Reveley memo on productivity| October 12, 2010
President Taylor Reveley sent the following memo to vice presidents and deans Oct. 12, 2010. -Ed
A Financial Foundation to Sustain
William & Mary as a Public Ivy
I. Important Context
William & Mary is a research university that calls itself a College, and it is an institution that resembles the Ivy League schools more than it does public research universities. The College of William & Mary comprises a species of one.
We want to maintain our powerful commitment to undergraduate education even as we move increasingly into research and nurture graduate and professional programs of serious distinction. We want our tenured professors to keep teaching undergraduates in class and out, with far less assistance from graduate students and adjuncts than is the norm in public universities. We delight in a student/faculty ratio that is remarkably low for a public school, in small classes, available courses, and a superb caliber of instruction and learning. We want William & Mary to stay a residential campus of great beauty and human scale, with a powerful sense of community and continuity. While we know that our student body has grown significantly since 1950, we have been concerned in recent years lest too much continued growth degrade our collegiality and quality. And of course we always want to be worthy of our deep roots in American history and our heritage of public service.
All in all, this is quite splendid. It is also very costly. As a “one of a kind” public ivy, William & Mary no longer has the financial resources to maintain our current excellence, much less move in the directions charted by our strategic plan. Financial crisis, of course, characterizes higher education throughout America, especially public higher education and meagerly endowed private schools. We are doing better than the vast majority of other colleges and universities. But we are not doing well enough. This century will belong to the schools that either already have or can build sustainable financial foundations. We need to build ours.
Over the last generation, taxpayer support for William & Mary has declined from 43% of our operating budget to 14% this fiscal year and less than 12% next fiscal year. This trend is not likely to reverse, given the enormous demands on state revenue going forward and Virginia’s practice of low taxation. To the extent there is new funding for higher education in Virginia, and there will certainly be new funding as the Great Recession fades, William & Mary’s needs pale in comparison with those of other state schools that have (a) less capacity to charge tuition, attract grants, and develop philanthropic resources and (b) greater willingness to admit ever growing numbers of in-state students. Against this background, it seems unavoidable that, if William & Mary is to preserve its essential character and realize its potential in this century, the College must increasingly fend for itself financially. Our funding is already dependent on a public/private partnership. Within this partnership, the private side must now do the great bulk of the heavy lifting.
So, what is the course forward? In my judgment, it is a financial foundation resting on four pillars: (1) a residuum of taxpayer support, especially for capital projects; (2) growing streams of earned income [tuition and fees, research grants and contracts, and entrepreneurial leveraging of our strengths to generate new sources of revenue]; (3) greatly enhanced philanthropy [annual giving, endowment, funds for bricks and mortar]; and (4) internal productivity gains. These four pillars are interdependent. If we fail to build any one of them, the capacity of the other three pillars to support the foundation will be severly impaired.
William & Mary has the strength in the market to raise in-state tuition significantly, so long as we provide adequate need-based aid and merit aid. While we are already near the competitive limit for out-of-state tuition, there is quite a bit of room to grow if we can raise enough endowment to fund need-based and merit aid. State politics, however, affect our capacity to draw on this market strength. Were our percentage of out-of-state students to be rolled back by legislative action, or were our Board of Visitors denied the flexibility to raise in-state tuition, our capacity to earn income would be greatly diminished. Research grants and contracts are more in our control, as are things entrepreneurial. We are working hard on the grants front. We have barely begun to scratch on the entrepreneurial.
As to taxpayer support, we want to sustain the state’s support of capital projects, receiving our fair share of funds for bricks and mortar. We also hope to keep the amount of state operating support that remains after the severe cuts of the last few years (the functional equivalent of a significant slug of endowment at a 4.75% annual spending rate). But we are willing to forego new state operating support, once it begins to flow again, in return for the freedom to set in-state tuition and retain at least our existing percentage of out-of-state students. This would enable us to earn more income than we could realistically hope to get in new taxpayer funds, while freeing up the new taxpayer support that would have otherwise come to William & Mary for community colleges in particular.
