"Extraordinary Times, Extraordinary Opportunities" - Watch the address (streaming media)
Good afternoon. Thank you for being here. Welcome to all of you, especially the women and men of the faculty who are being recognized for their service and professional achievement. Congratulations to all of you and a warm welcome to your families and friends.
For nearly 20 years I have crafted convocation addresses. During that time the use of this bully pulpit changed as the format, focus and external environment shifted. So it will today as I integrate the state of the University into several national and international trends and the political and economic realities of the day. But make no mistake: The state of Creighton University is solid and the future is promising.
Higher education is changing dramatically, buffeted by external forces not of our making. Creighton University has faced many challenges in the past 131 years, and each time, guided by its mission and animated by its people, it has courageously transformed itself—growing from a small, local school for boys into a leading Catholic Jesuit university. Knowing this, we face the future with strong faith, renewed spirit and bold confidence. But we must believe this. We must want this. We must be willing to work together to accomplish our destiny.
Winston Churchill noted that “a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” There is no dearth of difficulties, thus there should be no lack of opportunities open to us. Hence the title for this convocation: “Extraordinary Times, Extraordinary Opportunities.”
We live in interesting times. The challenges are real. Universities across the country are clearly feeling the effects of the faltering economy. Like Creighton, many are clearly taking decisive steps to confront that turmoil. At the same time, we as a nation have begun a new adventure with the inauguration of President Obama. A sense of cautious optimism and a feeling that “change” is afoot hovers over the political, economic and social institutions of the country. “Yes. We can,” echoes from coast to coast. This is the same spirit of hope, determination and optimism that I invoke today as the Creighton family moves forward in addressing our present circumstance.
In what follows, I will address the progress being made in our institutional strategic planning and our response to the present financial and budgetary challenges. I will end with observations about our successful capital campaign and the implications as we look to the future of fund-raising in this economic climate.
I. STRATEGIC PLANNING
Since the fall of 2007, Creighton has been engaged in a new process of strategic planning. Last April, we held a two-day planning retreat with over 60 faculty, staff, administrative, student and alumni participants. The findings of that group were shared with the entire University community through a series of town hall meetings on campus and on our webpage. Since last Nov., 12 task forces with over 120 faculty, staff, administrative and student members, have been studying in more detail the elements of our five strategic commitments. My Cabinet and I are weighing the recommendations from those task forces and we anticipate publishing the final version later this semester.
Our commitment to planning is well-placed in this time of economic stress and external challenges. Renewing our understanding of who we are and where we want to take our collective enterprise gives us the strength to persevere and thrive in the face of both anticipated and unforeseen events.
We will not waver from being guided by our Catholic and Jesuit identity as we engage in our intellectual pursuits, patient care and service. We remain committed to our two core business models of providing:
- an affordable, outstanding undergraduate education to traditional four-year students, and
- a challenging and relevant graduate and professional education in our selected colleges and schools.
We continue our commitment to selectively expand our graduate and professional programs and to explore the appropriate integration of on-line learning in all our programs. The growth in this semester’s record enrollment is entirely due to new graduate programs, primarily on-line. As an aside, the fall 2009 freshman class is looking very solid.
Our vision is both simply stated and ennobling – Creighton University will be a national leader in preparing students to enrich and renew society through professional distinction, responsible leadership and committed citizenship.
Our strategic commitments are few, but crucial to meeting our vision. Enriching and advancing the Catholic and Jesuit identity is the No. 1 Strategic Commitment in Creighton’s Strategic Plan. Recognizing the demographic challenges that the future will present in terms of declining numbers of Jesuits, the tentative strategies and tactics for this initiative call for greater involvement of lay faculty and staff and recommend enhancing institutional structures and programs to perpetuate the Jesuit charism. Hiring for mission, inclusion in rank and tenure and staff promotion decisions, continuing education programs, and curricular and co-curricular components are tactical steps being considered to ensure this commitment is met.
As our recent Jesuit General Congregation noted in its Sixth Decree on “Collaboration at the Heart of Mission”:
“The leadership of a Jesuit work depends upon commitments for mission and can be exercised by Jesuits or by others. Such leaders must have a commitment to the mission of the Society as realized in the particular work, though they may be of religious or spiritual traditions different from our own.” [G.G. 35, Decree 6, #11]
Our second Strategic Commitment is to improve the way we do our business by being more flexible, more proactive and more entrepreneurial. At a time when financial resources are scarce, it is clear we need to reduce costs and become more efficient. We also realize that the competitive demands of our constituents must be addressed for us to advance our positions of strength in the markets in which we provide our services. It also is more important than ever for us to not only make sound decisions about allocating resources to new ventures, but also to have the will to eliminate programs that are no longer effective or have become less important to fulfilling our mission.
