STATE OF THE UNIVERSITY ADDRESS

Delivered by President Brit Kirwan on Oct. 11, 2001

As you know, the president traditionally delivers a State of the University address at the first meeting of the University Senate each fall. This year, that opportunity arrives at a time when our nation and the world are in a tumultuous state because of the Sept. 11 terrorist attack.

During this crisis, we have been reminded of what a special place Ohio State is. For more than three years, it has been both a privilege and a source of pride to serve as president of this University.

In recent weeks, that pride has reached new heights as I have observed this community and this University respond to a national trauma that none of us could ever have anticipated -- even in our worst nightmares.

I am proud that Ohio State was the first major university to postpone the football game scheduled for Sept. 15, a move later adopted by essentially all other intercollegiate and professional teams.

I am proud that, instead of a football game, we sponsored, jointly with the American Red Cross and Dispatch Companies, the"Show You Care" telethon in Ohio Stadium. The atmosphere at that event, with over 10,000 people present and a sea of American flags, is hard to describe. It was among the most inspiring experiences of my life. The event raised well over $800,000 for the Red Cross Disaster Relief Fund.

I am proud of the University's candlelight vigil, organized largely by our students. At the vigil, thousands of students, staff, and faculty gathered on the Oval for a very moving commemoration of the tragedies.

I am proud of our faculty and staff, who, through teach-ins and other programs, engaged our students in discussions about these tragic events and their implications.

I am proud of our counseling professionals and our international student support staff, who responded so quickly and offered their services to students and others throughout the days and nights following the tragedy.

I am proud of the way that our community supported the victims of the attacks as well as the rescuers -- some from Ohio -- who put their lives at risk on our behalf. Of course, all of us offer our support for the members of our University community -- faculty, staff and students -- who have been or soon will be called up for military duty.

Above all, I am proud of the show of unity, respect, community spirit and feelings of mutual appreciation that permeated our campus this past month.

Each of us must do our part to help make such feelings an ongoing part of life at Ohio State.

By Kevin Fitzsimons President Kirwan delivers the address to the University Senate on Oct. 11 in McPherson Laboratory.

The events of Sept. 11 will affect us in many ways. Neither a nation nor its people recover quickly from the trauma we have experienced. Many Americans hunger for stability and normalcy, hopes that are as understandable as they are difficult to meet in today's environment.

Nonetheless, by holding fast to our values and working together, we can and will get through this difficult period.

Last year, I devoted my entire State of the University address, and many other presentations on and off campus, to a description of our Academic Plan. The Plan has been well received here and elsewhere. Subsequent actions have focused on implementation of the Plan's strategies and initiatives.

Later this fall, we will issue an updated Academic Plan that highlights progress to date and, in light of current budget realities, adjusts implementation but does not lower our goals.

To call the period since the Plan's debut fluid would be an understatement. In fact, the last 12 months have been exceptionally unpredictable, unearthing one unpleasant surprise after another.

Last fall, the Board of Regents -- with the governor's support -- presented a"high hopes" budget that would have significantly strengthened this University and higher education across Ohio.

But as autumn turned to winter and spring, those high hopes were dashed, replaced by budget reductions that hit higher education especially hard. It was yet another example of the chronic under-funding of higher education that is putting our state at risk.

One serious consequence of these fiscal constraints for Ohio State was a minimal pay increase this year. This was done with the understanding that we would develop a multiyear strategy to systematically address faculty and staff salary deficiencies beginning July 1, 2001.

Because of our fiscal problems, we also put several important programs on hold. One example was Academic Enrichment. We also scaled back our effort to recruit senior eminent faculty.

In June, I proposed three new Academic Plan initiatives for the current academic year and identified a multiyear compensation catch-up strategy as our overriding priority.

I noted that, at least for the current biennium, this strategy would require us to fund most of the salary increases internally through some kind of reallocation effort.

Ed Ray and Bill Shkurti were charged to work with a specially appointed group, the Competitive Compensation Oversight Committee. The task was to develop a strategy that restores faculty salaries to the median of those at our benchmark universities.

Staff salaries would be adjusted by position category using a corresponding set of benchmark organizations.

As the summer progressed, it became evident that additional surprises were in store, none of them pleasant. The economy continued to worsen, with a growing litany of production cutbacks, corporate lay-offs, and missed profit targets.

The Conference Board's Index of Leading Economic Indicators fell in July and again in August. A state, if not a national, recession appeared increasingly likely.

On Sept. 6, the Ohio Supreme Court ruled that the state needed to appropriate substantially more money to K-12 education -- well above the significant increase appropriated last spring.

This total has been estimated to be as high as an additional $1.24 billion per year, retroactive to July 1, 2001.

Five days after the court decision came the tragic events of Sept. 11 and the resulting economic fallout.

