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Chancellor's Speeches

Remarks of USM Chancellor William E. Kirwan
Education Writers Association Annual Meeting
Higher Ed -- State Funding: The Changing Compact
Friday, May 6, 2005

Thank you, Mary Jane . . . for that introduction, for the tremendous work you as President of the EWA Board, and for your outstanding reporting on higher education issues in the Minneapolis Star Tribune and other publications.

It is a pleasure to be here this morning with the Education Writers of America. The opportunity to address so many professional education reporters from the print and broadcast media is a rare and valuable opportunity.

I am also pleased to be joining my fellow panelists, University of Florida President Bernie Machen and Paul Lingenfelter, Executive Director of SHEEO. Both Bernie and Paul have first-hand experience with "The Changing Compact" that we now see between higher education and the state funding mechanisms. I look forward to the insights they will offer and the ideas our discussion will yield.

For my part, I will speak both about the broader trends and developments affecting higher education and the need to re-examine and rethink the issues funding, access, and affordability.

By way of background, the University System of Marylandwhere I serve as Chancellorconsists of 11 degree granting institutions as well as 2 specialized research centers. We enroll over 120,000 students (both full and part-time) with over 6,600 faculty members. I had the privilege of serving as President of our flagship campusthe University of Maryland, College Parkfor ten years. I was also privileged to serve for four years as president of The Ohio State University.

Over the past half century, higher education and its role in society have undergone a fundamental change in the United States. The emergence of the international marketplace and the reduction of trade barriers make it clear that the US can no longer compete as a production-line manufacturing economy. Gone are the days when a strong back and a sound work ethic all but guaranteed a decent job and a good life. The path to prosperity -- both for individuals and for our nation -- now requires knowledge, innovation and creativity. Our nation has been successful in making the transformation from an economy built on muscle power to one driven by brainpower and our institutions of higher educationboth public and private; two-year and four-yearhave been largely responsible for this success.

Indeed, the cornerstone for building the U.S. knowledge economy has been the expansion of access to higher education. In the first half of the twentieth century, college was considered the private domain of an elite minority. Since then, with financial aid and greater public support, the doors of higher education have been opened to larger and larger numbers of people. The U.S. was the first nation in the world to "democratize" higher education. In 1960, for example, approximately 45% of all high school graduates continued on to college. Today, the figure stands at nearly 70%. Even more telling, in 1960 less than 8% of the population of the United States over the age of 25 had completed four or more years of college. Today, that number stands at almost 30%. In my view, this transformation is the crowning achievement of post-WW II America. It has provided the U.S. economy with the workforce necessary to build the world's largest knowledge-driven economy and the largest middle class of any nation in the history of humanity.

It is important to digress for a just moment to make a point that we must never forget: The value of colleges and universities is not restricted to educating people for success in the workplace. Education for its own sake has always been central to our mission. An understanding of history, an appreciation of art and literature, insight into philosophy, and an awareness of world cultures are indispensable aspects of a civilized society. Yes, we have an obligation to ensure that our graduates are prepared to meet the rigorous challenges of the new economy armed with the knowledge and skill they need to compete in an ever-changing and increasingly-competitive workplace. At the same time, we have an obligation to make sure our graduates have the cultural and intellectual underpinnings necessary to enable them to take their place as enlightened and progressive membersand leadersof society. As we face the enormous challenges in the years ahead, we must never lose sight of the fact that this dual responsibility is part and parcel of our raison d'etre.

Ironically, just as higher education in the U.S. is at the height of its success and is the envy of every other nation in the world, so too is it at the zenith of adversity. There is a convergence of factors that make it increasingly difficult for our colleges and universities to fulfill their missions and meet their obligations to society.

The most important challenge we in higher education face is funding. We all know that adequate funding is the life-blood of quality higher education. Attracting the best faculty in competition with the private sector and -- increasingly -- universities in other countries, developing state-of-the-art facilities with cutting-edge technology, supporting the best and brightest academic talent, expanding capacity to serve more students, and meeting the growing demand for financial aid, all require resources. We have a self imposed expectation, and the larger society also expects us to pursue excellence. But, building excellence and capacity come at a significant cost!

With the economy struggling across the United States, state budgets are tight. Though rebounding, giving and endowments are down, and -- as a result -- financial support for public and private colleges and universities is not keeping pace with rising costs. But, I fear that the dynamic at work is more than just a sluggish economic cycle. There appears to be a troubling long term trend at work. Forces seem to be moving us away from the very approach that has served higher education and our nation so well. There is a demonstrable shift in the public's attitude away from thinking of higher education as a "common good" toward considering it more of a "private benefit". By this I mean, rather than states and the federal government investing in higher education to make college accessible and affordable in recognition of the fact that an educated citizenry benefits the larger society, there is a dramatic shift toward expecting individuals to pay a larger share of the cost since - as the argument goes - college graduates have a significant increase in lifetime earnings power. To illustrate the longer term trend in higher education funding, I note that in Maryland, from 1990 to the present--in constant dollars--State support for higher education has dropped from almost $7,900 per-student to less that $5,700 per-student.  That is a reduction in state support of almost 28% in less than 15 years.

Paradoxically, this shift is occurring at precisely the time when higher education institutionsboth as centers of learning and hubs of researchhave never been so vital for economic growth and for advancing the common good. Indeed, in the long run, it will be access to our higher education institutions and their contributions to advancing knowledge that will ensure a sound economic future and a high quality of life in America.

