THE UNIVERSITY OFCHICAGO CRICOIDNovember 8, 1977 ISSN 0362-4706 An Official Publication Volume XI, Number 5CONTENTS103 THE STATE OF THE UNIVERSITY, 1977114 THE UNIVERSITY BUDGET, 1977/78THE UNIVERSITY OF CHICAGOFOUNDED BY JOHN D. ROCKEFELLER©Copyright 1977 by The University of Chicago. All rights reserved.THE UNIVERSITY OF CHICAGO RECORDTHE STATE OF THE UNIVERSITY, 1977By JOHN T. WILSON, PRESIDENTNovember 8, 1977In last year's State of the University message Ipurposely put off discussion of the budget untillate in the report. As I then perceived the University's state, there were signs of decreasing preoccupation with budgetary and related administrative problems, as compared to the previous sixyears. I continue to hold that belief, although wehave by no means reached a state of affluence. Atthe same time, we have succeeded in achieving animportant budgetary goal, and I think that factwarrants early mention.The BudgetIn Edward Levi's State of the University addressof May 13, 1974 he reported a commitment to theTrustees, following a budgeted deficit for 1973/74which had reached $5.9 million, to eliminate overa three-year period the shortfall between incomeand expense in the University's unrestrictedbudget. Thus, for 1974/75 the shortfall was to beno more than $4 million, for 1975/76 no more than$2 million, and by June 30, 1977 the plan was tohave the budget in balance. In large measure thiswas to be achieved by a combination of improvedcontrols on expenditures and from increased unrestricted income which was to be generated fromthe newly launched Phase II of the Campaign forChicago.There was considerably less success than wasanticipated for increasing the flow of unrestrictedfunds from the Campaign. In addition, the extraordinarily hard winter, along with the energycrisis, sent energy expenditures skyrocketing.Despite these difficulties, I am pleased to reportthat we ended last fiscal year with the budget inbalance. We also submitted to the Trustees attheir June meeting a budget which is in balance forthe current fiscal year. With reasonable good for tune, and with continued undiminished effort onthe part of all, we should achieve this goal againnext June 30.The Academic UnitsThe Graduate Divisions and ProfessionalSchoolsFrom the variety and quality of intellectual endeavors within this University, it is difficult tohighlight any area or program. But for the OrientalInstitute, last academic year was a year of remarkable achievement. The Assyrian Dictionaryand the Hittite Dictionary projects, the archeolog-ical programs, and the epigraphic survey in Egyptall flourished. From the educational, scholarly,and artistic points of view, the Tutankhamun exhibit at the Field Museum, cosponsored by theUniversity through the Oriental Institute, was aspectacular success, attracting large and appreciative crowds from throughout the Midwest. Andthe Institute's own Tut show in the newly completed Babylonian Hall received wide acclaim, ashas the Institute's Mesopotamian exhibition. TheHall is the Institute's first new gallery in morethan forty years. In 1979 the Oriental Institute willcelebrate its sixtieth anniversary. Members of thefaculty and the Visiting Committee are now planning a fitting tribute that will mark the occasion.The Tut exhibits and the indispensable role thatthe Oriental Institute played in making them possible illustrate an argument frequently made byDean Karl Weintraub on behalf of the humanities.He points out that the "visible humanities" of thetheatre, the concert stage, and the fine artsmuseums all enjoy an advantageous position inattracting the attention and the support of our society as compared to the "less visible" or even"invisible" humanities of the academic world.How the recent experiences of the Division of theHumanities in attracting support for its programs103fit this argument, I am not certain. Last year theDivision enjoyed continued success in obtainingnew funds from a variety of sources and for avariety of purposes. These include the senior pre-doctoral fellowship grant from the Whiting Foundation, the Woods Charitable Fund support forteaching and research in the fine arts, and the Andrew W. Mellon Foundation grant for the SouthAsian and for the Far Eastern programs. In addition, the National Endowment for the Humanitiesmade a "challenge grant" award to the Universityfor the general support of the humanities.The scholarly functions of the Division remainstrong, with a number of faculty committees conducting reviews and discussions of the role andpracticability of master's degree offerings; theconsequences to the several language and literature programs from the growing demands for thestudy of comparative literature; and the relationship of the Division to undergraduatehumanities programs. Direction of the NationalHumanities Institute passed successfully from itsoriginal leader, Neil Harris, who returns to teaching and research in the History Department, toEdward Rosenheim, of the English Department.Nineteen new Institute Fellows from an equalnumber of colleges and universities across thecountry are pursuing a variety of activities, allaimed at the enhancement of undergraduate studyin the humanities.The Physical Sciences and the Social SciencesDivisions were less successful in establishing asolid base of new funding from the private sectorthan was the Humanities Division, althoughstrong efforts have been under way in both Divisions. In each of these major areas, the deansand faculty continue to wrestle with the very serious problem of declining availability of federalgovernment funds for research and for support ofgraduate students. Accompanying the erosion ofsupport levels, there is also a frustrating increasein the uncertainties relating to the policies and directions of existing programs. The unsettling situation facing academic science has been discussedin a recent report entitled The State of AcademicScience, by Bruce L. R. Smith, of Columbia University. Although the University is considerablybetter off than many institutions whose sciencedepartments are, in Mr. Smith's view, facing virtual extinction or at best a level of mediocrity,there is no doubt that the scramble for federalgovernment funds in all areas of science consumesextraordinary amounts of time and effort andmakes serious inroads into the amount of facultytime remaining to devote to research itself. As in the Humanities Division, both the Physical andthe Social Sciences faculties, in addition to copingwith problems related to support for research andgraduate training programs, were involved in introspective reviews of faculty performance standards; of Master's level offerings; and with revisions of core and upper-level undergraduatecourse offerings.Over the past several years, I have discussedwhat seems to be a never-ending series of problems in the Biological Sciences Division and ThePritzker School of Medicine. In spite of the adverse trends in the federal government's supportof biomedical research, which essentially parallelthose described for the Physical and Social Sciences, the Biological Sciences did well last year inthis respect, increasing the levels of federal funding in essentially all areas. In addition, the Division was successful in strengthening its base support from within the private sector. All of thisseems in keeping with the scholarly celebrationand the special convocation which is scheduledfor November 14, 1977 to mark the fiftieth anniversary of the establishment of the clinical departments of the Division.The year brought reassurance that some problems, although persistent, are not "never-ending. ' ' Of major significance was the resolutionof two long-standing financial issues within ThePritzker School of Medicine. The first related tothe reimbursement of clinical medical faculty forprofessional services rendered to patients sponsored by the Illinois Department of Public Aid.This seemingly endless dispute regarding unwarranted discounting of fee reimbursements forfaculty physicians was resolved in the University's favor with the abolition of the discount. Thesecond had to do with a freeze on Medicaid reimbursement for inpatient and outpatient hospitalcosts which, again in favor of the University, waslifted last May. While the State government continues to press for major changes in the reimbursement systems, the new administration haspromised to work with the institutions that areaffected, to achieve equitable changes. During thepast year major progress was made in strengthening the affiliation between the Division and theMichael Reese Hospital and Medical Center.Many thorny issues remain, but basic conditionshave now been established which will allowMichael Reese to play an increasingly importantrole as a partner of the University in academicmedical endeavors and in problems of communityand regional health care.In an earlier State of the University message, I104expressed concern that the medical enterprise wastaking on many of the characteristics of a federalpublic utility. During the last year increased pressure toward regulation at all levels of governmentimpinged upon the full range of academic functions: research at both the basic and clinicallevels; medical school admissions policy; housestaff personnel policies; continuing medical education; hospital cost containment and rate setting;curriculum content; and the conditions of medicalcare. In response to these developments I haveappointed a University-wide Committee onHealth Care Planning Policies to track the issuesas they arise and to develop preliminary assessments for the University's position on them,which can then be reviewed administratively andby the Trustees. There is also, under the chairmanship of Mr. Stanford Goldblatt, a TrusteeCommittee on Hospitals and Clinics which hasassumed a vigorous role in Medical Center activities. The involvement of members of thisCommittee has been invaluable in broadening ourperspective on policy issues facing the MedicalCenter and in assisting us in various governmentalareas. So, despite the many continuing problems,I believe last year was one of progress and accomplishment for the Division, the School and themedical center.In the relative tranquility of the other Professional Schools, the year was characterized byintensive reviews of curricula; studies of enrollment; development efforts; anticipation of spaceneeds; and