Since then, many governors have called for budget reductions that are negatively impacting publicly funded colleges and universities across the country, especially in the Midwest.

In Ohio, revenues are behind projections by $215 million for the first three months of this fiscal year. Some estimate this year's shortfall at $1 billion, not counting the resources required to satisfy the Supreme Court decision.

Last week, we learned that Governor Taft is likely to enact a 6 percent rescission on all state agency funds for the current fiscal year.

For us, this rescission will amount to more than $27 million Universitywide and more than $19 million from our instructional subsidy at the Columbus campus.

Is this all? Could the situation get even worse? We don't know since the answer depends upon the economy and implementation of the Supreme Court decision. We do know that we have no choice but to proceed with addressing the realities at hand.

Planning in such an environment is obviously a challenge. It brings to mind a Conference Board economist named Edgar Fiedler who urged security analysts to remember one basic principle."Give them a number or give them a date, but never give them both."

Unfortunately, as I stand here on Oct. 11, I don't have the luxury of taking Mr. Fiedler's advice. I can say that whatever the future brings, we will do the best we can with the resources we have.

I can add that looking down the road into the next biennium, there is some reason for optimism. By then, our economy should be stronger, the DeRolph case should be concluded, and our efforts to promote the merits of higher education should have borne fruit.

But that's then; this is now. And there's very little reason for optimism about our fiscal circumstances this year or next.

Clearly, we cannot count on additional state revenues, and holding the cut to 6 percent is far from certain. To maintain momentum toward the aspirations of the Academic Plan, therefore, we'll need to make some very tough choices.

In summary, our resource problem is more severe, of greater duration, and more uncertain than when we met in June.

How we address this challenge will say a lot about us and about our future, for fundamentally there are two polar-opposite options from which to choose.

One option is to hunker down, put our vision on hold, and muddle through the next few years as best we can.

This approach has some advantages. It's easy to administer, and we can use the economic crisis as the reason for our stagnation.

While some may see this as the safe option, to me it's by far the more dangerous approach. It guarantees that we'll lose ground -- substantial ground -- in pursuit of our goals for academic excellence.

It also represents a turning back to a time decades ago when this University was not willing to make hard choices, when the University tried to be all things to all people and when being OK at what we do was good enough.

In short, this option is not worthy of Ohio State, and we should reject it.

The other option is to develop an active response built on self-reliance and prioritization.

This option enables us to be the masters of our destiny. It enables us to take advantage of the excellent groundwork we have laid in preparing for budget restructuring and creating the Academic Plan.

But it requires us to systematically redirect existing resources to match the continuing needs of the Academic Plan and to stop doing less-important tasks.

And, to be faithful to our values, it requires us be fair to all while moving the University forward toward greater academic excellence.

Fortunately, the path I advocate is one we have already begun to travel. We have already rejected the idea that we can be everything to everybody.

For example, our Selective Investment strategy is serving us well and demonstrates that we have the wisdom and the grit to travel this road.

But even with our recent history of progress, the challenge I outline today will require tougher decisions and more dramatic actions.

Clearly we need more than just bold words, however. We need tough-minded, realistic strategies.

So, how exactly do we continue our progress over the next few years? Before answering this question, prudence requires me to add a caveat: We cannot control the external environment, and at some point continued economic difficulties could send us back to the drawing board. Barring such eventualities, this is how I believe we should proceed.

We begin with the Academic Plan and the four initiatives on which we can make significant progress in the short to medium term. As you will recall, these items were discussed at our June meeting.

Three of these items were selected not only for their intrinsic merit and their effect on various Plan strategies, but also because funding for them has been identified.

To remind you, these three items are:

• A series of enhancements to our undergraduate program through use of the"over-the-cap" tuition funds;

• A major biomedical research initiative, drawing in part upon the Tobacco Settlement funds; and

• Creation of an Institute for the Study of Race and Ethnicity in the Americas, using funds earmarked last year.

We will move forward with these three initiatives, each of which has the potential to make us a better university. We expect to make progress on other aspects of the Academic Plan as well.

This brings me to our No. 1 funding priority and the chief focus of our current efforts: The compensation of faculty and staff.

Compensation is an integral and essential building block of our Academic Plan.

We cannot be an excellent university without excellent faculty, and we will not have excellent faculty if we do not provide compensation that is competitive with our benchmark peer institutions. The same is true for staff.

I surely don't need to remind this group that over the past four or five years, due to inadequate state support, average salaries for faculty and staff have fallen to near the bottom of these benchmark institutions.

Our mid-term compensation goal is to be at the median salary level of our benchmark universities for faculty and of the established comparison organizations for staff within the next three or four years.

Prior to last year, our average compensation rate was roughly 2 percent below these benchmarks. We estimate that since then we have dropped another 2 percent. Thus, the estimated deficit today totals approximately 4 percent.

