2009 State of the University Address

Thursday, January 29, 2009
Eric R. Gilbertson, President
Saginaw Valley State University

I traditionally begin this presentation by telling you that the "state" of our University is healthy but fragile, strong but vulnerable, only as safe and as successful as your good work and best thinking will make it. So there . . . now it's been said.

You all read the papers and listen to the news. It's a difficult time in Michigan and in our region. But with a lot of hard work and a little luck we - our University and our students and our faculty and staff - will be all right. In fact, we can be good and even better.

*      *      *

Thanks so much for coming. I hope to make it worth your while.  The prize for coming furthest today goes to Bob Yien, here from Taipei - where the temperature should reach 70 degrees. Bob really missed hearing my speeches and just couldn't stay away.

*       *       *

As is also customary, I will begin with several updates - numbers, charts, pictures, measuring or depicting those things that can be counted or seen. There are other matters too - equally if not more important - and I'll get to those later.

*      *      *

I want to share with you first the most important numbers: Winter Semester enrollments. These are the most important numbers not just for purposes of our financial stability or our vanity but because students are, after all, our mission and our reason for being. And the numbers of students we serve speak in at least some measure to our success in accomplishing that mission.

You will recall that Fall Semester enrollments were even stronger than expected, evidencing solid growth over the previous years. Likewise, we now have solid growth over the previous winter semesters: overall "headcount" (i.e. the total number of individual students enrolled) stands at 9,499, a 2.45 percent increase over a year ago; and the number of credit hours taught grew by more than 4 percent over the Winter of 2008. 

 

Robust growth in the number of undergraduate students and credit hours is responsible for the overall health of our enrollments. Growth came both in numbers of new students and returning students - the latter signaling an encouraging trend in student success and retention.

As in recent years, there has been a decrease in both the headcount and credit hours taught in our graduate programs. These losses have largely been in the College of Education - attributable in part to the woeful market for new teachers in our region and State. There has been modest growth in a few other graduate programs - notably the MBA - due primarily to an influx of international students.

All-in-all, we can be very proud of the work that brought about these encouraging results. We can also be grateful that students and their families continue to make the financial sacrifices necessary to come to the University and to stay - particularly given the economic distress so many of them are experiencing.
More on that to follow.

*      *      *

We continue to invest in our University - both in human talent and in capital facilities.
Hiring for next Fall Semester is now well underway and we expect to maintain all those positions that were previously authorized in the 2009-10 budget. We are currently recruiting for 29 new faculty in 21 departments, and for 39 new staff members.

Likewise, several capital projects are either underway or about to begin.

The $2.8 million classroom/office addition to the Arbury Fine Arts Center is emerging from the ground and should be ready for occupancy and use this coming fall.

The $11 million new student housing project is now "framed" and visible and on schedule for completion this summer. This will bring our total housing capacity to 2,600 students. For reasons I'll soon explain, we expect this will be the last housing addition we will build for the foreseeable future.

The new $2.9 million University Health Center, which will be leased under an operating agreement with Covenant Health Care, is also "out of the ground" and on schedule for a summer opening.

And finally, the new $28 million Health and Human Services academic facility is in the hands of architects and planners, and construction will begin soon. A "groundbreaking" is now set for April 7th, and classes are scheduled in this facility for the Fall of 2010.

All these projects and positions are funded and we are proceeding with them in full confidence that a "down" time in the economic environment is still a very good time to invest. If there is a future - and there is - this is a good time to be aggressive. And we are doing so.

*      *      *

At its December meeting, the Board of Control approved a "Strategic Plan" for the University. This is a successor plan to the one completed last year and about which you have heard me speak before - perhaps tediously so.

The new plan encompasses a three-year time frame; given the economic and political uncertainties surrounding us, this seemed about as far out as we could expect to see.

The plan is ambitious - not, perhaps in the expansive ways that earlier plans were, when we were anticipating major capital expansions and new endowments and adding ever more students and student housing - but ambitious in the sense that we are called upon to stretch what we can do and how well we do it without the assurance of ever increasing financial resources. But the lack of more financial resources must never get in the way of new thinking and improvements.  The plan has several key chapters.

