President Jischke Speech

April 4, 2003

Purdue University President Martin C. Jischke made these remarks Friday (4/4) during a meeting of the Purdue University Board of Trustees.

President Martin C. Jischke's comments to the board of trustees

I have good news to start our meetings!

While we don't make our decisions based on rankings, it is nice when we receive recognition for the great work that's taking place here.

The U.S. News rankings of graduates programs is out this morning. The survey ranks Purdue's graduate programs in the Schools of Engineering number nine overall in the country. The Krannert School of Management's MBA program ranks 24th overall and number two nationally in production/operations management and number nine in the supply chain/logistics category.

This shows a rise in rankings from last year for both schools.

Individual engineering graduate program national rankings for Purdue are:

• second, agricultural engineering,

• third, industrial engineering,

• sixth, aerospace,

• seventh, civil engineering, mechanical engineering and nuclear engineering,

• and 10th, electrical/electronic engineering.

In a separate ranking category, employers placed Purdue engineering among the top 10 in the nation.

The is very exciting news, and our congratulations to everyone whose hard work accomplished this.

As we begin the final weeks of the spring semester, state support and funding cuts remain a top concern. This morning I'm going to summarize some of the impacts of budget cuts to Purdue. I am also going to discuss some measures we have initiated to reduce expenses.

We are being impacted by the state revenue shortfalls. The impact during the past two years has been about $75 million.

We are nonetheless progressing on our strategic plans, because we have found ways to deal with these impacts.

But our progress could be slowed if this trend continues. If this continues in the long term, it will impact our ability to meet our strategic goals.

We are working closely with the governor and the General Assembly on the budget for the next biennium. The House has approved a spending plan for the coming biennium, and the Senate has a plan that has been passed out of committee.

Both of these address some of our requests and economic development initiatives.

It is significant that the House and Senate are attempting to restore some of higher education's losses at a time when our state continues to face significant revenue shortages. This tells us our legislators understand that education will play a major role in eliminating these revenue shortages in the future.

The budgets passed by the House and Senate provide convincing evidence that Indiana's legislators recognize the strategic role of higher education in our state.

While there are some major differences between the House and Senate versions, there are also some common points.

Both versions fund enrollment growth, which is very important for growing regional campuses.

Both recognize the new adjustment for funding major research institutions. This is important in helping us leverage federal research dollars that create jobs and new companies for Indiana.

Both versions include our $36 million Millennium Engineering Building.

Both provide a 1 percent inflation adjustment in the second year.

Both attempt to restore critical repair and renovation funding that is being withheld

this biennium.

While we appreciate this and understand the difficulties of state budgeting, both versions fall short of some of our real needs.

For example, for all of higher education, the House version includes $12.7 million in repair and renovation for each year of the biennium. This represents only about one-quarter of the total amount requested.

The House bill restores many of the budget reductions imposed on Indiana colleges and universities under the Deficit Management Plan. The House bill also supports: the Biomedical Engineering building on our West Lafayette campus and the Fort Wayne Music building.

Among operating cuts imposed by the governor's Deficit Management Plan, the Senate bill restores funds only for the Animal Disease Diagnostics Lab.

The Senate version includes funding for Purdue's Biomedical Engineering program expansion. In addition, the Senate version funds the request from our Fort Wayne campus for support of the Northeast Indiana Innovation Center. The Senate also has an economic development package under consideration that supports several initiatives of interest to Purdue including the 21st Century Research and Technology Fund, and regional technology centers.

We appreciate the work that has gone into these spending plans, and the support they show for Purdue initiatives. At the same time, we continue to be concerned – along with everyone else – about declining state revenues, which are still falling short of projections.

As our state moves forward, we join those who are concerned about the rising cost of higher education and the need for colleges and universities to hold the line on expenses.

Purdue historically has been an excellent steward of resources. We have further reduced and held the line on expenses during these times of revenue shortfalls.

Purdue is doing its part.

Cuts to education are among the major measures the state has used to deal with revenue shortfalls. And in addition to absorbing these cuts, we have taken further steps to hold down costs.

My message today is this: compared with other Big Ten universities and our peers, Purdue continues to be an incredible bargain for our students and our state. We have successfully managed our limited resources to become among the top universities in this nation and world.

We will continue to do this.

But – if we are to ensure the future of affordable higher education for the people of Indiana – it will require more than asking universities to continue making do with less. It will require strong state support, along with increased private fund raising, sponsored programs and research.

In 1999, the Commission of Institutions of Higher Education of the North Central Association of Colleges and Schools reviewed Purdue. The university was granted full 10-year accreditation status.

In its report, the commission said: "Purdue has demonstrated its ability to manage its resources effectively and to define, set and pursue its educational priorities in a clear and effective fashion. The leadership of the university is to be highly commended for the thoughtful, efficient way it has deployed the scarce resources at its disposal and the thoughtful care and energy it has given to secure funding from within the state, as well as from private and federal sources ..."

That is a strong statement of support for our historic resource management.

In 2002 I appointed a Presidential Task Force to examine various aspects of current resource stewardship at Purdue. This is what we learned: Purdue continues to be underfunded with the double impact of state support and tuition that both fall below our peers.