That equates to a salary deficiency of almost $18 million for our faculty and staff.

To eliminate this deficit, our strategy will be to provide salaries over the next three to four years that, on average, both meet current market increases and include at least an additional 1 percent per year in catch-up funds.

In the implementation of our compensation plan we will be guided by seven principles, which are as follows:

One, the Academic Plan will be the driving force behind everything we do.

Two, individual compensation will be based on merit.

Three, the degree to which salaries are deficient varies by college and job category. Therefore, compensation targets may vary among colleges and units.

Four, the responsibility for generating resources must be shared between the central administration and the colleges and support units.

Five, we will give priority to the compensation of existing faculty and staff over the hiring of highly compensated new faculty.

Six, compensation decisions must be carefully coordinated with the budget restructuring initiative.

And seven, we will give the highest priority to protecting academic excellence.

In discussing our compensation strategy, I want to make two other points. First, our intent is more than just the development of a competitive compensation plan in a statistical sense.

Ohio State is populated with faculty and staff Ñ in all disciplines and support units Ñ who make important contributions to the University. We must recognize their good work in our compensation plan.

This means that all faculty and staff contributing to the advancement of the University's goals will receive compensation increases that move them to more competitive levels.

And second, we will pursue this strategy in an open and consultative fashion. In particular, we will work closely with the Senate and its committees.

Our goal is to ensure that funds are redirected within each college and support unit in a way that most effectively meets that unit's compensation and other needs as it advances the Academic Plan.

Our challenge then is to address the anticipated $19 million budget cut in General Funds for this year, and also generate sufficient funds to support the Academic Plan, including most especially our compensation plan.

Here's how we'll do it.

First, we will aggressively pursue increased revenue from sources other than general fund appropriations. This includes tuition, private fund raising, and government and industry grants.

Second, we will reduce centrally funded initiatives by 10 percent to free up more funds at the college and unit level.

For example, we will cut the Strategic Investment fund from $4 million to $2 million. A group of colleagues chaired by Carole Anderson is reviewing other central commitments to determine where savings might be found, while Glen Hoffsis is leading a group to review support-unit base budgets.

Third, we will ask our academic support units to develop plans to reprogram up to 7 percent of next year's budget.

Those funds would be available for salary increases, as well as other aspects of the Academic Plan within those units, and to meet the reduction in state funding that we anticipate.

Fourth, we will ask our colleges to develop plans to reprogram up to 5 percent of next year's budget. Those funds also would be available for salary increases and other aspects of the Academic Plan critical to their mission, and to meet the anticipated reduction in state funding.

The result of these reprogramming actions will be a total of between $35 and $45 million in FY 2003 to make our compensation goals a reality, continue our progress in implementing the Academic Plan, and respond to the mandated budget cut.

Clearly, a redirection effort of this magnitude will require us to stop doing some of the things we have been doing. This will not be easy.

Meeting our targets of increasing compensation and absorbing additional state budget cuts means a total of between 400 and 800 full-time equivalent General Funds positions will have to be eliminated over the next 12-18 months.

We will strive to manage vacancies and voluntary separations to achieve these reductions, and thus minimize layoffs to the greatest extent possible.

Although this will create additional demands on the people who remain, asking them to just work harder or do more is not the long-term answer.

We must find a way to become more focused on what is truly important and eliminate functions, actions and processes that are not as critical.

Additional guidance on the mechanism of how all this will be done will be forthcoming within the next week from the provost and the senior vice president for business and finance.

Difficult though it will be, it is important to keep our challenge in perspective. During the early 1990s, the University cut budgets for support units by 20 percent and colleges by 15 percent. This required the elimination of some 1,100 positions but resulted in fewer than 100 actual layoffs.

Moreover, those cuts were more heavily associated with a reduction of expenditures. The bulk of our actions are intended to redirect funds so that we can invest more on higher-priority items.

As far as the timing of this redirection effort is concerned, the colleges and academic support units will provide the provost with detailed information and specific plans in January. These plans will identify the source of redirected funds and strategies for generating new revenues where possible. They also will provide details of what funds will be redirected to compensation and other areas important to the goals of the Academic Plan.

Between now and then, there will be extensive discussions and consultation on compensation targets with faculty, department chairs, deans, Senate leaders and vice presidents. College and support unit plans will be discussed thoroughly throughout winter quarter.

As usual, we will ask the Board of Trustees to adopt a compensation package in May for FY 2003.

As I stated earlier, that package will advance salaries on average at a rate comparable to our benchmark peers and add at least 1 percent to move us toward our compensation goals. Again, we intend to reach our goals within three or four years.

As I already noted, this strategy assumes no further major reduction in state support beyond what has been announced. Should any such additional action occur, it will complicate our work but will not diminish our commitment.