But in state after state across the U.S., the story repeats itself. Budgets are strained by a struggling national economy, the effect of recent state and federal tax cuts, increasing healthcare costs, and mandated spending for primary and secondary education. Higher education is generally the largest discretionary item in most state budgets. And higher education is facing a systematicand I'm afraid a long-termwithdrawal of public support.

Besides cursing our fate and wringing our hands, what should we in higher education be doing about this situation? What actions should we be taking to address the enormous challenges facing our institutions and meet our responsibilities to our communities and our nation? What steps can we take to rebuild public support for our mission?

I'm not in a position to answer these fundamentally important questions in full. But I do want to offer two suggestions that should be part of a common agenda in higher education. The first speaks to getting our own house in order. The second examines how we might go about rebuilding the public trust and regaining support for higher education as a common good worthy of greater investment of public funds.

First, we must make a firm commitment to act as cost-conscious, cost-effective stewards of our funds, regardless of the source. We operate under a model where educational expenditures at colleges and universities across the country are rising about 4.5% to 5% annually. This is not sustainable long term. We must find ways to reduce costs.

To address this issue in Maryland, the USM launched an effort that we call our Effectiveness and Efficiency Initiative (E&E). It consists of a systematic examination and reengineering of all of our academic and administrative processes. With the E&E initiative we are endeavoring to reduce time to degree for our students, expand on-line and other out-of-classroom educational opportunities, and provide lower cost options for degree attainment. In addition, we are leveraging our power as a system to drive down prices and negotiate better product, service and energy contracts. Through our E&E efforts we have achieved over $90 million in cost savings and cost avoidance over the past two years.

Our E&E efforts underscore the unique benefits we can reap by operating as a system, as opposed to stand-alone institutions. For example, as a system we renegotiated with PeopleSoft, consolidating multiple contracts into one and establishing maintenance caps, safeguarding our institutions from excessive costs. We are also using the leverage we have as a system to purchase electricity at more competitive prices, resulting in significant savings. In addition, we have the ability to better manage enrollment growth when taking a system wide view.

The rigor and impact of our efforts have impressed our Governor and Legislature. So much so, in fact, they are rewarding us with a 5.7% increase in state funding, our first increase in state finds for three years. Of course, the reason behind these efforts is to free up money for reinvestment not only in quality initiatives, but also in affordability and accessibility.

The fact is, however, we in higher education cannot simply "manage" our way out of reduced support and growing enrollment. Without adequate supportincluding state supporthigher education will face two options: We can maintain quality by continuing to raise tuition at a very high rate, closing the door to higher education for thousands of students who represent our future workforce; or we can keep tuition modest to allow for affordable access, putting higher education on the path to mediocrity, which serves no one.

Given that neither of these options is acceptable, brings me to my second point: We must make it clear to all concerned that we cannot address our challenges just by being more efficient. As important as it is to demonstrate our commitment to access and to holding down costs, we will not prosper as a nation in the decades ahead if we do not also convince the body politic that we need and deserve greater investment of public funds.

Unfortunately, we do not have a common language and message that cuts across the various sectors of higher education and resonates with the public. In fact, we are sending very confusing and mixed messages. On the one hand, we cry poverty, as I have done today. But, in the same breath, we boast of the huge growth in our research expenditures, of how little of our budget now comes from the states, about how students are beating down the doors to attend our institutions and how much they will earn with our degrees. At some of our institutions our athletic programs generate tens of millions of dollars and coaches earn what most would describe as exorbitant salaries. Is it any wonder that many see us as - at least relatively speaking - as fat and happy? Is it any wonder that when legislators are faced with the choice of funding us or other strapped programs that have state funds as their sole source of revenue, we come up on the short end of the stick? Of course, we know that the auxiliary revenue of research grants or athletic programs can't be used to expand our education programs and reduce the costs of our education program. But can we really expect the public to analyze our various messages and make the subtle distinctions between arcane topics like restricted and unrestricted funds?

If we are to regain the public trust, we need to find a common language and develop a compelling message. The American Council on Education is sponsoring an initiative to do just that. While the work is still in the preliminary stages, the outlines of that message are emerging.

We need to remind the public that

  • The entrepreneurs that create jobs in the knowledge economy and the highly-skilled workers that fill them . . .come from higher education.
  • The teachers who educate our children from grade school through high school . . . come from higher education.
  • The doctors and nurses who provide our health care . . . come from higher education.
  • The medical and technological innovations that improve our lives every single day . . .come from higher education.
  • The breakthroughs in security matters that will better protect our nation and the world . . .come from higher education.

Higher education raises incomes and lowers poverty . . . creates opportunities and solves problems...reduces barriers and elevates civic engagement. Higher education changes the lives of the people who will change the world.

These are the reasons why we must ensure access for all qualified students to a high quality higher education. Doing that is our best hope; one might say our only hope for building a bright future for America. For these reasons, higher education is the quintessential "common good."

It is our hope that once we craft these messages, we can draw upon what is potentially the world's greatest grassroots network...the connections our colleges and universities have to their alumni and friends. We want to unleash this network to tell our story in a clear, unified and unambiguous way. We need to convince the truck driver in Tennessee and the farmer in Idaho that his or her life and the lives of their families will be better off when we can ensure every qualified student a chance at a college degree. It's a daunting task but it is a task worthy of our time, attention and energy.