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Text of Chancellor Ballard's State of the University speech

GREENVILLE   (Feb. 2, 2011)   —   State of the University
East Carolina University
Feb. 2, 2011

Former ECU Board of Trustees Chairman Bob Greczyn greeted those attending the second State of the University address by Chancellor Steve Ballard.

David Brody, chair of the ECU Board of Trustees, was unable to attend the speech and introduce the chancellor.

Greczyn said, “I remember vividly that my first Board of Trustees meeting was so calm because it’s the July meeting where nothing actually happens and at the next meeting we were thrust into the throes of changing our chancellor. And when you change a chancellor, you never know with 100 percent surety what you’re going to get.

“And I will tell you that I was in school here when one of the great chancellors of this university was here, Leo Jenkins. And I don’t say this lightly, Leo Jenkins, and I knew him personally as a student, and Leo Jenkins was a pain in the neck. And that’s one of the things that made him a great chancellor, and Steve Ballard is a pain in the neck. And I think it’s one of the things that allows me today to mention his name and Leo Jenkins’ name in the same breath because I think he’s been a super chancellor now for this university for seven years. This has been an exceptional time. An exceptional time of change. An exceptional time for this university with adding a dental school. All the wonderful things that have occurred here in the midst of some very difficult economic circumstances. Those economic circumstances are not relenting. You may have noticed yesterday that the stock market hit 12,000. Well, that’s got to be a leading indicator. I sure hope it’s a leading indicator because the financial crisis is not yet abated.

"Hopefully, we don’t have too much longer to go through this. But maintaining the core of this university and maintaining our academic excellence has been one of the hallmarks of Steve Ballard’s administration at this university. We have seen so much good come out of this university and I believe we will survive this as we survive all things, perhaps better, perhaps stronger, and perhaps more ready to move into the future in dramatic new ways that will bring additional glory to East Carolina University. We’ll probably focus too much time and energy on baseball, but when you have a baseball player as your chancellor, you do get to do that. I would like to introduce and bring up here, a great friend of East Carolina University, eastern North Carolina and this state, and my friend, Chancellor Steve Ballard.”

Chancellor Steve Ballard’s State of the University address:

“Timing is everything. I see today that I’m competing with Groundhog Day, football signing day, and a chicken dinner at the Kiwanis luncheon. So, I thank you for being here today. I do want to talk about this great university. More or less, I’m going to end up telling a story and these minutes might not be like I’d like, but one minute on the past, five to six minutes on today and the budget, and 10 to 12 minutes on the future. Because it’s the future that we must focus on, and it’s so positive for East Carolina University because of what everyone here does and because what many people throughout every constituency of the university do for this institution. It’s great to be here. If you remember nothing else, I hope you remember that we have great optimism and great resolve about the future. We know we have a challenging 12 to 18 months. There’s no question about it. Everybody else does. I’ll speak about the details of that momentarily, but the optimism, the resolve about the future, and the pride that we have in this institution is overwhelming and it will certainly get us through these tough times.

Being a chancellor, like Bob indicated, is a little bit like being a baseball coach… you know you are just one bad year away from the job market.  So, that makes it even nicer for me to be here today.

Last year at the first State of the University that I had given, we focused on the broad overview, and I think that was very appropriate, and we talked about our history, values, priorities, and accomplishments.  They are all substantial. We are who we are today because of the last 107 years and everything that has contributed to this university. But the pride that we have today has everything to do with that 107 years. One of the things that I’m most proud about is the mission of this institution. It is so unusual. It is so authentic. It makes such a big difference. We are a national model for regional transformation. We do so many things that make that come to life. I hope we never forget and certainly don’t let the budget times get in the way of that authentic mission that I think the entire state of North Carolina is recognizing, has recognized, and will continue to see.

Today
Today, however, is much different than just one year ago, as everyone in this room knows. We face the most daunting budget picture of the last 60 years and it is vital for everyone to understand those challenges so we can get through them and move forward. I will try to paint that budget picture as best I can, recognizing on Feb. 2 there’s much we don’t know. And so much will change before May, June, July, and the uncertainties may get more difficult. Dr. Niswander assures me the recession is over. His data is overwhelming on that score. Unfortunately, the fiscal crisis is not, and the fiscal crisis of state revenues will be with us for another year into the start of our biennium.  

