UGA President Testifies before Subcommittee

University of Georgia President Michael F. Adams
Testimony before the House Higher Education Appropriations Subcommittee
Tuesday, February 10, 2009
Georgia State Capitol

Thank you, Chairman Smith and the members of this committee for the opportunity to talk with you about the University of Georgia, the capital projects priorities, our goals and objectives and the budget struggle we share with you.

First, I want to thank Chairman Smith and the members of this committee for your support of the university system and the University of Georgia through the years. We have enjoyed strong support from you and for that we are grateful.

Our top capital project is the Special Collections Library. UGA has been entrusted with some of this state’s greatest historical treasures, and in our current library facility we are unable to display them as we should and incapable of caring for them in the manner that they deserve.

The proposed Special Collections Libraries building at UGA will house a vast array of materials including rare books, manuscripts, political papers, historic radio and television programs, and other original materials that illuminate history and culture. It will store these materials in the best possible environmental conditions to ensure their survival for future generations while also providing space for scholars and the public to view and use them.

At present,UGA provides only 70% of the library space specified by the Regents guidelines while peers provide up to 150%. This building will bring us to about 90%.

And in keeping with how we do most projects at UGA these days, this is a public-private partnership—the University will raise $15 million and the state will contribute $30 million. We have raised $13.2 million, placing us within two million dollars of our goal, and I think that is a good deal for the taxpayers to get such a great facility for two-thirds of the cost.

There is also a need for a Central Utility Plant for the Northwest Precinct of the campus, which will be a focus of development over the next 10 years. It will be the site of the Special Collections Library, the proposed new Terry College of Business complex and the proposed new facility for the College of Family and Consumer Sciences, as well as other academic facilities.

The Central Utility Plant—a $6 million project—will help answer the Governor’s challenge to reduce energy consumption on a unit basis by 15% over the next 12 years. By the year 2020, this project will realize $5.4 million in energy cost avoidance.

Both of these projects are fully ready to go as soon as the bonds are sold. We appreciate your support of these important capital projects, and we appreciate your service to this state.

I also want to express my appreciation for your continuing support of the MCG/UGA Medical Partnership. In the past two years Georgia dropped from 37th to 40th in the nation in physician-to-population ratios. However, we are now on track to serve the first class of students in fall of 2010, and we are ready for the medical accrediting team that will be visiting in April. This has only been possible with support from this body. The $7.8 million in the current budget will help us achieve increased medical care for a state in need of doctors.

These are difficult times for all of us in state government; difficult times call for leadership, and all of us have been placed in important leadership positions. We at UGA accept our responsibility to you and to the people of this state to work with you through these difficult times. I have told our campus that we will not whine; we will not point fingers; we will not place blame. The University of Georgia will strive to maintain the quality of the education we provide, the quality of the research we conduct and the quality of the service we provide to the people of this state. That is our mission, and we are committed to it.

But I need to tell you that it is harder and harder for us to do this. We have fewer people and fewer resources than we need, but I realize every state entity can say that these days.

We will continue to cooperate with you and to work to provide an excellent education to our students. I can assure you that we have felt the pain of the economic downtown and the resulting budget cuts—our faculty, students and staff have all been impacted.

To give you some idea of that impact, UGA is currently operating under a 9% budget reduction scenario, which means that we will lose more than $36 million in state support for our Resident Instruction budget. That hurts in a variety of ways.

As of the end of January, we have 153 vacant faculty positions and 173 vacant staff positions. We have eliminated 47 graduate assistants and 52 student workers. This has a direct impact on our ability to teach our students and keep them on track to graduation.

In the “B” budget, we will be losing more than $8 million, affecting the Agricultural Experiment Stations, the Cooperative Extension Service, the Veterinary Teaching Hospital and the Poultry Diagnostic and Research Center.

UGA students this semester paid an additional $100 fee and student costs are likely to go up given that Georgia ranks near the bottom in the Southeast for tuition rates.

While we should not be the most expensive higher education option, we should also not rank so low that flagships in Alabama and South Carolina and many other states have significantly higher tuition rates than we. I will say more about tuition in a minute.

The budget reductions have already been felt, and felt quite severely, by our employees. In addition to the annual increase in their health insurance premiums, they also participated directly in the budget cut when the Regents reduced the employer contribution to the premium from 75 percent to 70 percent. The savings to the state were used to cover part of the System’s budget cut.

And while I agree with this action, I just want to make sure that those of you who have college and university employees in your district understand that they are participating in the budget cuts, and feeling the pain of them, each time they are paid because their paychecks are smaller.

Consider a UGA employee at the lowest end of our wage scale. Over the past several years, we have made a concerted effort to raise those salaries from about $13,000 to $21,000 this year. But with the change in premium, the $1,000 raise we had designated for those workers this year was wiped out.

If they were on the PPO family plan, which is the most popular plan, their annual health insurance premium went up $1,061—an increase of almost 30% in one year—more than consuming their raise. In fact, the break-even point at which the salary increase covered the health insurance increase is $42,400.

