THE UNIVERSITY OFCHICAGO 9 RECORDDecember 31, 1980 ISSN 0362-4706 An Official Publication Volume XIV, Number 6CONTENTS213 THE STATE OF THE UNIVERSITY, 1980217 THE UNIVERSITY BUDGET, 1980-81233 REPORT ON FUND-RAISING RESULTS IN 1979-80, PLANS FOR 1980-81,AND THE STRATEGY FOR THE 1980s236 REPORT ON ENERGY CONSUMPTION AND COST242 REPORT ON RENOVATION AND CONSTRUCTION OF FACILITIES, 1979-80245 NON-DISCRIMINATION POLICYTHE UNIVERSITY OF CHICAGOFOUNDED BY JOHN D. ROCKEFELLERCopyright 1980 by The University of Chicago. All rights reserved.THE UNIVERSITY OF CHICAGO RECORDTHE STATE OF THE UNIVERSITY, 1980By HANNA H. GRAY, PRESIDENTNovember 20, 1980I should like to comment this afternoon on thestate of the arts and sciences at Chicago and toaddress my view of some significant issues thatwe need consistently to review and to resolve aswe pursue the aim of giving definition and vitalityto the common academic core of our University.Let me begin by citing these remarks made bya university president:The problem of tenure has become unusually acutebecause the times are out of joint. The market situationin the teaching profession has had a profound effect.Just before the War, and again just afterward, therewas a surge of students; colleges and universities grewrapidly and junior colleges sprang up like weeds. Consequently there was an intense demand for teachersand jobs were plentiful. ... At the same time the greatfoundations were pouring out money to the capitalfunds of institutions and private philanthropy made allprevious periods of beneficence seem puny. Furthermore the public showed such a lively interest in improving professorial salaries that state institutions,like privately endowed universities and colleges,added to their faculties and advanced salaries rapidly.It was at this same period that 'research' becamea watchword. The miracles of medicine and appliedscience, the startling suggestions of . . . mathematicians and physicists, the vogue for economic predictions — all these came to a great climax and absorbedpublic interest. No institution was longer regarded asrespectable unless research was a significant part ofits program. ... All these factors combined to makefor great mobility in the teaching profession. The problem was not so much how an individual should finda job but of a choice among those available.But since then, said the president, there had comea swift decline and disillusion, resulting inan oversupply of degree holders as great as the excessof openings had been. . . . Budgets . . . were cut,income from endowments fell, enrollments no longermounted rapidly and salaries were cut. Public faithreacted violently. . . . There was talk of a scientificholiday; education was put under severe criticismfrom within and without. Naturally these factors united to produce widespread academic unemployment.. . . Superabundance of optimism was followed bypublic pessimism of the deepest dye. It went to extremes as foolish as optimism had previously.These words, with their familiar ring, were written in 1940, by President Henry Wriston of BrownUniversity. He was right, of course, about theundue pessimism of his time. Precisely the samewarning is appropriate today. Wriston' s description captured the sense of reversal to an age ofgrowth in the history of universities — a transitionwhich had begun some eleven years earlier withthe crash of 1929. So today's pessimism derivesfrom current perceptions of the continuing impactof the last eleven or so years on a set of expectations derived from another "heroic" age.The questions before us have to do with seeingthrough and beyond those persistent difficultiesof constraint to which we have become accustomed and which render impossible the solutions — if they were ever that — or prescriptions ofincremental growth. Our joint obligation and opportunity is to decide how an institution of greatstrength can build on its most vigorous foundations and can move through debate and actiontoward the selective, purposeful choices whichwill foster the sustained distinction of scholarshipand research and the effective quality of educationto which we aspire.The renewal of institutional leadership will arisefrom a shared commitment to our vision of theUniversity's role and future. There is great reasonfor confidence in our capacity to achieve that end.Any observation of the University's presentstrength and of the faculty's deliberations in thosemajor areas which have been under study — enrollments, research policy, graduate education,the strategies of longer-term budget planning, toname only four — must generate the realistic op-213timism which is appropriate to our condition.There is considerable momentum already in theseand many other initiatives which have as theirobject the shaping of directions for the wholeUniversity, with full regard for the interdependence of its parts and for fostering an academicenvironment in which teaching and research willflourish at the highest level.But for now, for our immediate purposes, let usturn, however artificial the separation, to the artsand sciences. In our terms, that means essentiallythe faculty and programs of the divisions and theCollege, although it includes many from theprofessional schools. By choice and by history wehave no single governing faculty of arts and sciences. The University's decentralized systemplaces primary responsibility for academic policyand administration in graduate divisions whosegroupings of departments and committees are intended to support broader associations of disciplinary approaches and relationships and in a college marked internally by both common anddivisional jurisdictions.The College has been reorganized more timesthan I may know, and I am not about to proposeanother. The last major reorganization took placesome fifteen years ago, and its purpose was to giveenabling form to our conception of what the framework of an undergraduate education in the liberalarts should be at this University. It was to articulate the conception of a four-year college witha coherent curriculum that includes basic and advanced general education, some breadth of elective subjects, some depth of concentration, someflexibility in pursuing individual interest and independent work. It was to affirm the importanceof a closer and more fruitful interchange and cooperation between the College and the divisionsand of a faculty with joint appointments and anengagement in undergraduate as well as graduateinstruction.The numbers of faculty on joint appointment,and the numbers of divisional faculty teaching inthe College, have grown dramatically since 1965.Not all divisional faculty teach in the College, norhas that ever been intended. Elective courses andofferings in areas of concentration have also expanded considerably.We have a first-rate College of which we arejustly proud. Its relationship to the divisions isstronger and healthier than was the case fifteenyears ago. It has also become more difficult todefine or to discern an entity that can be called aCollege faculty. I don't mean that we ought to have such a separate group; in my view, we nevershould. But I draw attention to a paradox that hasmarked our history and that marks it still. We havea firm commitment to the importance of a commoncore of learning, to a set of basic values aboutwhat it is to become liberally educated, to a cur-ricular design that denies that simple distributionamong a variety of disciplinary offerings gives anyreal coherence or breadth to undergraduate study.On the other hand, we have a tradition of autonomous choice and extraordinary flexibility in acommunity of scholars dedicated to research andgraduate teaching. The interest in undergraduateteaching, and in its different aspects, is uneven;so, too, is the concern with viewing undergraduateeducation as a whole. The common core and general education courses find it difficult to attract allthe faculty they need. For some faculty, the educational conviction that such courses are indeedgood is in conflict with their own intellectual convictions about the particular substance or methodor syllabus of the course in which they mightteach. Where common requirements are taken seriously, as they are here, and where they are expected to give life to the basic methods and waysand objects of knowing which all students are tounderstand, then controversy about their contentand method will always be acute and passionate —far more so than in an institution which offers acafeteria staffed by as many short-order cooks ascan make their own thing. Hence the intensity ofour debates, which