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Reveley remarks at SCHEV Board meeting

The following are prepared remarks by William & Mary President Taylor Reveley, who spoke at the July 20 meeting of the State Council of Higher Education for Virginia. -Ed

SCHEV Board Meeting

W&M Alumni Hall

July 20, 2010

Taylor Reveley

William & Mary is honored that SCHEV has come to visit our campus. We care about SCHEV and deeply appreciate the time and energy that those of you on its board devote to the welfare of higher education in Virginia.  Your leadership is vital. We are also very grateful to the SCHEV staff for your tireless efforts to nurture Virginia's colleges and universities. 

The Commonwealth needs a coordinating body for its large, diverse system of public colleges and universities.  SCHEV is the sort of coordinating body that makes the most sense for Virginia. 

Taylor ReveleyWe know SCHEV faces challenges right now, moving from one staff leader to another and facing large data-gathering and report-writing demands while shrinking in staff size.  Then there are rumblings that SCHEV should go the way of the woolly mammoth, become extinct, and be replaced by something else, maybe a North Carolina-like high command, maybe a gossamer entity doing little or nothing. William & Mary, however, wants SCHEV to remain and thrive, but to spend more time thinking about how to save a system of public higher education that is beginning to circle the drain.  SCHEV's voice is all the more critical as the Governor's Commission on Higher Education begins its work and as state schools draw ever closer to a financial cliff in FY 2012, when the steep reductions in state funding of the last few years will no longer be softened by federal stimulus relief.

My handlers told me that, on occasions such as this, it is customary for the president of the host campus to sing the praises of his or her school.  Of course, it is in the nature of college presidents to do this at every conceivable opportunity.  Let me focus on one important fact about William & Mary.  This university, which calls itself a college, is the only member of its species. There is no other public college or university like William & Mary in the United States.  There are a few private institutions that resemble us, but they tend to be richer than God.  We are not. 

Why is William & Mary a species of one?  Why is there only one William & Mary? 

Founded in 1693 by British monarchs, William & Mary is a public ivy, one of the very best liberal arts universities, second only to Harvard in age in the United States. William & Mary remains steadfastly devoted to teaching, especially undergraduate teaching, even while moving increasingly into cutting-edge research important to society. Despite having no medical and engineering schools to attract grants, last year we had over $50 million in sponsored research. Other research universities do not have tenured professors as committed to undergraduate teaching as is true here.  As one of our professors puts it, William & Mary has "the heart of a college and the brains of a research university."  Another faculty member says our students are "taught by professors, taught in small classes, graded by professors, and known by professors during college and later life."  And to quote an undergraduate, the "professors are better than I could have imagined.  They are the best teachers I have ever had.  They are passionate about what they teach." 

Thus, to a degree unknown among other public research universities, William & Mary has a low student/faculty ratio, small classes, and close involvement of its tenured faculty with undergraduates as well as graduate and professional students.  Admission standards are very high, courses are available, student research is emphasized.  Nearly half of our undergraduates study abroad at some point during their college careers. Almost 75% of our undergraduates live on campus. 

Because William & Mary takes a liberal arts approach to education, our students hone their ability to think rigorously and critically, and they learn to engage sympathetically ideas and perspectives different from their own.  They also develop the intellectual dexterity to change careers as necessary over the course of their working lives. 

Producing good citizens and effective leaders has been a William & Mary strength for generations.  In the words of Dumas Malone, "no American institution of learning has ever surpassed the record of this little College, in Jefferson's generation, as a nursery of statesmen."  Our graduates played seminal roles in creating both the State of Virginia and the United States of America.  Three U.S. Presidents were students at William & Mary (Jefferson, Monroe and Tyler), and George Washington had close ties to the College.  His surveyor's license came from William & Mary, and he was our first American Chancellor, a post now held by Sandra Day O'Connor; her immediate predecessors as Chancellor were Henry Kissinger, Margaret Thatcher, and Warren Burger.  The Great Chief Justice of the U.S. Supreme Court, John Marshall, was among the first law students at William & Mary. These days two members of President Obama's cabinet graduated from William & Mary -- Robert Gates, Secretary of Defense, and Christina Romer, Chair of the Council of Economic Advisers.  Our students spend hundreds of thosuands of hours each year in service to others.

Phi Beta Kappa, the most important American society recognizing academic excellence, began at William & Mary.  Student-governed honor systems began at William & Mary.  The oldest law school in the United States began at William & Mary.  The oldest academic structure in the United States is our Sir Christopher Wren Building.  And unlike all other public universities in the country, William & Mary was private for more than two centuries before becoming public.  In 1906, unable to recover from the devastation of the Civil War, the College deeded its real estate to the Commonwealth, disbanded a Board of Visitors that traced its ancestry back to 1693, and accepted state ownership in return for financial support. 

