus and undertaken during the years from the early 1990s to 2010, added roughly 1.3 million square feet of usable space to the campus in response to identified needs, fully 25 percent of current available space.  Moreover, we made these additions without diverting operational funds from the educational programs or salary increases, or tapping student tuition.  Finally, this expansion occurred not because of “Dennison’s edifice complex,” as some have speculated, but because of the drive to give to faculty and students what they needed to fulfill the mission of the University.

The success in attracting external funds to support research, combined with attention to the provision of appropriate facilities, led as well to a widening awareness of the dearth of information technology and lack of a functional IT backbone and network on the campus.  Having come from an environment in Michigan heavily invested in and influenced by information technology, I understood the need.  To address it, I charged a task force in 1992-1993 to visit other campuses and generate recommendations for an effective IT strategy.  The members took the charge seriously and provided the blue print for subsequent development.  The University has initiated another such process today, with more direct assistance from the private sector, to prepare a new IT strategic plan.

By the mid-90s, the University had its first backbone and the beginnings of appropriate technology across the campus.  Starting relatively late allowed us to take advantage of developments elsewhere and skip some stages of the evolutionary process.  With regard to administrative and student processing, a prudent decision in the late 1980s to acquire what emerged as the leading system positioned the University well to upgrade rather than make new acquisitions.  Scarcity of funds slowed the spread of technology into the educational programs, but certainly did not deter it.  By the end of the decade, the University had information technology in many classrooms and the faculty relied on learning management and other systems far more than had occurred earlier.  However, acquisition of the necessary bandwidth and connectivity to facilitate communication, distance education, and research required several years of challenging work.  Today, the Northern Tier network across Montana – linking the campus at gigabit capacity to Seattle, Minneapolis, and the world – and the advent of cloud computing allows the University to acquire what it needs rather than build it locally.  The University has clearly entered a new IT era, as indicated by the annual double digit percentage increases in online enrollments, the equally rapid rise in research computing, the burgeoning reliance on IT tools and processes in the design and delivery of educational programs, and the implementation of a sustainable plan to equip all classrooms with appropriate information technology.

IV

The University virtually transformed itself primarily because of generous contributions from the private sector, with State funds providing critical leverage in a number of instances.  Students and their families accepted higher tuition to assure quality and access, while generous private donors contributed to programs and facilities.  First in 1992 and then again in 2002, the University in partnership with The University of Montana Foundation conducted two fund-raising campaigns, the largest and most successful in the history of the State.  These campaigns solicited private funds for 1) scholarship, fellowship, professorship, faculty chair, faculty stipend, and program endowments; 2) current programming, i.e., funds expended as raised; and 3) facilities.  As mentioned, the Davidson Honors College, Gallagher Business Building, and Skaggs Building received significant private support.  In addition, private funds combined with revenue bonds allowed the renovation of the University Theatre, the site for Commencement during the 1930s and 1940s.  The lion’s share of the financing for Don Anderson Hall for the School of Journalism in 2008, the Payne Family Native American Center in 2010, and the Phyllis J. Washington Education Center in 2009 came from private donations, as for the School of Law Building renovation and expansion in 2009 and the Gilkey Executive Education Center scheduled for completion in 2011.  Many of these same generous donors also directed millions to Intercollegiate Athletics for student athlete grants-in-aid, facility renovations, and the giant TV screen and turf in Washington-Grizzly Stadium.  The University more than doubled the seating capacity of Washington-Grizzly Stadium (three different projects in 1995, 2001, and 2009) and refurbished the Adams Center, the venue for basketball and other sports, with bond proceeds and repaid the bonds with the revenue from ticket sales and other revenue generated by Athletics.  I will offer a few specific comments about Intercollegiate Athletics a bit later.