You may not remember the numbers we discuss today, but please remember these three things about these next 18 months:
•    First, we will survive this fiscal crisis and remain a great university. There’s no question in my mind that we know how to do that. In part we’ll do that because we are mission driven and will maintain our focus. I would like to remember Winston Churchill’s famous words, “When you’re going through Hell, keep going….” And we will certainly do that.
•    Second, we are a vital part of the solution to this state. We believe in opportunity and we make a difference for eastern North Carolina; and
•    Third, education is about people. Education is about opportunity – giving students access to an excellent university and insuring that they can realize their dreams to the best of their abilities.

Those three things are huge. They are who we are and who we will continue to be.

Let me get to the bad news. First off, I will talk about budget figures and what we have in front of us. I will only talk about our base state budget here today. I could mention the threats that our salaries are now under and the probable loss of our F&A funds. Research equipment funds have been frozen, and we face the possible loss of those. And repair and renovation are under great scrutiny. I’m not going to go into those last three categories because I don’t want to be accused of creating an institutional depression here. Those are, however, at risk and we will pay a lot of attention during the legislative session to what the legislature says. Some of those funds are absolutely vital for an institution that’s 107 years old.


The Budget  
Most of you and our community are all too familiar with the basic outline of the budget situation. ECU has lost $106 million over the past three years before anything happens this year; that includes both one-time “reversions” and base budget cuts. That is a lot of money to expect and then lose. Last year, when the UNC System represented 13 percent of the state budget, the 17 universities accounted for 29 percent of the governor’s reversion. Two years ago, when we had our biggest base cuts today, 92 percent of ECU’s base budget cut came from administrative positions and administrative function. The point of that is that we did all we could to protect the student experience and academic quality. So, higher education continues to do its part—both at the system level and at our level. But facing the fourth year –and there will probably be five years of base budget cuts—we have very little flexibility compared to where we have been. All the “low-hanging fruit,” most of the realizable opportunities that we could do to keep from having an impact on academic quality have been exhausted.

We know that fiscal next year, starting in 2012 will be the worst yet. The gap between revenues and past expenditures, which is what everyone is focusing on, is approximately $3.7 billion, or a 20 percent gap in the state budget. For ECU, 20 percent is about $60 million, on top of the $106 million that we have already lost, or given back. 
Whether or not we will have a 20 percent cut is anybody’s guess. You can certainly hear rational arguments for a cut between 8 percent to 20 percent, so without question the cut we receive will be between 8 percent and 20 percent. I ask everyone here today to pray for the 8 percent but as a chancellor I have to prepare for 20 percent. There is simply no other way to look at it from my point of view on Feb. 2 other than the absolute necessity of being ready for 20 percent.

If it makes you feel any better, and it doesn’t help me at all, most states across the country, 40 states, are in equal or worse conditions than we do. Those 40 states face budget gaps that will require a total of $113 billion that will require cuts in higher ed unless new resources are found, which are unlikely at this time. California, one of the premier higher education systems, faces  $20 billion shortfall, and Illinois has a $25 billion shortfall. In the University of California System, tuition has tripled in the last eight years. So, we can find worse misery than our own, if we chose to look at it that way.  

Our philosophy, as we enter this period of possible 20 percent cuts, includes three components:
•    There is only one East Carolina University. We are all in this together and we all have a stake in the outcome. We know every element of ECU and every constituency will suffer.   But our goal is to emerge with our integrity and our mission intact. And to be a better university at the end of it.
•    Second, we will continue to be as strategic as we can: We will continue to focus on our five strategic priorities and will be guided by “ECU Tomorrow.” These commitments define our future and therefore our resources will be aligned with the programs, services, and degrees that have been agreed to by our Board of Trustees as well as the statewide Board of Governors, as our strategic plans have been.
•    And, we will keep our eye on the long-term: We will define where we want to be at the end of this recession and stay focused on that. We won’t eat our seed corn. We will protect our fundamental commitments that this university has made and the impacts that we have on our state.

So, given this philosophy we have four primary ways to find $60 million for the next fiscal year. I will discuss them in terms of what we must do first, second, third and fourth. But the order is not correlated with how much money can be realized from each. The least desirable choices will almost certainly yield the most funds.  That is a fancy way of saying that we are cutting to the bone, if we face a $60 million cut.

1.    First, we will continue to be more efficient in every way possible and more productive in all of our operations and that includes consolidating services, doing more shared services and more partnerships, less administrative expenditures. We have an exemplary record of being efficient. Of the 16 public universities in North Carolina in President Bowles’ “PACE Initiative” to increase efficiency three years ago. We were first in saving money through efficiency improvements. So, we know how to do that. We’ve been there. According to the data from the General Administration two years ago, ECU is one of two universities where administrative growth has been less than the growth of the student population.  Every other constituent institution had higher administrative growth than they did student growth.