relationships with other academicunits within the University and within neighboringinstitutions. Of special note, the Divinity Schoolcosponsored, along with the Union of HebrewCongregations, a major international conferenceon "The Jewish Religious Tradition," whichbrought representatives to the University fromevery major center of Jewish learning in theworld. Also to be noted, in the Graduate LibrarySchool, Don R. Swanson succeeded HowardWinger, to whom we are indebted for his serviceas dean during the past five years.The CollegeIn recent years these reports have highlighted twoproblems in the College: staffing undergraduateteaching programs, particularly the core courses;and the undergraduate curriculum, both in generaleducation and in the areas of concentration.Although some staffing problems persist, curricu-lar issues seemed to take precedence last year, asformer Dean Oxnard reported to the Council lastspring. Discussions of these issues in the College Council were flavored from time to time by sideexcursions into political and organizational matters.With reference to teaching, we are pleased totake note of increased participation of tenuredfaculty in undergraduate offerings, and particularly in core courses. The Biological Sciences Division, which has done extraordinarily well inmeeting teaching responsibilities, had twice asmany tenured as nontenured faculty teaching inthe common core. The Physical Sciences Division also reached this same level of participation.In the Social Sciences, about equal numbers oftenured and nontenured faculty are teaching, butthe total number is small. Most Humanities Division faculty teaching in the College, particularly inthe common core, are nontenured.The Harper Postdoctoral Teaching Fellow program, now under review in the College, seems tobe judged a success, having surmounted some initial difficulties. Most students have accepted it;faculty have shown somewhat more ambivalence.Two Harper Fellows were nominated for Quantrell Awards last year. In the future, I would hopethe Harper Fellow Program might stand on itsown merit and not as a solution to a College teaching problem.Discussions of the undergraduate curriculum inoral and in written form continued last year at alllevels. Clearly, the common core, however defined, is perceived to be the cornerstone of generaleducation in Chicago. A number of new commoncore courses have been devised over the past twoor three years, which may encourage experimentation in the traditional core courses. Just asclearly, the upper level component of generaleducation, the so-called "second-quartet," mustbe reviewed and strengthened. And, my feelinglast year of the need for changes in concentrationprograms has been reinforced through reports ofcurricular discussions and from discussionthroughout the year with undergraduate students.Particular account should be taken of the fact thatthese programs are not solely for the purpose ofallowing an undergraduate to enter graduate orprofessional work in a given area.Over the past few years the connections between collegiate and graduate and professionalschool programs have been strengthened greatly.There are now a number of joint degree sequencesthat allow students to move ahead in graduate andprofessional areas at a faster than normal pace.There are also a number of new collaborationsbetween collegiate and professional areas that arenot necessarily preprofessional but include both105general and specialized education. The program inPolitics, Economics, Rhetoric, and Law was thefirst of these; the most recent is the Program in theArts and Sciences Basic to Human Biology andMedicine (ASHUM) — a College-Medical Schoolcollaboration. The first students entered this program this October. The College also continues tohave a very strong program of undergraduate research.An activity which is under the general supervision of the College and which is enjoying increasing visibility is the Office of Special Programs."The Program," as it has come to be known, usesathletics as a means of attracting, retaining, andimproving youngsters in academic endeavors.The participants are minority students from highschools around the city and the attempt is to interest them in the idea of going to college and to helpmake that a realistic goal for many. Over the lastfew years this program, which includes academicwork emphasizing English and mathematics, hashad excellent results and is now nationally recognized and, in fact, imitated. This is a specialcase of the University's contribution to broadening the academic opportunities for minority students and, in my judgment, a very significant one.Larry Hawkins, the director of "The Program,"and his staff are to be congratulated for their dedicated work.As of the end of last academic year, CharlesOxnard resigned the deanship of the College andwas succeeded by Jonathan Smith, who has beenMaster of the Humanities Collegiate Division andActing Master of the New Collegiate Division.Edwin Taylor was appointed to succeed GodfreyGetz as Master of the Biological Sciences Collegiate Division. Keith Baker and Leon Stockcontinue as Masters of the Social Sciences and thePhysical Sciences Collegiate Divisions, respectively. Searches are now under way for newMasters in the Humanities and New CollegiateDivisions. All of these are demanding and difficultroles, and we are grateful to those who haveserved and to those who continue to serve inthem.Extension, the Press, and Pre -Collegiate ProgramsFor University Extension, academic year 1976/77was a period of relative stability. The program ofnoncredit courses for adults, although enjoyingsuccess, experienced some difficulty in operatingat scattered centers in suburban areas. Space inthe downtown area now being used also leavessomething to be desired. This situation will be re viewed in the current academic year. The possibility of increasing Extension's role in relation tonondegree students taking credit courses wassuggested by the Board of Adult Education andthat issue also will be reviewed this year. TheArts on the Midway program continued to havegreat acceptance. The Center for ContinuingEducation has continued to struggle with very difficult economic problems. The University hasapplied to the Kellogg Foundation for a substantial revolving fund to permit the Center to makethe kind of investment in the development of newprograms, especially programs which show somepromise of becoming self-supporting or even profitable in the long range, which its present budgetary situation does not permit. University Theatre,in addition to maintaining its regular program ofproductions, student workshops and other activities, devoted much attention during the year toplanning for a new theatre and exploring implications of such a facility for the theatre program.A general comment on the character of Extension within this University may be in order. At anaccelerating rate during the past decade, many institutions of higher education have been turning toadult education, in one or another of its aspects,as a major new emphasis of the institutional mission. Two principal factors account for this trend.One is a cluster of serious concerns connectedwith perceptions of our society's developingneeds and character. A second, and perhaps moreimportant, factor has been the economic problemsbrought on universities by rising costs and lowerenrollments. The demographics are clear: a largerand larger percentage of our population will beolder for some time to come, thus the "adult market" becomes a more and more important sourceof support for educational institutions. Almost allof the burgeoning activity in the adult componentof the programs of institutions of higher educationhas been career-oriented. Since the early 1960s ithas been the overall policy of Extension here notto develop credit programs and not to focus oncareer-oriented training for adults. That policy isbased upon good reasons, and seems to be theappropriate one for this University.The University of Chicago Press continues tobe the largest and, we think, the best Americanuniversity press. During the past year it publishedone-hundred new hardcover books and over one-hundred books in its two paperback series:Phoenix and Midway Reprints, all in addition tothe continued publication of some thirty-sixscholarly journals. Although continuing to publish106primarily scholarly monographs, the Press has recently embarked on a number of special projectssuch as The Lisle Letters and An Historic Atlas ofSouth Asia. The most extraordinary new specialproject is Philip Gossett's forthcoming criticaledition of the works of Verdi. A unique publishingexperience for the Press during the past year wasthe one work of original fiction which it hasbrought out: Norman MacLean's^4 River RunsThrough It. The book has attracted national attention and admiration. Also of interest in relationto the work of the Press, the National Endowmentfor the Humanities has been most helpful in supporting Ravin McDavid's work on the LinguisticAtlas of the United States, J.A.B. van Buitenen'swork on the Mahabharata, and Anthony Yu'stranslation of Journey to the West.In the precollegiate area, the LaboratorySchools are doing very well. The academic programs continue strong and the physical facilitiesare in better condition than they have been formany years. Although some enrollment decline isbeing experienced, the budget is in sound shape.Faculty, administration, and staff turnover is minimal. Relationships with the University and thesurrounding community are healthy and expanding. Parental support is strong, without being intrusive. All in all, morale within the LaboratorySchools is very high. The Laboratory Schoolshave always provided an outstanding educationalexperience for the most able student. They arenow doing likewise for students of solid averagetalent who are eager and willing to profit fromwhat the Schools have to offer. Over the past fewyears, the Laboratory Schools have made a clearand willing commitment to minority children.University High School students are increasinglyattending classes in the College. In other linkageswith the University, the teacher training programsof the Department of Education have been reinforced and numerous University faculty members are participating in special programs of theSchools, such as Arts Week and the debate tournament.Similarly, the