But private sector engagement accomplished even more, under the skillful coordination of the Foundation.  Scholarships and fellowships assured access for students, and attracted more of the best and brightest undergraduate and graduate students to the University.  Faculty stipends aided retention of good people by enhancing the compensation of faculty members, and also supported faculty research and creative activities during the summers.  Four additional Endowed Chairs lured outstanding faculty members to the University to work with the students.  Other contributions allowed me to address the most pressing needs and assist student, faculty, and staff to achieve their goals.  Over the years from 1992 to 2010, alumni, friends, and private companies and foundations donated more than $500 million to The University of Montana.  The culture of philanthropy that emerged during these two decades of demanding but rewarding endeavor provided the critical impetus without which the University could never have progressed as it did into the 21st century.  That culture and its manifold benefits will prove even more essential in the next 20 years.

The literature about the modern university presidency fairly bristles with criticism verging on outrage about the time that presidents spend raising funds.  In my opinion, these claims not only exaggerate the time required but miss the mark almost completely by failing to take account of the value of the interactions that occur.  While donors expect recognition, I have never found them demanding of excessive attention, nor have I experienced pressure from a donor to provide special favors.  Instead, I have found most donors willing to help when they see and understand the value of doing so, offering counsel, guidance, and financial support for good and well justified causes.  Because we recognize a need for specific support, we do what we should do in any case.  In fact, I doubt that public higher education can survive without private support.  Therefore, I did not and do not find the work unwelcome, uncomfortable, or unsavory, but very enjoyable because of the opportunity to sing the praises of University programs and interact with interesting people willing to help if they understand the needs.

V

Over the years, enrollments blossomed because of strategic recruitment, and the number of degrees conferred rose accordingly.  Late in the first decade of the 21st century, the University awarded every year about 250 associate, 2,000 baccalaureate, 475 master’s, 140 professional doctoral, and 75 research doctoral degrees.  Interestingly enough, over the twenty years from 1990 to 2010, the University conferred more degrees than during the preceding century.  The relatively rapid rise in enrollment added urgency to the need for additional facilities.  Earlier administrative decisions had diverted older, well used, and time-worn residence halls to other uses, such as offices for faculty, staff, and graduate assistants, because either the students refused to live in them or the cost of repairs for code compliance as residence facilities had become prohibitive.  As a result, the demand for additional student housing became apparent as early as Fall 1990 when a group of students attempted to construct tents on the Oval in symbolic protest – news stories described the plight of students sleeping in their cars – and desisted only when I agreed to do something about student housing.  I initially sought to engage a private developer in a collaborative project, but the relatively high rents to support a return to the developer prevented an agreement.  Thereafter, as mentioned earlier, the University constructed a new residence hall and family housing units and renovated existing housing space.

The profile of the students changed considerably over those years, becoming more diverse.  With some 3,500 nonresident, 450 international, and 550 Native American students, The University of Montana has the most diverse student population in the State of Montana, and Missoula has become the most cosmopolitan of Montana cities.  Located in the heart of Indian Country, the University serves all Montanans, a commitment facilitated by the completion of the Payne Family Native American Center we will dedicate during Commencement Week 2010.  In fact, the University has the largest concentration of Native American students on any campus, other than some Tribal Colleges, and ranks among the top twenty colleges and universities in the country for the awarding of degrees to Native Americans.  The Payne Center will serve the campus as well as the seven Reservation communities around the State.

Even though the academic profile of the students improved, far too many still arrive on campus either lacking motivation or ill prepared to benefit from the University programs.  I say that not to blame students or our colleagues in the public schools.  Rather, I believe we must find ways to make education more relevant and meaningful to young people.  To do so, the University initiated Partnering for Student Success, with a multifaceted and ambitious agenda of assuring improved academic preparation in high school; aligning the curricular requirements for high school graduation and college admission; providing appropriate support services once students arrive on campus; and redesigning the undergraduate curricula to allow students to take more responsibility for their own education.  The program depends on recognized and meaningful institutional, faculty, and learner responsibility, each exercised to enhance student success.  Work with the high schools involves rethinking teacher preparation programs and collaborating with high school teachers on professional development; agreeing on appropriate educational standards, benchmarks, and assessments to assure real participation access, not just threshold access, to college; and implementing a new set of University admission standards related directly to the preparation essential to success in college.  With regard to support for admitted students, we have set retention and graduation targets that require improved performance by the students and the University.  We will announce annually our success or lack of success in meeting those targets.