Again, we understand why these reductions have to be made. We are working hard to minimize the impact of these cuts on our classrooms, labs, and service projects. We feel it is our responsibility to you and to the state to continue to offer the highest possible service even as our resources have shrunk significantly.

Such effort places strain on everyone at UGA, from the custodians to the faculty and yes to top administrators as everyone absorbs more duties and works longer hours to cover unmet needs. And I believe this is what we should do. I just want this body to know that we are indeed sharing in the state’s budget reductions and that these are having a very direct impact on the UGA family. Institutionally and individually, we feel the pain of the economic downturn.

We are committed to cooperating with the General Assembly and the Governor to work through this downturn. But please don’t take UGA’s careful and effective management of this crisis as reason to believe we have not been hurt or that we can handle additional cuts without serious damage to the core mission of the institution.

I also want you to know that I believe we at UGA should do everything we can to produce ourselves out of the budget crisis, as I told the campus a few weeks ago.

There are five areas of revenue generation where we will focus our efforts:

1) Fundraising. Even following the success of the Archway to Excellence campaign, UGA’s colleges, schools and units must reach out to their constituencies for the level of private support, which characterizes great public universities. Private support provides a level of flexibility that helps the institution address funding needs as they arise.

2) Research grants. The faculty must become even more aggressive in pursuing federal, corporate and foundation grants for research. We have done very well the last five years, and we have strengths in many of the areas that are receiving funding. We should be competitive to receive more research grants.

3) Tuition. As I mentioned earlier, UGA’s tuition needs to be in the mid-range of the SREB flagships; it is currently 15th out of 16. The University of Georgia is a top-20 public university, but tuition here is $300 below Tennessee, $2,700 below South Carolina and $1,500 below Kentucky. In recent months, the governor of Florida and that state’s higher education leadership have approved tuition increases that will float to the national norm. I don’t want to be behind Florida in anything.

4) The university’s auxiliary units—parking, dining, housing, athletics—all depend upon the academic mission of the university for their very existence. I will propose that we look at ways to increase the overhead that we currently recover from these auxiliaries for the purpose of supporting the core academic mission of the institution.

5) Credit hour production. We simply must produce more credit hours. Ideally, we would enroll more students, but our enrollment is capped. Ideally, the formula would more accurately reflect current conditions on campus, but it lags two years behind. Ideally, a credit hour at a research university would be worth more than a credit hour at a regional university or two-year school, but the formula treats them as equals. Our only option is to teach more classes and encourage students to take more hours.

I believe these are proactive steps we at UGA can take to contribute to the state’s efforts to work its way out of the current economic decline.

I also want you to know that even in these tight times, UGA continues to excel and continues to make its mark nationally and internationally. For the ninth consecutive year, U.S. News & World Report has ranked UGA among the nation’s very best public research universities. UGA was the only public university to have two students in the 2008 class of Rhodes Scholars. In addition, we had students receive Truman, Marshall and Goldwater scholarships. Only three other schools in the country had students win all of those honors—Columbia, Stanford and Yale. The Center for Tropical and Emerging Diseases received the largest medical grant—and the third-largest grant overall—in UGA history. Two UGA faculty recently were among only 68 from across the country honored at the White House with the Presidential Early Career Award for Scientists and Engineers. These are just a few examples of the many outstanding accomplishments continuing to be achieved by our students and faculty.

In summary, we have felt real pain. We are willing to do our part. We are looking very hard at both sides of our ledger. But we continue to see high achievement on the part of our students, faculty and staff. And we will be stronger coming out of this difficult time.

Thank you for your attention.

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2009 State of the University of Georgia Address

University of Georgia President Michael F. Adams presented the 2009 State of the University Address today. The full text of the address is below.

The State of the University Address
by Michael F. Adams, President
The University of Georgia

Thank you, Bruce, for that introduction and for your leadership on Council this year.

Good afternoon to each of you, and thank you for joining me as I am privileged to report annually to the faculty on the state of the university.

Who could have predicted the changes and challenges that 2008 would bring locally, nationally and internationally? An African-American and a woman in the Democratic presidential primary, competing for the opportunity to face the oldest presidential candidate in history in one of the most unusual elections ever in America. A man named Wakamatsu became a manager in major league baseball, while in Chicago “Da Bears” were coached by a man named Lovie and the White Sox managed by a Hispanic.

Couple all that with one of the oddest vice presidential picks in history, and “you betcha” it was a year of change.

The world is changing.

On a serious note, these events highlight the kind of world for which we are preparing our students.

This has been both a rewarding and challenging year for the University of Georgia. Great successes in some areas have been tempered somewhat by the difficulties in the state budget. The markets remain low with a high degree of volatility. The optimism generated by the success of the Archway to Excellence campaign has been offset by these uncertainties. Despite challenges, we are committed together, without hesitation, to our core missions of teaching, research and service. Indeed, many of you have gone the extra mile and carried heavier burdens, and I am indebted to you for that.

I particularly wish to recognize the faculty of this great university. Through these difficult times, despite the larger classes, despite the late hours, despite decreased office resources, and other obstacles that have positioned themselves before you, you have stepped up your efforts and labored to teach, to serve and to inquire into the nature of things. Your commitment to the academy and to this institution is what has sustained our progress, and for that I am truly grateful.