programs of the Sonia ShankmanOrthogenic School reflect a high quality level inthe three areas of its commitment: the treatmentof severely autistic children and adolescents, stafftraining, and research. From an enrollment of approximately fifty children, four were graduatedthis June: two boys and two girls. Concurrentlythe two boys finished University High School andhave been accepted at colleges of their choice.One of the girls has accepted work in a bankwithin the city and the other, a very talented art ist, will complete her final year of college in thecoming year. It is a remarkable tribute to theSonia Shankman School when the creative energyof severely disturbed children is released from thebondage of their illness. The present staff of theSchool has come to be trained from widely divergent backgrounds in this country and fromFrance, England, Ireland and Canada.FacultyStarting with academic year 1971/72, The University of Chicago has been following a "no-growth"policy in the total size of its faculty. As of June 30,1977 the faculty numbered 1,039, not countingthose primarily engaged in administration, a reduction of some eighty-five since June of 1970.Until now this reduction in faculty size has beenachieved primarily through attrition. Because ofincreasing incongruities between faculty resources and teaching needs for undergraduateprograms, especially for general education,further reduction in faculty will undoubtedly haveto be more selectively achieved. The problem isillustrated in the Humanities Division, althoughanalogous incongruities within other academicareas exist. Historically, this University has attempted to encompass the study of all of the greatcultures of the world and not concentrate itsstrength solely on "Western civilization." TheHumanities Division faculty is sprinkled withextraordinary talent in Far Eastern, Near Eastern, Slavic, and South Asian areas, although thenumber of students in these "non-Western" fieldsis a relatively small proportion of the total studentbody of the Division. Thus, the work of undergraduate teaching falls heavily on the "Western"faculty and the problem is compounded when oneexamines it from the point of view of young versussenior faculty. The Committee on the Size andComposition of the Faculty continues to strugglewith the problem, but an easy solution has notbeen readily apparent. Pending legislation relatingto retirement age, which has been discussedwidely recently, will have an important bearing onthis problem in some, as yet, undetermined way.It has been our assumption that a reduction infaculty size could be accomplished without a significant loss of overall quality. Whether this hasbeen achieved is a difficult matter to judge. In anattempt to get some perspective on it, we reviewed as of the end of last academic year all ofthe changes which occurred at the three professorial ranks during the past five years.As of June 1973 there were some 484 individuals in the rank of full professor as compared to 509107in June of this year. During the five-year period,there were some 78 retirements, 18 deaths, 72 resignations, 64 recruitments and 129 promotions tothe rank of professor. Three individuals, one ofwhom is a Distinguished Service Professor andtwo of whom are University Professors, departedand returned, which I interpret as a good sign regarding the University.Within the Divisions there are areas in theBiological Sciences where losses in senior rankshave not been replaced. At the same time, distinguished appointments in other equally importantareas have been achieved. Within the HumanitiesDivision there has been a significant reduction insenior faculty. We have not been successful inattracting senior replacements in the English Department, which has been hit especially hard,although the lack of success is not related tobudget. In other departments of the Division,strong recruitments have been made, for example,in Music, Philosophy and Classics. The SocialSciences Division also has made significant appointments and is probably unmatched in anyother university in the country. In the PhysicalSciences, the Mathematics Department continuesto be among the most distinguished, Astronomyhas been strengthened, Statistics and GeophysicalSciences, although small, continue strong. Wehave been less successful in attracting senior appointments in Physics and Chemistry althoughthese units are making moves to remedy the situation.There is a need to add to the number of seniorfaculty in several of the Professional Schools. ButI believe one can without hesitation state that allcontinue to be among the very best in theircategories. Particularly in The Pritzker School ofMedicine, departments which five years ago wereheading in the direction of severe academic difficulties, have been turned around and can now becounted as outstanding in comparison to anyacross the country.In the recruitment of young faculty there seemsto be general agreement that all areas have donewell during the five-year period, although theeventual status of these individuals in their respective fields is a matter which has yet to bedetermined. At the same time, standards for promotion have risen, and faculty who have attainedtenure in the last five years are among the best intheir respective areas.Obviously there is great subjectivity in such assessments, but allowing for this I believe theoverall strength and balance of the faculties havebeen maintained, despite the budgetary lim itations under which deans and chairmen havebeen working. It should be noted that during thefive-year period, four University Professors wereappointed, six new named chairs were establishedin the College, three of which were filled throughoutside recruitment, with a fourth appointmentfrom outside the University scheduled for nextacademic year. There also has been successfulcompensation for limited faculty growth in severalacademic units through the creation of visiting lecturer series and the regularization of several distinguished visiting appointments.During the last year, a number of new facultychairs were established, including: the GeorgeWells Beadle Distinguished Service Professorship; the Harry Kalven Jr. Professorship ofLaw; the Lee and Brena Freeman Professorshipof Law; the George V. Bobrinskoy Professorshipof Sanskrit; the Harry N. Wyatt Professorship inLaw; the Norman and Edna Freehling Professorship in Social Sciences; the Joseph B. Kirs-ner Professorship in Medicine; the Lawrence A.Kimpton Distinguished Service Professorship;and the Harry Pratt Judson Distinguished ServiceProfessorship. The directorship of the UniversityLibraries also was endowed by a gift from theJoseph and Helen Regenstein Foundation.Faculty honors during the year, over and abovethe traditional societal and disciplinary awards,included the two Nobel prizes to Saul Bellow andMilton Friedman, which arrived in time to be announced in -last year's report. Professor Bellowalso was elected by the National Council of theHumanities to give the Jefferson Lecture in theHumanities — the second year in a row in whichthis University has been so honored, John HopeFranklin having been the lecturer the previousyear. In addition, eleven members of the facultyreceived Guggenheim Fellowships and one waselected to the National Academy of Science andtwo to the American Academy of Arts and Sciences.The pleasure of mentioning honors and awards,however great, is attenuated by deaths last yearwithin faculty and academic ranks, including:John G. Hawthorne, Associate Professor in theDepartment of Classical Languages and Literatures and the College; Harry G. Johnson, CharlesF. Grey Distinguished Service Professor in theDepartment of Economics; Ralph Johnson, Professor in the Department of Geophysical Sciences, the Physicial Sciences Collegiate Division,and the Committee on Evolutionary Biology; Benjamin W. Lee, Professor in the Department ofPhysics and the Enrico Fermi Institute and Head,108Theoretical Physics, Fermi National AcceleratorLaboratory; Robert L. Miller, Professor in theDepartment of Geophysical Sciences; NormanPerrin, Professor in the Divinity School; RichardReilly, Professor in the Department of Medicine;Kurt Rossmann, Professor in the Department ofRadiology and The Franklin McLean Institute;Christopher C. Smith, Assistant Director of College Admissions and Lecturer in the DivinitySchool; and Gustavus F. Swift, archeologist andCurator of the Oriental Institute. Their collectivecontribution to the quality and diversity of theUniversity was enormous and their absences willbe keenly felt.The LibraryIn last year's report we commended the Librarystaff for its skill in coping with the maintenance ofcollections and with service demands under mostdifficult circumstances. These efforts are continuing. The Library staff also made significant contributions to national and regional library planning, especially in the area of automation of library services.In its report of two years ago, the LibraryBoard placed first priority in the budget on themaintenance of the library collections. Special efforts this year have been made by the bibliographers to work with faculty in defining withgreater precision the scope of publications appropriate for our collections, in improving cooperation with other research libraries, and in estimating the limits of the financial commitment whichthe University must make to maintain collectionsadequately.The acquisition and cataloging of materials aremore fully automated in the Joseph RegensteinLibrary than in any other research library in thecountry. The system, developed locally, encompasses most of the manual files and has enabledthe Library to reconstitute its staff with fewer positions and to save space. During the year a comprehensive inventory of unprocessed material wasundertaken and plans are in shape to reduce andeventually to eliminate all backlogs as funds canbe made available to do so.The public services staff directed a great deal ofattention throughout the year to the introductionof newly automated services. An on-line terminalis now in routine daily use at the general referencedesk to search current bibliographic files. Planning was undertaken for the eventual introductionof automated charging in the circulation department. The pilot system introduced last summer quarter in the reserve reading room became operational during the winter quarter and is