President Jischke Speech

October 14, 2003

Purdue President Martin C. Jischke made these remarks on Tuesday (10/14) to the Rotary Club of Indianapolis.

Indiana’s New Economy: The Time Is Now

I am here today to talk about building a winning state.

Indiana has arrived at a crossroads. We are at a point in our history when we can start to build a new economy for Indiana.

To accomplish this we must stay the course with progress we are making, find the resources to move forward and continue investing in capacities that will drive our economic development.

The experience of Purdue University these past three years is evidence that with planning, strategic investments and continued support for education, the people of Indiana can shape a great future.

Even as we address the problems we face today, now is the time for our state to reach for its full potential.

Three years into this new century, our national economy continues to struggle. Indiana has been hit hard. It has been hit hard because nationwide manufacturing has been severely impacted. And Indiana depends on manufacturing more than any other state.

We all know the facts.

Since the year 2000, Indiana has lost more than 136,000 jobs. This is the worst job loss in the nation. Manufacturing accounts for more than 90,000 of the jobs we have lost.

In 1965 Indiana ranked 17th in the nation in per capita income. By 2000 we had dropped to 33rd — the largest decline by any state.

We are leading the nation in too many negative economic measurements.

At the same time, the economic data in Indiana is not all grim.

Manufacturing remains the largest sector of our economy. About 20 percent of the jobs in our state are in manufacturing. These are good-paying jobs and we want to keep them.

Indiana is also strong in the life sciences. It is our fastest-growing economic sector.

Health industry wages are 16 percent above the state average. Indiana ranks in the top 10 in production of pharmaceuticals and medical devices. We are a major global player in orthopedics.

The potential for growth in all of this is substantial, and Purdue and others have created BioCrossroads, formerly the Central Indiana Life Sciences Initiative, to promote this.

We have other factors going for us.

Indiana has a great work force.

Our state government has stepped forward, restructuring taxes, including a phase-out of the inventory tax and elimination of the corporate gross income tax, which for many years discouraged business investment. The state has changed its budgetary priorities, investing in education and economic development.

Leaders in this state are coming together to promote economic development through organizations such as the Alliance for Indiana’s Future and the Central Indiana Corporate Partnership.

And finally, our state has world-class, major research universities playing a leading role in driving our economy.

I arrived at Purdue three years ago with a mandate from our Board of Trustees to draft and implement strategic plans for the university, plans that would use our land-grant missions to advance our state.

We set our vision high — preeminence, world leadership.

We launched initiatives to accomplish our goals.

We next took a step that is absolutely essential to success in any planning process. We calculated what our initiatives would cost and developed revenue streams to support them.

Those revenue streams include a $1.3 billion private fund drive — among the largest for public universities in the nation — and a $1,000-a-year tuition increase for new students.

We made this decision because we were convinced that we could give our students better value if they paid more and if we also increased revenue from other sources.

We announced the tuition increase eight months in advance. We told people that even after the increase, our fees would still rank low in the Big Ten. Our fees are now eighth among 10 Big Ten public universities.

We told people exactly where this money would be spent: on additional faculty, on a better learning environment, on new technology, on student scholarships and financial aid.

Since we announced the increase, our applications for admission have risen to record levels.

We started our $1.3 billion fund drive in the year 2000, just as the bottom dropped out of the stock market and economy.

We stayed the course. We explained exactly how the funds would be invested to accomplish our goals.

Three years into our seven-year campaign, our fund raising is hitting record levels. Our Campaign for Purdue has surpassed $775 million.

Our students, alumni and friends believe in the power of what we are doing.

Our strategic plans are crafted to make Purdue a better university so we can help Indiana become a better state. And it is working!

As we do all this, we are also sharing in Indiana’s budget cuts.

The state’s revenue shortfalls have cost Purdue more than $100 million in the last three years.

In the past five years, the national Higher Education Consumer Price Index has risen 21 percent. During that period we have aggressively worked to contain our costs, and have held our supply and expense budgets to increases of only 8 percent. We are annually reallocating at least 2 percent of our own budgets for strategic initiatives.

While carefully managing our funds, we have used our strategic plans to develop new revenue streams, improve our market positions and make Purdue a better university.

In a Sunday edition in late August, The New York Times reported on the impact of funding cuts to higher education institutions across the nation:

• The University of Illinois has canceled 1,000 classes in hundreds of subjects;

• Virginia Tech is eliminating an education major and suspending mandatory history classes because it does not have enough faculty;

• The University of Missouri is cutting teacher training, cutting a nursing degree, cutting international programs;

• The University of Michigan is doubling the size of some classes, reducing library hours, cutting freshman seminars.

The list goes on.

While this is taking place across the nation, Purdue is increasing faculty; increasing student scholarship and financial aid; increasing technology; adding new degree programs; launching visionary initiatives in learning, discovery and engagement; promoting economic development throughout our state; and constructing new buildings and facilities at a rate that is unprecedented in our history.