*       *      *

There are goals for increasing student involvement in research and for new opportunities for faculty to expand their thinking and their experiences - here and abroad.

 

We will increase the opportunities for our students to travel and seek rich experiences - with some specific targets that will stretch our efforts - and for departments to propose initiatives that will develop distinctive qualities for their programs. And we will find better ways to coordinate and promote unique opportunities for high-achieving students.

We expect enrollment growth to slow and eventually level. Virtually all of our growth in the past decade has come from planned investments in student housing and the expansion of student recruitment to more distant markets.  We plan no additional student housing - at least in the short term - and the effect of that will likely be to level enrollments at about 10,000 students.

There are some important reasons for this decision. Student housing, which has, again, enabled our recent growth, is funded through bonded indebtedness. Stated simply, we have borrowed some $80 million to build these facilities. We don't want them ever to be empty. And this does not seem to be a good time to think expansively about either additional debt or endless expansion.

This size - approximately 10,000 students - is large enough to provide a "critical mass" necessary for a broad range of programs and experiences, but not so huge as to lose all human-scale perspective within our institution. To some extent, this size also helps define our University and is an important factor in our identity.  We are a public university with affordable tuition, a broad range of academic and professional programs, a focus on teaching - all in a human scale organization with humane values.

This is who we are and what we offer, and in many ways these qualities differentiate us from many other public universities.

But sustaining enrollments at these levels will not be easy - particularly when the numbers of high school graduates in Michigan are now in decline - and this will require continued strategic and aggressive efforts on the part of our Admissions Staff and support from all of us as well.

We also intend to increase our enrollments of international students and students with high academic potential, and to continue to improve our student retention and success rates - with some clear, numerical benchmarks.

I should add also that in recent years our students have undertaken a quite remarkable range of campus and community service initiatives of their own - raising money for charitable causes, traveling to perform altruistic works, bringing visitors to a campus of which they are very proud. The regional Kennedy Center American College Theater Festival just a few weeks ago, which brought some 1,500 guests to the campus for competition, is just one example.

And as our students do more, care more, they expect even more of us - as they should.

*      *      *

We will complete the current array of new construction projects, then turn to the renovation needs in existing facilities. We will also intensify our efforts to achieve energy efficiencies. The Board of Control is now considering the approval of some $1.8 million in new energy conservation measures for our campus. You might also be interested in knowing, for example, that geothermal heating and cooling will be installed in the new Health and Human Services Building.

 

We also hope to expand campus participation in cultural and recreational programs, and to increase opportunities for civic involvement and the professional development of our staff. And when the time is right, we will again ask our friends and neighbors to support the University financially through a new endowment campaign.

The University has become an important economic asset to our region. We bring in people and we bring in money; and we also assist in the development of businesses and other economic drivers for our neighbors.

And we also have become an important force in lifting the cultural life for neighboring communities - with lectures and plays and concerts and sports events. The value we create is sometimes underestimated by our external constituents, and we need to demonstrate that the University is an asset - economic and cultural - worthy of their continued support and investment.

*      *      *

In the final analysis, this is an ambitious agenda for the next three years. And you are all enlisted to participate in and support these goals.

*      *      *

With all that as backdrop, let me now offer you a glimpse of the larger context of where we are and how we are and how the world around us is affecting our plans and our fortunes.

In an informal survey of some friends and colleagues, I asked what issues or topics they wanted to have addressed in this presentation. Beyond the usual - enrollments, hiring, building projects and the like - all were wondering and worrying about the economy and its effects on SVSU. It was rather like the Clinton campaign's 1992 mantra: "It's the Economy, Stupid!"

My first job in "higher" education was as a graduate assistant and then later an instructor of economics, teaching fundamentals of macro and micro economics to unenthused freshmen and sophomores. I fear you will likewise be numbed by too much tiresome talk about economics; but it is important that we try to understand how the world around us does impact our institution and what we do.

The economy does seem to be the proverbial "elephant in the room," so let's deal with it.