now aroutine activity. An enhanced capability will beintroduced throughout Regenstein during the nextacademic year. This service will provide very current, prompt information about loans accessiblefrom a wide range of locations.The Systems Division of the Library receivedan extension of its grant from the Council on Library Resources and the National Endowment forthe Humanities to further enhance the LibraryData Management System and to continue development of a general circulation system. Now in itseleventh year, this project is emerging as a resource of national significance.The most conspicuous changes in Regensteinduring the year were the alterations to the firstfloor. The carpet in heavily used areas was replaced with terrazzo, and informal lounges werecreated near the entrance. A graphics plan, notyet implemented, was prepared and a schedule forrefurbishing equipment in public areas was instituted. The student canteen was enlarged andremodeled to increase its capacity fourfold.Further alterations are under study to facilitatebuilding maintenance and to improve space utilization.The Crerar Library merger proposal continuesunder consideration by a Trustee-faculty Committee and conversations are now underway betweenthe Trustees of both institutions.In the short and long run, the Library urgentlyneeds additional budgetary support. The recentlyannounced anonymous $1 million endowment giftto the Library in the form of a challenge grant forsupport of acquisitions is most welcome. It is noteasy to make up ground lost during difficult financial periods, even if more affluent days ever doreturn. But as the Library Board has pointed out,while money is an essential means, it is no substitute for an intelligent and responsible policy fordealing with conditions as they exist and for whatwill unquestionably be a difficult future. The University is greatly indebted to the Board and thedirector for their efforts in these directions duringthe past several years.Student AffairsIn last year's State of the University message wegave a detailed report on student life and studentactivities. This year's comments will be brieferand touch only the highlights of a very successfulyear.Recruitment and Enrollment. You will recall that109the autumn 1976 enrollment was a source ofdisappointment — and, eventually, a modestbudget readjustment for each of the majoracademic areas. The official Quadrangles enrollment for autumn 1976 was 7,851: 2,441 undergraduates, 2,600 students in the Divisions, 2,568in the six Professional Schools and the Committeeon Public Policy Studies, and 242 students-at-large and "special" students from our neighboringtheological schools. This total of 7,851 was a dropfrom just over 8,000 students on the Quadranglesin the autumn of 1975.Fortunately, and thanks to special efforts on thepart of many people, we have been able to reversethis dip. It is now apparent that the University notonly met but exceeded its enrollment target of7,900 students this fall and again reached an enrollment of 8,000 students on the Quadrangles.Although applications to the College and to theDivisions declined slightly, the quality of the applicant pool remained strong and a higher proportion of our admitted students accepted admissionand are now on campus. The College, even withan entering class somewhat smaller than lastyear's, increased enrollment from 2,441 to 2,500,an increase of about 400 students since 1973/74.The Divisions this year have a few more students than last year's 2,600, with the Humanitiesup at least 6 percent and with the other three Divisions holding their own. The ProfessionalSchools have some fifty fewer students, withhigher enrollments in Law and Social ServiceAdministration not quite offsetting losses in Business, Divinity and the Graduate Library School.It is obvious that for a number of years to comeextraordinary efforts will continue to be requiredto maintain the Quadrangles enrollment at thelevel of 8,000, let alone to increase it to the 8,500target recommended by the faculty Committee onEnrollment two years ago. But this year, at least,we have had those extraordinary efforts by everypart of the University, including those for whichthe results were disappointing. The outcome ofthose efforts is evident, and I am grateful.Student Housing. Last academic year some 65percent of the students in the College and over 28percent of the University single graduate studentslived in University residence halls. Another 1 , 100students, primarily graduate, lived in married student apartments. This autumn quarter some 50percent of the undergraduates who lived in residence halls returned. While several factors areresponsible for this, the highest occupany rate inUniversity housing in the University's history,one of the most significant is the success of the Resident Master program. This year, one of ourcharter Resident Masters, Kenneth Northcott,has left the Mastership after eight years. We werefortunate to have Morris and Gayle Janowitz accept appointment as Resident Masters of PierceTower. The Janowitzes join Peter and YolandaDembowski in Snell-Hitchcock, Gwin and RuthKolb in Burton-Judson, and Izaak and PeraWirszup in Woodward Court. We are also delighted to announce that Donald and Alma Lachhave agreed to become the first Resident Mastersof the Shoreland and will move there as soon as anapartment can be prepared for them.Campus Life. In autumn 1976 the French government generously sponsored a week of contemporary French culture on the campus in celebration of the American Bicentennial. Included wereplays, films, lectures, music, photography, andtelevision documentaries. The Bergman Galleryhad a banner year, highlighted by the ChicagoComedy exhibit. We were also fortunate in havingthe Chicago Symphony Orchestra perform twicein Mandel Hall. University life continued to beenriched by the activities of the David and AlfredSmart Gallery and by an unmatched Departmentof Music. Again, last year the First Chair series,which brings principal musicians from theChicago Symphony Orchestra to the residencehalls for talks and demonstrations, attracted largecrowds. And John Hope Franklin helped to celebrate the occasion of the one-hundredth Woodward Court Lecture by speaking to an audience ofover 800 students and faculty.Physical Education and Athletics. 1976/77 was ayear of many new developments and of great success in the newly-merged Department of PhysicalEducation and Athletics. It was also the first yearof operation for the Governing Board of Athleticsand Recreational Sports, the faculty board whosepurpose is to set goals and policies for the department and to help see that they are met. TheBoard, chaired by Roger Hildebrand, has helpedto oversee the construction of Phase I of the FieldHouse renovation project, the construction of theStagg Field Gatehouse facility, and the construction of eight new tennis courts (a gift) on thecorner of 55th and Ellis. All of these projects arescheduled for completion this autumn quarter.They will benefit all users of the University's athletic facilities, student, staff and faculty.Another first for 1976/77 has been the University's affiliation with the Midwest Collegiate Athletic Conference, the first year of conferencecompetition since the University withdrew fromthe Big Ten in 1946. We fielded intercollegiate110teams in every Conference sport, and we haveevery hope that our affiliation with the MidwestConference will be a long and happy one.Speaking of firsts, the women's intercollegiatevarsity teams finished first in tennis, first inSoftball in the Illinois small college championships, first in the Brown University invitationaltournament, and second in the Illinois small college championships. The women's volleyballteam finished fourth in the state. This recordspeaks very highly of the women's varsity program.This has also been the first year of an expandedclub sports program, the equivalent of intercollegiate competition for our many graduate students. There are some nineteen club sports pursued at the University, ranging from cricket tomen's and women's crew. Finally, the intramuralprogram once again experienced a banner yearwith over 3,000 students participating on morethan 600 teams in forty-two different competitions.Some Problems. As loans to students have continued to increase steadily, we have faced severeproblems with processing the growing number ofapplications. It has been necessary to expand thestaff of the loan counselor' s office and to move itto new quarters. Its operations will be supervisedby a newly-appointed assistant dean of studentswho has also been given responsibility for theproposed Student Information System, which willallow us to replace the current, outmoded systemof maintaining student records. A faculty committee, chaired by Pastora Cafferty, has been meeting this year and has submitted an interim reportthat should help improve recruitment of minoritystudents and further their progress while they arehere.The Campus and the Physical PlantThe past year saw intensified activity in campusplanning. The principal development was Trusteeapproval of a plan for extensive renovation of theUniversity's physical plant, and an accompanyingfinancing program involving the successful $35million bond issue initiated under the auspices ofthe Illinois Educational Facilities Authority. Theobjective of the planned renovation program is tomake more effective use of space presently unused or inadequately used. The plan involvesmajor construction and modification within eighteen buildings to provide additional or improvedresearch, work, or teaching space, faculty offices,and student residential and recreational space. The plan also provides for changes to conserveenergy, and for building and equipment modifications which will increase operating efficiency. Theplan is to be implemented over the next threeyears. The first project, already begun, is the extensive renovation of the Shoreland Hotel. Otherprojects to follow will depend on the developmentof detailed justification of need, feasible architectural schemes to meet the need, a final reaffirmation of priorities and of the ability of the unit involved or the University to service the debt involved in a particular renovation or acquisition.The renovation program is a major step for theUniversity to take. It is being taken only aftermuch planning and discussion