delivered by Chancellor Howard Cohen
at the Faculty & Staff University Spring Convocation
April 16, 2009
Good afternoon and welcome to the Spring 2009 faculty convocation.
I want to begin by thanking you for your forbearance as the nation, the State of Indiana and the university work through these difficult recessionary times.
Although nobody can say how long we will be in recession or when we can expect to see economic recovery, we do know that the State of Indiana is about to complete its budgeting process for the next two years. We can be pretty confident that, whatever the outcome, we will be living with it until the state produces its next biennial budget for 2011-2013.
As you all know, the state budget process is multi-staged. It began in January when the Governor submitted a budget that, for us, took into consideration recommendations from the Indiana Commission for Higher Education. The House of Representatives then produced its (one year) version of the budget and passed it along to the Senate. A very different budget proposal has now been approved by the Senate. The two versions will need to go to Conference Committee sometime between April 17, when the next state revenue forecast will be announced, and April 29, which is the last day of the legislative session. In the Senate’s version, Purdue Calumet would receive a net increase of .7% over our 2008-09 state funding (about $209,000), but that would be in one-time stimulus funds rather than recurring base budget funds. (In fact, a somewhat larger base budget reduction is compensated for with stimulus dollars for a total one-time allocation in 2009-2010 of $491,391) We would also receive the release of the planning money for the Emerging Technology Building that was previously voted but not released to us. The fate of this money is still unknown.
If the Conference Committee irons out their differences by the end of April, the budget will require the approval by the Governor. Should our legislators be unable to do so, or should the Governor object, it is possible that further negotiation would occur in a special session of the legislature.
The outline of this process is pretty much Civics 101, but the politics of it is anything but…
Here are the issues that are of concern to the university:
- Will Federal stimulus funds be used, as the Senate Budget Committee proposes, to “back fill” reductions in state appropriations and enrollment incentive increases with federal dollars to give us an appropriation equal to or somewhat greater than the appropriation we received for this year (2008-09)? Although the effect of this would be level funding for three years, the federal funds are “one time” rather than “base budget.” That means they would go away in 2011. Would the state make up the difference at that time? Nobody can say. This could be a ticking time bomb for a reduction in the next biennium.
- Will the 2009-11 budget contain funding for capital projects? In particular, will it contain funds for our Emerging Technologies Building? Our planning funds for that building were in the 2007-09 budget, but (as I mentioned) those funds were held up by the State Budget Committee. We need to have those funds released and the funding for the construction approved.
- Tuition rates are set independently by the Board of Trustees, but the legislature often articulates an expectation to the Board. Although the Legislature is very likely not providing increases, we should also expect that the Legislature does not want us to raise tuition substantially to compensate for that. Why not? One answer is that they do not want to place an additional burden on the college-going citizens of Indiana in recessionary times. Another is that they do not want their “flat-line appropriations” to appear to be the cause of tuition increases.
Tuition rates for next year will be set by the Board of Trustees at its May 29th Board meeting. (Open forum on campus scheduled for noon of the 28th.) That means that rates will need to be made public on May 18th. If the Legislature completes its work by its statutory deadline, this will be after the session. If the Legislature is unable to agree on a budget, the Governor would call it back into special session. If that happens, I have no idea about what the tuition setting dynamics might be.
In the face of these unknowns, Purdue Calumet is planning a prudent path for next year, combining fiscal responsibility with our efforts to continuously improve the quality and stature of our campus.
- On the fiscal responsibility side, we have already announced that the special merit bonus process for 2008-09 was suspended and that there will be no process for general salary raises for any of us for 2009-10. Faculty who were promoted last Friday by the Board of Trustees will receive their scheduled rank increases.
- We have also announced that we have no plans for furloughs or layoffs or reductions in force in response to a flat or reduced state appropriation. Some vacant positions, however, will not be filled.
- Nor have we instituted a hiring freeze. Senior Leadership is reviewing each vacant position to determine whether it is of strategic importance and needs to be filled at this time. Positions that are of strategic importance should be filled. In the context of an uncertain national job market, this is an excellent time to recruit talented faculty and staff.
- University will fund the increase in health insurance premiums rather than sharing it with the employee, as it has traditionally done in the past.
- We have planned for a budget reallocation of 4% from “unprotected” accounts. The protected accounts include the instructional budget, benefits, utilities, some scholarship accounts and debt service. These are either required obligations or the source of our tuition revenue. We cannot cut debt service, we have little choice but to pay our utility bills and to fund your benefits. It would be unwise to cut instruction or scholarships because these are the generators of our tuition revenue. All other support for our instructional mission is subject to reallocation. Those funds will either be used to cover potential state appropriation reductions in our campus revenues, potential enrollment shortfalls or for distribution back to campus activities with high strategic priority.