If you are a faculty member here today, I would like to ask you to stand so that we can express our gratitude to you.

As difficult as some of the circumstances we face may seem, we have faced obstacles here before. Listen now to these words from Tom Dyer’s excellent bicentennial history of the University of Georgia, written to describe the outlook for this place in its earliest days:

“Baldwin’s prophecy (that Georgians ‘may soon see under their fostering care a very respectable literary institution’) proved overly sanguine, for the enthusiasm that marked the early planning soon faded. Sixteen years dragged by before the charter’s design was implemented and the university opened its doors to students in 1801. In the hiatus, false starts, incessant haggling, a declining interest in higher education, and even hints of embezzlement plagued the efforts of those who sought to establish a seat of higher education for the state.”

And these:

“{B}y 1806 a variety of religious, political and personality difficulties threatened to tear the institution apart. No single cause stood at the base of the problems, but religious disputes assumed increasing importance.”

“So desperate had the financial situation become by 1806 that the trustees petitioned the legislature for permission to conduct a lottery ‘to raise $3,000 to purchase books for the use of the University.’

The accumulating problems convinced the legislature to order the trustees to account for the low state into which the university had fallen.”

Some things never change. Instead of a $3,000 shortfall, University Librarian Bill Potter tells me that today it’s more like $3 million.

In 1818 there was a legislative attempt to move the university to Milledgeville. In 1830, New College burned.

In 1841, the General Assembly, unhappy with what it perceived to be an elitist cast to the university (history does echo, doesn’t it?), voted to cut the year’s appropriation by half that year and in full the following year. Dyer writes:

“Soon after the unwelcome legislation, the Board of Trustees moved to reduce the size of the faculty by one third, with the dismissal of two faculty members. Although the board regretted the action, it saw no other course, thus lowering the faculty from six to four. With six faculty members, Georgia stood respectably among the better colleges in the country.

But with the reduction in force came a reduction in status and a lowering of prospects for future growth.”

In the spring and summer of 1861, 75 of the 123 enrolled students withdrew to fight in the Civil War. By early 1862, there were only 39 students on campus; three trustees would die in battle. In the fall of 1863, the board voted to suspend the operation of the university; it would not re-open until January 1866, with 78 students.

In the 1920s, concern grew over the prominence of athletics (I’m glad we don’t face that issue today), to the point that some wondered whether the city of Athens would have to expand the streets to accommodate gameday traffic. (Clearly an ancient concern that is not meaningful in 2009.)

In 1941, one of the most serious threats to the University of Georgia originated in the Governor’s office, when Governor Eugene Talmadge, angered over what he interpreted to be a pro-integration stance in the College of Education, “began a purge of the University System of Georgia.”

Talmadge bullied the Board of Regents into firing Dean Walter Cocking; when UGA Chancellor Caldwell threatened to resign in protest, the board voted to rehire Cocking.

An angry Talmadge then stacked the board with members who had agreed to fire Cocking. Emboldened, Talmadge sought the removal of other University System faculty for allegedly supporting racism and communism.

In December 1941, the Southern Association of Colleges and Schools voted unanimously to strip the University System – not just UGA – of its accreditation in the fall of 1942. Accreditation became the central issue of the 1942 gubernatorial campaign, and Ellis Arnall won that race easily. The controversy resulted in the reformation of the Board of Regents, most significantly giving that board constitutional status. Accreditation was restored on September 1, 1942.

In the early 1960s the university was again the scene of racial strife, and only the late Ernest Vandiver’s willingness to change his mind after running on a segregationist platform kept UGA open for the admission of Charlayne Hunter and Hamilton Holmes. Governor Vandiver’s courageous action changed the direction of the University of Georgia toward greater inclusion forever.

You can be certain that throughout Georgia history the most pressing social issues have hit this campus before they hit the rest of the state. In many ways, UGA is a town hall where the state can vocalize its various opinions.

In more recent times, we have dealt with significant budget cuts in the early 1990s and during the 2002-2003 budget cycle, both of which resulted in multi-million-dollar programmatic cuts and layoffs.

I hope the point is clear – UGA has faced much significant challenge -- even threat -- that at the time seemed to portend doom. Yet every time, this great university came out of those challenges stronger, more focused and more committed to serving the state of Georgia.

Today we again face a significant challenge, yet I am fully confident that we will emerge from this as we always have – stronger, more focused and more committed to serving the people of Georgia.

The human tendency in times like these is to focus on the negative; we all fall prey to that temptation periodically. I have spent more time in the past year on options for reducing expenditures than I ever care to again.

And yet, the net result is that while we have contracted through attrition in several ways, we have to this point avoided layoffs.

The Herculean management efforts of many, but especially the fiduciary leadership of Arnett Mace, Tim Burgess, Ryan Nesbit and Chris Miller has allowed us to protect jobs. I would like for them to stand so that you may join me in thanking them publicly.