devoted toestablishing the importance and priority of theneeds, the "opportunity costs" involved in renovating, the unavailability of other funds, the economic advantages of renovation (e.g., with respect to maintenance) compared to new construction. It has also involved weighing our experienceover the past five years, during which the University expended $18 million for such purposes. Theavailability of the State of Illinois program offering the opportunity of borrowing at interest ratessubstantially below market levels was a key factor, since it means a level of debt service whichthe University can manage. But the financial advantages were not the controlling point. The pointis that the renovation-borrowing plan offers theUniversity a way to make better and more effective use of its available facilities — its remarkableolder buildings — for priority University purposes.The University acquired a surplus governmentproperty at no cost on Cornell Avenue, into whichthe Printing Department will move in January,freeing valuable space in the Bookstore for otheruse. Other projects completed during the year include: the Surgery-Brain Research Pavilion whichwill open next week; the Marjorie Kovler ViralOncology Building, which was opened earlier thisautumn quarter; the 6th floor of the CummingsLife Science Center for developmental biologylaboratories; various projects in the hospital, including a new burn unit; and a highly desired renovation of the Bookstore, to provide for an enlarged book department. Lastly, the acquisition ofSouth Campus land from the city was completedand appropriate landscaping has begun.CampaignYou will recall that Phase I of the Campaign forChicago which spanned the years of 1965-68 had agoal of $160 million which was successfully met.IllPlans for Phase II of the Campaign began activelyin 1972. The plan and the structure, as well as thescope of the Campaign were discussed with theBoard of the Trustees throughout 1973 and PhaseII was publicly launched in the fall of 1974 with astated goal of $280 million. It was anticipated thatthe Campaign would run for three years with afive year payout. It is now four years since theCampaign was initiated and essentially threeyears since its public announcement. Theachievement to date in terms of dollars is approximately $160 million — considerably less thanhoped for although, under the circumstances, notentirely discouraging.The circumstances include the decline in themarket and the business community during thisperiod, modifications in federal government programs and in the direction of certain major foundations. They also involved significant changes inthe internal organization of the institution, both atthe senior staff level and on the Board of Trustees, and a failure to achieve the projected level ofgifts in excess of $5 million.It is a remarkable tribute to the quality of theUniversity and to the general esteem in which it isheld that the Campaign has achieved the level ofresponse that it has. Among the encouraging aspects are the degree of support pledged and contributions made by the Board of Trustees and thefaculty and staff of the University. Another encouraging aspect, particularly in the long-rangeinterests of the University, has been the responsefrom the corporate community, especiallyChicago corporations. Foundations and associations also have been very responsive, although insome of the areas we have not done as well as wehad hoped. We are also just beginning, in terms ofthe history of the University, to build a basis forbequest and life income agreements. Most significantly, funds from alumni have shown steadygrowth during the period of the Campaign.A major goal of the Campaign was to strengthensubstantially the endowment base of the University. Although almost $30 million has beenpledged for this purpose, that amount is onlyone-fifth of the amount sought. The Campaign forChicago Phase II does not emphasize new buildings, although the earlier drive for the medicalarea which included some construction, was incorporated into the Campaign.It is anticipated that during the period betweennow and the end of the current academic yearthere will be a plan developed which will focus onseveral concrete goals which emphasize:1) unrestricted gifts and increased levels of an nual giving, with the hope that increased levels ofannual giving will be maintained in future years;2) endowment for faculty salaries, endowedchairs, student aid, and the Library.With respect to the limited component of theCampaign having to do with buildings, the emphasis will be on renovations rather than on newbuildings, with the only building anticipated beinga new theatre.We have frequently stated that the Campaignwill be successful in ways other than actual fundraising if we develop during the period of theCampaign the structure for the continuing effortsfollowing its close. There must be insurance for acontinued increased level of alumni and annualgiving. As current three- to five-year pledges ofcorporations are completed, some of which havebeen very large and unrestricted, proposals forcontinued support must be established and successfully pursued. As foundations come and go orchange their programs, the University must beready to respond to these new and modified opportunities. I believe we are in a favorable position to maintain and develop the resources forcontinued development efforts.The Universal HeritageThe January 1909 edition of The World's Work, apublication that is no longer in existence, featuredan article by Mr. John D. Rockefeller in which hestated his views on philanthropy and, in particular, why he gave funds to support the establishment of The University of Chicago.The giver who works out these problems for himself will, no doubt, find many critics. So many peoplesee the pressing needs of everyday life that possiblythey fail to realize those which are, if less obvious, ofan even larger significance — for instance, the greatclaim of higher education. Ignorance is the source ofa large part of the poverty and a vast amount of thecrime in the world — hence the need of education. Ifwe assist the highest forms of education — in whatever field — we secure the widest influence in enlarging the boundaries of human knowledge; for all thenew facts discovered or set in motion become theuniversal heritage. I think we cannot overestimatethe importance of this matter. The mere fact thatmost of the great achievements in science, medicine,art, and literature are the flower of the higher education is sufficient. Some great writer will one dayshow how these things have ministered to the wantsof all the people, educated and uneducated, high andlow, rich and poor, and made life more what we allwant it to be.The best philanthropy is constantly in search ofthe finalities — a search for cause, an attempt to cureevils at their source. My interest in The University112of Chicago has been enhanced by the fact that whileit has comprehensively considered the other featuresof a collegiate course it has given so much attentionto research.Although the University has moved throughseveral evolutionary stages, its essential characteras described by Mr. Rockefeller remains unchanged: an institution devoted to the highestlevels of scholarship and education, with primaryemphasis upon graduate study, with a Collegewhose vitality and richness stems from, drawsupon, and contributes to this primary thrust.I would like to report on what is in a sense amodern day case study of the kind of support forthe University which Mr. Rockefeller had in mindas furthering "the universal heritage." The casealso illustrates the dilemma of the privateresearch-oriented university in maintaining itself.In the period 1961-1977 The University ofChicago received three major Ford Foundationgrants for the support of international and areastudies. These grants brought the Universityabout $16.7 million, including interest and realizedcapital gains on multi-year grants paid at the beginning of the first two grants. The biggest singlecategory, $5.8 million, was in endowment fundingfor faculty salaries. By careful management andby judicious use of matching funds, it was possibleto support fully, nineteen faculty positions fromthese funds: nine in the Social Sciences, five in theHumanities, two in Law, and one each in Business, Divinity, and the Library. About $1.4 million of expendable funds under these grants supported the salaries of junior faculty members during this period.One million dollars was for a new building. Incombination with a private donation and a grantfrom the National Science Foundation, it helpedpay for the construction of the Albert Pick Hallfor International Studies. Funds were also provided for the renovation of Foster Hall.Funds from the grants, in combination withNDEA funds and University resources, madepossible a dramatic expansion of the scholarly resources of the Library in the major cultures of theworld. About $1.5 million were used to build upthe collections on the Far East, Southern Asia,the Soviet Union and the Slavic world, and theMiddle East. These four collections are nowamong the best in the United States, and in someareas unexcelled in the entire world. In addition,an endowment fund of $600,000 was established,the income from which is utilized for acquisitions in the field of international studies.The Ford Foundation gifts played an importantrole in the expansion of faculty which, in turn,stimulated the creation of three new departments:the Department of Slavic Languages and Literatures in 1961; the Department of Far EasternLanguages and Civilizations in 1966; and the Department of Southern Asian Languages andCivilizations in 1966. The old Department ofOriental Languages and Civilizations was transformed into the Department of Near EasternLanguages and Civilizations. About $2.2 millionof the funds have supported graduate studentswho are now on the faculties of more than 150universities and colleges around the world.Ironically, last year saw the end of the program.During the very period of such a remarkable development in the intellectual strength of the University, we have seen an almost complete shift onthe part of many private and public agencies awayfrom the support of "the highest forms of education." A university, especially a research university, is an institution whose time base compares tothat of the Church