have made Chicago a place ofsometimes ferocious but exceptionally lively andproductive educational discussion. We need, Ithink, to live with the conditions that underlie thisstate of things, but not to accept the status quo.We need to engage more faculty in thinking aboutthe whole of the College curriculum, about waysof attracting more colleagues to teaching in thecommon core, about the means by which to avoidthe dangers that can accompany our system —namely, that certain courses can become too rigidor that a given syllabus may be wrongly identifiedwith general education per se. The issue is notwhether we have an excellent curriculum now. Wedo. The question is whether we can find ways toensure the continuing balance that we seek in thefour-year curriculum and whether we can directcritical attention on the part of a significant groupof faculty to the continuing revitalization of theCollege.The tension between the claims of commonalityand of individual choice will not disappear or giveway to narrow ideological unity. The attractive214simplicity of such single-mindedness, even whendisguised as comprehensive gospel, should neverbe permitted to obscure the complexity which weknow attaches to the struggle of attaining someknowledge, let alone wisdom, or the enrichingvariety of genuine and competing intellectual convictions. The search for curricular structure, nowsuddenly fashionable again elsewhere, should notseek to impose a false coherence of forced intellectual assent.The character and quality of undergraduate education will rest on a broad agreement, one inwhich the faculty within the arts and sciences asa whole participate, if to varying degrees, as tothe principal purposes and guidelines to be sought.To my mind, a liberal education at this Universityaims above all to develop the gift of intellectualintegrity, the capacity for critical thinking and informed independent judgment, to introduce students to fundamental aspects of the cultural inheritance, of the study of civilization, and ofmethods of analysis and discovery that cross arange of the arts and sciences. I take it that wewant students to cultivate their ability to see relationships among disciplines and especially amongdifferent dimensions of inherently complex issuesthat might otherwise appear or be treated simplyas technical problems. We hope that they will gainand apply an intelligent respect for the powers,and even the limitations, of the mind and its potential to see things whole, as for the values ofcreative research and professional standards,whatever may be their own future vocations.The health of the College is linked to that of thegraduate divisions. In both areas, of course, thenature of instruction and character of our programs rest on the quality and commitment of thefaculty. It is in the matter of graduate educationand of the pattern of faculty appointments that weface the most critical questions now before theUniversity.The Commission on Graduate Education beganits work last spring under the chairmanship ofKeith Baker. Its task, as the chairman has writtento the faculty,is to consider the present state and future shape ofgraduate education at this university in the light of itstraditional commitment to excellence in teaching andresearch and of the current constraints on the organization of higher education. . . . Among the issuesthe commission has been charged to consider are theassumptions and goals underlying our approaches tograduate education at the University of Chicago andthe strengths and weaknesses of our current programs;our policies relating to admissions and aid and our ability to identify, attract, and sustain the most promising students; the requirements and length of timeexpected for the completion of graduate degree programs; the role which graduate students play in research and teaching.The commission has solicited the views of thefaculty, and its findings and recommendations willreceive wide discussion. The range of questionsit is studying composes the University's most significant educational agenda. It is vitally importantthat in the meantime departments and committeesand divisional faculties give intensive consideration to these issues of graduate education and curriculum in relation to their own disciplines andprograms.But this kind of discussion needs also to be concerned with broader relationships within andacross divisions and with the professional schoolsas well. Departmental and even divisional linescan create habits of constricted vision, despite ourvigorous tradition of cross-disciplinary work anddespite the unusual flexibility of our academic arrangements. It is time to reflect, for example, onwhether the studies of languages and literaturesshould be organized in new ways, time to inquirewhether the neighborhood alliances between appropriate areas of the physical and biological sciences are adequate.Above all, it is time to give attention to thefuture patterns of appointments as these affect ourpriorities in the arts and sciences.We must take it as a given that the faculty cannotgrow in number over this next period of time andindeed will have to be slightly reduced in size. Allof us are familiar with the problems created by theextension of the retirement age which will beginin 1982 and which will postpone to a still later timethe significant occurrence of new vacancies. Weknow it is crucial to make positions available toyoung scholars and teachers, both for our owninstitutional vitality and for the sustenance of research and teaching — indeed, of universities andcolleges — in the future. We believe both in thepolicy of making junior appointments which carrythe possibility of consideration for tenure and inthe importance of continuing to attract distinguished senior scholars.But at the same time we must concentrate andnot diffuse our strengths. To plan for the vitalityof the future is to identify and consolidate thoseand to maintain the flexibility to introduce newstrength in areas of significant opportunity orneed. Such planning must balance many desirablegoals, and it must establish priorities. The changes215it brings will rarely be dramatic and radical actsof excision or addition. Instead they will comefrom the compression of one or another subfieldor with shifts in the scope of certain activities. Theprocess depends on careful and rigorous assessment by faculty of the most promising and pressingareas in which this institution with its resourcesand purposes and capacities should seek to concentrate its best efforts.The process we are pursuing is not easy. Fortitude and imagination are required to resolve thecompeting and excellent claims which emerge. Butthe working out of priorities for faculty appointments, after consultation between deans and theirfaculties, will provide a means for establishing oursense of what can be done over a period of severalyears, and of where we intend to go. It will enableus to clarify our choices and to allocate our resources wisely in the service of our academicgoals. It must take into account the symbiotic relationship of the College and divisions, and ofthese to the professional schools.A year ago the report of the Bradburn Committee on enrollments stimulated a larger discussion throughout the University. From that havecome the conclusions that we should plan to increase the size of the College to about 3,000 students over the next several years, to arrest thedecline in numbers of graduate students in thedivisions, and to maintain a stable total enrollmentfor the professional schools.The judgments guiding these decisions assumethat the University's character as a research institution and the character and quality of its undergraduate and professional schools require ascope and depth of program, a distinction andbreadth of faculty which a different scale couldnot support and which an expanded emphasis onprofessional education might radically alter. Thestrength of the College can be reinforced whileguaranteeing the kind of curriculum, the insistenceon small classes wherever appropriate, the sharingof intellectual experience which are its hallmark.Obviously we do not intend to increase the size of the student body at the expense of these valuesor by lowering standards of admission. Nor willit be necessary to admit many more students eachyear, for the growth of the College has in factresulted equally from its increased retention rate,which should continue. Our success in strengthening the College, and the University by consequence, will depend in any case, quite apart fromany question of numbers, on the kinds of applicants we