These comments remind me that the University has regressed rather than progressed in at least one respect since the founding.  When the first students came in 1895, only about 5 actually enrolled in college courses, while the other 45 participated initially in the University’s preparatory school.  In 1908, when Montana had a sufficient number of high schools to prepare students for college, the University discontinued the prep school as unnecessary, but the President continued as the official State Inspector of High Schools until the next decade.  Thereafter, public higher education and public k-12 education drifted apart, with both and the society at large impacted negatively by the ever-widening chasm separating them.  With an enrollment today of about 15,000, most of whom come prepared for the academic challenge of college, we have rediscovered the imperative to collaborate and cooperate with the public schools in order to fulfill the University mission.  That formal collaborative process began in 2008 with the formation of the Montana Math & Science Teachers Initiative, designed to assure that Montana has the requisite number and quality of math and science teachers; the convening of the Missoula Education Summit in 2009, to address the educational challenges in the Missoula area; and the launching of Graduation Matters Missoula in 2009 with University and community support, but spearheaded by Superintendent Alex Apostle, to persuade more young people to stay in school.  This cooperative approach harkens back to the founding and the original purpose of the University.

Curricular change comes slowly on college campuses, and for good reason.  Faculty members, as medical doctors, follow the motto of “Do no harm.”  With the lives of thousands of young people affected by the design and structure of the curricula, we must avoid mistakes.  However, it often seems that the fear of error has prevented responsive and needed change.  During the past twenty years, I have urged revision of the general education program to make it more relevant and comprehensible to the students and the implementation of an assessment program that allows us to assure the achievement of intended learning outcomes.  However, while we have made progress, we still adhere to the older approach of counting credits for graduation rather than assessing competencies.  I have also argued persistently, with unfailing enthusiasm, that we must involve the students in international experiences because of the increasingly interdependent global society of the 21st century.  To that end, I have supported the development of exchange agreements with some 100 colleges and universities around the world to allow the students and faculty to interact with their global peers.  To prepare these students for the world of the future, we must help them to know that world.  Still, only a small but growing minority of our graduates ever experience the life-changing effects of international engagement and interaction.  It bears remembering that the first Rhodes Scholar from The University of Montana earned First Class Honors for his academic work at Oxford University in 1904.  The emphasis on international education also dates from the founding.  Institutional success in these endeavors must come in the future.

For two decades, I have used every argument and tool available to provide opportunities for students to engage in community service.  For that purpose, I provided leadership in the establishment of the Montana Campus Compact, which the University continues to host and which today counts 19 of the 21 higher education institutions in the State as members.  Affiliated with its national parent, the Montana Campus Compact promotes student community service.  I also served for 15 years as the founding Chair of the Montana Commission on Community Service that provides funding for service activities.  Because of these commitments, and its service learning programs, the University has earned the Carnegie Classification for Community Engagement and a place on the President’s Higher Education Honor Role for Community Service.  In my view, such involvement helps students to develop those “habits of the heart” – a term coined by Alexis de Tocqueville to describe the community bonds among the American citizens he studied in the mid-19th century – essential to good citizenship.

In my view, too many colleges and universities ignore the increasingly apparent need to help young people understand the demands and requirements of citizenship, including competency in civil discourse and ethical deliberation prior to action.  I often wonder why we in higher education stress the need for doors on the barn after the horses have escaped.  Think about the ink and thought devoted to lapses of ethics after the revelations leading to the dot.com or the more recent financial and other industry scandals.  Virtually every one of the business leaders in question earned degrees from colleges and universities prior to accepting professional positions.  Think also of the scorn heaped upon politicians, most of whom have degrees from college and universities, for their alleged ineffectiveness and interest-based approach to serious issues.  Exposure to appropriate coursework will never guarantee decent and reasonable behavior, but it certainly increases the likelihood that people will conduct themselves according to common sense rules of responsible behavior.  That, at least, strikes me as the foundation and rationale for all education.