Strengthening and delivering transformative education is our third Strategic Commitment. The world of the 21st century is evolving faster than anyone can imagine. As a consequence, our traditional educational processes are coming under significant stress. While we recognize that to be true to our heritage there are fundamental elements of our educational endeavors that cannot change, these cores of our existence can and must be adapted to a changing world.
To move this strategy forward, we are considering a greater integration of assessment activities across the University, continued focusing of our new student recruitment and retention efforts, appropriate expansion of co-curricular activities that provide students with learning experiences outside the traditional classroom, increased integration of technology into programs and pedagogy, and maintaining and improving our physical environment.
The major distinction that separates a university from other educational enterprises is the creation, dissemination, and integration of knowledge. Our scholarly pursuits must be one element that distinguishes us. So our fourth Strategic Commitment addresses our intentions regarding scholarship. To meet this commitment we will define the scope and emphasis of scholarship in all programs; we will expand the engagement of students and staff in the scholarship process, especially funding student research opportunities; and we will modify current infrastructures that impede more robust and interdisciplinary scholarly activity. Simply put, we will articulate and support the right mix of scholarship activity that will enable Creighton to achieve its vision.
Our fifth and last Strategic Commitment addresses the importance of continuously renewing our faculty, staff and administrators. No national university can exist without exceptional students, but clearly neither can one exist without outstanding faculty and staff.
This commitment addresses the challenges posed by an aging staff and faculty, coupled with shrinking demographic pools of possible replacements in many disciplines. It also addresses how we can do better in preparing and renewing faculty and staff in their abilities to provide the unique education that is Creighton’s.
In addition to fine-tuning the strategies and tactics recommended by the task forces, over the coming months we will be discussing the appropriate measures needed to monitor the success of these activities. No plan can be successful unless performance is measured and monitored and there is a direct link to budgetary activity.
This is our vision and our plan for conducting our business to meet that vision. I am enthusiastic about continuing this process and helping each of you improve how we serve our students, alumni, patients and communities. Yes, resources are tight and we face financial challenges, as I will more fully discuss in a minute. But not all the elements of our plan require new financing. As we find greater efficiencies, as we become more frugal, as we redirect resources, we will be able to implement many of our plans. The synergy of focused redirection will generate significant momentum that will carry us into our purposeful future. We must, and will, continue these efforts.
II. FINANCES AND BUDGET ISSUES
Tucked between planning and fundraising is the fiscal reality of the day. You read the newspapers, watch CNN, and visit with your family and neighbors; no one is exempt in this economic meltdown. Alegent, Qwest, First National Bank, Omaha World-Herald, Union Pacific, Lozier and InfoUSA are some of the local names joined to Boeing, General Motors, Morgan Stanley, Starbucks, Microsoft and Harvard to illustrate the breadth and depth of this economic nightmare.
Higher education was broadsided in a big way: increased pressure on tuition and financial aid; the broad impact of investment losses on operations and philanthropy; illiquidity of balance sheets; and the volatility in-debt markets, as well as debt structure, hit education like the perfect storm!
Aside from the global economic meltdown, Creighton has an additional challenge in the under-performance of our medical clinics and the operations overrun in the School of Medicine. Both will be covered in the following comments.
There is no way I can sugar-coat this message without alienating Academic Affairs; nor overstate the point without undervaluing the performance of our clinics and medical departments. Hence the safest passage is to go right down the middle to the essence of the issues…with all candor and transparency.
Very early on, well ahead of most institutions, Creighton was proactive in publicly announcing the steps being taken to address possible fiscal issues; doing so even in the face of inaccurate and biased media coverage. I can honestly say we have NOT lost our confidence in achieving our budget objectives.
We are probably all growing a little weary of hearing the constant drumbeat of negative news on the economic front. But the situation is real and it has a real impact on Creighton. It is important to understand how these general conditions translate to specific implications for us. The most significant impact is the reduced ability of students and their families to afford tuition. This comes as a result of diminished savings; declining investments; reduced availability of loans, especially home equity loans given the decline in home values; and job losses.
This situation translates to our need to remain as affordable as possible, which we will try to achieve by minimizing our tuition rate increases, supplementing our financial aid budget and reducing expenses. I will share specifics on each of these a bit later.