attract, on our procedures for recruitment and admissions, on the greater visibility andunderstanding which the College can commandnationally. Systematic attention is being devotedto these matters, and a similar emphasis is beingplaced on the recruitment and admission of graduate students, and to financial aid.We are planning a fund-raising campaign for theCollege and divisions, for supporting and strengthening the arts and sciences. This will be the largestof the special purpose campaigns within the largercontext of University fund raising in the comingperiod of years. Such planning is again a meansof defining and stating our institutional priorities,of meeting the stringencies that we confront, andof looking to the University of the coming decadeand beyond. The principal goals of such a campaign will have to do with junior and senior facultyappointments, with scholarships and fellowships,with funds for the sciences and the library, withsome resources that will enable us to make selective changes and additions and to respond to newopportunities. The campaign will assert the centralrole of liberal education, of graduate training, ofbasic research and scholarship in the arts and sciences.Out of our continuing discussions and the conclusions and plans to which they lead will comethe opportunity to maintain and to build that role.We have the great good fortune to be building onsecure and vigorous foundations, with the supportand energetic participation of a faculty whosequality constitutes the strength which we possesstoday and which we can anticipate with equal confidence in the time to come.216THE UNIVERSITY BUDGET, 1980-81To: The Faculty, The University of ChicagoFrom: Kenneth W. Dam, ProvostNovember 24, 1980To budget is to choose. Wise choices require careful decisions about priorities. At our University,priorities are focused on faculty and students andwhat they need to do their work. The Universitybudget is one of the prime vehicles through whichthe University makes fundamental educationalchoices. To be sure, some of the most importantdecisions are taken outside the context of the annual budget cycle. Appointments and promotionsare obvious examples. But the budget nevertheless summarizes the results of these other processes.University budgets are not easy either to understand or to explain. Part of the complexityarises from the ever-present distinction betweenrestricted and unrestricted funds. A large portionof the monies at the disposal of the University canonly be used for specified purposes. Because thosemonies are received in trust or because their receipt is contingent upon performance, it is simplynot true that a dollar is a dollar is a dollar. Thedemands upon unrestricted funds so greatly exceed the supply of those funds that the restricted-unrestricted distinction remains crucial.Perhaps the budget of greatest interest to thefaculty is what may be called the academic budget,which supports instruction, research, the library,student services, student aid, and the generaladministration of the University. Expenditures inthe academic budget will total $184.1 million inthe current year. Of this amount, $84.3 million isexpected to come from unrestricted funds and$95.7 million from restricted funds. A deficit of$3.9 million in the unrestricted budget is planned.1This is a planned maximum deficit, and steps arebeing taken to reduce it within the course of theyear.Still broader than the academic budget is theconsolidated budget, which includes the gross ex-1 . A surplus of $0.2 million in the auxiliary enterprises budgetoffsets a $4.1 million deficit in the academic budget to producethe $3.9 million budget deficit in unrestricted funds. penditures of auxiliary enterprises. The consolidated budget for 1980-81 is $349.1 million.2The largest auxiliary enterprise, the Universityof Chicago Hospitals and Clinics, anticipates expenditures of $125.1 million and revenues of$133.7 million in the current year. The resultingsurplus budgeted for the hospitals substantiallyexceeds the unrestricted funds deficit. Althoughthe University of Chicago as a corporation thusanticipates a surplus of $4.7 million in the currentyear, the hospital surplus is pledged, for a numberof legal and other reasons, to the support of thehospital and to new hospital construction. Consequently, the $3.9 million deficit in the unrestricted budget must remain a source of major concern. Here too a dollar is not necessarily a dollar.The nonhospital auxiliary enterprises of theUniversity are budgeted essentially on a breakeven basis. Their total expenditures are expectedto be $39.9 million for the current year. It is conventional to divide these enterprises into "academic" enterprises (by which we mean the University of Chicago Laboratory Schools, theOrthogenic School, and the Human ResourcesCenter) and "other" enterprises. But most of the"others" are either essential to a teaching University (for example, housing and food services)or add academic lustre to the University (for example, the University of Chicago Press). Amongthe auxiliary enterprises, small surpluses and deficits can be expected to arise in any given year,and those deviations may be expected to balanceout. If they do not and the balance falls on thedeficit side, then serious overall budget troublescan occur. Such net deficits of these "other" auxiliary enterprises as a group did in fact occur inthe 1970s. In 1979-80 a serious unanticipated deficit arose in the Printing Department. Steps arebeing taken to eliminate this deficit in the currentyear.3 An overall surplus of $0.2 million is budgeted within this category.2. This amount does not include the Argonne National Laboratory, which is managed by the University under contract withthe Department of Energy. Argonne' s budget for operations for1980-81 is $268.0 million. The University receives a managementfee and would not normally be responsible for any Argonnedeficit.3. Within the academic auxiliary enterprises category, a majorunanticipated deficit also arose in 1979-80 in the Human Resources Center. Here too steps to eliminate the deficit are beingtaken.217o$39,708 9,982 8,504 16,933 5,454$80,581$6,463 51,056 30,031$87,550 $168,131 ON vo O 00 ^r vo O0 vo vo r- r- cnvO^ ^ ON ON^ Tf t^0" vo" cn" r*T on" in"-^- T-H co 0 00 ^ t-h cn mt-h in on in tt on t-hcn on^ r- co co^CO t-H Tf00 00$87,550 $170,7631 co in vo oo covo in M Tf ^t^ °^ ^ ^ ^vo" oo" r^ in inCO t-h in in cn t-hCO 00 t-h COT-H ^ fN ON^ vo" vo" r^r^ ^ cn 00 mCN SOco rf^0" rf00 ^n tj- 00 m t 0 ^- a\O h M h i- t Ncn t-h r-^ On^ ^ in ^vo" vo" cn" ^" on" «n wCO T-H rf co co Tj- on vo coon no r- r^ on on cnno^ CN vo vo inTt «n co" 00 nCN <SCO O^0" vT00 ^a O ^- oo in o^-oo vo r^ t-ht-h on 00^ 00^ r-;t-h oo" <n >o >nCO T-H^5- r- r- co int^ On 0 00in in «> ^tr^ vo" Tf voVO ^ CN^5- i/± in fS00 vo^ 3 vo cn as vo r- 00 on0 cn r- cn in cn 00r^ in vo h cn co ^t0" ^ cn co 00 inCO .t-H^5- r- 0 00 00 On vo ^fO 00 CO CO CO 001^ CN CN ON CNin cn" t-h" co"vo t^^ ^5- m M00 ONON on o t^ tj- cocn in co cn OnON ^ ^ CN COoo" on" Tt" tt" inCN t-h co ¦ r- on t-hCO ON vo Ot-h in ^f cncn" vo" 0" co"VO ^- CN ^ OVO OCN ^t0" rf^5- €«• CN O t^ CN VO CN CN^O CN ON vo CO 00 mon i> ^ in r^ 00 cor^ ^f cn" cn" r-" rf ^^CN t-h^5- t- 0 00 t-h 60 in ^f-^ rj- in t-H CO t-HOn 00^ t-h^ ONOn ^ t-h t-h coin voV3- V5- vo ^vo ^Hcn r^0" 0I CO CN 00 Tl- CN© i-h in vo vor^ vo^ cn r^ oqoo" on" CO CN TfCN t-h ON NO © tJ-on co ^ '^rt-h^ ^ 00 NOn" vo" r^ 0in co cn O ONCN jHin r^ co r^ O cn rt- t-h cn0 00 vo vo r^ on tj-vo^ in CN O ^ 00 CNvo" ^-" cn" t-h" r-" rt ^^CN t-h in O O On" O no ^tco co t-h cn r- 00 invo f^* r- s-^ ^ 00^vo" on" t-h" cn"in in h SOcn ^nin iHtt" tHNO f^ina t^ on *-< r-> >nco in in in voO t-h » VO ©vo t-h co O coCN T-H T-H vo rf co voVO O t^ CNr^. ro t-h t-hTt vo" r^ vo'in co t-h co Ontt Oin r^On" ^¦° a 00 in co t-h on cn inVO CN 00 ^t 00 00 CNrh CN t^ co t-h^ On^ CNno" ^ cn" 0" r-" Ti-" wCN t-h^5- CO 00 O OO ON OO Ovo ^- on ^- cn r- mTH T-H^ VO T-H O^ Tfin" in" t-h riin in CO NOin 1^On" ^t*> aN h t-h vo VOin co r-» r^ ,^-»-h o in -^ Ot^ cn" co" on" ^tCN t-h CN T-H T-H Tf00 O On vocn t-h t-h inco" vo" co" inin co t-h^3- ^5- VO OOin <*>00^ t-H^Tf oein O no r^ r^ in in vo coin 00 ON NO CN 0 0»n 00 0^ vp^ vo 00 00r^ co" 1-4 On" vo" ^rCN^5- CO ON 00 l> Tf ^ Tfco 0 ^ co O inl> CN ^t t-h |^ co^co" O COin inV5- &t VO ONin 0000^ 1^rf 00in OVO »-h »Tl >0 ^o r- in o in»-h ©^ ©^ ON ©co" cn" in oo" coCN t-h t-h On co 00On On -^ CNt-H O^ Tt 00cn" vo" in" inin co t-h O fHr-» voco^ i^r^ oTin O in 00 co on xf tj- 000 in vo 00 r- vo inin OS (M vo^ t^ ON thvo" co" t-h" 00" vo" ^ WCN in 0 ^t cn co ^- voOS T-H CN T-< T-H on t^in On "3- cn ^ cocn" t-T ^fin in ON ^tVO NOco ON^r^ oTin 0V5- ^sONfH on «n oo r- Onco r^ t-h o vor- »n vo^ vo^ cot-h o cn" r^ co"CN t-h 00 ON on in0 co 0 vo°\ ON^ co^ Oin" in" cn" co'^ CO T-H CO iHt-h rico r^t-T |Cin On in r— in t-h vo rf inin 00 vo no r- 0 cnt-h NO ON CO CN t-h s^00" co" t-h* 00" no" inCN co t-h co 0 in on "^On co co co vo in Onin t-h in co t-hco" no" ^in rf CN "^T-H OCO On^t-T rfin O1 in t-h cn oo t-hr- on r*» t-h rtco^ co^ in ^ oo" t-T rC r^ ^CN t-h r- t-h ^t coON vo Tl- Onl> O^ 00^ ON0" ^f cn" cnin co t-hV5- &t 00 »^On On°0, voOn" O-* S CN t-h on rf t-h cn CN^ On co t-h on in coO^ Tf ON^ CN CN 00^ t-hOn" co" t-h 00" no" inCN r- in *-h 00 cn cn t-hON t-h CN CO VO CO COVO t^ ^ CO CN^ t-h^f tT ^r"in -<3- as voON ON00^ *n^on" "^f-*. sh-»aa a.a c og •- o2 s ^ § s3 S ^ S ^ r?.S M¦» e "S 1 ^ ^ t5 -g 1 I |V V £ > G $ to h^^t- «| ° a (§ a So^wootS |P* < PQ H "BhIS II 1 1 |£j -is 1 %i 1Jt-hO Sog(SJcvlS isO chevied CW < pq S218The raison d'etre for the University is teachingand research. Therefore, the emphasis in this report will be on the $184. 