President’s Report
Board of Trustees, May 21, 2010

Chairman Cioffi, trustees and trustees emeriti, faculty, students, staff, alumni, and friends, good morning.

I want first to welcome everyone to the great celebratory weekend of our academic year. On Sunday, we will confer degrees on more than 3,000 undergraduate, graduate and professional students with all of the pageantry and joy of a ceremony that reminds us of why we are here laboring together to ensure the academic quality and vitality of our University. Each student who crosses the stage on Sunday will step out into the world as an exemplar and bearer of the legacy of this great University. The core academic mission symbolized by Commencement remains our deepest commitment, our calling, and our labor of love.

As we look beyond Commencement, the state of our University is sound. Moving from FY 10 to FY 11 we will go from balanced budget to balanced budget. More than 22,000 undergraduate applications have produced enrollment deposits slightly in excess of our pre-melt target, promising to yield one of the two strongest classes in the history of the University with respect to College Board scores and diversity, no small feat in these challenging times. Also no small feat is that by the end of our third quarter new gifts through Development and Alumni Relations had exceeded the level of new gifts in FY 2007, the climactic year of our last campaign. In contrast to a roughly 12% national decline in giving to colleges and universities this year, UVM has a good chance of completing the year with a gain. Also, grant and contract awards to the University at the end of the April were running $13 million ahead of last year’s record pace. In short, the University’s budget is solid; the price-value equation at UVM is holding up strongly for college-bound high school students; the University continues to build enthusiasm and commitment expressed through the generous philanthropy of alumni, parents, and friends; and Vermont’s University is competing effectively for external grants in peer-reviewed competitions that test—and testify to—the scientific, scholarly, and creative power of the faculty.

Turning to the budget, hats should be off to everyone, including the vice presidents, deans, department chairs, unit heads, and faculty and staff across the campus who have met formidable fiscal challenges over the past two years while producing the outcomes we have just summarized. In the general fund, we have in two years cut some $16 million while shifting $22 million to undergraduate financial aid. That shift, of course, has been a key element in enrollment management successes supported by a huge contributing community of admissions professionals, deans, staff, faculty, students, parents, and alumni who help recruit the incoming class.

The budget we are asking the Board to approve for 2011 has been very selectively trimmed to focus support on academics. The State appropriation last week of $2.58 million in one-time funds that we had not previously budgeted has allowed us to recommend lowering the rate of tuition increase from the 4.8% proposed to BFI last month to 4%. We are very grateful to the Legislature and the Governor for the temporary funding that has allowed us to make UVM even more affordable for students and families. We have also restrained growth in the cost of attendance, which, inclusive of tuition, fees, room and meals, will go up 3.9%, surely one of the very lowest increases among public research universities nationwide although we continue to rank 50th in the country in terms of state General Fund support per student, given the State’s own resource constraints.

If we could, we would do with less than the 4.0% tuition increase the budget proposes. But after all the belt-tightening the plain fact is that that increase is required simply to cover our bare bones increases in financial aid for students as well as planned increases in total compensation for faculty and staff (with salaries remaining frozen for the second consecutive year for non-union-represented staff who earn more than $75,000). There are many items, on the other hand, for which the tuition level proposed in this budget gives us no extra margin, even though the needs are urgent and strategic: for example, our pressing needs in deferred maintenance, start-up funds for new faculty, up-to-date information and instructional technology, and programmatic priorities like General Education and an enhanced First-Year Experience (on both of which EPIR will receive reports at this meeting), improved advising and counseling, and student life. We also know that the swap of base for one-time dollars means we will have to start right away in FY 2011 with planning to cover in FY 2012 a hole temporarily filled by the one-time funds.

I am looking forward to continuing dialogue with the Board on our long-term tuition strategy. We remain deeply committed to access, affordability, and diversity. We share the concern of all who worry the day may come when deserving students will not be able to go to college because of the high cost of earning degrees that most now consider to be an essential foundation for success. At the same time, let’s be clear: we are producing a nationally competitive University for the benefit of Vermont with what the latest survey by the association of State Higher Education Executive Officers shows is by far the lowest level of state support per student in the nation. Given the constraints on public support in Vermont, we can only sustain this institution for Vermont by relying on student tuition, by increasing the level of philanthropic support for UVM, and by continuing to operate as efficiently as possible. Let’s also be clear that our approach to tuition pricing and financial aid continues to attract highly qualified students to UVM.