as an institution. Its commitment is to individuals who are, in turn, obligatedto the lifetime search for knowledge not onlythrough their own direct efforts but through theefforts of their student progeny. Such long-termobligations require long-term continuous support,in one form or another, through successive generations of faculty and students.There is not time, nor is this the place to arguethe role of the private research universities in oursociety, or the reasons why their scholarly contributions have been so much greater than theirnumbers and size would dictate, or why their professional schools and graduate departments generally are to be found in greater proportion in thehighest ranks than should otherwise be anticipated. Suffice it to say that if we are to furtherthe universal heritage, the means must be found,and I believe essentially from the private sector,to maintain the private research university.President Kimpton once pointed out that thehistory of The University of Chicago seemed tobe a series of brilliant, even speculative, forwardmovements, followed by periods of retrenchmentand consolidation. This was at a time after theUniversity had gone through a painful period ofbudget balancing and, as he put it, "putting ourhouse in order." The last few years have beendifficult and no doubt the immediate future willrequire continued constraints. But I believe wehave weathered the period well and have now113reached a point where our energies, and those ofour successors, can be devoted less to problemsof means, and more to problems of ends in furthering the University's fundamental academic pur-To: The Faculty, The University of ChicagoFrom: D. Gale Johnson, ProvostNovember 8, 1977In last year's discussion of the budget I wrote:"The most striking and encouraging aspect of the1976/77 budget is that it brings to completion theelimination of the gap between revenues and ex-penditues in the University's budget." Eventhough the number of students, and thus tuitionincome, did not meet the goal on which the 1976/77 budget was based, and energy costs werehigher than anticipated, the 1976/77 year ended inbalance.The 1977/78 budget also has a balance betweenrevenues and expenditures. It is anticipated thatthe budget for 1978/79 and subsequent years willbe established on the same basis. As I will note insome detail later, maintaining a balanced budgetfor future years has a number of very clear andimportant implications. Among the most important is that the income sources that can support anincrease in expenditures are limited in numbersand depend almost entirely upon the success ofour efforts to attract students and to increase theflow of expendable gifts, grants, and contractsthat will support the unrestricted budget. It is notprudent to expect a significant increase in endowment income for the next several years.The 1976/77 BudgetThe 1976/77 budget was established to achieve abalance between income and expenditure. Thisbalance was achieved and, in fact, there was a poses and thus the universal heritage.John T. Wilson is President of the University andProfessor in the Department of Education.small excess of $237,000. This small excess wasachieved in spite of two severe disappointments.One was the shortfall in enrollment below thenumber on which tuition income had beenestimated for the year. The other strain was theunusually cold winter which resulted in a largerenergy cost than had been budgeted. The overrunin energy expenditures was held to $360,000 byimportant energy-conserving efforts.The decline in tuition income of approximately$1,250,000 below the level assumed in the 1976/77budget required a revision of expenditure levels ofapproximately an equivalent amount. This revision was made in October, 1976. In spite of theunforeseen increase in energy costs, actual expenditures during the year were, in total, nearlyidentical with the revised and reduced budgetlevels. This can only be described as a remarkableachievement. It was achieved because faculty,students, staff, and administration acted responsibly. Without the high degree of cooperationthat occurred, such a difficult adjustment couldnot have been made.In terms of actual expenditures from the unrestricted budget, expenditures in 1976/77 exceeded those of 1975/76 by 4.4 percent. Unfortunately, approximately a third of the increasewas required to pay for increased energy costs.Assumptions in the 1977/78 BudgetThe first and most important assumption on whichthe 1977/78 budget was based has already beennoted — the budget should achieve a balance between income and expenditures within the unrestricted funds and in total. In order to reach thisTHE UNIVERSITY BUDGET, 1977/78114overriding objective for 1977/78 the Deans'Budget Committee made the following recommendations:— Efforts to increase student enrollment shouldbe actively continued.—Tuition for 1977/78 should be increased by$100 per quarter over the level of 1976/77.— The size of the faculty should be further reduced.— Strenuous efforts should be made throughconservation measures substantially to reduce the consumption of fuel and electricity.— Review should be made of all portions of thesupport services budget to attempt to reducecosts.The Deans' Budget Committee concluded that"most of the 1977/78 unrestricted budget can be atonly about the same dollar level as the budget for1976/77, as adopted in April, 1976."The actual 1977/78 budget as adopted was reasonably close to that recommended by the Deans'Budget Committee. However, there were certainacademic areas where somewhat largerallocations were required and student aid was increased by 5 percent.The 1977/78 BudgetThe University's 1977/78 operating budget asadopted by the Board of Trustees is shown in detail in Table VI. Comparative figures are given for1976/77, though the comparison is with the budgetas adjusted in the fall of 1976 and not with thebudget presented in last year's discussion of thebudget. The total expenditure budget for 1977/78is $257,884,000 or $24,970,000 in excess of the1976/77 adjusted budget. The increase is 10.7 percent. However, as the following tabulation indicates, the increases were quite unequally divided among the four major sub-budgets:General Funds(Unrestricted)Of Which: UtilitiesAll OtherRestricted FundsAcademic AuxiliaryEnterprisesOf Which: HospitalsAll OtherAuxiliary EnterprisesTotal $ 4,317 ,085 ( 7.1%)1,078,000(24.4%)3,239,085 ( 5.8%)6,089,500( 8.9%)13,233,000(16.9%)12,922,000(18.4%)311,000( 3.9%)1,330,000( 5.1%)$24,970,000(10.7%)Compared to the 1976/77 budget adopted in June,1976, the increase in General Funds (Unrestricted), excluding utilities in the 1977/78budget, was 3.7 percent. Auxiliary Enterprises. Only a few brief commentsseem to be required concerning the two groups ofAuxiliary Enterprises — Academic and Other. TheAcademic Auxiliary Enterprises are budgeted tobalance income and expenses; this balance wasachieved during 1976/77, and a balance is assumedfor 1977/78. Two serious problems affecting theHospitals and Clinics have plagued us for severalyears and, fortunately, both were resolved on reasonably favorable terms during 1976/77. One wasthe unwillingness to provide adequate reimbursement for the services rendered by the clinical medical faculty to patients whose bills were beingpaid, in large part, by the Illinois Department ofPublic Aid. This dispute, which had been bothdifficult and costly for the University, was finallyresolved after five years. Similarly there was asuccessful end, at least for the time being, of thefreeze on payments by Medicaid for hospital andclinical services.Progress continues to be made in reducing thesubsidy to the other Auxiliary Enterprises. For1976/77 the actual subsidy was $387,000, a significant reduction from the very good performance of 1975/76 when the subsidy was $450,000. Ishould note that not all of the other Auxiliary Enterprises required a subsidy. The UniversityPress continued its enviable record of operating inthe black. The two largest claimants of the subsidy were student housing and the University busservice. A significant part of the subsidy for thebus service was due to the operation of the evening and night minibus system for which nocharge is made.General Funds (Unrestricted). Budgeted expenditures for all activities supported by unrestrictedfunds are about 7.1 percent greater than budgetedfor last year. For academic activities (instructionand research, the Library, student activities andaid, and general administration) the increase is 5.5percent. The cost of utilities is expected to increase by 24.4 percent.The amount budgeted for student aid has beenincreased by 6.8 percent compared to last year'srevised budget. This is the first increase in unrestricted student aid in several years.The unrestricted allocation for the Library remained unchanged. While efforts to increase theendowment for the Library and to raise other restricted funds are meeting with some success, infuture budgets there must be a significant increasein the total resources available to the Library. TheLibrary management and staff have made manyadjustments in the face of tight bugets and rapidlyincreasing costs of journals and monographs.115Further belt tightening will amost certainly havean adverse effect on the quality of the holdingsand services.Restricted Funds. Except for restricted endowment income, the main sources of restricted fundsfor support of academic programs are subject toconsiderable uncertainty. This is due to the largenumber of separate sources providing such funds.Our best estimate is that the total of restrictedfunds will increase by 8.9 percent, with the increase being approximately equally divided between government grants and contracts and other,with the latter consisting of grants from foundations and other private sources.The importance of restricted funds to the University's programs is very great. Such funds arenow significantly greater than unrestricted funds.They provide for more than a third of total studentaid and support a large part of our research effort.DiscussionAs was reported last year, between 1970/71 and1976/77 the increase in unrestricted and restrictedexpenditures in support of the academic programsof the University had failed to keep pace withinflation. Based on the use of the Consumer PriceIndex to measure the rate of inflation, by 1976/77the decline in the real