1 million academic budget.No one can be certain what lies ahead for theUniversity in the 1980s, but we can expect thebudgetary future to be difficult. There are, nevertheless, elements that justify a measured degreeof optimism. Major adjustments have been madein the 1970s. Indeed, the composition of the University's budget is considerably different todayfrom what it was a decade ago. One cannot thinkseriously about the future without taking into account some of the changes that have occurred inthe last ten years. Everyone is familiar with thegreat growth in energy costs. Not so obvious, perhaps, are the fundamental shifts that have occurred in income from endowment and from tuition. Before undertaking a detailed look at lastyear's budgetary outcome and the current year'soutlook, it may be useful to consider some of theprincipal budgetary changes in the decade of the1970s. (Table I sets forth the actual income andexpenditures in the academic budget for the fiscalyears 1970-71 through 1979-80 for those readersseeking additional detail.)I. The Decade of the 1970sA. RevenuesEndowmentPayments to the budget from endowment have notincreased significantly, even in nominal dollars, inrecent years. Indeed, such payments are now significantly lower than they were in the early 1970s.(See Table II.) The reasons for this disappointingresult are complex. First, payments to the budgetare not equal to the income earned on the endowment because payments are determined by a formula. This formula, first instituted in 1972, presently results in payments to the budget of less thanthe total of dividends and interest actually earned.Under this formula, which applies to the TotalReturn Investment Pool (comprising 93 percent ofthe total endowment), the payout to the budget is5 percent of a specially calculated ten-year average. The average is constructed by taking the year-end market values of the TRIP endowment for thepreceding ten years (adjusted for new gifts), eliminating the highest two years and the lowest twoyears, and then averaging the remaining six years.This six-year average for the ten-year period ending December 31, 1979 was $296.6 million. The 5percent payout on this average for 1980-81 is $14.8million.The TRIP formula, and particularly the limita- TABLE II: PAYMENTS TO THEBUDGET FROM ENDOWMENTAcademic Year Amount1971-72 $17,075,0001972-73 19,474,0001973-74 20,003,0001974-75 18,992,0001975-76 16,842,0001976-77 16,305,0001977-78 16,440,0001978-79 16,720,0001979-80 16,379,000tion of expenditures to 5 percent, is often misunderstood, particularly in today's inflationaryenvironment of high interest rates. Why, it is frequently asked, should expenditures on a particularendowment gift be limited to 5 percent when interest rates of 10 percent and even more are readilyavailable in the short-term money and long-termbond markets?The answer is somewhat complicated but compelling. First, some formula based on the totalvalue of the TRIP endowment is desirable. It permits the University to invest for the highest totalreturn (dividends and interest plus growth in themarket value of principal) rather than to avoid,say, low dividend stocks on the ground that thecurrent yield would be too low. Thus, a total returnformula frees investment policy from artificialconstraints. Second, a formula permits the University to smooth out fluctuations in total returnfrom year to year and to plan expenditures intelligently. Both the stock and bond markets havebeen highly volatile, and a formula avoids the feastand famine cycle in University expenditures thatwould result from tying a particular year's expenditure to the current or preceding year's totalreturn.If one accepts the idea of a formula based onan average of the market value of the endowmentover time, the question then becomes why thepayout should be limited to 5 percent. The purposeis simply to be assured that the endowment maintains its real value (that is, its value adjusted forinflation). If the payout percentage were to be 10or 12 percent, as is sometimes suggested, on theground that current yields of that level are nowavailable, the endowment would almost surelyshrink in real terms. If, for example, the 5 percentwere indeed to be the real return on the endowment in the 1980s but 12 percent were to be paidout, then the endowment would be only about half219TABLE III: MARKET VALUEOF ENDOWMENT* (TRIP)Years Ending 12/31 Amount1970 $325,501,1441971 360,423,0291972 383,091,6981973 321,251,9211974 243,354,2421975 255,870,7621976 281,387,5941977 277,298,7751978 274,946,4311979 299,077,7431980** 346,576,938*Adjusted for gifts**As of October 31, 1980as great in terms of what it would actually buy atthe end of the decade as it would be if only 5percent were paid out.The TRIP formula is thus designed to permit theUniversity to maintain the real value of endowment expenditures over time. Universities that inthe past spent substantially more than 5 percenthave learned to their sorrow that they have hurtthemselves badly, even without regard to the generally disappointing returns from both stocks andbonds over the last decade. In retrospect, the decision of the trustees in 1972 to adopt a TRIPformula and the further decision in 1976 to reducethe payout percentage from 5!/2 percent to 5 percent have been particularly fortunate for the long-term future of the University.In today's inflationary economy it is perhapsdifficult to remember that the current yield fromUniversity endowment in the early and mid-1970swas below 5 percent. In fact, until 1978-79 theTRIP formula permitted the University to spendmore than current dividends and interest. Only inthe last two years has the current yield been largerthan 5 percent. In these two years a total of $8.1million in current yield on the TRIP endowmentfund has been reinvested. This reinvestment plusappreciation resulting from a favorable stock market (offset in part by a depreciation in the marketvalue of the bond portfolio as interest rates rose)caused the market value of the TRIP endowmentto appreciate from about $275 million at the endof 1978 to $347 million at October 31, 1980. TheTRIP formula thus has worked in recent years tolay the basis for considerably higher endowmentincome later in the 1980s, barring some future collapse in securities values analogous to that ex perienced in the mid-1970s. A further note of caution is that, even with favorable investment results,a substantial increase in the total payout is stillseveral years away due to the mechanics of theTRIP formula.4This generally favorable outlook for the TRIPpayout as a whole in the 1980s is equally relevantfor any particular endowment fund. Each fund,say for an endowed professorship, shares equallyin the experience of the Total Return InvestmentPool. Each such fund has a fixed number of sharesin the pool, and if reinvestment of current returnsin excess of 5 percent is made, that incrementredounds to the future benefit of the fund. Peoplefamiliar with mutual funds will readily see that thepool is in effect a mutual fund in which the shareholders are the individual restricted and unrestricted accounts that compose it.A question frequently asked is whether the endowment has "kept up with inflation." The simpleanswer is that it has not. On the contrary, themarket value has fallen, even in nominal terms.