Among the documents that cross my desk every week are those that remind me of what we do well around here. I want to share some of those things with you today, in no particular order, but simply to demonstrate the depth of good work done by the people of this great university:

UGA is tied for 20th among public universities in the 2009 edition of U.S. News & World Report’s “Best Colleges” edition. UGA has been in the top 20 eight out of the past 10 years.

UGA was the only public university to have two students in the 2008 class of Rhodes Scholars. In addition, we had students receive Truman, Marshall and Goldwater scholarships. Only three other schools in the country had students win all of those honors – Columbia, Stanford and Yale. Late last year, we learned that a UGA student had received a Mitchell scholarship.

The Center for Tropical and Emerging Global Diseases received the largest medical grant in UGA history -- $18.7 million from the Gates Foundation – to continue and expand research into treatments for schistosomiasis. That disease affects more than 200 million people in Africa, the Middle East and the Americas.

Two UGA faculty were among the 68 recipients of the Presidential Early Career Award for Scientists and Engineers. Presented during a White House ceremony, the award recognizes young faculty who have made significant advances in their fields of study.

In four out of the past five years, a UGA law graduate has been selected to clerk in the U.S. Supreme Court.

The Archway Project, which connects the resources of the university with communities in need, now serves seven communities: Moultrie/Colquitt County; Sandersville/Tennille /Washington County; Brunswick/Glynn County; Clayton County; Hart County; and Americus/Sumter County.

The Carl Vinson Institute of Government has signed a contract with the State Personnel Administration to conduct training for all state agencies.

The Institute also provides training and certification for county commissioners, city council members and judges, and more than 20,000 of them registered for those programs last year.

Under the auspices of the UGA Research Foundation, we purchased WNEG-TV and are in the process of converting space at the Grady College for studios and offices.

The UGA Alumni Association is the oldest such group in the South and the fourth oldest in the nation.

There are some 250,000 living alumni of the University of Georgia, and I have had the privilege of conferring almost one-third of those degrees.

Fulbright grants for international travel and study were awarded to six UGA students, five UGA faculty members and one staff member.

UGA is one of only two universities in the country to earn the Cleaning Industry Management Standard Certification with Honors. The certification applies to the management of the 28 buildings in the green corridor on North Campus.

Through the Warnell School of Forestry and Natural Resources, we own or manage with great care 23,928 acres around the state.

During the 2007-2008 academic year, more than 10,000 UGA students contributed nearly 300,000 hours of service to the community. For two years we have been recognized by the Corporation for National and Community Service for our programs to encourage and support student volunteerism.

UGA was included on the President’s Higher Education Community Service Honor Roll, which recognizes colleges and universities that support innovative and effective community service and service-learning programs.

According to the Institute of International Education, we are now fifth in the country in students having a long-term, residential study abroad experience.

Coincidentally, our Oxford program celebrates its 20th anniversary this year, and Cortona celebrates its 40th. I continue to believe that international education changes lives.

UGA operates 77 weather stations around the state which monitor temperature, humidity, wind speed and direction, solar radiation and soil moisture continuously. (We do everything but produce rain.)

Our Visitors Center recorded more than 55,000 contacts last year. Almost 19,000 people took a campus tour, with requests coming from 45 states and 13 countries.

Licensing revenues from research discoveries reached almost $24 million in fiscal year 2008, up almost 47 percent over the previous year and the seventh consecutive year of increased revenue.

We operate 157 Cooperative Extension Service offices around the state, putting the expertise of the University of Georgia within reach of everyone in the state. There are 163,000 students in Georgia enrolled in 4-H programs.

In a facility in Griffin are stored samples of more than 1,500 plant species from around the world, part of a USDA program to rebuild the world’s agricultural infrastructure in the event of a global catastrophe. UGA is one of four institutions in the nation where such samples are stored.

I could go on, but I will stop there. The point is that the University of Georgia, through its people, is continuing to do the good work that it has done for decades. More importantly, we will continue to do that good work in the coming years. The people of Georgia need us more today than they have in many years.

Indeed, 2010 marks the 225th anniversary of the signing of the UGA charter, and offers an opportunity both to recall the grand and glorious history of this place and, more importantly, to look to its future. I believe that in 2010, we will be a stronger university than we are today, and we will celebrate our past as we move briskly toward our future. To that end, I am appointing a university committee this year that will plan an anniversary celebration and symposium to be held during the spring semester of 2010.

Emeritus University professor and former vice president of instruction Dr. Tom Dyer, now retired, has accepted my request to chair that committee. Dr. Dyer authored a wonderful book on the history of the University of Georgia, and you have heard me reference passages from it today.

Dyer also helped the university with its bicentennial celebration in 1985. Among the many great things that happened during that celebration was the inauguration of the Holmes/Hunter Lecture.

I can think of no other more suited to lead our celebratory efforts in this regard, and I am grateful to Dr. Dyer for graciously stepping forth to do so.

Perhaps the most important thing that was completed in 2008 was the Archway to Excellence campaign.

Frankly, I was a bit surprised when I reviewed previous State of the University speeches and realized how little I had said about the campaign or about the important role of fundraising in general.