value of expenditures forthe academic programs of the University had been9.5 percent. The Higher Education PriceIndex — a measure of the prices of goods and services paid by colleges and universities — is available for 1976/77, and with 1970/71 equal to 100, the1976/77 index was 146.7. This is exactly the increase that was used in last year' s budget messageto compare the real or deflated value of 1976/77 budgeted expenditures for academic programswith the expenditures of 1970/71. The calculationindicated that the University's real expendituresdeclined by 9.5 percent between 1970/71 and1976/77.Assuming that the increase in the price indexfor 1977/78 compared to 1976/77 will be 6 percent,the decline in the real value of the University'sexpenditures may have been halted. The realvalue of the 1977/78 budgeted expenditures foracademic programs is estimated to be 8.1 percentbelow 1970/71. However, if the rate of inflation isgreater than 6 percent, the actual increase in realexpenditures will be less than indicated.Tuition. In last year's report, tuition rates werecalculated in terms of dollars of constant purchasing power. The table has been updated through1977/78 (Table I). It has been assumed that theConsumer Price Index will increase by 6 percentbetween 1976/77 and 1977/78. While the tuition inthe College in 1977/78 exceeds the 1970/71 tuitionby $1,385, in terms of deflated dollars the increaseis only $50. The increase in deflated dollars for thegraduate divisions is somewhat smaller. Therehave been increases, in terms of deflated dollars,of $349 for the Graduate School of Business and$301 for the Law School.As viewed by the student, tuition is only onepart of the cost of attending the University. ForCollege students the total of tuition, room andboard charge has increased somewhat more thantuition alone. The 1977/78 College tuition rate is160 percent of the 1970/71 rate; tuition, room andboard in 1977/78 will be 163.5 percent of the samecharges in 1970/71. However, in terms of constantdollars, tuition, room and board will have increased by approximately 4 percent since 1970/71.TABLE I: TUITION IN CURRENT DOLLARS AND DEFLATED BY THE CONSUMERPRICE INDEX, 1970/71 THROUGH 1976/77GRADUATECOLLEGE DIVISIONS BUSINESS LAWCurrent Deflated Current Deflated Current Deflated Current Deflated1970/71 2,325 2,325 2,475 2,475 2,475 2,475 2,475 2,4751971/72 2,475 2,391 2,625 2,536 2,625 2,536 2,625 2,5361972/73 2,625 2,433 2,775 2,572 2,925 2,711 2,775 2,5721973/74 2,850 2,419 3,000 2,547 3,150 2,674 3,000 2,5471974/75 3,000 2,297 3,210 2,458 3,750 2,871 3,300 2,5271975/76 3,210 2,298 3,420 2,448 3,750 2,684 3,690 2,6411976/77 3,420 2,313 3,630 2,456 4,050 2,740 4,050 2,7401977/78 3,720 2,375 3,930 2,509 1 4,425 2,824 4,350 2,776116TABLE II: TUITION, ROOM AND BOARD FOR UNDERGRADUATES AT THE UNIVERSITY OF CHICAGO AND FAMILY INCOMES IN THE UNITED STATES, 1970/71THROUGH 1976/77Tuition, Room Tuition, Room and Board asand Board Family Incomes3 Percent of Family Income80th 80thMedian Percentile Median Percentile1970/71 $3,585 $9,882 $15,531 36.3% 23.1%1971/72 $3,861 $10,302 $16,218 37.4% 23.8%1972/73 $4,065 $11,130 $17,760 36.5% 22.9%1973/74 $4,425 $12,073 $19,253 36.7% 23.0%1974/75 $4,690 $12,861 $20,445 36.5% 22.9%1975/76 $5,010 $13,719 $21,814 36.5% 23.0%1976/77 $5,395 $14,550 $23,133 37.1% 23.3%Source: Family income data from U. S. Bureau of Census, except 1976/77 which has been estimated.aIncome data are for the calendar year of the first year of the fiscal period.There is one other comparison of the costs ofattending the College that may be of interest. Thisis the percentage of family income that is requiredto pay for tuition, room and board. Two measuresof family income have been used — the median income and the 80th percentile income. The 80thpercentile income is used because little, if any,student aid is available for students with income atthat level or higher. The percentage that the costof College attendance represents of these twomeasures of family income is presented in TableII for 1970/71 through 1976/77. The costs generally fall between 36 and 37 percent of median family income and at approximately 23 percent of the80th percentile family income.However, the tuition and student aid policiesthat have been followed during the past severalyears have meant that students and/or theirfamilies paid for a somewhat larger fraction oftotal College costs in 1976/77 than they did in1970/71. The tuition policy followed has been topermit a substantial differential between Collegetuition and the tuition at other major private universities. In 1976/77 the College' s tuition was $671below the average of nine other private universities.Faculty Compensation. Last year's discussion ofthe budget included two tables presenting data onfaculty compensation. One table showed facultycompensation, by academic rank, in current anddeflated dollars; the other table compared our faculty compensation with that at several other private universities and two public universities. These two tables (III and IV) have been broughtup to date through 1976/77.While faculty compensation has continued toincrease in terms of current dollars, the erosion interms of dollars of constant purchasing power hascontinued for professors and associate professors.For assistant professors there appears to havebeen a modest gain in purchasing power since1974/75, and the same is true of the small numberof instructors. From 1970/71 through 1976/77 average faculty compensation for professors and associate professors declined by 1 1 percent in constant dollars; for assistant professors the declinewas approximately 8 percent and for instructors alittle less than 3 percent. This differential declinein real salaries is consistent with our objective toprotect the salaries of younger faculty members asfully as possible.While last year it could be said that for theperiod from 1970/71 through 1975/76 faculty compensation, by rank, had changed little, if at all,relative to other private universities and twomajor public universities, our position declinedin 1976/77 — mostly for professors (nearly 3percent) and somewhat less for associate professors (about 2 percent). For assistant professorsour relative position remained strong and unchanged. The changes that occurred in 1976/77,and which may well continue for the currentacademic year, are worrisome. A continuing erosion of our relative compensation is likely to haveserious consequences to our competitive position.Correction of this apparent trend will require in-117creasing our income at a faster rate than in recentyears and further reductions in the size of the faculty. Since mid-1970 (as of June 30) the totalnumber of faculty has declined from 1,167 toTABLE III: AVERAGE FACULTYCOMPENSATION BY RANK,1970/71 THROUGH 1976/77*THE UNIVERSITY OF CHICAGOConstantCurrent 1970/71Dollars Dollars(in thousands)PROFESSOR1970/711971/721972/731973/741974/751975/761976/77 $26.627.528.830.731.933.835.1 $26.626.626.726.124.424.223.7ASSOCIATEPROFESSOR1970/711971/721972/731973/741974/751975/761976/77 $18.519.219.720.821.923.424.4 $18.518.618.217.616.816.816.5ASSISTANTPROFESSOR1970/711971/721972/731973/741974/751975/761976/77 $14.415.215.616.617.318.319.7 $14.414.714.414.113.213.113.3INSTRUCTOR1970/711971/721972/7}1973/741974/751975/761976/77 $11.711.512.113.314.215.616.9 $11.711.111.211.310.911.211.4* Faculty compensation includes salary and fringebenefits for a three-quarter appointment. 1,085; the number in the academic areas from1,116 to 1,039. Unless there is a significant increase in the rate of growth of income, furtherreductions in faculty size will be required if TheUniversity of Chicago is to continue as one of theworld's top universities.Income Sources. Excluding all auxiliary enterprises the income from endowment and currentsources increased from $93.3 million in 1970/71 to$139.8 million budgeted for 1977/78. This is anincrease of almost exactly 50 percent. Budgetedexpenditures did not increase by the same amountsince there was an underwriting of the budget in1970/71 (planned to be about $6 million, but actually less than $4 million), and there is noneplanned or expected for 1977/78.Table V gives the distribution of income bysources for 1970/71 and 1977/78 and the percentage increase in the absolute amounts for eachmajor category. Student fees provided very nearlythe same percentage, while the contribution ofendowment income has declined from 12.9 percent to 11.2 percent. Patient-related income hasincreased from 2. 1 percent to 4.8 percent. Indirectand direct cost recovery from federal grants hasdeclined from 44.5 percent to 39.2 percent. Thelargest increase has been in gifts and privategrants with the percentage increasing from 12.5 to18.5 percent.Utilities. A major component in the increase inexpenditures for instruction and research for thepast several years has been the costs of ourutilities — gas and electricity. Excluding the costspaid directly by auxiliary enterprises such as thehospitals, our expenditures have increased as follows in recent years:1973/74 $2,757,7301974/75 $3,420,4331975/76 $3,945,7531976/77 $4,781,5431977/78 (budget) $5,500,000The budget for 1977/78 is almost double theamount actually expended five years earlier. For1977/78 utility costs equal approximately 8.5 percent of the unrestricted budget, up from about 4percent jat the beginning of this decade. Total energy costs for 1977/78, including the amountscharged to auxiliary enterprises, are to approach$8,000,000.Energy conservation is a serious matter. Thereis no way that we can avoid paying significantlymore for natural gas and electricity in the futurethan we are currently paying. Serious efforts havebeen and will continue to be made to conserve118energy: (1) Improvements in the management ofour existing systems of heating and cooling; (2)Reductions in the levels of lighting and fuel consumption, and thus in temperatures, during theheating season; and in air conditioning, and thusincreases in temperatures, during the cooling season; and (3) Capital investments to improve theefficiency of systems. A part of the recent$35,000,000 borrowing for improvement of ourphysical plant has been designated for investments to reduce energy costs.A faculty advisory committee, reporting to theVice-President for Business and Finance and theProvost, has been appointed and is considering a variety of ways