(See Table III.) In large measure, this fall can beattributed to the increasing inflation experiencedduring the 1970s. Accelerating inflation was accompanied by higher interest rates, with the inevitable result that the University's holdings oflong-term bonds decreased in market value. Similarly, the market values of existing equity holdingsfailed to keep pace in the 1970s as a whole withrising corporate earnings and increased dividends,although the relation to increasing inflation is obviously more complicated in the case of stocksthan bonds.When the TRIP formula was first instituted in1972, the dividend and interest yield was then wellbelow the TRIP percentage.5 In the years from1972 to 1978, some $28.5 million was withdrawnin pursuance of the TRIP formula. It was, ofcourse, assumed here and at the many other nonprofit institutions adopting the total return ap-4. The highest year-end market values (adjusted for gifts) inthe ten years ending 1979 were in 1970, 1971, and 1972 at $326million, $360 million, and $383 million, respectively. Even excluding the two highest years, 1971 and 1972, as the TRIP formulademands, the relatively high 1970 year-end value of $326 millionwill disappear from the base when the payout for 1981-82 iscalculated. Since the October 31, 1980 market value of $347million exceeded the year-end 1970 value of $326 million, thereis some hope for a slight increase in the payout in 1981-82. Evenif the 1971 and 1972 values were not so high, it would still betrue that a new ten-year high in year-end market value couldhave no impact on the payout immediately because the twohighest years are excluded from the base.5. The TRIP percentage was 5Vi percent from 1972 to 1976,when it was reduced to 5 percent.220proach that these withdrawals would be made upfor by capital gains on common stock holdings,but the great stock market collapse of the middle1970s confounded that expectation. In addition tothe withdrawals mandated by the TRIP formula,an additional $10.0 million was withdrawn fromfunds functioning as endowment between 1971-72and 1975-76 to meet current deficits and in 1979-80another $2.75 million was withdrawn for that purpose.6The investment policy on endowment funds isnot, it should be emphasized, responsible for thelack of growth of endowment. The total return(current yield plus growth in principal) from June30, 1970 to June 30, 1980 was 6.92 percent. Although this return may appear low, it was typicalof the experience of other universities in a difficultdecade. The median return for 116 university investment pools for that period was 7.55 percent.The total return on the Standard and Poor 500stock index was 8.93 percent; the total return onthe Salomon Brothers bond index was 6.63 percent. In recent years the investment performanceof our endowment has been outstanding. For example, over the three years ending June 30, 1980,the Total Return Investment Pool (TRIP), whichconstitutes the vast bulk of total endowment, hashad a total return of 10.10 percent compared toa median return of 8.21 percent for the 116 university investment pools, 9.89 percent for theStandard and Poor 500 index, and only 0.61 percent for the Salomon Brothers bond index.In considering the impact of endowment incomeon the budget, it must be borne in mind that, fora variety of reasons, the budgeting process tendsto focus on the unrestricted budget. It is the unrestricted budget that must support the bulk ofinstruction costs and, in particular, most new appointments and increases in faculty salaries. Herethe limits of the endowment as a source of budgetsupport have been particularly important. Thesimple fact is that, because many donors havefavored restricted gifts and because withdrawalscome from the unrestricted funds functioning asendowment, the unrestricted portion of the endowment has fallen as a portion of total endowment. Consequently, in contrast to endowmentreceipts in the restricted budget, which rose in the1970s, endowment receipts in the unrestrictedbudget have fallen from levels of $12 million or6. Funds functioning as endowment are technically not trueendowment and may be expended for current purposes if necessary. more in 1973-74 to under $10 million in 1979-80.Where the endowment provided over 20 percentof funds for the unrestricted budget in the earlierperiod, it now provides little over 10 percent.Student FeesThe failure of receipts from the endowment togrow has put a special pressure on student feesas a source of revenues. Student fees (essentiallytuition) now account for about 49 percent of therevenues in the unrestricted academic budget. Atthe beginning of the decade, the correspondingfigure was about 40 percent. During the decadestudent fees approximately doubled, from $20.4"million in 1970-71 to $39.7 million in 1979-80.7Revenues from student fees are only gross revenues, of course, because a significant portion ofstudent fees is paid out as student aid. Althoughtotal student aid fell from $10.1 million in 1970-71to $7.4 million in 1974-75, it increased once againto $10. 1 million in 1979-80.8 It grew by $1 .0 millionfrom 1978-79 to 1979-80 alone and, as discussedbelow, has been increased substantially in the1980-81 budget. Moreover, a substantial portionof the increase in recent years has been providedout of unrestricted funds. In the four years from1976-77 to the current year, for example, unrestricted student aid has increased by one-half,from $4.9 million to $7.4 million. Despite the largest recent increases in student aid, net student feesnearly tripled, from $10.3 million in 1970-71 to$29.6 million in 1979-80.Nearly half of student aid comes from restrictedsources, such as endowed scholarship funds andvarious governmental programs. It is not alwaysrecognized that restricted gifts for such purposesrelieve the unrestricted budget in the same wayas wholly unrestricted gifts would.In the student fees account we find perhaps thelargest fiscal change from the University of 1970to the University of 1980. The University has become increasingly dependent on tuition as the fundamental source of support for those activities7. These figures do not include Laboratory Schools tuition,which appears as revenues in the Academic Auxiliary Enterprises category.8. These figures leave out of account the remarkable increasesin government and other funds that flow directly to studentsrather than through the accounts of the University. Over andabove all University and federal aid administered through theUniversity, our undergraduates received over $1.2 million inscholarship aid directly from external sources in 1979-80. Graduate students received another $0.8 million directly from outsidesources.221TABLE IV: TUITION, ROOM, AND BOARD FOR UNDERGRADUATES AT THEUNIVERSITY OF CHICAGO AND FAMILY INCOMES IN THE UNITED STATES1970-71 THROUGH 1980-81Year Tuition, Room,and Board Family Incomes* Tuition, Room, and Board asPercent of Family IncomeMedian 80thPercentile Median 80thPercentile1970-711971-721972-731973-741974-751975-761976-771977-781978-791979-801980-81 $3,5853,8614,0654,4254,6905,0105,3955,8686,4057,0387,915 $ 9,86710,28511,11612,05112,90213,71914,95816,00917,64019,60021,350 $15,53116,21817,76019,25320,69022,03623,92326,00028,63231,80034,650 36.3%37.436.536.736.436.536.136.736.335.937.1 23.1%23.822.923.022.722.722.622.522.422.122.8Source: Family income data from U.S. Bureau of Census, except last two years have been estimated.*Income data are for the calendar year of the first year of the fiscal period.supported by the unrestricted budget. Since theteaching function of the University is fundedlargely from the unrestricted budget, the conclusion is inescapable that tuition must rise to meetadded costs of instruction. In short, tuition mustrise if faculty salaries are to rise.Despite increases in student fees, the cost to thestudent of attending the University — that is, grosstuition, room, and board — has not increased as apercentage of family income over the past decade.