This is the result of solid support from the governor and General Assembly. This is the result of generous support from our alumni and friends. This is the result of our strategic plans.

Our plans provide us with a clear vision for preeminence and a road map for investing our resources that is leading us to success.

Our job now is to continue implementing our plans and delivering for our state.

Purdue is keeping its promises to the people of Indiana.

Like Purdue, the state of Indiana is at a turning point in its history. Today we have the opportunity in our state to grab hold of the sciences and technologies that are driving change throughout the world. We can control our own destiny.

In fact, we must.

John Schaar, a sociology professor emeritus at the University of California Santa Cruz, says: "The future is not some place we are going, but (a place) we are creating. The paths are not to be found, but made."

If Indiana is going to be among the leaders of the 21st century, as it should be, we must start making those paths today and creating that future now!

We can start by coming together as a people and deciding what we want Indiana to be.

We need a vision. We need to commit ourselves to goals that are widely shared and supported.

Second, we need to reach a consensus on strategic plans detailing what we will do to accomplish our goals.

And third, we need to agree on realistic revenue streams to support our initiatives.

A great American philosopher — Yogi Berra — said: "If you don’t know where you are going, when you get there you will be lost."

Well said, Yogi.

It makes far more sense than some people think.

If Indiana does not decide where it is going, how it will get there, what it will cost and how we will pay the bills, when we arrive in the future — as we inevitably must — we will be lost.

My vision for Indiana is a state that invests strongly in the power of education and in the promise of economic development.

My vision for Indiana is a state that uses the vast resources of its major research universities to educate our people and to drive the growth of business, industry, jobs, and revenue for communities and our state.

We are already moving in the right direction. Now is the time to move further and faster.

The governor and Legislature lined up solidly behind education and economic development in the last session of the General Assembly.

In the biennial budget, education accounts for about 55 percent of the General Fund — $4.1 billion this year and $4.2 billion next fiscal year. The higher education share of this is $1.5 billion.

We appreciate this support. We are truly grateful.

At the same time, while the percentage of the budget for education is solid, the dollars per student are not as great as in many other states.

In 2001-2002, our state appropriations per student at Purdue ranked 44 percent below the average of our peers.

That difference is worth $217 million! Real money by any calculations.

Budgeted support for higher education and economic development in Indiana are now threatened by revenue shortfalls and the rising cost of mandated programs.

Indiana is raising more money in tax revenue than last year. But it is not enough.

Medicaid is a major issue in Indiana and across the nation.

In 2001, 31 states were not able to keep up with Medicaid costs. In 2002 the number rose to 36. This year the projection is that 41 states will not meet these costs.

Clearly this is an issue that must be addressed jointly by our states and the federal government. This is not an issue that can be put aside until tomorrow.

Twenty-first century technology might help reduce some costs and enable us to shift revenue toward education and economic development.

For example, Celltrack, a company in Purdue Research Park, has worked with Nextel and Motorola in developing and marketing a system that uses cellular telephones and GPS technology to improve and cut the cost of monitoring of people on home detention.

The system is being considered for Marion County this week.

It allows one correction officer to watch 100 people on house arrest, compared with the current 40.

Developments such as this could have positive impacts on state correction budgets nationwide.

According to 2001 Justice Department statistics, one out of every 37 U.S. adults has been in state or federal prison at some point in his or her lifetime.

The cost is enormous. States are collectively spending about $40 billion a year on prison systems.

The amount of money it costs to keep an adult in an Indiana prison for one year is more than twice the annual state appropriation per full-time in-state student at Purdue-West Lafayette.

As we look at opportunities to make Indiana a better state, the immediate budget issue is the deficit.

Our deficit is at $800 million and rising. Because of continued revenue shortfalls, some say it will reach $1 billion or more.

In Indiana, as in every other state where this is happening, there are only two ways to bring the budget back into balance.

First, we can cut spending, cut services and programs, lay off people, cut economic development initiatives, cut education.

The second approach is to raise taxes or create new taxes in untapped areas such as services.

Both of these approaches are unpopular and carry serious potential consequences.

These are tough questions that should be addressed in the context of an overall strategic plan for Indiana with goals, initiatives and funding strategies.

These are not questions to be answered in the context of managing a problem. They are issues to be answered in the framework of accomplishing a goal.

Ultimately, the best way to increase revenue for our state is to grow the economy in a two-pronged approach.

First, we need to attract and promote new, knowledge-based high-technology businesses and industries. Second, we need to help our core business and industry compete and thrive in the international marketplace.

To accomplish this, we need partnerships between the public and private sectors and our major research universities.

The new economy that is sweeping the world today is driven by science and technology. States that are most effectively developing this knowledge-intensive economy are succeeding by partnering with major research universities.

In Massachusetts, MIT is responsible for 1,000 companies being headquartered in the state. In Seattle, an amazing 70 percent of all companies have a direct relationship to the University of Washington.