What was the Archway to Excellence campaign? What did we do, and why did we do it? First, we did our research. We analyzed the development statistics, with particular attention to the endowment, which was the single greatest deficiency.

In 1997, when I arrived, UGA’s endowment was approximately $220 million. It reached $700 million before the downturn in the markets and will get there again, with another $200 million in income-producing properties.

How did we get there? First and foremost, through the loyalty and support of UGA’s friends and alumni, who have come to understand that private support is a necessity, not a luxury. Truly great universities have very high levels of private support, and our alumni and friends want the University of Georgia to be one of those truly great universities.

Second is the hard work and shoe leather of the vice presidents, deans and development staff, who cultivate prospects and link their interests to our needs. The simple fact is that fundraising is friendraising first. We have hundreds of thousands of friends out there, and we want to meet them all. And frankly we want all of them to give a little something to little old UGA.

Steve Wrigley, now vice president for government relations who also served as senior vice president for external affairs through much of the campaign, and Tom Landrum, who now holds that senior vice president’s post, have been often praised for their leadership.

But there are five other people who have played critical roles in this success, and I want to recognize them today. Robert Hawkins is associate vice president for development, with primary responsibility for directing the institution’s fundraising efforts.

Keith Oelke is executive director of both corporate and foundation relations and gift and estate planning. With $108 million, or 16.5 percent, of the campaign total coming from those two sources, it is easy to see what an important role Keith has played.

Greg Daniels is senior director of principal and major gifts. Any successful campaign is built on a foundation of large gifts, and Greg is responsible for cultivating those people with the capacity for multi-million-dollar gifts.

Tammy Gilland is senior director of constituent-based programs. She manages the relationship between the university’s fundraising efforts and those of the more than two dozen development officers for the schools, colleges and other units at UGA.

Finally, David Jones is the director of the Donor Research unit, and he also directs the Annual Fund, which raises critically important unrestricted funds for UGA as well as money designated for specific schools and colleges.

Please join me thanking them for their very good work on behalf of the University of Georgia.

The Archway to Excellence campaign set out with a goal of $500 million in support of the mission of this university. It closed on June 30, 2008 with $653.4 million in gifts and pledges. I am deeply grateful to the alumni, friends and supporters of this university for their tremendous support of the campaign and UGA.

More important than the total, though, is the fact that the people of Georgia now fully understand the role that private giving plays in building a top-quality flagship university for this state.

So what did the campaign do for UGA? More than 102,000 donors made gifts or pledges totaling $653.6 million. By category, those gifts were

$82.3 million for student scholarships, awards and other support
$54.7 million for endowed professorships, chairs and faculty support
$174.3 million for academic and research program support
$51.9 million to help build the new learning environment
$38 million to serve the state and nation with outreach programs
$84.9 million for general unrestricted support
$151.8 million for the Georgia Bulldog Club’s support of varsity athletic programs
And millions more for other projects and needs. This is a historic record for UGA.
Given those, what did the campaign not do? A campaign, no matter how successful, never solves all problems. Most gifts and pledges are restricted – the donor gives money to the institution for a specific purpose, program or project. Few of the funds go toward operating expenses. As I noted earlier, some of the gifts are planned or deferred – wills, estates, trusts or other vehicles that dedicate future revenue to the university.

Yet as the prior list demonstrated, virtually everybody on campus has benefited or will benefit from the campaign in some way.

This is certainly not the last campaign that UGA will undertake. But in the next few years, what you will see is a shift from overall university fundraising to a focus on school, college and unit fundraising.

The responsibility is now on the Franklin College and the Terry College and the Grady College and the School of Law and the College of Veterinary Medicine and the School of Social Work and all the colleges and schools to build the same sort of case for support among their constituencies that we built for the Archway campaign.

It is on the State Botanical Garden and the Athletic Association and the Performing Arts Center and other units to do the same.

The construction that will soon begin on the much-needed expansion of the Georgia Museum of Art is a good example of the kind of constituent-based fundraising that will be required for units to meet their own goals. That project will cost $20 million, and it is all private money.

The biggest challenge for us right now is that just when it appeared that we were beginning to recover from the $54 million in cuts we suffered in FY03-04, we are again facing substantial cuts in the FY09 budget that will clearly stretch into FY10 as well.

We have two choices. We can sit around and whine and wring our hands, bemoaning our fate and pointing fingers, or we can produce our way out of this by generating additional revenue and becoming more self-sustaining. It will not be easy, and yet it is not easy for the Governor and the Legislature, either. State tax receipts are down relative to budget expectations, and the predictions for a quick and full recovery are not good. The University System is 10.4 percent of the state’s $22 billion budget, and UGA’s portion of the state budget is about 2.35%. With some 38 percent of our budget coming directly from the state, we are not well insulated from a sustained downturn in the state’s economy.

This is not to criticize the state, which has been quite helpful to UGA. But we do need to understand the gravity of the situation and we need to say to the state that we will help.

The best course of action for the University of Georgia is to continue to generate more revenue on our own, reducing the need for state funding. To that end, there are five actions we must undertake.

