Higher Education, Industry and Government

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Higher Education, Industry and Government
Elizabeth Hoffman, Ph.D. President, University of
Colorado System Economic Development Corporation
Luncheon February 18, 2004
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Americas Competitive Edge at Risk

• There is a crisis in funding public higher
  education in the state and nation
• Americas competitive edge is in jeopardy
• Colleges and universities have been the backbone
  of the the countrys progress
• Partnerships among government, industry and
  academia provide Americas competitive edge
• We need your help to sustain Americas
  competitive edge

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Public Higher Education
Economic Development
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The key factor going largely unheeded is the
rise of creativity as the central force in our
economy. The presence of a major research
university is a huge advantage in the Creative
Economymore important than the canals, railroads
and freeway systems of past epochs and a huge
potential source of competitive advantage.
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Alliances to Discover New Frontiers

• The company-owned research lab, that proud
  19th-century invention, is becoming obsolete
• Post WWII, research and development became
  decentralized, fostering partnerships with
  industry, government and academia

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Higher Eds Industry Strength Sectors

• In Colorados universities
• Biotechnology/Life Sciences/Biosecurity
• Storage/Computer Technology/Telecommunications
• Aerospace
• President Bushs space exploration initiative
  could have important implications for the state
  of Colorado (Lockheed Martin, Ball Aerospace)
• Sciences/Atmospheric
• Agriculture/Ecology
• Energy
• National Labs
• Homeland Security

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21st Century Workforce

• Forrester Research predicts that at least 3.3
  million white-collar jobs and 136 billion in
  wages will shift from the United States to
  low-cost countries by 2015
• Call centers and low-end RD
• In India, a call center worker earns about
  2,700/year, while a new graduate with a degree
  in IT will make around 5,000
• In China, an IT professional earns about
  one-sixth of a U.S. IT worker
• U.S. competitiveness is high-end and creative RD
• Requires partnerships with government, industry
  and academia

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CU Contributes to Colorados Economy

• For every 1 in unrestricted state general fund
  support, CU adds 16.64 to the CO economy (based
  on 2002 data)
• For every dollar of unrestricted state general
  fund support CU receives, 0.76 is recaptured by
  CO in taxes
• CU students spent more than 742M (438M new
  money) in CO Colorado Springs students 84.2M
• Every taxpayer dollar invested in CU-Boulder
  generates 2.28 of research awards from outside
  sources (1 in the nation)
• UCHSC generates 1.81, making it second in the
  nation among university health sciences centers

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Partnerships CU Institute for Bioenergetics

• Directors Karen Newell and Robert Camley
• Study of human immune system interaction with
  cell metabolism
• Four-campus institute
• Three companies have been developed to test
  theories, bring to market (Colorado Springs,
  California and Vermont).

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Partnerships Network Information and Space
Security (NISSC)

• New federal funding 1.5 million
• New partnerships with Homeland Security
  Educational Consortium
• U.S. Northern Command
• National Defense University
• UCCS
• University of Denver
• Seed grants for Northern Command priorities
• Fall 2003 19 grants, 190,000
• Spring 2004 11 grants, 65,000

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CU-Colorado Springs
Excellence and Outreach
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CU-Colorado Springs National Rankings

• Ranked fifth among public Western masters
  universities.
• Undergraduate business is third among masters
  universities in the West.
• Nursing is tied for second among masters
  universities in the West.