Philanthropy is utterly essential. Our annual giving must be driven relentlessly up in both participation and amount. It is crucial to help fuel the operating budget, and it is money we can raise in the near term. Serious new support for the operating budget from endowment will take many years to realize, barring a sudden change in our capacity to garner huge gifts. We must pursue endowment vigorously, but without much prospect for substantial near-term relief. In my judgment, William & Mary needs at least $2 billion in endowment (in current dollars), which is almost $1.5 billion more than we now have. All this will take a level of alumni commitment greater than William & Mary has enjoyed in the past. Building this commitment has transcendent importance for the College these days.
And now productivity – how to become more effective so we can do the job with fewer dollars while protecting the caliber of our students’ learning, the quality of their campus experience, and job satisfaction for those who work at William & Mary. This will not be easy. People at William & Mary already have the habit of doing more with less. Our faculty, administrators and staff work very hard and are the College’s greatest asset. Thus, productivity success can not be achieved by working harder but only by finding new ways of accomplishing our goals.
In my view, our capacity to defend William & Mary politically and to raise our philanthropic horizons will depend in no small part on our being able to show that we are doing our best to be cost-effective in all aspects of our life, the academic as well as the non-academic. Virtually all other sectors of the American economy have had to become more cost-effective or perish, and the country will not spare higher education from this regime. In short, we need productivity savings for financial, political, and philanthropic reasons. The sooner we can document such savings already made, show that we are spreading successful ideas across campus, and begin achieving new savings, the more effective we will be with the General Assembly, Governor, business supporters of higher education, and donors. And the sooner we will free up some dollars for pressing campus needs.
II. Pursuit of Productivity
At my request, Jim Golden (Strategic Initiatives VP and Strategic Planning Co-chair) will lead an evaluation of business practices across the campus. I ask that each of you assemble a small team in your sphere to identify all productivity gains already realized in recent years and consider (1) how our current practices can be improved or ended to make our operations more effective and (2) what opportunities exist to develop new revenue sources (which may include drawing on academic strengths). Please provide Jim with a list of your team members by October 29th.
Jim will meet with your teams to document productivity gains already made, assemble ideas, and work with you to identify ways to explore these ideas, including the potential use of consultants from the Mason School. He will share emerging ideas that might have broad applicability across units.
Early next term, Jim and the Provost will meet with each of you to draft implementation plans, including targets and deadlines. Final plans should get to Jim by March 30th for discussion with me.
Over the course of this year, we will also meet with several outside consultants to see if they can identify any systemic changes to make our processes more effective.
The Provost will take the lead. Some of the possibilities for greater effectiveness mentioned in my SCHEV remarks of last August will require university-level discussion, for example, a year-round academic calendar. For most, however, discussion will be useful only on a more local level, for instance, greater use of technology to teach “hybrid” courses, differential teaching loads depending on various levels of research activity, different blends of instructional faculty, and increased undergraduate enrollment. What might be effective in some disciplines, schools and departments won’t be in others.
To get us started, I ask that the dean of each of our five schools take up these matters with their faculties, chairs and programs directors, those that are closest to the action. At the threshold, please identify all areas where steps already taken have resulted in savings. Then three essential boundary conditions should frame discussions: (1) providing a comparable quality of student learning, (2) reducing the overall cost of instruction, and (3) maintaining a serious measure of intense student-faculty engagement. Michael will meet with each dean later this term to discuss initial progress. He will meet again with each dean in the spring term to review draft implementation plans, including targets and deadlines, with final plans due to Michael for consideration with me before Commencement.
Resources freed up as a result of savings in the academic sphere can be reallocated to pressing campus needs beyond simply repairing budget cuts of the last few years – for example, salary increases, greater research support and more opportunity for intense student learning. We will seek to maximize incentives for generating savings. Thus, units generating them will share in the reallocation of the resulting funds.
Not Going to be Easy
There is no doubt in my mind that
achieving further productivity gains at a place already as efficient as William
& Mary will be difficult. Nor am I
unaware that the concept of seeking productivity gains sets many teeth on edge,
especially when urged in all facets of the university, not just the
administrative. But I believe deeply
that we have no viable alternative. The
issue is not whether to achieve these gains.
The issue is how to do it well.