VI

As promised, I will comment briefly about Intercollegiate Athletics.  First, I must say that I do not view Athletics as an unwelcome and troublesome intruder on a campus; instead, I consider a viable and controlled Intercollegiate Athletics program an important asset for a college or university.  However, the host institution must decide the appropriate competition level, maintain control, and impose strict guidelines for budgeting.  I found competition at the Division I level in the Football Championship Sub-Division appropriate for The University of Montana, and have applied an upper bound on Athletics expenditures of no more than 5 percent of the total University budget.  In my view, evidence of success appears in the attendance records and fan and donor support.  Each year, the program generates roughly 2/3rds of the revenue required to support it, with the remainder coming from institutional resources.  A virtual army of economists has studied the issue and denied a positive relationship between fund raising in general and successful Athletics programs.  I thought the conclusions suspect when I read the studies, and that sense grew stronger with each passing year.  At this University, the donors passionate about Athletics also give generously to other purposes.  The synergism, while not universal, certainly pervades the donor base.  I know from experience that a very successful Grizzly football team helped to attract millions of dollars and hundreds of students to the campus.  Moreover, Grizzly Athletics adds more than $30 million annually to the Missoula economy, with about 50 percent of the people sitting in Washington-Grizzly Stadium on Saturday afternoons coming from outside Missoula County.  As an engine of support for the host institution and community, carefully managed Athletics programs make eminent sense.

However, they demand attention and control.  I think it imprudent to delegate oversight of Intercollegiate Athletics.  Without question, blame for problems will come to the president, whatever the administrative structure.  Recognize that fact and exercise personal control, drawing on others for assistance.  The overwhelming majority of Grizzly student athletes understands and abides the rules.  We simply do not tolerate the few who refuse to respect the rules.  The retention and graduation rates of student athletes exceed that of the student population overall, as expected and demanded.  While student athletes must devote time to practice and competition that takes away from study, they also receive support.  That the campus community recognizes their sacrifices seems clear from the faculty and student votes in favor of priority registration for student athletes, allowing them to get their classes at the times they have free.  The NCAA’s new program to assure that student athletes actually benefit from college – the Academic Progress Rate or APR – imposes penalties by reducing the number of allowable grants-in-aid by sport for failure to meet the prescribed standards.  While many colleges and universities, close to a majority with Division I programs, have lost grants-in-aid, this University has lost only a small fraction of a grant-in-aid in track and field.

Nonetheless, the University suffered a much publicized $1 million deficit in Athletics in 2004-2005.  Only a few institutions with Division I programs have avoided deficits, and typically cure them by infusing more support.  A technical deficit occurred at the University because of 1) an accounting error, and 2) the lack of adequate budget planning and monitoring.  The University corrected the accounting error quickly, and also instituted budget planning and monitoring procedures to provide alerts about potential problems before they occur.  The University did not record an institutional deficit in 2004, since positive fund balances in hundreds of other accounts more than compensated for the Athletics losses.  Nonetheless, a real problem occurred in Athletics, discovered and reported to me by University administrators, which I then reported to the Commissioner of Higher Education, the Regents, the press, and the public.  The exposure did not occur because of investigative reporting or a whistle blower, but because we pay attention.  We also corrected it and instituted procedures to prevent recurrence.

Grizzly Athletics also suffered some bad publicity from the criminal behavior of a few Grizzly football players.  Several letters to the editor made unfounded charges alleging the recruitment of thugs and the unwillingness of the University to prevent the thugs from harming others in the community.  However, no coach I continued under contract recruited thugs, and all coaches dismissed student athletes refusing to follow the rules.  Through background checks and personal interviews, the coaches know the records and talents of the student athletes.  Based on the known records, no one could have predicted the incidents that occurred.  The test of the institutional commitment to maintaining the integrity of the program came with the removal of the offenders.  Overall, however, I believe that Grizzly student athletes compare well with the general student population and with student athletes on any campus in the country.