(See Table IV.) The widely held notion that tuitionincreases in the 1970s placed undergraduate education beyond the reach of even upper middleincome families appears to have little foundationin fact. What is perhaps true is that the costs ofother things, such as single-family housing, haverisen even faster than college costs, thus makingthe cost of sending a son or daughter to collegeseem more burdensome. And, of course, the risingpercentage of personal income that goes for taxeshas placed the typical family under increasingeconomic pressure.Indirect Cost RecoveryPerhaps the least understood part of the budgetis indirect cost recovery on government grants andcontracts. Some of the misunderstandings maystem from the conventional treatment of this itemin the University's accounts. It has traditionallybeen treated as unrestricted income. Although, asa technical accounting matter, such treatment maybe justified because a dollar received from the government for indirect cost recovery may technically be spent on anything, the simple economic fact isthat indirect cost recovery is simply a reimbursement for already incurred costs. No sum can beobtained for indirect cost recovery without a demonstration that an equal amount has been expended in support of government grants and contracts. The notion that, when a new governmentgrant is obtained, the portion of the monies received under the rubric of indirect cost recoverycan be used to support the general expendituresof the University, beyond that portion devoted tothe support of government grants and contracts,is a misconception.9The proposal occasionally made that a portionof indirect cost receipts on a particular grantshould be passed through to the investigator obtaining the grant to support his research directlyis thus based on the erroneous notion that indirectcost recovery constitutes a profit rather than reimbursement for expenses actually incurred. Anysuch "pass through" would simply constitute afurther grant to the investigator out of Universityunrestricted funds. While the University does useunrestricted funds in substantial amounts to sup-9. If some faculty member were to be awarded a new $1 million research grant with, let us say, $300,000 thereof earmarkedfor indirect cost recovery (and assuming no additional indirectsupport by the University were required), the University wouldnot be any better able to support instruction and nongovernmentresearch. The $300,000 would indeed benefit other investigatorsworking under government research grants. It would do so byreducing the indirect cost rate on their grants in that year orfuture years. But that benefit would not extend to faculty andstudents outside the government-supported circle.222TABLE V: INDIRECT COST RECOVERYRATE (Salaries and Wages Base)Actual FixedYear Percentage PercentageRate Rate1970-71 57.9% 47.9%1971-72 58.2 51.01972-73 60.9 53.61973-74 66.6 56.01974-75 67.5 67.01975-76 69.3 67.01976-77 71.4 72.01977-78 72.9 72.01978-79 79.4 74.01979-80 * 76.01980-81 * 90.0*The actual rate not available yet for these years.port research, any additional use should plainlyrecognize that such research expenditures compete with faculty salaries, student aid, and othergeneral expenditures and are not the enjoymentof a profit derived from the investigator's grant.From the point of view of investigators, andparticularly those who are supported by the National Science Foundation which requires indirectcost recovery to be paid out of the grant itself, thefact that recovery is merely reimbursement foractually incurred costs rather than income doesnot make it seem any less a burden. The fundamental problem is not, however, indirect cost recovery. The facts are that over the past decadegovernment research funds for basic researchhave not kept pace with inflation and that availablefunds have been spread over an increased numberof institutions. The adjustment to the change ingovernment funding patterns and policies is difficult. The new Fund for the Physical Sciences hasbeen created to meet some of the resulting specialneeds of the physical sciences, especially the needfor flexible funds for laboratory start-up costs ofnew faculty members.The most troublesome aspect of indirect costrecovery at all universities has been its tendencyto grow as a percentage of wages and salaries paidby grants. Table V shows the extent to which theactual rate at the University of Chicago rose inthe 1970s. The fixed rate, which is the rate onwhich University receipts are calculated in anygiven year (by, for example, charges against NSFgrants), has also risen. The fixed rate is negotiatedwith government auditors at or before the beginning of each fiscal year. Because it must be fixed in advance of knowing what the actual rate forthat fiscal year will turn out to be, the fixed ratehas tended to lag behind the actual rate.10Receipts from indirect cost recovery, measuredin nominal terms, have risen steadily in the 1970s.Since higher receipts necessarily reflect highercosts, an important question is why costs haverisen more rapidly than salaries and wages supported by government grants, as reflected in thesteadily higher indirect cost percentages. As TableVI shows, indirect cost recovery adjusted for inflation increased very little in the 1970s and actually fell in the last few years. Increasing unitenergy costs for research buildings have been amajor factor in determining indirect costs attributable to research. Because of the special needsof laboratories, the energy costs of research buildings often greatly exceed those of other space.Energy costs in 1978-79 in Kovler and Searle, forexample, were $2.88 and $2.61 per square foot,respectively. Comparable figures for the Regen-stein Library and Cobb Hall were $0.73 and$0.40. »The increase in the indirect cost recovery rateduring the 1970s reflects what has been happeningto the salaries and wages base. For whatever reason, the salaries and wages base has not increasedat the same rate as total government researchgrants. In the three years from 1975-76 to 1978-79salaries and wages under government grants andcontracts grew only 13 percent while other expenditures under those grants and contracts increased by 29 percent. One obvious reason is that10. The fixed rate for any given year is established at theoutset of the year based on an estimate of indirect costs ofresearch expenditures compared to other activities in the University. Carryovers and adjustments based on the actual experience of past years are taken into account in setting the fixedrate, which is determined in negotiations with government auditors.1 1 . Energy costs alone account for more than ten of the ninetypoints in the current cost recovery rate. They are part of acategory known as Operation and Maintenance of Physical Plant.The components and their contribution to the ninety points are:Indirect Departmental Administration 29.6Operation and Maintenance of Physical Plant 28.4General Administration and General Expenses 11.3Library Expenses 8.3Student Services 3.5Building Use Charges 3.1Equipment Use Charges 3.0Government Contracts Administration 2.4Under-distribution of Fringe Benefits 0.490.0Additional information on the calculation of the indirect costrecovery rate is available in the Report of the Ad Hoc Committeeon Government Funding of Research and Education, The University of Chicago Record, Volume XIV, Number 4, pp. Ill,130-131, 147 (October 10, 1980).223TABLE VI: INDIRECT COST RECOVERYREVENUESYear Nominal Adjusted forInflation1970-71 $ 7,417,719 $ 7,417,7191971-72 7,606,896 7,349,6581972-73 8,904,722 8,252,7541973-74 9,476,177 8,044,2931974-75 10,656,787 8,159,8681975-76 12,764,314 9,136,9461976-77 14,224,050 9,617,3431977-78 15,874,970 10,047,4491978-79 15,747,851 9,097,5451979-80 16,933,453 8,630,710faculty salaries have not grown at the same rateas inflation. Another factor may be the hesitancyof some funding agencies and program officers toinclude faculty salaries in research grants, therebyreducing one component of the salaries and wagesbase. Whether the change from a salaries andwages base to a ''modified total direct" base, nowmandated by the Office of Management and Budget Regulation A-21, will have an effect on thebehavior of the percentage applicable to that newbase is unclear.12One question that is often asked is whether theindirect cost rate at the University of Chicago ishigher than the rate at other universities. Thatquestion is difficult to answer because most otheruniversities are already on a modified total directbase. Moreover, there are special differences between universities that account for differences inrates that would have to be taken into account indrawing any detailed inferences as to the significance of the rate. Nevertheless, even with theunusual increase in the rate this year, the equivalent rate of 53 percent on a modified total directbasis is certainly not out of line with the rate atother major private universities. The modified total direct rate for 1980-81 at Princeton is 64 percent, at Stanford 58 percent, at Yale 55 percent,and at Columbia it is 54 percent but will rise in1981-82 to 67.6 percent.1312. The percentage will necessarily be lower than at presentbecause the base includes a larger portion of total contract expenditures, and it may also be true that the percentage will notgrow at the same rate. The largest determinant of the percentagein the future will not, however, be the nature of the base butrather what happens to expenses allocable to research.13. Some more decentralized universities have separate ratesfor different areas. For example, at Harvard the modified totaldirect rate for 1980-81 ranges from 49 to 120 percent dependingupon the area. GiftsGifts are reflected in the budget in several ways.Endowment gifts reach the budget only throughthe annual 5 percent TRIP payout. Other gifts mayor may not be fully expendable in a given year.Some gifts are by their terms expendable only overa period of years.From a budgetary point of view, unrestricted,currently expendable gifts are important. Suchgifts, which constitute only about one-tenth of total "fund-raising progress" in any year,14 are ofgreat utility because they can be used for any purpose.In the early years of the decade, budget projections for current unrestricted gifts proved overlyoptimistic. Moreover, current unrestricted giftsactually received fell from $4.0 million in 1970-71to a low of $3.1 million in 1972-73 and 1974-75.Since then there has been some growth in thatfigure, reaching $5.4 million in 1979-80. 