First, we must be successful in the move to unit-based fundraising.

There are faculty in law, in ecology, in family and consumer sciences, in environment and design and in every school and college who deserve to be in endowed professorships and chairs. There are likewise students who deserve scholarships and fellowships. There are alumni and friends of every college and school with the capacity and desire to make those gifts.

There are programs in the Institute for Behavioral Research, in the Graduate School, at the Ag farms and across this campus that deserve outside support, and there are people with the capacity and the desire to support them.

The task at hand is to identify those people, build relationships with them and connect their resources to our needs as we did so successfully in the Archway campaign.

A dean, vice president or, yes, president at any college or university who is not spending at least one-third of his or her time on development is not going to be successful and, frankly, is holding the institution back. It is an essential part of the job.

This does not signal the end of the campaign but a refocusing of our efforts toward the birth of a new culture of development at the University of Georgia.

Second, we must generate more money on our own. We have had some successes in this area – after several relatively flat years, research grants are now on an upward trajectory. In 2008, UGA received $4.1 million from the Department of Agriculture to study the mysterious deaths of honeybee colonies; $9.2 million from the National Institutes of Health to look into the molecular underpinnings of the early steps that cells take in becoming specialized cell types; and a $9 million NIH grant to study barriers to effective addiction treatment, among many others.

I have no doubt that there is additional research currently underway at UGA that is deserving of such funding, if we are willing to do the work of seeking it and applying for it. In what is a very competitive grant environment, we simply have to do more and do better. Faculty must be more aggressive in pursuing grant funding.

The initiative with the Medical College of Georgia to train physicians in Athens will provide opportunities to boost proposals and grants for the College of Public Health, communications, business, law, biostatistics and other areas.

Third, we must raise tuition at least to the mid-range of Southern Regional Education Board flagships. Currently, we are at the bottom of that list. I never thought I would live to see the day where tuition at the University of Georgia, a top-20 public university, was $80 below Alabama, $300 below Tennessee, $2,700 below South Carolina and $1,500 below Kentucky.

I am willing to move tuition toward the middle of the SREB pack either through straight tuition or through a fee structure.

Tuition is an investment in the quality of the educational experience for every student at UGA. All the good intentions in the world are not going to pay faculty at an appropriate level.

In December, Smart Money magazine, a publication of the Wall Street Journal, published a story entitled, “Why the Ivies Aren’t Worth It.” The story looked at the return on investment by comparing what students paid in tuition and what they earned in their early and mid-careers. UGA placed fourth on that ranking, with a return almost twice that of Harvard. As I told the reporter, “We are such a bargain.”

In recent months, the Governor of Florida and that state’s higher education leadership have approved tuition increases that will float to the national norm. I don’t want to be behind Florida in anything.

Fourth, we must develop a realistic pricing structure for auxiliary units such as athletics, housing, student activities, food services, transportation and parking. I will recommend to the Cabinet that we assess a percentage of auxiliary revenues for the purpose of supporting the academic mission of the university.

The university provides central administrative and leadership support to the auxiliaries, and they all ultimately rise and fall on the strength of the academic program. (Nobody comes to UGA for our parking, after all.)

The captured dollars will go to funding the core instructional mission of the University of Georgia.

Fifth, and perhaps most importantly, we must produce more credit hours. In the past five years, credit hour production has remained flat, as has enrollment.

The formula which determines the level of our funding has a two-year lag, meaning that this year’s funding is based on enrollment and credit-hour production during the 2006-07 academic year; enrollment and credit-hour production this year will fund the 2010-11 academic year. It is easy to see how the number of credits we generate can stagnate that revenue source for years at a time if we are not more intentional about teaching more.

The formula’s most serious flaw, however, is that it is exclusively quantity-driven, with no qualitative indicators. Call me biased, but I believe that a credit hour at the University of Georgia is one of the very best credit hours in the system, but the formula does not. There is no consideration of the value – and expense – of producing a credit hour at a research university. No consideration of retention, of graduation rates, of the success of our alumni. Until the formula recognizes quality, we, like most major public universities, have little choice but to examine revenue production and use in every phase of this endeavor. Instead of worrying about what is being done to our budget, we can work in this area to improve a revenue stream to the benefit of the entire university community.

The fact is that this one area, particularly with the new facility for graduate programs in Gwinnett and the undergraduate programs in Griffin and Tifton, may offer the greatest potential for enhancing the university’s bottom line. And lest these measures seem too stringent, remember that the only end of these means is to benefit students and faculty.

The University of Georgia has endured hard times before – closing the campus during war, integration, political threats to academic freedom, budget cuts – and every time, the people of this university have risen to the challenge, done what had to be done and lived to enjoy even greater success. I am confident that we will do so again. The choice for us, again, is clear – carp and moan and sit by while the quality we have built at this university declines, or produce ourselves through this challenge.

For me, it’s an easy choice. I will not allow us to wallow in self-pity.

I wish that the trajectory of this university were always upward, without interruption. I wish we never had to face the challenges we have faced this year. I wish that the hardships placed upon the faculty and staff, and particularly those at the lower end of the wage scale, were not as significant as they have been. But an institution that has been around for 224 years will face times like these periodically.