As to the record on access and affordability for Vermonters, this fall, for the sixth year in a row, we will have what had only occurred five times in the fifteen years from 1990 through 2004, more than 600 entering Vermont undergraduates. These new Vermont students represent a bigger and bigger share of the smaller and smaller numbers of Vermont high school graduates. Since 2008, moreover, the percentage of Vermont undergraduates who pay nothing at UVM for tuition and fees (other than room and meals) has risen from 28.7% to 32%. In addition to those whose aid packages fully cover tuition and fees, another 49.2% of our Vermont students have financial aid awards. As we think about the budget and tuition policy, I ask that we dwell on those numbers: All told, 81.2% of our full-time Vermont students receive financial aid, and those whose aid packages relieve them of paying any tuition and fees—32%—greatly outnumber those—just 18.8%—who pay the full fare.  And even the full sticker price for Vermonters comes to only about half of our general fund expenditures per student.

The benefits that Vermont derives from its University are countless. In sum, those benefits include the enormous economic engine we represent, with 3,700 employees and economic spillover effects of well over a billion and a half dollars per year. The benefits also include our huge impact on the human resources of the state in educating the plurality of the State’s social workers, nurses, teachers, doctors, engineers, agriculturists, and some 38% of all of the bachelor’s degrees awarded by all institutions, public and independent. And the benefits further include a service mission carried forward not just by UVM Extension but also by every one of our colleges and schools. In short, I for one would be surprised if Vermont’s return on investment in its University is not the highest ROI obtained by any state for investment in public research universities.

We are, as always, grateful for the support of the State, but we also recognize that this is a relationship in which both parties—the University and the State—are subject to recurrent disappointments and frustrations. I continue to believe that Vermont cannot succeed unless UVM succeeds, nor can UVM succeed without Vermont’s support—both tangible and intangible. In the interest of the long-term success of the State, I believe it would behoove us all over the coming years to look for ways to rethink, renew, and reform the relationship in ways that give the University the greatest possible probabilities of continuing success.

For the last two years, the Board and administration have worked to strengthen financial and operational accountability, internal controls, and checks and balances. I want to welcome UVM’s new Chief Internal Auditor, William Harrison (Bill, please stand so that everyone can welcome you). I also want to thank Erica Heffner for her unfaltering, professional service in the interim role. And I want to welcome our new Chief Compliance Officer, Anna Drummond (Anna, please stand, and welcome aboard).  The complementary yet distinct functions of internal audit and compliance represent a sustained effort to address the increasingly complex legal, regulatory, and policy environments in which research universities operate. We are also working to mitigate risk in highly sensitive domains through the search now under way for a lead information technology security officer and through the upcoming designation of Ms. Drummond as chief privacy officer in addition to her role as Chief Compliance Officer. While we are welcoming Bill and Anna, let me join Rob in expressing deep appreciation on the eve of his retirement to Fred Curran, who with great heart, warm smiles, and sometimes creased brow has been a mainstay of UVM so long and so very well: thank you, Fred.

The challenge of sustaining and building academic quality while remaining accessible and affordable with exceptionally modest public funding must be met, in part, by building much higher levels of philanthropic giving. Coming to you at this meeting is a recommendation to proceed with the development of an affiliated Foundation for fundraising. All our Land-Grant public peers in New England have long had foundations. The Vermont State Colleges and the Vermont Student Assistance Corporation already have foundations. I believe we can only take philanthropy for the benefit of UVM and of Vermont to significantly higher levels by developing the large group of deeply engaged, philanthropically capable leadership volunteers that the Foundation Board will represent—development of that leadership group is for me the most compelling rationale for the Foundation.

On July 1, 2010, it will have been three years since we wrapped up the Campaign for the University of Vermont. This year, we have been planning the next campaign, including the drafting of a test case statement that I will share with groups of major donors in a dozen or more meetings between mid-June and mid-September. Those meetings will prepare the participants for interviews with campaign consultants who will then complete, by the end of the fall semester, a feasibility study. I hope we will approve moving to the silent phase of UVM’s third comprehensive campaign as early as next February. I believe that our chances of success in an appropriately ambitious campaign for UVM will be greatly enhanced if the third campaign and the UVM Development Foundation start up concurrently in the course of the next twelve months.