A second area where we are affected by general economic conditions is related to the depressed state of the investment markets. There has been much publicity about this subject; one needs to look no further than your own retirement savings to see what has happened in the stock markets over the past year. Our endowment has suffered along with all of higher education. Despite a broad asset allocation to diversify our investments, there has been no place to hide from market declines, which affected all asset classes.
As you can see in the chart, the combined Creighton/Health Future Foundation endowment stood at $274 million as of Dec. 31, 2008, which is down about $100 million, or 28 percent, from where it stood at the end of last fiscal year. The overall decline in the endowment would have been more significant without the success of the campaign, which added over $50 million to the endowment in the past three years.
The direct implication of this decline in the endowment value is reduced distributions in support of our operating budget. This reduced support translates into more financial aid being funded out of the operating budget and the need to reduce operating expenses.
As mentioned earlier, in addition to the general economic conditions, we have some additional challenges related to the operation of the clinical practice in the School of Medicine. The operation of a clinical practice is an essential ingredient to medical education, giving our students the exposure to patients required to become competent medical practitioners. The Omaha market is a challenging one in which to operate due to the amount of competition.
Added to that is the inherently higher cost structure of academic medicine and the large amount of indigent care represented by our patient base. Clinical revenues have not kept pace with the increased cost of delivering patient care services and there are gaps in our practice where physician recruitment and retention efforts have not been successful.
To add to that dilemma, in 2008 we suffered losses from adjustments that were required to revalue patient account balances. These adjustments largely resulted from complications associated with the implementation of a new billing system.
So, you ask, how have we responded to these challenges? Check out the color and thickness of my hair!
- Last fall we announced hiring restrictions, which will add positions only when viewed as mission critical. Some exceptions have been made in cases where student or patient needs are affected and where positions have the opportunity to generate additional revenues.
- As you know, we also implemented a financial enhancement process, which called for plans from each division to enhance its budget by 10 percent through increased revenues, reduced expenses or a combination of each. The 10 percent target was set to provide flexibility in selecting specific measures to be pursued. The Budget Committee has completed its initial review of these plans and identified, to date, a total of $8 million for implementation. This represents less than half of the submitted enhancements. The details of the plans are in the process of being finalized.
- In December we announced a Voluntary Separation Program and a Voluntary Reduction in Work Schedule Program. The Voluntary Separation Program provided severance benefits based on years of service to up to 25 employees electing to leave their position with the University. Twenty-two individuals signed up for the program before the deadline. The program was a win-win for the employees and Creighton, as the individuals took the opportunity to jump-start their retirement or new careers, and the University expects to achieve annual budget savings of an estimated $500,000 through restructuring the vacated positions. While the Voluntary Reduction in Work Schedule Program, in reality, is routinely arranged between employees and supervisors on an informal basis.
- As an additional measure to produce budget savings, as well as enhance cash flow and preserve borrowing capacity, we placed restrictions on capital projects. Although the majority of projects already under way at the time of the policy were approved to continue, new projects have been shelved. Any proposed new project requires Budget Committee and/or Board review.
- Other efforts we are making toward addressing the current situation will be reflected in decisions for the fiscal 2009-10 budget. We are still finalizing several aspects of next year’s budget, but there are several key elements that are set at this time.
- The undergraduate tuition rate will increase by 3.5 percent next year, the lowest rate of increase in 46 years.
- Recognizing that any increase will represent a challenge to some students and their families, we are adding $2.4 million to financial aid resources to address the impact of this increase on family finances.
- While still considering options for endowment spending next year, it is clear that there will be a significant decrease in operating budget support from the endowment.
- Included in the budget for 2009-10 is a merit-based compensation bonus pool of $1.5 million, the distribution of which will be contingent on the achievement of key overall University objectives such as enrollment targets and the successful implementation of financial enhancement plan improvements. We should be in a position to evaluate the success of our collective efforts by November.
Everyone has some part to play in our success, whether that is welcoming prospective students and their families, preparing the campus for visits, or even turning off light switches and watching our spending. Or something as helpful as using the Creighton medical practice for your family’s health needs. Think about that one! Quality care is not in water features, convenient parking or westward addresses; it is in physician care…and we have the best in Omaha.
- There will be no general increase in non-salary expense budgets next year, with the exception of a modest increase for library acquisitions. The remaining elements of the budget will be finalized over the next weeks.