With input from many of you, and particularly from the Competitive Compensation Oversight Committee that I appointed in June, Ed Ray and Bill Shkurti have developed explicit guidelines to implement the process that I have described here.

They will share that material with the deans, the vice presidents and the Senate in the next few days.

As I noted earlier, we believe that our major challenge is getting through this fiscal year and FY 2003. By the next biennium, the economy should be recovering and state revenues should be growing.

We hope that no additional budget reductions or reprogramming will be needed by that time.

Nonetheless, it would be prudent for all University units to prepare to reprogram an additional 1 percent for each of the fiscal years 2004 and 2005.

Let me turn to another important matter. In my address last year, I asked the Senate to consider Academic Plan proposals to transition from quarters to semesters and to review the undergraduate core curriculum. You responded very constructively, for which I am grateful.

However, it would be wise at this point to recognize the difficulties that would accompany any near-term calendar conversion.

Converting to a semester system, we have learned, will require the design and implementation of a new Student Information System. This is something that at some point we must do, but it will take between three and four years and cost at least $30 million.

Given current budget realities, we could not even begin that process for two years. Thus, a vote on this issue does not seem sensible this year.

However, I have asked Ed Ray and Bill Shkurti to continue working with Senate committees and Resource Planning to identify best practices and the most cost-effective ways to implement calendar conversion.

This will allow us to be much better informed in the autumn of 2003, when a vote would make more sense.

At the same time, I do ask that you continue your work on curricular reform as expeditiously as possible.

As I said last year, given the rising academic quality of our student body and the ever-changing standards of what constitutes an educated citizen, the reform effort is timely.

I am also convinced that the University has an excessive number of credits required for graduation and that our curriculum can be streamlined without losing any of its rigor.

In conclusion, let me reiterate the obvious. The budget plan I have presented today will be difficult to implement. That difficulty will be felt throughout the University and the larger community.

That said, I also am convinced that it will allow us to move forward even in the face of adversity.

Moreover, it will assure that when the economic upturn comes, we will be even better prepared to take full advantage of opportunities offered.

Making tough choices is hard work; there is a natural tendency to resist them. But making tough choices strengthens and renews an organization, as it has done here already, and we will emerge stronger and better as a result.

Over the next year, each of us will be called upon not only to make tough choices but also to defend them when faced with objections from our colleagues. Each of us will be called upon to sacrifice for the good of the University, ceasing or postponing important tasks in favor of more essential items.

In short, each of us will be called upon to demonstrate leadership. And that's how it should be, for we are, after all, leaders of this institution.

At times like this, it helps to hold fast to our beliefs. The Academic Plan codifies our purpose, which is to advance the well being of the people of Ohio and the global community through the creation, dissemination and application of knowledge.

This is an important point. We must succeed not only because we owe it to the University but also because it is important for our state.

Ohio must prepare itself for the knowledge economy to protect and enhance the standard of living of its people and to offer the opportunities that future generations of Ohioans deserve.

The Academic Plan also reaffirms our core values, which are to:

• Pursue knowledge for its own sake;

• Ignite in our students a lifelong love of learning;

• Produce discoveries that make the world a better place;

• Celebrate and learn from our diversity; and

• Open the world to our students.

Finally, it defines our overarching goal, which is to be among the world's truly great universities.

I know you agree with me that we will become a great university only by living our vision and maintaining momentum -- whatever the circumstances.

I know you also agree with me that we will become a great university only by finding innovative ways to address our challenges, opening our minds to new ideas and embracing change.

That is the path we started down, and it is the path we pursue now even more vigorously. And let me note that as we proceed on this journey, we have the unanimous, full and wholehearted support of our Board of Trustees.

We should be encouraged by the progress we have made over recent years. As you will see when the updated Academic Plan comes out later this fall, year one was filled with productive activity and impressive early results.

Recently, we admitted once again the best-prepared and most diverse freshman class in our history. For the first time ever, our fund-raising efforts produced over $200 million last year.

Competitively funded research increased by almost 13 percent to an all-time high. We had three members of our current faculty elected to the National Academies in the past 12 months. Our Diversity Action Plan is proving to be the action document we had wanted.

And last Saturday night we held an impressive ceremony, recognizing 26 of our most distinguished faculty members in the most visible way possible -- before over 104,000 people in Ohio Stadium. Observing this ceremony, and knowing that we have many more superb faculty members just like the women and men honored, brought home once again what an extraordinary opportunity we have to achieve our vision.

The months ahead will test us, I know. But our task is noble, and our will is strong. I am confident that we are up to the test.

Thank you for your attention today and thank you so very much for your many and valued contributions to The Ohio State University.

You are the heart of our University, and we need your continued dedicated efforts now more than ever before.