A 4% reduction in these accounts will not be unnoticeable. There will be things we no longer do. Some of our activities will be curtailed. However, we have tried to minimize the impact of these cuts, and we will identify them for you and share them in a memo to the campus.
Although this is a time when our traditional sources of revenue are constricted, this is not a time for Purdue Calumet to slow down on our path toward becoming known as a high quality full-service regional university. We must continue to honor our strategic commitments and continue to seek out creative ways to move forward on our developmental trajectory. These are likely to require us to seek out new sources of revenue to fund growth in targeted areas.
On our immediate horizon is an opportunity to become a significant provider of distance education in selected, scalable, programs. The School of Education, the School of Nursing and the School of Technology are in discussions with Higher Ed Holdings to offer the Master’s Degree in Instructional Technology, the RN to BSN degree completion program and, possibly, the Master’s of Technology degree respectively, through this partnership.
HEH is a private corporation that will provide marketing, course management software with infrastructure and technical support, instructional designers to aid course conversion and “coaches” to support instruction. Purdue Calumet controls faculty, course content, student admissions and student evaluation and grading. In other words, quality is our responsibility and in our hands. This partnership, which already exists with other universities, has the potential to allow us to serve an additional 2,000-3,000 students without additional buildings or significant major additional investments in technology infrastructure. Revenue from this endeavor can feed growth in these schools while at the same time producing enrollment funding that will benefit the rest of the university. Should these programs be successful, in partnership with HEH, we will be able to develop additional distance education programs that are capable of attracting large numbers of students.
A second major opportunity we have is in the growth of Engineering in our strength areas of Energy and Water and in our developing area of Visualization and Simulation. These areas are of great interest to regional employers and they are areas that Congressman Visclosky has committed to support as a means of raising the capacity of Northwest Indiana to become a leader in advanced manufacturing and the growth of technology based industries. In addition to his support that brought the computational grid (linking us to Notre Dame and Purdue WL) to our campus, he has appropriated almost $7 million in 2009 and is considering another $5 million in 2010 is support of these programs. It is a rare opportunity for us to use this moment to significantly advance these academic programs.
Third, our HTM program is in an excellent position to expand its enrollments because of the projected growth in the hospitality industry, our proximity to the Chicago markets for students and jobs, and its potential for private sector sponsorship. We have a high quality program with few regional competitors. Our limited facilities are currently limiting growth, but if we can attract private support for expansion of the labs and teaching spaces, we will be able to attract additional students. Here, too, student growth brings additional revenue that will help all of our programs and support areas.
In addition to supporting our academic programs with growth potential, we must look to build the profile of a full-service regional university. For Purdue Calumet, this includes expansion of our athletics programs. PUC currently offers men’s and women’s basketball. We have about 30 students who are here to participate in athletics, and cheerleading. There are many students in our region who have played the “minor” high school sports (tennis, volley ball, cross country running, golf, soft ball, and so on) and who wish to continue their participation in college. Those students, who are often academically excellent, do not consider us because we do not have an outlet for those interests. We have developed a plan to offer ten additional sports that would bring our student athlete population to around 200.
If we are to gain our “market share” of good students from northwest Indiana, we need to create these kinds of opportunities at Purdue Calumet. In doing so, we will also bring our campus into better alignment with the profile of a quality regional university (vs. a community commuter campus) and also be more attractive to students who are not athletes, but want a full university experience.
Finally, in that same vein, we must continue to differentiate ourselves from Ivy Tech, leaving the community college mission to them and embracing the baccalaureate and masters level education that is at the core of our mission. This will mean dropping the Associate Degree options where they remain and attracting the students who came for that purpose to commit to the bachelor’s degrees. None of our benchmark universities offer associate degree programs. That remnant of community college education is understandable; after all, Ivy Tech has only taken on the community college mission in the last six years. My point is that we need to accelerate the transition from our end as one element of a strategy to make us more attractive to students who want more than a community college experience. We will be in a stronger position to recruit more able students, if they do not see us as a “last resort” choice.
These are five elements of a quality improvement strategy for Purdue Calumet that can be accomplished in difficult financial times without substantial dependence on state revenues. These are not the only opportunities, nor are they all “sure bets,” and “5″ is not a magic number. These are attractive possibilities, they are within our reach, and they have the potential to improve our quality and grow our revenue. We will pursue them with an open mind. If some of them do not work out, there are sure to be other strategic opportunities on the horizon that support our mission and have the potential to attract external financial support.
I hope your “take away” today is that, despite these difficult financial times and despite likely revenue restrictions, Purdue Calumet is in a position to grow and to become an even better university. We need to be attuned to opportunities and willing to try new things. We need to deliver on our promises. The better we are at this, the more opportunities will come our way. I am looking forward to a time in the not-so-distant future when we can come back to the financial losses we have all had to bear in order to make compensation appropriate for the university we will become.
Thank you for your continuing support for Purdue Calumet and your continuing commitment to our students.