Before I leave this subject, I think it is important to note some of the things you do not see as a part of the 2009-10 budget, given what some local and national institutions and companies have announced and, of course, what has been making its way around the campus rumor mill. The 2009-10 budget does not include:
- Reductions in retirement plan contribution;
- Rollbacks in salaries;
- Reductions in health care benefits; or
- Reductions in tuition remission programs.
These actions, which would easily fix the deficit, are decisions made in the spirit of our mission as a Catholic and Jesuit university which cares deeply about its people.
Another factor in our present budget discussion deals with the School of Medicine and Creighton Medical Associates.
There are a number of initiatives under way in the School of Medicine to address the clinical practice issues I referenced earlier. I’ll touch on several of the most notable ones.
- The arrival of the School of Medicine’s new dean, Dr. Rowen Zetterman, at the beginning of January was an important step in the process of refining and advancing the School’s vision and restoring financial health. Working closely with Dr. Zetterman to implement these initiatives will be individuals filling key financial and operational roles.
- Restructuring of the financial reporting function and development of enhanced reports and analyses are well under way. These are critical elements in ensuring that the necessary information is available to the right people at the right time to monitor results.
- Restructured administrative and operational functions will be designed to enhance the efficiency and effectiveness of the clinical practice.
- A number of improvements have already been made in the patient billing system and related processes, with more in progress. The improvements will ensure the effective collection, management and reporting of revenues generated by the clinical practice.
- Revisions to the structure of the practice plan will be designed to help CMA function more effectively as a group practice. We have a dedicated group of clinical faculty, and just as with any team, the right structure is needed to maximize group effectiveness. When this is accomplished, both the team and all of its members benefit.
- Increasing patient volumes by enhancing productivity and efficiency are certainly important, but just as critical is ensuring we have a sufficient number of physicians in the right practice areas. Increased emphasis has been placed on physician recruitment this year, with notable results. These efforts will continue as we fill gaps in our physician complement and grow the practice.
Having the right structure in place and a full complement of excellent clinical faculty go a long way toward ensuring our students have access to the patients needed to develop into competent physicians, but another key ingredient is a business development program supported by effective marketing. Efforts in this area will provide the support necessary to help faculty grow and maintain a healthy clinical practice.
I do not want to leave this topic without acknowledging the quality work done by our physicians, support staff and practice plan personnel. When we have much work to do, it is natural to focus on the things that need fixing and forget about those things that do not. As is the case with the rest of the University, the School of Medicine has a talented group of dedicated faculty, staff and administrators. We need to ensure we provide an environment that enhances their opportunity to be successful…glad that is over.
III. “WILLING TO LEAD” CAMPAIGN
The other bookend of today’s comments focuses on our capital campaign. This has been an extraordinary time in the life of Creighton University—as I have outlined in this address. We face many challenges and opportunities, for sure, yet our momentum is real and unmistakable. Ours are purposeful actions!
We have been conducting a multiple-year campaign, called “Willing to Lead.” The theme reflects our ongoing commitment to elevate Creighton’s standing on the national scene. The momentum is evident in the wave of private support for Creighton and its mission and the new culture of philanthropy that now defines this institution.
This campaign has been quite a ride. With a goal of $350 million, we set a bold and ambitious benchmark. I am personally gratified by the unprecedented response of our alumni and friends in Omaha and beyond. We experienced historic gifts and historic participation, with more than 60,000 individuals. Today I am pleased to announce that as of February 1st we received more than $395 million in gifts and commitments to the “Willing to Lead” campaign.
Roughly 50 percent of the campaign’s dollars have infused our academic mission—directly or indirectly: Hixson-Lied Science, Rigge and Criss renovations, 14 new endowed chairs and five endowed professorships, as well as programs like the Werner Institute and the Center for the Asian World.
The other half of the campaign’s results have revitalized our physical environment through capital improvements, making the campus more cohesive, dynamic and inviting for students and visitors alike. New construction of Davis Square and Opus Hall, Morrison Stadium, the Harper Center, the Ryan Center and D.J. Sokol Arena, and renovations to St. John’s, Creighton Hall and the Wareham Building, as well as the extension of the central mall, are evidence of campaign commitments. The campus has grown 40 acres to a 130-acre footprint.
For Creighton to realize a successful campaign of more than $395 million is an incredible milestone. It is the result of many gifts—historically large, average and small—all of which are testimony of the affection and respect for this institution held by our alumni and friends in Omaha and beyond. This success is a harbinger for what is yet to come; so much more is possible as we look to the future.