Fundraising is simply a means to an end: academic excellence and the quality of the student experience. Various programmatic enhancements have been under way in the current year. The Joint Committee on General Education of the Faculty Senate and the administration has developed a sound plan for a system of general education at the University. The principles of general education laid out in the plan have been endorsed by the Curricular Affairs Committee of the Faculty Senate. Faculty consultation group have played a crucial role in helping to define critia for courses in phase A requirements. The Joint Committee on General Education has begun writing a detailed proposal for the first phase of implementation. That proposal will go to the Curricular Affairs Committee for review early next fall and then to the full Senate.  Depending on the time required for Senate review and approval, the first phase of the general education system could be implemented as early as fall 2011. New degree programs have been approved, including new undergraduate majors in Global Studies and in Neuroscience. The discussion with the Faculty Senate about a reformed and strengthened Academic Program Review process, like the General Education discussion, has advanced to the point at which it is reasonable to expect action by the full Senate in the fall.

As for the centerpiece of this year’s implementation of the “focus and excel” strategy, the Transdisciplinary Research Initiative has involved faculty to a perhaps unprecedented extent. Yesterday the Senate received a thoughtful and constructive report with recommendations for ways to engage the faculty through the Senate even more fully in advancing and assessing excellence in research, scholarship and creative activity, with special attention to transdisciplinary initiatives.  We welcome the Senate report, and look forward to an active dialogue with the Senate next year about its findings and recommendations. TRI has already been a highly collaborative project to map current and emerging strengths in research, scholarship, and creative activity across college/school, departmental, and disciplinary lines. The project will inform some of the resource allocation decisions always being made; but in this instance, and increasingly, those decisions will be made with more focus, intentionality, and community input.

I have come to think of the project not as the Transdisciplinary Research Initiative but simply as the Transdisciplinary Initiative.  To my mind, the Initiative will be key to UVM’s continuing success, but only to the extent that we have succeeded in mapping out world-class strengths and potentials in a small number of transdisciplinary areas that, building on genuine strengths in the disciplines, identify hundreds of faculty prepared to collaborate in undergraduate as much as in graduate teaching, in the creation of knowledge and solutions, and in service in the Land Grant tradition.

The resolution coming before the Board today on TRI marks an early milestone on a long journey. For a number of trustees, the presentations by the TRI faculty work groups in February marked the most intellectually exciting episode in their service on this Board, and I must say that in my many decades in higher education the development and assessment of the TRI proposals has been the richest and most stimulating case of cross-cutting, campus-wide intellectual dialogue I have experienced. In devising next steps, we will work closely with the Faculty Senate, welcoming its freshly energized commitment to increased engagement. We will be very mindful that a critical task will be to hold the designated Spires accountable for progress gauged against appropriate metrics and that there will also be the indispensable challenge of keeping the focus on just a handful of areas.

We face tremendous challenges in securing resources adequate to the vision and mission we have endorsed for our University. One challenge we must meet is the unsustainable growth of the University’s liability for post-retirement medical benefits. Since that future liability must be charged under Governmental Accounting Standards Board rules to the University’s financial statements at the rate of tens of millions of dollars each year, it is rapidly exerting significant drag on our ability to build academic excellence and meet the needs of students and faculty. We must address this problem in a way that is humane and sensitive to the economic and human costs and benefits of proposed solutions. To do so openly and expeditiously, I will soon charge a task-force of members of the campus community with developing recommendations on post-retirement medical benefits in advance of our next Board meeting in October.

I want to congratulate both the Graduate Student Senate and the Student Government Association on the revisions of their constitutions and bylaws that pave the way for formal recognition today of the Graduate Student Senate as one of our governance bodies. Finally, though we do indeed face challenges too great in number and complexity to touch on all of them in this report, Vermont’s University is, as we had hoped and predicted, emerging earlier and stronger than most of our peers from the Great Recession. Our successes are collective and represent the efforts of faculty, staff, students, alumni, parents, and friends throughout the UVM family. For those efforts, on behalf of the University, I want to express heartfelt gratitude. Mr. Chair, if there are questions, I will be happy to try to respond. Thank you.