in which energy can be conserved.To a considerable degree the conservation of energy depends upon each of us — faculty, staff, andstudents. While exact estimates are not available,we do know that more than half of our utility costsare for uses other than space heating and cooling.This means that a major part of the uses such aslighting and operating laboratory equipment canbe controlled by users — which means by literallythousands of different individuals. While it is truethat what each of us does may matter very little, itis quite obvious that if we all conserved energywhenever we could the aggregate effect would besubstantial.TABLE IV: UNIVERSITY OF CHICAGO FACULTY COMPENSATION AS PERCENTAGE OFFACULTY COMPENSATION AT SEVERAL OTHER UNIVERSITIES BY RANK, 1970/71THROUGH 1976/771970/71 1972/73 1974/75Assoc. Asst. Assoc. Asst. Assoc. Asst.Prof. Prof. Prof. Inst. Prof. Prof. Prof. Inst. Prof. Prof. Prof. Inst.Harvard 97.8 99.5 97.3 95.1 102.1 97.5 106.8 — 98.2 103.8 108.1 —Yale 93.3 106.3 109.1 108.3 97.0 108.8 114.7 105.2 99.7 114.6 123.6 120.3Princeton 104.3 111.4 109.9 121.9 107.1 110.0 111.4 118.6 105.3 108.4 114.6 129.1Pennsylvania 107.2 106.3 108.3 — 103.6 100.5 102.0 100.8 100.9 97.8 98.9 106.8Stanford 106.4 103.4 102.1 118.2 105.1 100.0 99.4 — 103.9 103.3 103.6 —Michigan 111.8 105.7 110.0 106.4 109.9 101.0 97.5 97.6 107.0 99.5 96.1 102.9Wisconsin 125.5* 118.6* 110.8* 108.3* 119.0 110.7 103.3 99.2 118.6 110.6 101.8 104.4Av. Fac. Comp.at U. of Chicago 26.6 18.5 14.4 11.7 28.8 19.7 15.6 12.1 31.9 21.9 17.3 14.2(thousands)TABLE IV (Continued)1975/76 1976/77Assoc. Asst. Assoc. Asst.Prof. Prof. Prof. Inst. Prof. Prof. Prof. Inst.Harvard 94.7 104.9 106.4 91.2 103.4 109.4 —Yale 99.1 114.1 123.6 120.0 98.6 111.4 121.6 111.9Princeton 105.6 109.3 113.7 132.2 103.2 108.4 118.7 130.0Pennsylvania 103.0 101.7 101.1 121.9 97.2 96.1 100.5 129.3Stanford 103.4 99.6 102.8 — 99.4 99.2 99.5 96.6Michigan 107.0 101.7 96.8 106.1 106.4 100.8 99.5 108.3Wisconsin 118.2 111.4 100.0 108.3 117.0 110.9 101.5 110.5Av. Fac. Comp.at U. of Chicago(thousands) 33.8 23.4 18.3 15.6 35.1 24.4 19.7 16.9?Averages for entire University of Wisconsin System, whereas other Wisconsin figures are for Madison campus onlySource: AAUP Annual Report on the Economic Status of the Profession119TABLE V: DISTRIBUTION OF INCOME BY MAJORSOURCE, 1970/71 AND 1977/78, FOR UNIVERSITYEXCLUDING AUXILIARY ENTERPRISESChange inMajor Source 1970/71 1977/78 Amount(Percent) (Percent)Student Fees 23.0 23.4 52Endowment Income 12.9 11.2 31General Investmentand Miscellaneous 4.9 3.2 -3Patient- Related Income 2.1 4.8 231Government Grantsand Contracts 44.6 39.1 32Gifts and PrivateGrantsTOTAL 12.5 18.2 11750100.0 100.0**Due to rounding errors the total does not come out even.Patience and cooperation and goodwill are required if we are to keep energy costs from exceeding 10 percent of our unrestricted budget. Somepersonal discomfort is likely to be involved, butfailure to realize the economies that are possiblewill also have undesirable consequences.Plant and Institutional Support Services. Inperiods of tight budgets there lurks in the minds ofmany faculty members the suspicion that thestrictly administrative parts of the University areabsorbing an unduly large part of any budget increases that may be available. While it has beenpossible by a comparison of the data presented inthe Provost's budget messages, of which this isthe ninth, to allay such suspicions, the fact thatutility costs have not been separated from plantoperations in the data as presented may have blurred the true situation. Based on actual expenditures, except for 1977/78, plant operation andmaintenance (excluding utilities) plus institutionalsupport services were the following percentagesof the total instruction and research budgets forseveral recent years:1970/71 11.3%1971/72 10.51972/73 11.31973/74 12.11975/76 11.41977/78 11.8The changes in the percentages have been modest, even though a million square feet of new spacehas been added since 1970/71. Concluding CommentsOne can interpret the University's current situation either optimistically or pessimistically. TheUniversity has come through the last few years offinancial difficulties in a quite remarkable manner.I wish it could be said that the financial future ofthe University is so secure that the period ofstringency required to bring the budget into balance has now come to an end. But our budgetbalance must be described as a precarious one.It will not be possible for us to depart from oureffort at gradual reduction of the size of the faculty nor our efforts to achieve a Quadrangles enrollment of more than 8,000. Nor can any of usrelax our attempts to increase the flow of unrestricted and restricted funds.External forces — primarily governmental —continue to impinge upon us in a variety of ways.As noted earlier, the University has obtained areasonably satisfactory resolution of the longstanding disagreement over payments for hospitaland physicians' services, though in the process wehad to forego several million dollars in paymentsthat any reasonable concept of fairness wouldhave indicated rightfully was due us.One of the more significant changes that may beimposed upon the University is the legislationnow in Congress to extend the retirement age toseventy. While not all of the implications of theproposed legislation can now be determined, theeffects on faculty size and our ability to make new120§ i o8 8 O8 | oo o8o o O T-^ O "P f» Os NOcn cnO ON s cnCNQ\ ^ fO t o o o o o O888 88 ooON O ^ «o 1^ CNr- «o *-¦ 1 I-- cn >/->>o t-» oo ^ mONNO cn © S88 o o§§CN ©oo SCO O © SNO Oio CN o o o o o oo o o o o ©©^ ©^ ©^ ©^ ©^ ©«o on" cn no" © cn"cn CN CO NO CN Onoo © cn cn »o ^tCN oo" ^" *-h" ©" cn 8OC00.2 fe oo>ooooooo^ q o\ oo q q ^o o ©^oo,^tcn>o»ov-r^oC>ocN<ooNcnr^ooo\ONTf CN CN 00 O NO •/-> On Tt^q _ _* ^h u-> Onr-» no o r-- o oo oo oo ©©©©©©o o ©^ ©^ o ©^© ~* °n o oC ©o on 90 «o r- -<t^h vo On cn cn CNt^ vo" ^" ©" cnQwH<2PuO04OnPU<iHSPQOnX .3 cj•cCM .flllN^ D .a<oaa-_ _ 3OS3 3D Ofa «i OSCM gD _~O T3t §« 331 Z 2 73£ 8 2 §u 73 DiQ 3 O* Oh73 733 3OS #03 33 3 • - T333t « d i-S o .a3 >rj DD «»g £l &•^3^ C 3 •- au3fa DogCM <UI! 3OaS 045 --HI £ 1 1 1 1 -iS 2 T3 d "43 T3 QS •- B ft S 3 o2 .-2 5 a 2 3 oPQ £ J c/3 3 W dW <£ 3 OS oo .2 - 3 ,«C8 -— i ."ti 73 w *-*^ D O 2 ^ ^ r?U cu DC Pu £ ^ fa^ oQ PQ as 000 *3•g g3 g aSo3S3 .5. S 03 Oti »? ^OO On 3O2 P £D <1> <U¦^ > DffiSuD^h pa"OOHfaT3«S"©cn3Ofa8 o © ©OOQo © ©°> 2 Evo" ON 00cn cn 8O^<N o o o o o8 8 8 8 8cn irT cn o" ^-^O On cn no •/">cn r- cn oo on o o o o o oo o Q o o s©. ©^ R ©^ ©^ °^•o cn cn vo" >o cncn "* cn rf -^ cn00 vO CN <N »o "*ri r-^ *¦* ~ o" cn" 888O O O O »0O O ^O O ONO cnCN *-< 8852CN cn cnOn ONCN ¦^ cn u-> on" o8 o oo oo >oS U-i NOr- vo "^fcn cn o o o o o© o o © ©o o o o o Ooono r-- o o r-'— ' «o NO o «/->^ r- on r- on 8tJ- On CNNO 00 o o o o o o© S 2 © © S©^ °~ °« ©^ ©. °r>CN ~£ ON <N Tf »o"cn ON oo no O ^cn no on i— ' cn CNQH<H©PQD>PQP4 3T33CM .,_,facy ^ cSs c ^.^3^J tV5 PQ & *g 5& 13g Ih »5O D OJ> ° oO 03 73 ?a£ £ 0 3as-oo"33rtCMoCM O ?*"S g uS o 34! g OoS 3 3DW DIM ^sir g3Q €« PJ 0 O •c3T3PQ1.13D6-2*3 D C Cvl73 w 3 '-68 3 £ "gu ^ t§ £ o o ^ .2 21=5 oo fi $ •a £3 ^OO PQ T3 3 C >->1 O • rtDC c^ o 1/5 2CM WT33OS 13 CJ3 i_9 n ft- ^00 -S <£h3 2 «-3 D D D3O £ 3£ CJ > O"g.2 QOK c«MooH?oUfaappointments of the ablest young scholars and topromote to tenure the most productive of ournontenured faculty are quite obvious.In recent years the process of adjusting ourcommitments to the available resources, assumingthe achievement of a balanced budget, has required a reduction, through attrition, in thenumber of faculty of approximately ten per year.If the retirement age were increased to seventy, apreliminary analysis of the effects on the budgetindicate that maintaining a balanced budget andpreventing erosion in the level of our facultysalaries compared to other major universitieswould require increasing the annual reduction infaculty numbers to approximately twenty for thenext five years. Even this conclusion assumes thatnot more than half of the faculty members whocould extend their appointments would do so.If the annual reduction in the number of facultywere increased to twenty, it would not be possibleto achieve such a reduction by attrition only.Thus, there would be two serious consequences.One is that the number of new appointments thatcould be made of younger and promising scholarswould be greatly reduced. The other is that itwould be increasingly difficult to promote to tenure the most productive of our nontenured faculty.There would be other significant consequencesof which I will note only one. Most other universities and numerous research institutionswould have fewer openings for younger scholars and researchers if the legislation becomes law.Consequently the national demand for youngpeople finishing their graduate and professionaltraining would be much more significantly reduced than it has been in recent years. The effectsof the national reduction in demand for youngscholars on enrollment at The University ofChicago would be extremely serious. It is hard tobelieve that we could maintain our current enrollments in the graduate divisions for very longonce the effects of the change in age of retirementupon the positions available for new entrants intothe academic market began to be felt. The declinein enrollment in the arts and sciences would be feltnot only by us, but by most other universities, andthis decline, in turn, would adversely affect thenumber of new appointments available nationally.Perhaps the retirement age of seventy will notbecome law, though at the time of writing it appears to be a realistic expectation. Even if it doesnot become law soon, the possiblity creates considerable uncertainty for this academic year. Butwe have faced uncertainties in the past, and wehave continued to be an institution of great vitalityand strength; and I am confident that we can adjust to this new intervention if it should come topass.D. Gale Johnson is Provost and the Eliakim Hastings Moore Distinguished Service Professor in theDepartment of Economics and in the College.122THE UNIVERSITY OF CHICAGO RECORDVICE PRESIDENT FOR PUBLIC AFFAIRSRoom 200, Administration Buildingn —x •*M 0o o>Q >-Ix O Vrn o>r 2<mH OH Z C333 Zm r cn03>< aOXo>oo rX5oa*-4 3a<mCM0o>a©Bo§o63"0BONo z"0 I om ^ c 333 P TJ*£ ,P> 3HOzl.O rr- >S o— 0)CO322 Nto¦e- o m*¦ T- OV) 3