There can be no doubt that UGA is infinitely stronger today than it was 15 or 20 years ago. Indeed that strength, coupled with a palpable commitment to excellence by all of my colleagues and the efficient and innovative management of those I have already mentioned will allow us to weather this downturn as we have done before.

For the average student there was relatively little impact from the budget crisis in 2008. The imposition of a $100 temporary student fee does require our students to assist with the management of this situation as we have been asking faculty and staff to do at, frankly, a greater level.

In that regard, just this morning, Dr. Arnett Mace shared with his staff his intention to retire as Provost at the end of this calendar year -- something that he shared with me just a few weeks ago. You may not know that he first approached me two years ago expressing those very same intentions. However, I prevailed upon him to remain and provide leadership to our academic enterprise and help steward us through these financially challenging times. He selflessly agreed to serve longer than he had originally planned.

I will have more to say about his retirement from the Provost’s position at an appropriate time at the end of the year. But it behooves me to share with you today that Arnett’s contributions to the University of Georgia have made this a better place for everyone. I am neither exaggerating nor being melodramatic when I say that there are many people who would, quite frankly, not be employed today but for Dr. Mace’s extraordinary management leadership, particularly during these past two years. And there are literally thousands of students who would have experienced an education of lesser quality and value if not for Arnett’s efforts.

Even as he retires, I’ve asked him to continue to serve this institution on a part-time basis for another two years to help shepherd the medical initiative to its permanent location at the Navy School property and to help assist with a few key donors that provide promise for the University of Georgia going forward.

Arnett, we thank you for your stalwart dedication, commitment and service to this university community. I ask you to please stand, and I ask the audience to join me in expressing our gratitude to Provost Arnett C. Mace Jr.

We are here, first and foremost, to serve the students in good times and bad, and we will continue to do so to the best of our ability. We will continue to make progress in 2009.

We will finish the new Pharmacy Building. We will open the Tate Center Expansion. We will begin to expand the Georgia Museum of Art. We will open the expanded Student Health Center. We will begin the Special Collections Library.

We will teach more effectively, we will manage more prudently, we will research with a wider scope and we will not take one step back from serving the people of Georgia.

We will work with our friends in government and with our many alumni and supporters. We will not whine or criticize. But when recovery comes, as it surely will, we will hold our funding partners to the same level of cooperation that we have demonstrated to them.

We will not retreat. We will not accept a march toward mediocrity. This will be a better place in 2009 and beyond than it was when the 21st century began.

I am privileged to work with the quality of people who commit their talents to the University of Georgia, and it is an honor to continue to call you colleagues and friends.

Thank you.

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University of Georgia Budget Update

University of Georgia Budget Update
President Michael F. Adams

I would like to begin my comments on the budget situation with words of praise for the people who have spent countless hours working to ensure the long-term financial stability of the University of Georgia. The credit for our careful management of the budget crisis to date goes to the many faculty and staff who have taken on extra responsibility in areas where there are unfilled positions. The credit also goes to the leadership team in the budget area: Arnett Mace; Tom Landrum; and Tim Burgess, with the help of the many dedicated staff in Finance and Administration; and of course the deans, vice presidents, directors, and department heads who face the greatest challenge of managing these budget reductions at the school, college, and departmental levels.

We are facing an economic crisis of a magnitude unprecedented since WWII. My belief has been that we must manage very conservatively during these times, doing all that we can to preserve faculty and staff jobs—which remains my top priority—so that we can continue to carry out our missions of teaching, research and service. To date, we have been able to avoid the worst of this economic recession because of the planning by our budget team that began about this time last year. But we do not yet know how much the fiscal year 2009 budget ultimately will be cut and what the funding levels will look like for 2010.

As you will recall, at their October meeting the Board of Regents directed that we reduce our FY 09 budget by 6%. This action led to a reduction to UGA's state-appropriated funds of over $29.7 million, with $24 million being reduced from our Resident Instruction budget and $5.7 million from our B Units, the experiment station and extension units that extend our research and outreach missions throughout the state.

Although the University System has not received specific budget instructions from the state regarding further budget reductions, the Board of Regents yesterday took prudent action to prepare for a likely budget reduction of 8%. Increasing the FY 2009 budget reduction to 8% would increase the reduction to UGA's state-appropriated funds from $29.7 million to about $39.7 million, with $32.1 million being reduced from our Resident Instruction budget and $7.6 million from our B Units.

Given the budget challenges facing all public colleges and universities in Georgia, the Board of Regents took the following three actions yesterday in a special called meeting.

First, the Regents voted to reduce the employer contribution rate for the PPO and HMO health insurance plans from 75% to 70%. This action increases the employee cost for these and the Indemnity health plans, if the employee does not opt to move to a lower-cost plan. Importantly, the open enrollment period has been reopened until December 15th to allow faculty, staff, and retirees to make different choices should they wish to do so, in light of the change in premiums.