For the task is not yet complete; let me say in no uncertain terms—we are not done! Creighton must never settle for what is, but always aspire for the more, what is yet to be realized. We have known from the outset that this campaign would not be the concluding event but the beginning of a new era of philanthropy and growth for this University; it is what I have referred to as our “second founding.”
I truly believe that more than a few transformative opportunities lie ahead of us. Our Board and donor community are pushing us to build on the momentum, to continue to pursue unmet opportunities—to reach toward our vision vigorously and purposefully.
We are harnessing their energy and addressing new strategic priorities, especially in the area of endowment. We will remain vigilant in moving ahead to secure the philanthropic support needed to move Creighton forward. This is not the time to put on the brakes, nor retrench, nor retreat. We are moving forward in a seamless segue to new opportunities and new priorities.
We do this mindful of the economy’s impact across higher education and sensitive to what it means for our donors. For I believe that new, interesting and meaningful ways to engage alumni and donors will bear fruit when this financial crisis is over.
We entered this period of economic turmoil from a position of strength and I am optimistic that we will weather this storm and will come out stronger for staying the course. Our bold tomorrow is here, and an even bolder tomorrow awaits us! I say, “Be flexible, be confident and be engaged…people rally to worthy causes!” Creighton is, indeed, a worthy cause.
As mentioned, the focus of this next phase of our fundraising efforts will be on endowment growth. Undoubtedly, as we move forward in consultation with the deans and vice presidents, specific projects—capital and other—will surface. Each will be evaluated in the context of institutional mission fit and fiscal feasibility. Nevertheless, endowment will be central and the leitmotif of our efforts.
Endowments empower universities to better achieve their teaching, research and service missions by providing a stable source of revenue for these activities. Teaching and research are especially assisted through endowed chairs and program support. Endowment resources allow all institutions to provide educational excellence beyond what can be financed solely by tuition. And as a tuition-driven institution—45 percent of Creighton’s budget is funded by tuition and fees—the need to grow the endowment is paramount.
I believe fundraising is even more critical for universities during difficult economic times. Consequently, our fundraisers continue to reach out to donors, listen to their interests and concerns and share the importance of endowments and endowed gifts to the future of the institution.
To round things out, any dialogue about Creighton’s future begins and ends with a focus on students, faculty and staff—the heart of the academic community. A growing endowment, fueled by philanthropy, will enable us to make permanent our commitment to access and affordability, to quality of programs and services, and allow us to live our Catholic and Jesuit educational legacy. It has been noted that “education and philanthropy are each, separately, among the most powerful forces at work shaping the future of our society. In combination, they may be unsurpassed in their capacity to improve the human condition.” I believe that the combination of philanthropy and education will, indeed, determine the future of Creighton University.
Donors give to endowment because they believe in the institution’s mission and have confidence in its track record of using endowed funds wisely and effectively. That is the disposition of Creighton’s donors! Donors give to worthy causes. And Creighton is, indeed, an exquisitely worthy cause!
The last 32 minutes were important. Today’s was an important address from several perspectives. It was meant to be informative and instructive of our present state of institutional planning, resource allocation/reallocation and fundraising efforts. But it was also, and more importantly, meant to be an occasion that would rally the multiple constituencies of the Creighton community and position all of us in the same place; allowing each of you, by being better informed, to tell the Creighton story more accurately.
There is no way I could stand before you and tell you that this economy has not sired its challenges. Those challenges are real, but the opportunities are abundant. For I believe there are sparks in this economic stubble that can catch fire and engage all of us and provide light to guide us into the future.
This is not a day for facile words and heroic exhortations, but rather it is the occasion for honest, candid and accurate accounts of Creighton’s institutional wellness and future aspirations. My hope was to create a sense of urgency and extend an invitation for engagement.
Not all of you will be pleased with our decisions. Some would prefer different actions. Others will leave here disappointed, while others will see this as a rallying call to strive, in these extraordinary times, for extraordinary opportunities opening before the University.
For my part, I am a believer in our future, a believer that the human genius can grasp and solve problems, that a communal effort can overcome individual mistakes and misinformation. I believe each member of the Creighton community has a role to play and a responsibility in moving Creighton forward.
As St. Paul writes in a letter to Timothy: “God did not give us a timid spirit … but a spirit of courage ….” It is my intent to capitalize on that spirit of courage, confidence and forward momentum! Creighton’s future is assured and it is bright!
Thank you.
John P. Schlegel, S.J.