We know the impact of Stanford on Silicon Valley, and Duke, the University of North Carolina and North Carolina State on the Research Triangle.

Purdue is ideally situated to be an engine powering Indiana's success.

We are partnering with other universities such as Indiana University, Rose-Hulman and IUPUI to combine our strengths for the people of our state.

At Purdue we are developing a new interdisciplinary research area called Discovery Park.

In Discovery Park we have $100 million in state-of-the-art research facilities with enormous economic development potential all under construction — today!

We are building a $55.4 million nanotechnology center, a $25 million biomedical engineering building, the $15 million Bindley Bioscience Center, and a $7 million Center for Entrepreneurship that will drive our research into the economy.

We are planning an e-Enterprise Center in Discovery Park and a new Computer Science building on campus. We have just dedicated a privately funded $35 million Rawls Hall that will attract top students and faculty to our School of Management and our state.

We have just dedicated the $11 million Robert and Terry Bowen Laboratory for Large-Scale Civil Engineering, the most modern, well-equipped civil engineering lab for large-scale testing in the world. It is privately funded.

We are building a $20 million addition to our Chemical Engineering building — privately funded.

We are active in high-technology economic development for Indiana in many other ways.

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

We are working to build more such centers throughout Indiana, including a federally supported facility in Merrillville that is already under construction.

Our Research Park in West Lafayette has been named Indiana’s first Certified Technology Park. It is a model for Indiana.

We are working with community economic development plans throughout the state.

We are working hard on economic development initiatives in Indianapolis. We have opened a full-time engagement office here in Indianapolis.

Last year our Technical Assistance Program helped 400 Indiana companies, including 102 in Marion County.

Purdue is delivering on its strategic plan goals for the people of Indiana.

One of the best economic development tools available to us is the state's 21st Century Research and Technology Fund. Thank you to the General Assembly for funding this important program.

We would like to see it grow even larger.

The 21st Century Research and Technology Fund is designed to produce new economic initiatives by providing matching funds for collaborative research involving Indiana universities and private businesses. It is designed to create economic growth.

The 21st Century Fund has been used successfully to attract additional grants and venture capital to our state. For every dollar of state money invested, two — not one — two dollars in external investments come into Indiana.

This fund is Indiana’s key to unlock venture capital and federal research and development dollars for our state.

As we work to promote the high-technology sector, we must also work on our core economy.

Developments in nanotechnology, biosciences, biomedical engineering, genomics, alternative energy and information technology, to name just a few, are on the verge of transforming the way we live and work.

Who will manufacture these products of the future, the new protein-based drugs, the nano-devices, the fuel cells that will power tomorrow’s automobiles?

I believe Indiana manufacturers must compete for these opportunities and that we can be world leaders in producing the high-technology, high value-added products that will identify the winners in the new global marketplace.

To help our industries leap into the future we must assist Indiana manufacturing in capitalizing on the knowledge and discovery assets of our universities.

This is what an Advanced Manufacturing Institute can do.

Our vision is that in seven years, an Advanced Manufacturing Institute affiliated with Purdue will be working with hundreds of companies in our state. It will be attracting new companies to locate here. It will be self-sustaining.

The Advanced Manufacturing Institute will be a place where industries can seek assistance, positioning themselves to manufacture the products that will emerge from the 21st century explosion in engineering, science and technology. It will be a place where Indiana manufacturers can seek assistance in using high technology in their manufacturing processes. It will be a place where Indiana manufacturers can find assistance in achieving and maintaining competitiveness.

As we work on this institute we are addressing another sector of our core economy. The transportation, distribution and logistics industry is a major economic presence in our state.

This industry is very important to Indiana’s economy today, and it is a key to our economic development in the 21st century.

In our work with the Central Indiana Corporate Partnership investigating the potential for an Advanced Manufacturing Institute, we realized that a critical aspect of modern manufacturing is transportation, distribution and logistics. We also realized the time is perfect for a major initiative that will leverage Purdue’s strengths in engineering, management and information technology to create a multi-university research and teaching center in transportation, distribution and logistics.

The Central Indiana Corporate Partnership has commissioned Purdue to study the feasibility of locating such a center on our campus.

We are very excited about this potential in the Crossroads of America.

There is a great deal happening in Indiana today. There is even more being positioned just on the horizon.

Indiana is a great state with great people. There is a great heritage here, great pride.

My message to you today is this: We can be even better. Indiana can and should aspire to be the best in the nation in education, preschool through graduate school. Indiana can, and should, aspire to have the best economy in the nation, solid core industries, and a thriving high-technology sector.

British writer W. Somerset Maugham said: "It's a funny thing about life. If you refuse to accept anything but the best, you very often get it."

We must refuse to accept anything but the best for our state.

The time for Indiana has arrived!

The time for a new economy, a new future for our state is now!

This is a transforming moment for the 21st century when people are being called to step forward, to set a new course for the next 100 years.

We are the people.

This is our moment.

And I believe we can succeed in building the best for Indiana through our efforts today!

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