Bear with me. . . . The field has long since passed me by, but remnants of my graduate training in this "dismal science" return from time-to-time, especially in moments of economic turmoil.
And we clearly are in such a time of turmoil now.

*      *      *

There are some knowns and some unknowns and some unknowables. It is obvious that the American economy - and because of its importance, the world economy - is in a serious recession. Gross Domestic Product shrank in 2008 and could well do so again in 2009. Literally millions of people have lost their jobs, and tens of millions of people have lost retirement and investment assets - including many of us.

Michigan has been hard hit - for obvious reasons - though I wouldn't want to be in New York or California now with their fiscal problems. (The State of California's budget deficit is now reportedly larger than the entire budget for the State of Michigan.)

Some economists are predicting a moderate recovery late in 2009; for Michigan, it will probably be well into 2010 before there is any net job growth. An informal inquiry to SVSU's own Department of Economics suggests no real consensus from our own knowledgeable colleagues around these same predictions - though their views do tend to a cautiously pessimistic forecast.

Whatever prediction you may choose to believe, no one is disputing that our economy is in "deep do-do."

*      *      *

So . . . how does this affect SVSU?

First, you have doubtless read or heard about the recent "liquidity" crisis - not an overstatement or hyperbole - and, indeed, SVSU has been affected by this problem. To make a long story short, last autumn we were notified by the firm which was managing the University's cash balances that our own funds - previously guaranteed to be available upon 24 hours notice - could not be accessed as they were needed. Thanks to the good work of Jim Muladore, sufficient funds were eventually withdrawn and we did "meet payroll" during those times. (All of our paychecks did cash, after all.)

But this situation - and a lingering fear of what could have happened - has now forced us to do our basic business in different ways. The cash we collect - most of which comes in at the beginning of each semester - must now be invested only in the safest federal notes so that there is no doubt as to their immediate accessability. And this means that we will lose hundreds of thousands of dollars in interest that we had previously earned by investing these fund balances.

Another immediate and direct problem related to the economy has been its effect on the University endowments. Here's a news flash: The stock market has tanked - as you all may have noticed from reading your TIAA-CREF statements.

Our endowments, which fund several key institutional assets - endowed chairs, special programs, scholarships - have lost value at about the same rate as all of our personal accounts. We did set aside reserves to cushion such income shortfalls, and we expect these investments eventually to regain their value, but there will be a short-term revenue loss that will place an additional burden on the University's General Fund.

Our capital projects, as indicated earlier, will go forward as planned. Funding is in hand, and we anticipate that costs may even be lower than previously estimated, given the favorable bidding climate for construction.

Once again, if there is a future, this remains a very good time to invest in it. And these investments are still solid and prudent even in these parlous times.

*      *      *

Most important, however, State revenues for Michigan will still likely fall short of budget allocations by a least a few hundred million dollars this year (assuming no immediate help from the federal "stimulus" package) and the forecast for next year is for a $1.2 billion shortfall.

Thus far in the current year, no appropriation cuts have been assessed against Michigan schools and universities. So far, that is. But we have also taken measures, as always, to protect the University against such short-term revenue swings.

So . . . we all still have our jobs.

As for next year, we'll know more about the State's revenue shortfall and its implication for higher education in the next few months; but the news will likely not be good and our choices may well be unpleasant.

*      *      *

You have heard me lament in the past how cuts in State funding have necessitated tuition increases. The result has been the development of a wholly different funding model for our University - one much more reliant on tuition. This trend seems very likely to continue on indefinitely.

Parenthetically, allow me to say also that I hate tuition. Tuition increases are, I am sure, the one and only cause of my precipitously diminishing popularity on this campus. In my perfect world, higher education would be regarded as a public good - a Jeffersonian ideal - and funded accordingly.

But . . . this is the imperfect world we now inhabit.

We can take some pride in the fact that SVSU's tuition is relatively low when compared to our sister public universities in Michigan. We have worked hard to keep it that way.