Second, the Regents voted to waive BOR policy 704.021 on mandatory student fee. This is the policy that outlines the standard timetable and procedures by which mandatory fees are typically set by the Board of Regents, usually in April.

Third, they voted to institute a mandatory fee of $100 per semester at research universities and the largest comprehensive universities, $75 at the other comprehensive universities, and $50 at access institutions.

Each of these actions is part of a tiered approach that has been followed over several months by the System to address the changing budget situation. I would like to speak to these items in more detail.

First, the health care action. As UGA faculty and staff will receive the merit salary increases approved for January 1, 2009, these raises will help mitigate the health insurance cost increases that System employees are being asked to bear. At UGA, we have made concerted attempts to address salary concerns in specific targeted areas over the past months and years. As of January 1, 2009, we will have been able to move the minimum salary to $21,000 after steady steps in that direction over several years. Along with raising the minimum salary, we also allocated funds to mitigate staff salary compression issues that are associated with raising the minimum hiring rate. Likewise, we have allocated over $1.8 million additional funds in this fiscal year alone to help bring faculty salaries more in line with our competitors, with $1.3 million of this funding being targeted at the associate professor level. This is the fourth year that we have allocated funds to supplement the merit salary increase pool. In addition to these targeted salary increase allocations, we also provided funds to add an additional ½% to the 2.5% merit pool provided by the state to ensure that all faculty and staff are receiving a minimum ½% salary increase to help mitigate the impact of the growing cost and inflationary pressures that are confronting all of us.

Such efforts would not have been possible without a shared commitment to these efforts among the senior leadership team, and the belief that such actions were important to the future of the institution. It is not easy to watch progress in salaries diluted by the very real pressures of this economic recession, but the Chancellor and the Board of Regents have been clear in indicating that at this stage of budget reductions, all employees have a role to play in helping address the budget crisis.

While other state agencies and other universities outside of Georgia are taking steps to furlough employees, furloughs are not being considered for University System employees at this time. We are also not yet taking steps towards hard layoffs across the University for full-time positions. However, the pain of the current level of cuts has already had a direct effect on positions. Vacancies are not being filled, and some part-time contracts have not been renewed that would otherwise have been renewed in better times. This is real pain, and real function being lost at this institution.

In total, the budget reductions are forcing UGA to defer filling 167 faculty positions, 183 staff positions, 47 graduate assistant positions, and 52 student worker positions across the institution. These vacancies translate to class sections that are not offered, student course needs that go unmet, and programs that are canceled.

Second, the issue of the Special Spring Semester ‘09 fee. The action taken by the board places a mandatory fee of $100 at the research universities, $75 at the comprehensive universities, and $50 at the access institutions for Spring 2009 in order to sustain academic quality. The Board will, in the normal course of business, set fees for the next fiscal year in April. The Board of Regents will make decisions about tuition and fees for fiscal year 2010 at that time.

Just as employees are being asked to help significantly in these challenging budget times, students are being asked to step up and help to ensure that the academic quality of this institution remains strong. We will continue to do everything possible to achieve greater efficiency in our operations so that we retain as much flexibility as possible in meeting our academic mission.

I have said before that I believe UGA’s tuition is too low; one has only to look at tuition at the other states in the Southern region to see this underscored. The $4,395 in tuition that UGA is assessing to in-state undergraduates (Fall 2008 and Spring 2009 semesters) is $1,033 below the median of $5,428 and $1,412 below the average of $5,807 for tuition being assessed by UGA's peers in the Southern region. The national discrepancies are even larger. As recently as last week, the governor of Florida, one state whose tuition has historically been lower than ours, announced his support for tuition increases of up to 15% to help struggling public colleges and universities.

In taking this action to implement a mandatory fee midyear, the Chancellor and the Regents have acknowledged that maintenance of academic programs depends upon such funds. Georgia’s students receive an excellent education at UGA, and as much as I regret increases, I do believe that they are justified to ensure that we can continue to provide appropriate academic offerings to our students that are of the quality that our students demand and deserve and that the state expects from its flagship institution.

Please understand that this is December 4th, and there is still a possibility that the budget reduction will go higher than 8%. This is a fluid, ever-changing situation, and we do not yet know how Georgia will fare in the coming months. I also want to be forthright in saying that we do not yet know the prospects for a pay raise in 2010, but I believe it to be slim. We will continue to work closely with the System officials and with our legislative leadership in our planning as we move through these challenging times.

Like almost every higher education institution in the nation, we are facing the challenges of a national economic downturn. Our neighboring states have these same issues. For my part, I remain grateful that UGA is located in Athens, with its strong sense of community and its good quality of life, for I think in difficult economic times such factors become increasingly important.

While we do not know the economic course of the next several months, we will continue to keep the campus informed of additional actions that impact our budget. I remain confident that the day-to-day work that we do to serve students as well as the citizens of Georgia is the best means to provide a bright future for this state. This institution has faced many difficult times in its 223-year history and has survived, each time to grow to a stronger and more expansive level of service. I am confident we will do so again and that there will be improvement in the next 12-18 months. I am truly grateful to all of our faculty, staff, and students for their shared sense of commitment to the University and its academic programs.

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