In fiscal year 2001 – when compared with our peer institutions – Purdue was 36 percent below average expenditures per full-time equivalent student. When compared with Big Ten institutions, our expenditures were 31 percent below the average.

In 2001 our state educational appropriation per full-time equivalent student was 23 percent below the Big Ten average. It was 41 percent below our peer institutions.

At the same time, recent increases not withstanding, Purdue undergraduate resident fees are below the mean and rank fifth among our peer institutions. Our in-state fees rank sixth among Big Ten public institutions and below the mean.

This not only indicates Purdue's low funding level compared with other universities, but also signifies Purdue's very efficient use of funds in delivering programs.

Purdue is putting its limited resources to maximum benefit for our students and our state.

Our costs are low compared with our peers.

Our faculty salaries continue to run 10 percent less than peer institutions, although total compensation – salary plus benefits – is somewhat more competitive, and cost of living differences further close the gap.

In the last five years the Higher Education Price Index has increased by 21 percent. During this same period, Purdue employee salaries increased a composite 18 percent. Our allocations for supplies and expenses grew 8 percent.

In the last two budget years there were no inflationary increases for Purdue's West Lafayette supply and expense budgets, while the Higher Education Price Index and the Consumer Price Index have continued to rise.

We are effectively using our human resources.

The proportion of Purdue's higher administrative staff has remained relatively unchanged, from 2.6 percent in 1995 to 2.9 percent in 2001.

This compares quite favorably with our peer institutions, which have seen an average increase in higher administrative staff from 3.2 percent in 1995 to 4.1 percent in 2001. The Big Ten averages are higher still: 4.6 percent in 1995 to 6.3 percent in 2001.

All of this illustrates Purdue's attention to managing administrative growth and overhead.

Purdue has historically been known for its efficiency and effectiveness in space and facility management.

The university manages about 15.4 million gross square feet of space on our West Lafayette campus. Of this, 10.5 million is assignable square footage. This represents a net-to-gross ratio of 68 percent.

This is more efficient than the nationally accepted benchmark norms of 55 percent to 65 percent for similar facilities.

Our assigned square feet of classroom and teaching laboratory space per full-time equivalent student is below the Big Ten average. In fact, in classroom space, it is just a little more than half the Big Ten average.

While this signifies insufficient academic space, it also demonstrates Purdue's high degree of efficiency in space utilization.

Funding cuts to Purdue have resulted in many concerns about the repair and renovation of our facilities. One of our major responsibilities is the stewardship of these assets that belong to the people of Indiana.

Among the impacts of funding cuts are deferred repairs and renovations. As of last fall our deferred repairs and renovations had reached a total of $358 million.

This includes $4.9 million in classroom renovations, $112 million in laboratory renovations, $15 million in fire and safety, $97 million in heating, ventilation and air-conditioning related work, and $85 million in infrastructure needs.

With little or no new investments in renovations, this number could grow annually by $25 million.

Examples of projects that are needed, but are being deferred, are renovations in Lilly Hall, and renovations to other buildings, such as Electrical Engineering, Wetherill, and Chemical Engineering.

The backlog in repair and renovation to Lilly Hall alone has reached $66.5 million.

Other projects that were planned for 2001 to 2003 but have been deferred include:

• The installation of an elevator in University Hall to help make it accessible to all students, faculty, staff and visitors.

• A significant infrastructure need that is not being addressed is a long-term project to replace the more than 50-year-old electrical distribution system that serves the main part of campus and building electrical vaults.

This project has been planned for more than 10 years, yet little progress has been made due to lack of repair and renovation infrastructure funding. Without this project, the older buildings on the main part of campus have inadequate capacity for new loads, have power quality problems, and have exposure to extended outages, in addition to safety and code issues.

Cuts in our repair and renovation budget are a very serious issue at this university.

We have taken many steps to deal with state budgets cuts.

Program support has been reduced across campus.

In engineering the Technical Assistance Program has reduced the scope of projects for small businesses and is working on a plan to bill for services. Continuing Engineering Education has become totally self-supporting. The position of director of the Institute for Interdisciplinary Engineering Studies has been eliminated.

In agriculture vacant field staff positions have been frozen. The school applied for Voluntary Early Retirement Authority through the U.S. Department of Agriculture for qualified Civil Service employees. This resulted in nine Civil Service retirees and 19 Voluntary Early Retirement Authority retirees. The Animal Disease Diagnostic Laboratory has been forced to freeze vacant positions and reduce clerical and service staff. This has greatly reduced the capacity to quickly diagnose and control potentially serious animal diseases, which could directly impact Indiana's food supply and economy.

In Purdue West Lafayette physical facilities, 15 vacant skills and trades positions have been left unfilled.

All Purdue campuses are feeling the impact of budget cuts and are holding the line and reducing expenses.

• Fort Wayne, which already receives among the lowest campus appropriations in the state, has held back on filling a significant number of positions.