Again, that means many of the feasible options have been identified and realized in the last three to four years. We have fewer choices this year.

Productivity improvements will be a focus and will only yield about three to five percent of a $60 million goal. We will look at every realistic option and ask every constituency to identify those options, but in that regard I’ve asked Faculty Chair Walker to speak with the Educational Policy and Planning Committee of the Faculty Senate to recommend criteria by which we can consolidate services, academic programs, and reduce administrative costs associated with overseeing departments and colleges. I think while that is never a preferred choice, we have no choice but to take the most serious look we can at that as we try to protect our faculty.

2.    Second choice, we will be to look at our emergency fund to help offset these cuts. This is a painful option because it is so difficult to replace emergency funds once they are spent and, obviously, they could be needed to respond to large-scale emergencies such as a Hurricane Floyd, gubernatorial budget reversions, and future fiscal challenges, which are certainly possible. When I said that we would focus on the long-term, it was with this option in mind… we can’t spend all of our savings account to deal with a short-term crisis. At most, I estimate that we might be able to find one-fourth of our cut scenario from this option. So, doing this complicated math, options 1 and 2 may provide, at best, $20 million, or about one-third the $60 million needed.

3.    The next two options are even more painful but unavoidable.  Option # 3 is called “Unit Reductions,” for every college and every division. I know we’ll have to ask every college and division to meet a fixed reduction.

Since we have made so many reductions over the past three years, and sacrificed so many non-academic positions, it is inevitable that the units will now have to cut into the academic core and the size of our faculty. I hope that we can keep the overall size of our faculty close to what it is today. Many schools and colleges will have no choice other than to use faculty openings and academic resources to reach their goal. The availability of classes will be reduced, while class size and teaching loads, on average, will increase.  

We may have to ask each college and division to reduce their expenditures by 9 to 12 percent. If we take 9 percent of the state funding from each college and division, that would generate about $30 million or half of our $60 million target.

4.    Last, most painful for me, and inevitably, students will have to pay more for their education through increased tuition and fees. We anticipate that students will have to fund at least 20 percent, perhaps more, of the $60 million reduction, and this will follow substantial increases in tuition and fees already approved for the coming year by the Board of Governors and already realized over the last two years. We have always prided ourselves in being an access institution and our first university priority is student success, so making higher education less affordable is a not an attractive option for me. I would not propose it if I did not consider it necessary to protect the quality of what we do and the quality of the experiences our students are getting.  

Even with these large increases in tuition, we will remain affordable at least in terms of comparison to our peers that we have been assigned by the Board of Governors. We have 15 peer universities. Most recent figures indicate that we will remain either the 2nd or the 3rd most affordable university among our peers as we move forward.

Campus Engagement
I will end the gloomy part of my speech with this commitment:  we will involve and engage the campus community as much as we can during this process. The budget estimates presented today will undoubtedly change and better options could emerge.  We will do everything we can to be innovative, find appropriate partnerships, and do all we can to protect the student experience.  
 
We have had a “Campus Engagement Task Force” working for two months to ensure that we receive feedback from every element of the East Carolina community.  We seek your participation in the budget process and here are three ways we’ve identified to make that possible:     
•    We have begun college-by-college forums. We have one tomorrow in Allied Health Sciences. That will include faculty, staff, students and administrators to come together to heard the budget figures, to ask questions and to get all the information you need to think about this.
•    We will invite electronic feedback and post the most recent state information on the web so that the best data is available to you and transparent. This process has begun with the posting of the latest fiscal brief on the status of the current state deficit; and
•    Every campus constituency, from alumni to faculty to student government and staff senate, will have a member of my leadership team assigned to it and that person will facilitate interaction and be available for meetings and updates. We are going to do everything we can to make this an East Carolina University approach to how we meet these numbers.

North Carolina Tomorrow:  Education is the Solution
That’s enough of the gloom and doom. Everyone talks about “the new normal,” but I have no idea what that means. I do know one component of it. We won’t enjoy as many state resources in the future as we have in the past. There’s just no way North Carolina can continue to support about 60 percent the total cost of higher education. So, we have an obligation to use this crisis to change our thinking, identify better business practices, and to create a better public institution. This includes focusing on those activities that make the most difference for students and contribute the most to North Carolina, and it must include being an even better business enterprise.