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CU-Colorado Springs Distinctions

• AASCUs most engaged
• Community and rural Colorado outreach

Student Achievement

• 91 percent pass rate on PLACE exam for
  elementary educators (78.6 state average)
• 93 percent pass rate for RN (1 among state
  universities)
• Fastest growing university in Colorado

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Accelerated Nursing Program
Made possible by a 200,000 Johnson Foundation
gift

• BSN in 16 months (second degree)
• 24 students in first cohort, Fall 2004

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K-12 Education Programs

• Pikes Peak Educational Research Center
• English as a Second Language training
• Project Lead the Way

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Sustaining Higher Eds Competitive Advantage
Budget, Legislative Items and Issues
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Colorados Two-year Change -21.8
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CUs FY1990 Total Budget (634M)
CUs FY2004 Total Budget (1.62B)
Source FY1990 Annual Financial Report
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State Budget FY1990 2.5B
State Budget FY2004 5.7B
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State General Fund ProjectionsPotential Impact
to Higher Ed

• This chart assumes
• Current OSPB projections
• K-12 Amend 23 requirements are met
• 10-yr average growth for all agencies
• Higher education receives balance of funds

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Solutions and Strategies

• Amend TABOR, Amendment 23, or Gallagher
• Use a ballot initiative to take higher education
  out from under TABOR
• Adopt a comprehensive higher education act that
  includes three components
• If all else fails look for ways to attain
  greater autonomy (public-benefit corporation)

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A New Funding Model for Higher Ed

• Bill currently being drafted contains
• College Opportunity Fund -- provide an
  undergraduate grant for any Colorado resident to
  attend a not-for-profit institution
• Enterprise status for any eligible
  higher-education institution
• Allows bonding authority for academic facilities.
• Will be able to remove tuition revenue from TABOR
• Performance Contracts
• Establish an accountability mechanisms
• Provides additional management tuition
  flexibility

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How Would CU Attain Greater Autonomy?

• Require legislation
• Removing regulation and TABOR limitations
• Allowing us to own state-owned building
• Require substantial increase in non-state
  resources
• Ten-fold increase in endowment
• Increase in-state tuition two to three times to
  replace general fund and increased aid to hold
  low and mid-level income student harmless
• New strategic approach to assuage brain drain and
  sustain quality

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Federal Public Policy Challenges

• College Affordability in Higher Education Act of
  2003, HR3311 Rep. Howard McKeon, R-Calif
• Bill proposes the first-ever federal price
  controls on college tuition
• Penalize colleges if they raise tuition more than
  two times CPI over a 3 year period
• Sanctions would include loss of federal student
  aid eligibility (except Pell and students loans)
• Sanctions actually hurt the students we want to
  help

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National CrossTalk
Chronicle of Higher Education
However, the College Board reports during the
last decade the net cost, adjusted for inflation,
of going to college is only 340 more at
four-year public institutions

• At community colleges and other two-year schools,
  students received 285 more in subsidies than
  they paid in tuition last year.

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Efficiencies
in Higher Education
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How CU Spends a Dollar, FY 2004
1.62B Budget
0.07 Clinical Services 0.07 Bookstore,
Housing, etc 0.07 Public and Student
Services 0.05 Utilities 0.05 Administration
0.69 Teaching, Research and Financial Aid
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CUs Efficiencies

• Leverage resources successfully
• Private gifts plus research grants and contracts
  totaled 538 million, nearly three times the
  state appropriation to CU projected to be nearly
  4 times for FY04
• Use information technology in our
  business-related activities (personnel,
  purchasing, risk management)
• Eliminate low enrollment programs (FY04, four
  degree programs and 10 centers and institutes)
• Digitize and share library materials with other
  institutions
• Consolidate programs

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CUs Efficiencies

• The university has saved millions of dollars.
• Negotiated a new health benefits contract with a
  4 average premium increase national average
  increase 15, savings in excess of 3M
• Consolidated risk management campus operations,
  resulting in an annual savings of at least
  700,000
• Implemented the Patriot Act via a systemwide
  approach, which saved up to 120,000

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Challenges to Cutting Costs

• Education is a very labor intensive industry
• Cannot
• Utilize labor overseas
• Shift costs to consumers (consumers pumping gas,
  fully-automated services)
• Outsourcing services
• Rising costs outside of our control
• Health benefits
• Library materials
• Utilities

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Higher Ed is a Jewel in the Crown of Americas
Competitive Advantage
We absolutely need your help to maintain U.S.,
and Colorados public investment in higher
education.