With Jamestown to our west, Yorktown to our east, and Colonial Williamsburg cheek-to-jowl, William & Mary does take strength from our historic past even as we move powerfully into the 21st century.

To sound this theme one last time: There truly is only one William & Mary. 

Now let me talk for a few minutes about the need for a new financial foundation for Virginia's system of public higher education.  Our system is strikingly diverse and highly productive, certainly one of the most compelling systems of public higher education in the country.  But it is barely able to keep a nostril above the financial waves.  The system is living on borrowed financial time.  We must do something to get it back on a solid financial foundation.

SCHEV, you need to help us all face the financial realities that must be taken into account if we are to have a financially sustainable future for higher education in Virginia. Those of you on the board have the personal prestige and independence to speak truth to power about these financial realities.

Here are seven sorts of facts that, in my judgment, must be taken into account in our financial planning: 

       Fact 1.         Across America state support for higher education has been declining for a long time.   Virginia has been hard hit.  Among the states, Virginia now ranks very low in appropriations per in-state student. Our neighbors North Carolina and Maryland provide much more aid per in-state student.

        Fact 2.         Virginia's leaders do appreciate how important college-educated citizens are to the state's economic, civic and cultural success, even its public safety.  The problem is that our political leaders confront many competing needs for state dollars.  The necessity to fund infrastructure, health care, K12 education, and public safety usually proves to be more politically compelling than the need to fund higher education.  Nor are new taxes to support higher education  likely. Virginia is a low tax state, and, if there were to be new taxes, they most likely would go to our tired roads, bridges, tunnels and rail lines. Given the enormous gap between what the state needs to pay for, on the one hand, and what the state's revenues are likely to be able to pay for, on the other, there is little prospect that the Commonwealth will be able to support adequately its entire system of public colleges and universities in the years to come. 

This does not mean we should stop trying to persuade the General Assembly and Governor to invest more in public higher education.  We should keep at, using the best arguments we can craft!  It does mean we should be realistic about how much the Commonwealth, in all reality, is going to be able to respond to our entreaties and exhortations.

        Fact 3.         Of necessity, Virginia's funding of higher education has come increasingly to rely on public/private partnerships.  The operating budgets of the strongest state universities are now utterly dependent on the private side of these public/private partnerships.  Thirty years ago William & Mary got 43% of its operating budget from the state taxpayers.  We're approaching 12% now and heading south.  The great bulk of the funds that pay for our operations come from private sources, in particular tuition, grants, and philanthropic gifts. 

         Fact 4.         Among the private funds most crucial to the public/private partnership that now sustains William & Mary is the tuition paid by out-of-state students.  These funds are flatly essential to the College's academic excellence. Out-of-state students provide almost 70% of all the tuition paid by William & Mary undergraduates.  In academic year 2010/11, each out-of-state student will pay $21,576 more than each in-state student.  Thus the out-of-state subsidy for in-state students has become huge and indispensable.

          Fact 5.         With greater reliance on the private sector to pay the bills comes increased emphasis on need-based financial aid to ensure that admitted students can pay for college.  Tuition "sticker price" does not control affordability.  The adequacy of need-based financial aid determines affordability.  Thus, it is "net cost" after aid is factored in that drives whether college is within the financial reach of a poor or middle-class family. In other words, tuition can rise without undermining affordability so long as adequate financial aid is available.

          Fact 6.         Growing reliance on tuition, grants and philanthropy to support those public colleges and universities with the greatest market strength can lessen the need for incremental state support of these schools, thereby freeing up scarce taxpayer dollars for schools (community colleges in particular) that are less able to increase tuition, attract grants, and bring in donations. 

          Fact 7.         Higher education across the country, including Virginia, should become more productive.  It needs to become ever more lean in its administrative dimensions.  In its academic dimensions, it needs to figure out how to provide the same caliber of learning at less cost. Just as most parts of the American economy have found it essential to become more productive, so also must higher education.  The challenge is how to do it without sacrificing learning of high quality.

What might these seven financial realities mean in concrete terms?  Let me sketch two examples at either end of the higher education continuum in Virginia. 

For community colleges, these realities could mean a larger share of state revenue than would be the case if the state's current "one size fits all" approach to dividing funds among schools were to continue. Thus, when the Recessionary Wolf finally goes back in its cave and the state fisc perks up, more new state dollars could go to community colleges than would have been theirs under past practice. Without seriously increased taxpayer support for community colleges, it is hard to see how they can continue to admit almost all comers or how they can increase their rates of retention and graduation.  To succeed, our community colleges must have a lot more state funding.  