VII

I reviewed this background to provide a sense of my experience.  Some people will regard that experience as marginally useful in view of the monumental challenges looming in the next two decades.  President Robert Bruininks of The University of Minnesota has described a “new normal” about to overwhelm us in public higher education [See Robert H. Bruininks, et al., “Transforming America’s Universities to Compete in the ‘New Normal,’” in Innovative Higher Education.  Special Issue:  Presidential Perspectives, Guest Ed., George M. Dennison, 35 (#2; Apr. 2010), pp. 75-125, at 113-25, http://springerlink.com/content/j60668r08r3r.]  He shares the view of many people that we must not expect a return of the good old days of adequate funding.  Even before the recent economic melt-down that began in 2008, knowledgeable analysts predicted budget deficits in every state by 2015 if the states continued current services under existing tax and revenue structures.  (See http://www.highereducation.org/reports/polictalert/pa_state_spending/pa_state_spendig.shtml.)  The melt-down has worsened and hastened the looming crisis because of the massive amounts of federal funds expended to deal with the problems.  Bruininks argues that we in public higher education will have to prioritize everything we do and terminate many worthy activities.  Even then, he believes that a significant but undetermined number of institutions will fail and disappear in the emerging harsh environment.

I know of no economist or analyst who predicts a rapid recovery from the current economic doldrums.  As the economy recovers gradually, the revenue challenge identified earlier will remain for resolution during a period when Americans must respond to President Barack Obama’s charge to return the United States to world leadership defined by the educational attainment of our citizenry by 2020.  The most recent estimate I have seen posits an increased expenditure of about $48 billion annually from all sources, added to the roughly $112 billion we now expend,  to raise the degree attainment level nationally from about 38 to 60 percent, the delta required to reclaim international leadership.  (See Peter McPherson and David Shulenburger, “Expanding Undergraduate Education to Meet National Goals: The Role of Research Universities,” An APLU Discussion Paper, at page 10, at http://www.aplu.org/NetCommunity/Document.Doc?id=1763).  How can we possibly accomplish the goal with even tighter higher education budgets in the near and longer terms?  Because tuition increased rapidly before and after the melt-down, political resistance to additional tuition increases appears not only likely but certain.  Even more to the point, tuition increases of the magnitude required will in all likelihood lead to enrollment declines because students and their families, with either stagnant or falling incomes, cannot meet the rising cost.  (See John Immerwahl, et al., “Squeeze Play 2010:  Continued Public Anxiety on Cots, Harsher Judgments on How Colleges Are Run,” Public Agenda, The National Center for Public Policy and Higher Education, Feb. 2010, pp. 2-9.)  No one has detected voter support for tax increases to generate the revenue to support the effort.  What, then, do we do?  The former Chairman of Intel and Co-Chair of Achieve, Inc., an organization dedicated to bringing about curricular alignment between high schools and colleges, Dr. Craig Barrett, reminded us last year in his Commencement Address at the University that “You cannot win unless you choose to compete.”  He used the term “win” in a positive sense, referring to the international competition to become the best in whatever we attempt.

In view of these considerations, what does higher education do in the “new normal”?  Most commentators urge us to do more with less.  I seriously doubt the relevance or providence of that counsel.  While I agree with the call for efficiency, I do not believe we can do the more required with less.  In fact, we have already adopted and implemented most of the best practices that can generate savings.  The University of Montana has reallocated several millions through these efforts, using the savings to sustain the quality of and access to the educational programs.  However, we cannot possibly respond to a challenge of the magnitude before us by making savings on the margin.  In plain words, the suggestion to do more with less seems to me a strategy conditioned by and reflective of the past.  We have always responded to financial challenges by making reductions and cuts here and there, hoping and planning for a later revival.  Frankly, I doubt that a response conditioned by the inclination to do more with less will have the desired effect in the “new normal.”  Following the older reactive pattern, on the premise of an eventual return to business as usual, augurs failure.  I hasten to add that I agree about the imminent emergence of the “new normal” Bob Bruininks described.  Without question, we have some very serious challenges before us.  We must find ways to finance the education of more Americans so as to regain world educational leadership that we lost to our competitive international disadvantage.  However, I have yet to see any new thinking or proposals sufficient to the mandate for change.