At the same time, let’s also understand that higher education is the major part of the solution to where North Carolina is headed.   ECU has a great story to tell. Today I will identify four of the essential ways that higher education is necessary for the future of North Carolina.  These entire examples make a compelling point… education is about people and opportunity.  My examples are what we do for jobs, health, opportunity, and serving people in the eastern part of the state.

1.    JOBS
North Carolinians need jobs.  They need well-paying jobs and jobs that will last.  

Our programs excel in workforce preparation.  Before I explain that, let me mention an important caveat.  While workforce development is important … it is not all we do for our students.  Equally important are the liberal arts foundation and the leadership opportunities we provide.  Our graduates are prepared for a complex technological world and they are ready to pursue further education to fulfill their goals. Our students learn how to learn, how to solve complex problems, and how to communicate effectively across countries, cultures, and languages.

Many of our professional programs have an exemplary record of preparing students for the job market.  Let me mention a few examples:   
•    We have a relatively new engineering program, which began in 2004 and was accredited in 2009. It has already grown to over 300 students with more applicants and higher academic credentials each year. Half of the students who apply to that program are from eastern North Carolina and over 90 percent of the graduates are either employed in the field or in a graduate program.  
•    In the College of Human Ecology, 90 percent of the graduates in Hospitality Management are employed upon graduation despite severe recession in that industry;
•    In the College of Education, we continue to prepare more teachers than any public university in the state and virtually all of them are employed as teachers within one year of graduation;
•    In the College of Business, more than 50 percent of the graduates of Management Information Systems are employed upon graduation, and they have an average starting salary of $54,000;
•    And, in the Health Sciences, 100 percent of the graduates of Nurse Anesthesia, Occupational Therapy, and Physical Therapy are employed upon graduation. Again, these programs have achieved near perfection in workforce development. One of every 5 newly created jobs is in health services, so ECU is preparing students for real jobs, real opportunities, and well paying jobs.


2.    HEALTH
Our graduates are prepared for the future and they are prepared for the job market. But we do more than that.

Underserved populations exist throughout the state, especially in the rural areas. Heart disease mortality in North Carolina is higher than the national rate, and the eastern 29 counties have the highest incidence of heart disease of any region in North Carolina.   A similar situation exists for diabetes and other metabolic illnesses. Ninety-three of 100 counties are below the national average for the number of dentists and four counties have no dentists at all.  

Responding to these needs is at the very heart of what East Carolina University has always been about. And it is no exaggeration to say that, without ECU, these problems will would be much worse.  
•    Everybody knows the story of our Brody School of Medicine. It provides more than $150 million per year in uncompensated care. It is the health care safety net in eastern North Carolina. In recent studies, the Brody School is ranked second nationally in producing primary care doctors and 7th nationally in overall social mission.

•    Our dental school has admitted most of its first class and it is on track to open in August.  We are proud of what the entire team has accomplished. But here is the real story. It is a break-the-mold approach to dental education and the accreditation team told me, “The whole country is watching.” The dental school will place fourth year students in dental clinics around the state, in the most underserved areas, and promises to address the severe shortage of primary care dentists in our rural areas.

•    In the area of obesity and diabetes, ECU continues to be a national leader in research related to the origin and causes of diabetes. Darrell Neufer and his colleagues in the Diabetes and Obesity Institute are making strides to understand the cellular mechanics at work in this disease and, hopefully, how antioxidant therapy can protect at-risk people.

1.    OPPORTUNITY
Our vision is to deliver on the promise of opportunity and we have been doing this since we were established as East Carolina Teachers Training School in 1907. To deliver on this promise requires both access and affordability.   
 
We should all be proud of our record.  We have nearly 28,000 students and the second highest number of undergraduates in the UNC system. We have grown over 27 percent since 2004 and we have excellent relationships with the community colleges so that successful community college students can easily transfer to ECU. And we welcome these students.  

But it is not just freshmen and transfers that we welcome.  Thousands of North Carolinians depend on continuing education and better credentials to compete in the job market and earn better salaries. Most of these students cannot come and be residential students on our campus. Our distance education programs, which exist across our colleges and are especially successful in the professional areas, serve people who must have this access to ECU. We lead the UNC system in serving these “distance” students with more than 6,000 enrolled each year.   This is a tremendous response to a vital state need related to workforce development. 