We have not, for example, (as have some of our sister universities), increased tuition rates for all students in order to redistribute financial aid to the neediest - sort of a "Robin Hood" approach. We provide some limited institutional need-based aid, but for the most part we have attempted instead to keep tuition rates as low as feasible for all of our students.

Our relatively low rates do position SVSU well in the higher education market, especially during difficult economic times like these. But the ominous trend of ever diminishing State support and ever higher tuition rates seems likely to continue unabated as far out as we can see.

Ironically, this does make SVSU less vulnerable to precipitous cuts in State funding - the State appropriation now constitutes less than thirty percent of our total General Fund revenue, and thus the reductions in that funding source have a proportionately diminished impact on the budget as a whole.

On the other hand, SVSU does become steadily more expensive to our students and much more vulnerable to enrollment fluctuations, given our dramatically expanded reliance on tuition income.

*       *      *

I remind students that while tuition is a burden, it is also demonstrably a bargain. The economic benefits from higher education have been amply documented, and the earnings gap between college graduates and others has only grown wider and wider.

For that reason, we have continued to see strong enrollments even during these difficult economic times. Students and their families now clearly see college as a necessary long-term investment - not unlike shelter or health care - and not merely a luxury or a discretionary expenditure.

But we dare not take that for granted.

*      *      *

Finally, we must keep in mind that the numbers of high school graduates in Michigan peaked last year and will decline by about fifteen percent in the decade ahead. And this decline will likely be exacerbated further by out-migration from Michigan - only Michigan and Rhode Island have actually lost population since the 2000 census.

This is yet another consequence of the lagging economy - one that should create continuing concern for us all.

For that reason - again - I remind you of the critical importance we must assign to the recruitment and retention of our students. Many of the economic forces that threaten our institution are outside our capacity to control - the recruitment and retention of students, however, is within our control and is critically important.

And so . . . at "bottom line" the fiscal health of our University - and our capacity to maintain the employment security of our faculty and staff - is vitally dependant on all of us making SVSU a place that provides the best possible experience, academic and in all other ways, for our students. If we do that, then while we are not and cannot be immune from the woes of the economy around us we will still deservedly remain solvent and vital.

Stated otherwise, the best way to protect our jobs is to do our jobs - and do them very well.  So far . . . so good.

*       *      *

Occasionally favorite quotes revisit us and seem uniquely to fit a current circumstance. I remember reading a speech given by Emerson to the Phi Beta Kappa Society in 1837. This was, by the way, not only the year the State of Michigan was admitted to the Union, it was the year of what history now calls "The panic of 1837" - when a speculation boom burst and banks across the land halted payments in precious metals. Financial institutions closed, unemployment soared, and a five-year depression ensued.
It was a troubled and troubling time - sound familiar? In that year and in that speech Emerson said: "This time, like all times, is a very good one, if we but know what to do with it."

We may not have cheerfully chosen to live and work in the parlous economic situation in which we find ourselves today. But it is the time we have, so what are we to do with it?

We can timorously hunker down and hope that nothing too bad happens and that fate will soon be kinder. Or we can be bold - bold within our means, of course, but moving forward when others may only be holding back.

We can still seize opportunities - or aggressively make opportunities when none have presented themselves - and use this time to advance our University in ways others will admire.

Another quote came back to me. This one is from the legendary Ohio State University football coach, Woody Hayes. I actually heard him say this one, years ago. He said: "Nothing stands still . . . you're either getting better or you'll be getting worse."

It wasn't said elegantly or to achieve any lofty purpose - though winning football games at Ohio State takes on the gravity of a religious imperative - but there is surely an element of plain-spoken wisdom there.
If we, as a University, are not building and creating and investing and thinking about how to improve, then we will doubtless be sliding backwards - and at a time when we can least afford to do that.

And so we will invest - in new facilities and new programs and new people. And we will aggressively recruit new students and challenge and support the ones we have. And we will take them places - in their imaginations and their travels - and we will provoke them and push ourselves to seize these times and those to come.

And we'll do that not just because it is in our self-interest to do so, but because that's what we do, because that is what SVSU has always done, because this is our moment and this is our calling.

On we go. . . .