VIII

So what do we do, accept failure and forget the challenge of our time, or search for a solution reflective of the conditions of today?  I favor the latter course of action, understanding that favoring an approach does not guarantee its acceptance or success.  In the time remaining, I want to propose a possible solution that holds great promise, making no claim to originality.  I confess straightaway that I borrowed this approach proposed nearly two decades ago by some one else before its time.  I endorse this proposal because I believe we must accept and act on the hard fact that our current approach to higher education financing, functional in its time, has become utterly and irreparably dysfunctional.  If we fail to adopt a more rational and equitable plan, we will lose in the international competition either because of the inadequacy of our approach, or because of the civic discord, waste, and divisiveness in American society inevitably fueled by the inequities certain to intensify in time.  Some one described insanity as the insistence upon taking the same actions time and after time while always expecting a different outcome.  We must have a financing plan for higher education that recognizes reality and offers the means to achieve our national goals and objectives.

In the late 1980s, former Senator Bill Bradley (New Jersey) proposed to place some of the so-called “Peace Dividend” anticipated with the end of the Cold War in an Education Trust to guarantee to every American below the age of 35 some $30,000 to secure an education, requiring repayment later in life on an income contingent basis.  The Bradley proposal called for “self reliance” education loans on the sound premises of 1) an education premium in wages earned over a lifetime combined with 2) lower welfare and other support payments for people with college degrees.  As an example of the persistence of the wage premium, a recent study by Patrick M. Barkey, Director of the Bureau of Business and Economic Research, analyzing the impact of The University of Montana on the Montana economy, concluded that the education wage premium earned by the 35,000 University alumni residing in Montana increases compensation levels by $441 million annually.  (See Patrick M. Barkey, “The University of Montana:  Growing Montana’s Economy,” The Bureau of Business and Economic Research, The University of Montana, February 2010, pp. 20, at 12-4, 18.)  Of equal importance, the education premium raises the average income in Montana by $1,346 per year.  However, the premium only becomes available over time, not immediately.

Directly on point, Bradley’s insight also reflected the reality that we currently expect young families to save and pay for college for their children during the periods of their lives when most of them have very few dollars to save.  Why not provide the funding up front as income contingent loans for those eligible to get an education, requiring only that they attend accredited colleges and universities.  Because of its design, Bradley’s “self reliance loan” account once established has the capacity to replenish itself and remain solvent, given careful monitoring to assure compliance with the rules.  In addition, the account can grow as the student numbers increase, but still retain the potential to sustain itself.  Although he did not flesh out the details and outline the rules, Bradley’s proposal has the potential to move the country out of the current predicament.

However, for various reasons, perhaps because the “Peace Dividend” never materialized, Bradley’s proposal never received a full hearing and he ultimately turned to other issues.  I think the proposal, if implemented, can move us away from the current impasse concerning appropriate support for higher education with the ongoing debates about loans versus grants, merit versus need, and state versus federal responsibility.  In a word, I think it responds to the educational challenge before us.  It specifically targets undergraduate education, leaving graduate education to other means, about which more in a moment.  If implemented, every American will have access to the account, but only for the purpose of acquiring an education.  We will have to determine the amount available to every American based on current conditions and the ultimate objective, and the amount will require periodic revision.  Certainly Bradley’s suggestion of $30,000 will not suffice; something closer to $75,000 seems more reasonable, with an account capitalization of roughly $300 billion.  In view of the recent “bail outs” of some industries, $300 billion sounds reasonable for this excellent cause, given the predictable return on the investment.  Pricing the average cost of education – whether of a four-year or two-year degree or a certificate – without regard to current subsidy or lack of subsidy makes most sense, with the loan limit set at that level.  Using this method avoids the issue of finding other ways to fund the overhead costs of the educational institutions, and also allows us to move beyond the invidious and increasingly less than useful distinction between resident and nonresident.  Set the price and allow the educational market to work.  Institutions choosing to charge more will require other self-generated means to finance their programs, since the loan value once determined remains fixed for a defined period.  Similarly, the students choosing higher cost institutions will have to supply the additional funds themselves.  While seemingly simple, the proposal will require thoughtful implementation for a chance at success.