And, the competencies and degrees our distance students receive are not frivolous.  A major reason we produce more teachers than any other North Carolina university is because of our online programs and our partnerships with the community colleges.

I also want to mention a special aspect of the success of our students…because we understand that coming to ECU is just the beginning.  ECU meets all the retention and graduation goals established by the General Administration. More important to me, we achieve the same levels of success across demographic groups. Recently, the Education Trust published a report called, “The Gap Closers” referring to the difficulty that most public universities have in achieving comparable graduation rates between minorities and the rest of the student population ECU is one of only 10 public universities in the nation where graduation rates for minorities equal or exceed that of other students.

Equally important is affordability. ECU has more students with a demonstrated financial need than any other university in the UNC system. We understand the challenges they face in terms of retention and graduation in a timely manner. In addition, we know our students will have to pay more for college in the future as state support decreases.

Our students pay about 22 cents per dollar on the total cost of education, and all you have to do is look around the country and see what a great bargain that is. We remain the 2nd most affordable university among our peer group and we remain approximately $2,500 below the median cost of that peer group.  And we put more and more resources into financial aid every year. This year, 80 percent of our campus-based tuition will go to need-based and merit-based financial aid.

We no longer live in a world in which economic strength depends on just the “best and the brightest.”  It is the entire workforce that must be ready for the challenges of a global economy. Thus, access and affordability are central to economic growth and no university does this well than ECU.

2.    SERVICE
Education is about people. While institutional reputations usually depend on such factors as federal support for research and the size of the endowment, the impact of a university comes from what we do for people and communities.

That is why service is so important and arguably the most important thing a public university can do, outside of ensuring academic quality. Our goal is to be the best university in the nation in public service – making a positive difference for our region. Our impact has always been substantial… from the volunteerism of our general student body to the targeted engagement of our honors students and dozens of community-oriented programs. A few examples will make my case:

•    Project HEART stands for “High Expectations for At-Risk Teens.” It is an AmeriCorps program, housed in the College of Education, and it has tutored and served more than 5,000 at risk teen-agers since 2000.  It was recently selected as one of the 52 most innovative AmeriCorps programs in the nation and Governor Perdue called it “a shining light and North Carolina at its best.”   
•    The Intergenerational Center is an example of a great Partnership with the City of Greenville, Pitt Community College, and ECU. Started in 2007, the center is a major resource for West Greenville in such areas as the Youth Apprentice Program and the Summer Significance Academy – which is targeted at keeping middle school students in the educational system.
•    Our Engagement and Outreach Scholars’ Academy has graduated 29 faculty members and 38 graduate students in three years. They have worked on community issues in 12 counties in such areas as disaster preparedness, student-learning experiences, improved educational programs, and services for migrant workers.
•    Because the military is such a special component of eastern North Carolina, ECU has made a commitment to serving the military. It is the least we can do to show our appreciation for what they do for us. To my knowledge not one single rating or ranking service across the country would count our service to the military in their annual rankings. We do this because of its impact, not for prestige. It includes excellent educational programs at Ft. Bragg, two excellent ROTC programs, a new program called “Operation Re-entry” which helps military personnel as they transition to civilian life, several student projects for the Wounded Warrior Barracks, and world class research in post-traumatic stress disorder and traumatic brain injury. Little wonder that ECU was recognized with the Freedom Award by Secretary of Defense Gates last September only the second university ever to be so honored.

Making a difference for people and for communities is part of our DNA.  When the University of North Carolina initiated the award for Community Service, it was no accident that Dr. Lessie Bass, the energy and the spirit behind the Intergenerational Center, was the first recipient. Hundreds of other faculty and staff share that same spirit and it is a primary reason why we make a difference for North Carolina.

Conclusion
Jobs, better health, opportunities for tomorrow, and service to our region – what an excellent story. We do face the most difficult fiscal picture in the last half-century, and it will challenge us all.   But we know how to survive tough times. We will maintain our sense of community, focus on our priorities, and respond to our state and our region in every way that we can. That is who we are.

On the other side of this great recession we will not only be here, we will be proud of the great difference we make and we will never lose sight of the opportunities we provide and that we must continue to provide. Martin Luther said, “Everything done in the world is done by hope.”  That hope has always been at the core of ECU, and it remains so in the future.  

I look forward to working with every one of you. Our challenges are not small, I think you all realize that, but they are inconsequential compared to our spirit.

Thank you for being here today. It’s a pleasure to work with you.

 


Contact: Mary Schulken