Calumet has gone from twice to once a day mail service, they've out-serviced some maintenance and reduced permanent staff, they've cut travel, and have left some non-mission critical positions vacant for extended periods.

North Central has increased educational opportunities for residents of northwest Indiana by adding five new baccalaureate degree programs without acquiring additional state funding. And, it has handled significant enrollment increases by hiring additional part-time faculty.

As we hold the line on expenses, we have increased efforts to raise more revenue through sponsored programs and fund raising. Our success in sponsored programs has grown rapidly.

In 2001-02 total sponsored funds awards of nearly $200 million equaled 78 percent of total state appropriations for Purdue. Research funds per full-time equivalent faculty reached 97 percent of the average faculty compensation.

This year our private fund raising will exceed West Lafayette operating appropriations.

Our strategic plans for preeminence depend on the $1.3 billion Campaign for Purdue.

Our annual fund raising has increased from $65 million in 1996-1997 to $164 million in 2001-2002, with another $70 million in pledges. And during the current fiscal year we will reach new record levels in fund raising while continuing to reduce the administrative cost for this work even further below national, Big Ten and peer median levels.

This money does not replace state support. Private fund raising gives Purdue the resources we need to go the extra mile, to reach the next level of excellence.

For example, since July 1, 1998, total construction at Purdue has been $294.3 million. State support accounted for only 30 percent of this, with the remaining 70 percent coming from other sources.

This relationship is being enhanced in our $1.3 billion Campaign for Purdue.

We have $784 million in capital projects planned, including the new Computer Science Building seen here, and 77 percent of this will come from private funds. The state is only being asked to contribute 23 percent.

A major part of our Campaign for Purdue is raising money for student financial aid and scholarships. This week we announced several major gifts as part of this campaign to raise $200 million, helping to keep Purdue accessible to all qualified students.

These funds will help more than 750 students.

One area of the scholarship campaign is the Purdue Opportunity Awards. These are designed to help Indiana students who have great financial need and extenuating circumstances that would otherwise prevent them from enrolling at Purdue.

One freshman student from each of the 92 counties in Indiana will receive the award annually. This scholarship program will provide these students with a total financial aid package that will include tuition, room and board for the recipient's first year at Purdue.

Investments in Purdue pay back big time for Indiana. Our graduates have a major impact on the economy of our state.

Purdue alumni living in Indiana contribute an estimated $681 million to our state's tax base. That is $388 million more than the $293 million Purdue received in annual operating appropriations in fiscal 2002.

This means for every $1 invested by the state in Purdue, $7.31 is added to annual earnings in Indiana.

At the same time, Purdue research generated 10,906 jobs in Indiana in the year 2000.

Purdue has been selected as one of the top 12 universities in the nation, for its support of state economic development. We are creating new businesses through our research, attracting new businesses through our facilities and expertise, and we are working with existing businesses to help them grow.

In the 10 years ending last June, Purdue's Technical Assistance Program, working with Indiana businesses and industries, has resulted in $46.6 million in capital investments, $20 million in cost savings and $177.5 million in increased sales.

In 2001-2002 alone, TAP helped Indiana companies add 971 jobs and saved another 1,932 jobs.

In 2000 the Purdue Research Foundation facilitated 10 startup companies. That ranks Purdue first among its peers.

At the Purdue Research Park we have created 150,000 square feet of incubation space, making our technology centers the largest in the United States.

The Commission on Institutions of Higher Education of the North Central Association of Colleges and Schools says Purdue "contributes impressively to the welfare of the people of Indiana ..."

As Indiana's land-grant institution, Purdue is committed to serving the state with the highest level of efficiency and effectiveness. As an institution that has placed many of its programs among the best in the nation and the world, Purdue is well positioned to achieve its vision of preeminence.

Purdue's strategic plans map the course that will achieve this vision for world leadership.

We have completed the first year of implementing our strategic priorities. A comprehensive report delineating the first year of progress has been publicly presented.

This report clearly demonstrates that Purdue is well on its way toward achieving its goals.

Without sound stewardship of resources, we could not be achieving the level of success we are experiencing with our plans.

Clearly, Purdue has joined the rest of Indiana in holding the line and reducing expenses during this time of revenue shortfalls. We appreciate all the individual efforts by our faculty and staff that are making this possible.

Our faculty and staff have an enormous commitment to this university and our students. In these difficult times, members of the faculty have helped to soften strains on our budget.

Two accomplished professors who have been appointed University Faculty Scholars have used their awards to help others. Jan Cover in philosophy has paid for speakers for his department. Ann Astell in English has used much of her award to build medieval studies holdings in the library.

Many other members of our faculty have contributed extensive time and energy to plan and write grant applications that help fund advancements in undergraduate learning.

We believe Purdue is doing its part, and then some, to hold the line on costs, while at the same time serving as an engine helping to drive Indiana's economy.

We will continue to do this.

We understand people are concerned about the cost of higher education. We are also very concerned.

And we are committed to working with the governor and General Assembly on a funding plan for higher education that is good for our state, its citizens and good for our students.

I not only believe this can be accomplished. I believe the future of our state depends on this being accomplished.

Working together, we will succeed.

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