President’s Report
Board of Trustees, September 4, 2008

Chairman Boyce, trustees of the University of Vermont, emeritus trustees, faculty, staff, students, alumni, and friends, this University has seen very good days over the course of the last six years, building academic quality, enhancing its value for all members of the UVM family and for the citizens of Vermont, and rising by many measures in visibility and reputation among the nation’s institutions of higher learning. Even so, the unanswered question through all of the good years has been whether UVM could and would continue to advance when times were not so good, when things did not go so smoothly on campus and in the larger world.

My answer to the question is this: we can and we will sustain our advance. I also offer, however, this cautionary note: while the invest-and-grow strategy has served us well, the circumstances in which we are now operating call for moving forward more deliberately, conserving precious resources, containing costs wherever possible, and focusing effort and resources intensively on programs and initiatives that will unquestionably enhance academic quality and the experience of students, faculty, and staff; that will make UVM a more competitive and attractive environment for learning, for discovery, and for academic, professional, and personal growth; and that will effectively and efficiently support scholarship and service, including service to the State of Vermont.

We must thus prepare ourselves to make difficult decisions among many appealing and seemingly pressing options, with recognition that our human and financial resources are limited. In short, only through the exercise of a strategically concentrated resolve will we be able to preserve and consolidate the gains we have made to date and lay a secure foundation for the next phase of UVM’s advance.

The budget proposals you will consider today and tomorrow embody this urgent imperative for focus and discipline. The proposal for a revised 2009 budget, along with the measures we have taken for the reconciliation of the FY 2007 and 2008 budgets, represent an effort, led by Interim CFO Richard Cate, to true up all University accounts with respect to the unbudgeted consultant expenditures and to replace the practices that led to these budgetary circumstances with better-grounded managerial accounting. For example, we are ending the custom of making one-time and recurring non-base budget commitments against hoped-for excess revenues—from now on all expenditures will be tied to specified, adequate, and certified sources of funds. That we have been able to address the issues for fiscal years 2007, 2008, and 2009 through a combination of cost containment (including budget cuts to administrative and support units necessitated by last week’s cut in UVM’s State appropriation) and draws on available unrestricted reserve funds indicates the strong financial management skills Mr. Cate has brought to our effort as well as the underlying fiscal health of the University. We recognize, however, that we cannot continue to draw on one-time funds from reserves to address recurring expenditures in the years ahead. Consequently, the challenges we will be tackling in fiscal years 2010, 2011, and 2012 will require the exercise of discipline and constraint to ensure our continuing success.

The shortfalls in financial management and internal controls highlighted in the report of the independent audit that comes before the Board at this meeting are inextricably linked with the spending practices that led to the budget status I just described. As to both, I say this: as CEO, I am personally accountable for the shortcomings in our practices and customs, as well as for the organizational culture in which they occurred. I view the recommendations of the Deloitte report as welcome signposts to set direction for new protocols and I am determined to ensure that those protocols meet the highest best-practice standards. Fueled by my own resolve, your continuing guidance, and the concerted efforts of my administration, I have confidence that we will reach this objective with dispatch and transparency.

We surely face internal challenges and significant adverse external economic and demographic trends. Despite these obstacles, we nonetheless find ourselves at a high watermark in UVM’s history. We face a Dickensian paradox: this is simultaneously the best and the worst of times. What a joy it was at this week’s inspiring Convocation to greet the most talented, diverse class in UVM’s history, born of what was by far our largest applicant pool! How heartening it is to see faculty research and scholarship resurgent in a funding environment more competitive than ever before. And how important it has been to see, during the last few months, UVM advance in ranking after ranking, including high marks for our academic quality, for a variety of programs and initiatives, and for the stellar success of our graduates, all of which I reported in the welcome back letter I sent to the UVM community last week.

Today and tomorrow, we will consider topics that bear directly on the imperative that we build on UVM’s strong foundations with unremitting attention to quality and do so by focusing effort and resources on the highest strategic priorities. The new University Strategic Plan calls on us to be “creative, focused, and resourceful” within a conceptual framework that demands that tough choices be made in support of academic quality and in advancement of our vision of preeminence “in our comprehensive commitment to liberal education, environment, health, and public service.” The trustee education modules offered tomorrow will address costs and their relation to the production of quality and academic program review; both topics underscore the challenges and difficult decisions that lie before us. The extended discussion topic for Educational Programs and Institutional Resources on differential tuition is another example of this work. And, finally, the examination of budget and financial controls issues is critically important to the continuing fiscal health and integrity of the University.

In his recent book The Post-American World, Fareed Zakaria writes that “Higher education is America’s best industry.” America’s colleges and universities are indeed widely acknowledged to be the best in the world. External validation tells us that UVM now stands—by a variety of measures—among the best of the best. Despite the challenges that lie before us, I believe with all my intellect and all my heart that UVM belongs in the forefront; that the quality, the value, and the position we have attained are sustainable; and that with focus, discipline, and the continuing talent, energy, enthusiasm, commitment, and hard work of our faculty, staff, students, alumni, friends, and this Board, we will strengthen the solid foundations underlying our efforts today.

At this critical juncture, it is with humility and resolve that I thank this Board for the opportunity to serve the University of Vermont, and express my deep gratitude to my colleagues for their past, present, and future contributions to UVM’s continuing advance. I have every confidence that UVM will enjoy continuing success and prosperity through discipline, hard work, and fidelity to our most important institutional priorities. Thank you.