Numerous details require careful analysis and consideration.  For example, does the loan cover living expenses while the students remain in good academic standing at approved colleges and universities?  On principle, I see no reason why not, since doing so takes account of the sacrifices that students make when they choose to devote two or more years to college.  In addition, covering these costs allows the student to work during summers and odd times to earn money for clothing and personal needs.  In addition, it seems appropriate to forgive the remaining balance on the income-contingent loans after a designated period of repayment for people who enter certain low-paying but critically needed professions or vocations.  Such details strike me as relatively simple to resolve.  As one famous American said during an earlier crisis, “We have nothing to fear but fear itself.”  Just as during that earlier time, I believe that Americans will choose to compete.  We can win if we choose to compete, but we need the human resource base of educated people to prevail.

Even if adopted, however, the proposal will not meet all the needs of higher education.  As mentioned, it ignores graduate education and research.  However, direct state appropriations combined with the federal funds available on a competitive grant basis offers a financing mechanism.  States will no longer have the bear the costs of undergraduate education and can afford to assume part of the burden for graduate education and research, thereby also retaining an ownership stake in the institutions.  Private institutions will have their endowments for this purpose.  The return on investment from research, technology transfer, and educating graduate students, identified by Barkey in the study mentioned earlier, provides ample justification for state funding.  (See Barkey, “Growing Montana’s Economy,” passim.)  In addition, the recent study by the Rockefeller Institute of Government at the University of Albany, entitled “A New Paradigm for Economic Development” – with the sub-title of “How Higher Education Institutions Are Working to Revitalize Their Regional and State Economies” – articulated four powerful reasons for states to support graduate education and research:  1. Advancing innovation in new technologies, new processes, new products, and new ideas through “knowledge creation.”  2. Transferring this new knowledge and resultant technology to the local private sector, thereby fostering business development and growth.  3. Exerting a more vigorous role in “community revitalization” either through direct University investment or engagement in the community.  4. Assuring a population base with the educational attainment essential to innovation and the management of innovation for public benefit.  (See David F. Shaffer and David J. Wright, “A New Paradigm for Economic Development:  How Higher Education Institutions Are Working to Revitalize Their Regional and State Economies,” Albany, New York, The Nelson A. Rockefeller Institute of Government, March 2010, pp. 1-71.)  Funding for graduate education and research appears less onerous under the conditions created by implementation of the self reliance loan program.

IX

I hope that these reflections have made your attendance this evening worthwhile and will provide stimulation for further thought about the future of higher education.  I have enjoyed the opportunity to talk about my experience of twenty years as a basis for suggesting future directions.  Whatever the response to my proposal, I trust that you will carry away with you the undeniable truth that Americans, as a people, must have a new plan for financing higher education.  In my own view, the Bradley proposal will renew the historic social compact binding each generation of Americans to assure the education of the next.  In addition, it leads us back to the original intent in founding public higher education.  The chartering legislation for The University of Montana specifically stipulated that “Tuition shall ever be free to all students who shall have been residents of the State for one year next preceding their admission, except in the Law and Medical Departments, and for extra studies.”  (See Merriam, History, p. 184.)  Even the founders considered special fees for legal, medical, and graduate education necessary, and only partially solved the residency issue.  Within two decades, those responsible for assuring the access to and quality of public higher education instituted the “Incidental Fee” assessed on all Montana resident students as tuition by another name to generate the required revenue.  The façade prevailed until the 1990s when the Regents recognized the “Incidental Fee” as resident tuition.  Unless we find a way to translate the historic social compact into 21st century terms, we stand in peril of losing all the good it has done for Americans throughout our history.  The United States emerged as the economic, social, cultural, and – for a time – educational leader of the world specifically because Americans subscribed to the compact.  Make no mistake.  In this instance, the past is prologue.  An educated citizenry represents the sine qua non in the human resource economy that emerged in the 19th century, attained maturity late in the 20th century, and will become pervasive in the 21st century.  Borrowing, paraphrasing, and extending Barrett’s mantra, “We cannot succeed unless we choose to compete, and we can compete only if we have the educated citizenry required for participation.

Thank you.

GMD/cc
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