At the other end of the continuum - say, William & Mary, to pick a school at random - it might mean our agreeing to back away from "one size fits all" state funding and to take less state support than would otherwise be the case.  But this could not be a one-way street.  In return for backing away from "one size fits all" funding, our Board of Visitors would need the flexibility to draw on the private sector, on the market, to support the College through tuition revenue, both in-state and out-of-state, and through a viable percentage of out-of-state students.  Because of William & Mary's strength in the market, it could then raise the private resources necessary to sustain itself, while the community colleges would have the taxpayer support necessary to sustain themselves. 

Politically speaking, the approach just sketched might require a willingness by William & Mary to accept some growth in our undergraduate body, especially some additional in-state students.  This would not be easy, given the sort of "hands on" education we provide, our residential nature, and the intimate, historic town surrounding the campus.  Easy or hard, however, it might be the political price for giving our Board of Visitors the flexibility to ensure William & Mary's continued success.

A few words about tuition. William & Mary has raised out-of-state tuition significantly, last year by the greatest amount of any public college or university in  Virginia: $2,500.  As already noted, in 2010/11 each out-of-state student at William & Mary will pay over $21,500 more in tuition and mandatory fees than each in-state student.  Since we have relatively little financial aid for out-of-state students, William & Mary has become more expensive, net, than the private schools with which we compete for out-of-state students, except for affluent families.  Thus, until we can raise more funds for financial aid for out-of-state students, we are bumping up against a competitive ceiling for price increases. 

From a market standpoint, our realistic opportunity for growth is with in-state tuition.  It now costs Wiliam & Mary far more to educate each in-state student than he or she contributes in tuition and the state provides as a subsidy.  This gap undermines both the continued financial feasibility of a superb William & Mary education and the College's financial capacity to educate more Virginians.

But wouldn't increasing in-state tuition put William & Mary beyond the financial reach of many Virginia families?  No! As already noted, there is a time-tested, practical solution: need-based financial aid.  So long as need-based aid increases in step with in-state tuition, affordability is not compromised. Thus, as tuition rises, so must our provision of need-based aid for poor families and, increasingly, the middle class.   William & Mary must remain affordable for Virginians.  

Beyond need-based grants, the availability of loans is also important for many middle-class families.  Loans have always played a part in paying for college, along with scholarships and jobs.  As home equity and bank lending for college costs have declined, loans to pay for school have become increasingly beyond the reach of the middle class. What if the state were to borrow low-cost money and fund a facility from which middle-class families in Virginia could borrow at modest rates to help educate their children in state schools?  There has been a similar state facility in years past.  It would cost the state relatively little while providing vital help to many in-state families. 

One last thought about the cost of college.  There are a number of variables that affect it. Two have already been mentioned: the "sticker price" made up of tuition and mandatory fees and the availability of financial aid to offset the sticker price.  Then comes whether the money paid the school actually leads to a degree and how long this takes.  William & Mary, with its powerful graduation rate, could charge more tuition to in-state students and still be a bargain compared to schools where large numbers of students pay tuition for degrees never received or degrees that take a very long time to get.  In short, a school's sticker price is only part of the cost equation.  The other parts are financial aid, whether a degree is obtained, and time to degree.

Finally, productivity.  Most schools, certainly William & Mary, have worked hard to make their administrative regimes more lean and efficient.  What we have yet to engage adequately is the academic side of the house.  This has to be done with exquisite care, but it must be done.  To mention some possibilities -- how to make better use of our academic facilities during the week (late afternoons, evenings, Fridays and Saturdays) and year round, whether small classes are always the best approach to learning or whether a combination of some large lecture courses coupled with more intense seminar experiences would be just as effective, how to harness software and personal computers to teach some basic material now taught in classrooms by live teachers, how increasingly to beam academic content from one campus to others, how to use the academic content already  learned in advanced high school courses to speed a student's progress to a bachelor's degree and from there to professional degrees, how to reduce the cost of textbooks, how to ensure that professors not productive on the scholarly front teach more, and how to use compensation to encourage productivity. 

Thinking about how to increase productivity will involve both finding effective ways of doing it, which will not be easy, and persuading schools to think seriously on the need to do it, which will be equally hard.   

One other aspect of productivity concerns philanthropy, becoming ever more effective at annual giving, endowment giving, bricks and mortar giving.  The colleges and universities that are able to attract serious donations must do their level best to gather these fish and loaves.   We are doing this at William & Mary.

If all of us who care about sustaining Virginia's marvelous system of state colleges and universities are willing to think realistically about our financial options, take advantage of our opportunities, and work doggedly, Virginia's system of public colleges and universities can enjoy a spectacular 21st century, indeed, lead the way for the country.  SCHEV, you can be a vital catalyst to this end.