15 Morerecently, budgeting for unrestricted gifts has become more realistic, and budget targets for currentunrestricted gifts are now being met. Nevertheless, current unrestricted gifts have not grown asa percentage of the unrestricted budget. They havefluctuated in a narrow band between 5.8 and 8.7percent throughout the decade and in 1979-80 provided 6.8 percent of unrestricted revenues.Other RevenuesAmong a variety of other sources of unrestrictedrevenues, the most important in budget-making inrecent years has been income from temporary investments. Often referred to as "cash float," thisitem, which represents investment of the workingcapital of the University in short-term securities,has become of particular budgetary significancein the past few years because of high nominal interest rates and the extreme volatility of thoserates. By 1979-80 this income, which had fluctuated between $1.0 and $2.0 million in the firsthalf of the decade, exceeded $3.0 million for thefirst time. A major factor in reducing the actualdeficit $1.0 million below the planned deficit for14. Fund-raising progress in 1979-80 totaled $40.5 million.Fund-raising progress is measured not by cash received butrather by total commitments, including gifts, grants, life incometrusts and pledges. Commitments to give more than five yearsin the future are, however, excluded.15. Because this budgetary figure includes transfers from theBaptist Theological Union, which has for many decades furnished a major portion of the support of the Divinity School,such B.T.U. transfers, as well as gifts for academic auxiliaryenterprises, are not included in the unrestricted gift line in thebudget ($4.5 million in 1980-81). Recent achievements and futuregoals in University development activities are the subject of areport by Jonathan F. Fanton, Vice-President for Academic Resources and Institutional Planning, in this issue.2241980-81 was a $0.5 million increase in cash floatincome above the budget projection.Only part of the increase is attributable to higherinterest rates. The amount of cash available forinvestment has been another factor. Indeed, highinterest rates have placed a special premium onimproved cash management, and the Universityis taking a hard look at its cash management practices in an effort to maximize income from thissource. Earlier receipt of funds, prompter depositof checks, speedier investment of demand depositbalances, and similar measures help to increasethe size of the academic program that can be supported. Nevertheless, funds available for investment have long been as notoriously volatile anitem as interest rates have recently become.B. ExpendituresIn this review of the 1970s special attention hasbeen given to revenues both because many readersof this report may be less familiar with the University's revenues than with its expenditures andbecause important changes occurred in the 1970sin the composition of revenues. Nevertheless, significant changes have also been experienced onthe expenditure side of the budget.Instruction and ResearchAlthough budgeting tends to focus on the unrestricted portion of the budget, a large and increasing portion of the central instruction and researchfunctions of the University are supported by restricted funds. Between 1970-71 and 1979-80 thecombined restricted and unrestricted budget expenditures for instruction and research increasedrather steadily from $73.8 million to $122.6 million. Yet in 1970-71 unrestricted funds supportedabout 39 percent and in 1979-80 only about 33percent of the total.Some research supported by the restricted budget could be, and certainly would have to be, dispensed with if restricted funds should dry up. Yetone cannot escape the fact that restricted fundsare necessary for the maintenance of core programs and the support of the regular faculty. Theunrestricted resources of the University, even augmented by endowed professorship funds, are simply inadequate to support the core enterprise ofthe University. Only about 73 percent of facultysalaries are supported by unrestricted funds. Endowed chairs and other restricted endowment provide less than 5 percent. The remainder of facultycompensation must come from current restrictedgifts, from government and foundation grants andcontracts and, in the clinical departments of theBiological Sciences Division, from professional fees. These sources of restricted income availablefor faculty salary support must, therefore, continue to grow substantially if the University is tobe able to maintain existing programs and if facultysalaries are to increase at even the rate of inflation.LibraryExpenditures in the library from restricted andunrestricted sources grew steadily from $3.9 million in 1970-71 to $5.8 million in 1977-78. In amidyear adjustment in 1978-79, the library budgetwas increased by about $1.0 million by an allocation out of unrestricted funds with the expresscondition that the bulk of added funds be used forbook purchases. Such purchases had suffered inthe general inflation of the 1970s. In 1979-80 library expenditures, now on a new and higher base,increased to $7.3 million.Support of the library will remain a matter ofcentral concern, both because of the library's central importance and because only about 10 percentof library expenditures are supported by restrictedfunds and even in that limited category endowment funds are small. Thus, the great bulk of fundsnecessary to support the library must be raisedanew each year.Current Expenditures on Physical PropertiesAlthough they remain a comparatively small portion of total academic expenditures, current expenditures on physical properties have steadilyincreased in importance. Out of total academicexpenditures from both the restricted and unrestricted budget of $104.6 million in 1970-71, physical properties accounted for $8.3 million orroughly 8.0 percent. By 1979-80 they were claiming $18.0 million, or 10.5 percent of total academicexpenditures of $170.8 million.Two principal factors in the increasing percentage can be identified. The first is the higherunit cost of energy which, despite the greater efficiency in energy consumption achieved, nevertheless accounts for close to half of the total. Thesecond factor is the considerably larger physicalplant in place at the end of the 1970s than at thebeginning. More than one million square feet ofspace were added on the campus during the decade.1616. The tendency of the University to grow physically whilethe number of faculty and students has declined is an issue thatrequires attention. Plant size did not increase in 1979-80 nor willit increase this year. The energy costs of increasing space requirements have been only one reason for an increasing emphasisin the University's physical planning on renovation of existingspace rather than construction of new space. The relevance ofspending on repair and renovation to financial equilibrium isdiscussed on page 228.22500t oooooooooooooooo©^ ©^ ©^ ©^ ©^ ©^ ©^ ©CNt^O©"-^-^©©"©"^oor^vocN«^NO«or^^ON»o©^cN\0©^rn-h vO Tf OO -h ffi' >o hV5- ©8ONONCOoo"00*/* $89,409,000 1,073,000 10,000 350,000 4,848,000 ogivc;On$5,083,500 125,127,000 1,506,500 ©©©^>^m ©©©©©©©©©©©©©^ 00^ ©^ »o ©^ ©^©" vo" «/-T rn ©" vo"© r^ r- m © ooON CN "sf on cn rncn ©" i-* m" tj-"V5- ©©rnCNrnrnV5- oooooooooo-o©©©©©©©©,©^ ©^ ©^ ©^ ©^ ©^ ©^ ©^in" i-* */¦{" vo" ^ oo" oo" oo"^oo^^rHoo>n"sT «o °o c^ Os rn vo^ onf^ vo" rn vo" rn <o >om *-« g©^cn"ONas © © © ©© © © ©©^ ©^ ©^ ©^rn cn ©" 1 rlcm m i-h cnrn r^ r^©" ^-"00 ©©ooor^«o00V5- © © ©© © ©©^ ©^ ©^CN oo" ©"OO CN Tj"oo^ »o «o^-" ^O" ^h"©V5- ©©"»/->ONCN ©©©©©©©©©©©©©^ ©^ ©^ ^ ©^ ON^©" ©" >0 ©" ©" ON© © r^ »o vo ^t»o ^t rn oo N xCN ON »-T CN rn ©©©^«o"mCNom oooI0073•caolmQ*acns73fia>& 1 8.a a < kll Isil£} cn .S cd ^_^2 53 is 73 1373 ^3 r? — e tf Ofi G ,2 T3 .S w '33 rt > 5 E c 3M O cw £ cd g "^J cd5 2 ^g '^ 2 ° ,rt cO 2 5 2 ao> u53^ s73 ^ a> +3WO en ** cd•= 1 s 1 1 I£ J3 fe "O ^ 73 1303 0>•cS-a b2^ o u1 ¦ u Z< <u-§ §^ +-» 3 OJU (« " (D'S '5b i2 P^8 ^ <» « cd^ £ x X e2 c.203oc» 3<L> 73.a w« O hn e M da * ffl g £ g08 O oo Z3 c*-" So cd1 S ig 3 3 5 'S S0 hiS73 ^^g Qa. -« UW .TJ PQa> ,,o °S3© ©u &1 © © © © ©© © © © ©©^ ©^ ©^ ©^ ©^©" ©" on" »o ©"«0 »0 '-h © ©r^ ©^ « o\ <o^f oo" 00" 00" rj-" Is-*"00 © © ©© © ©o ©^ ©^© ©" ©"t*- vO vOrn oo^ ^tt"^ m" tt g©^©"ONVO^ON^3- © © © © ©© © © © ©<o ©^ ©^ ©^ ©^m © ^-T o vo"«£ m ^- tj- i-hOr h in m h<0 CN *-<"m ©©©"ooCNO ©©©©©©©©©©©©©^ oo ©^ »o ©^ ©^© \D *n cn c£ T—<© on t^ m © voOv rf tt on rn mCN © ^ m" rr ©©envo"VOTfrnm oo00©c*rOj1 © © © © ©© © © © ©©^ ©^ ©^ ©^ ©^©" "O CN »o" ©"© <n r^- oo ©On rn «o rn -hon oo" r^ vo" tj-"m '-h g©^<N00r^VO" © © ©© © ©©^ ©^ ©^CN «0 ©"*-< © r-»o ^ ^l> ON ON^f CN ©©©^r^00i>oo © © © © ©© © © © ©©^ ©^ ©^ ©^ ©^vo" m" ^t oo" m"on ^-< ^-h m vo^ h h w w^r ^ _TV5- g©CNONoo" ©©©©©©© © © © © ©©^ ON^ ©^ CN ©^ ON© m" »o r^" ©" m"vo^ cn rn oo rn oocn on" t-h" cn m" ©©©^©"ON©"m ooo73jjjsI C/3cgIs £? «o g w ofi 8 1 § -* o -.< cnCfi0073§= 1 §s S wto ^ ^HIIf L!•§ >l & S a•£- fiI •§^ « § 1m e O f3*S C O >3na o c ca o — 5"^1 eo ^ 3 *- «<u e cd c ^i f 1 ? i •§1 1| 1 1 <g 3 C,ocSocn 3<D 73.a w1 » si :sO- 73 3 c tja ^ * § 2 §W -g Id U ^ gfr"8*|S.§8es o oo ^3 «h 33 cd1 1 1 § $ § 1 -a| 8 || g ; B .3 |>MSud.SpQ g fi= 2o ©u 6TABLE VIII: TUITION IN CURRENT DOLLARS AND DEFLATED BY THECONSUMER PRICE INDEX, 1970-71 THROUGH 1980-81(1970-71 Dollars)GraduateYear College 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 2,312 3,630 2,454 4,050 2,738 4,050 2,7381977-78 3,720 2,354 3,930 2,487 4,425 2,801 4,350 2,7531978-79 4,095 2,366 4,305 2,487 4,875 2,816 4,800 2,7731979-80 4,500 2,294 4,740 2,416 5,555 2,831 5,460 2,7831980-81* 5,100 2,311 5,355 2,426 6,300 2,854 6,192 2,806*Assumes 1980-81 Consumer Price Index will be 12.5 percent above 1979-80.II. The 1980-81 BudgetBudgeting for 1980-81 took place within the context of a four-year plan for achieving financialequilibrium at the University. This plan recognized that deficits in current unrestricted budgetswould be necessary for several years if financialequilibrium were to be achieved in a way that didnot interfere with a rational and appropriate process of determining academic priorities. The planrecognizes, to take several examples, that duringthe transition to financial equilibrium we must continue to hire younger faculty at a rate assuring anintellectually vigorous faculty in the future, to improve the support of the library, and to repair andrenovate physical facilities. Under this four-yearplan, planned deficits of $3,755 million in 1979-80,$3.5 million in 1980-81 and $2.0 million in 1981-82were to be permitted, and budget balance in1982-83 was projected.The budget outcome for 1979-80 was considerably more favorable than anticipated. The actualdeficit in unrestricted funds was $2.75 million.However, the factors that caused the deficit to belower than anticipated cannot be expected to recur. High interest rates in 1979-80 have alreadybeen mentioned.The consolidated budget for 1980-81 is compared with that for 1979-80 in Table VII. It provides for a growth of expenditures from $309.0million to $349.1 million, an increase of 13.0 percent. Unrestricted expenditures will grow from$80.0 million to $88.4 million, an increase of 10.5percent. The components are of greater importance to the readers of this memorandum than the totals and, therefore, some of the highlights warrant consideration.Revenue SourcesSubstantial increases in tuition were necessaryagain this year. The increase was 13.0 percent inthe divisions and 13.3 percent in the College. (SeeTable VIII.) Because enrollment is lower thisyear,17 the projected student fee income for theunrestricted budget increases by only 12.0 percent, from $39.9 million to $44.7 million.As a result of the TRIP formula, reviewedabove, endowment revenues in the unrestrictedbudget will fall 3.4 percent, from $8.32 million to$8.05 million. Restricted budget revenues from thesame source will also fall, though only 1 .9 percent,from $7.51 million to $7.37 million. The greaterdecrease in receipts from the unrestricted endowment reflects primarily the previously mentionedwithdrawals from unrestricted funds functioningas endowment to meet budget deficits.Receipts from indirect cost recovery are budgeted to grow 15.4 percent to $18.9 million. Theunusual size of the increase is a result of the recovery of indirect costs from prior years generatedby the increase this year in the indirect cost recovery rate described above. In view of the factthat the increase in the recovery rate this yearinvolved not merely a projected increase in indi-17. Quadrangles enrollment for the autumn quarter 1980 wasestimated, as of the end of the third week, at 7,758 comparedto 7,889 in the same quarter of 1979. All of the decrease wasexperienced in the graduate divisions, with enrollment in theCollege and the professional schools up slightly.227rect costs but also a one-year catch-up on priorunderrecoveries, this rate of increase in receiptscannot be expected in the future. Governmentgrants and contracts, it should be noted, are budgeted to increase 9.8 percent to $53.9 million.ExpendituresThe central functions of the University are instruction and research. Of the $184.1 million academicbudget, $130.9 million will be expended in 1980-81on those two functions. Here the distinction between restricted and unrestricted sources is ofconsiderable interest. Nearly all restricted academic expenditures — $89.4 million of $95.7 million — are for instruction and research. In contrast,the unrestricted budget, which must provide mostof the support for the library, student services,operation and maintenance of plant, and the like,can devote only $41.5 million of $88.4 million forinstruction and research.Budgeted student aid will rise from $10.7 millionin 1979-80 to $12.2 million in 1980-81. Almost allof the increase will come from the unrestrictedbudget. A major experiment was made this yearin increasing the amount of unrestricted studentaid by 23.3 percent. A substantial portion of theincrease was for graduate students in the divisionsand was aimed at arresting the decline in graduateenrollment and at enhancing the University's competitive position in attracting the highest qualitystudents. Studies are under way to assess the relationship of investment in financial aid to thenumber and quality of graduate students. It ishoped that the additional aid will stimulate morevigorous recruitment efforts by the departmentsand give tangible evidence of the University's determination to maintain its traditional commitmentto graduate education.Library expenditures, from restricted and unrestricted sources combined, will increase from$7.2 to $8.0 million. This 1 1 percent increase, coupled with an understanding that book purchaseswill increase not less than 12 percent, should enable the library to resume a reasonable rate ofpurchases of monographs. However, in view ofthe increasing number of scholarly serials andmonographs published and rapidly rising unit costs(especially for foreign publications), it will be difficult for the library to return to the relative leveland range of acquisitions enjoyed in the 1960s.III. Financial EquilibriumThe goal of the previously mentioned four-yearprogram endorsed by the trustees is financial equilibrium by the 1982-83 budget year. Financial equilibrium means more than a balanced budget,though such a balance is a precondition of achieving that goal. It also means equilibrium in theUniversity as a whole. For example, a universitycan be out of financial equilibrium even though itsoperating budget is in balance if it is spending toomuch from endowment to be able to maintain thereal income from endowment in the future. Thepreviously discussed TRIP formula is designed toprevent disequilibrium from that source. Similarly,a failure to repair and renovate the physical plantof a university at a rate adequate to maintain itsreal value over time can be a source of disequilibrium even though the operating budget is balanced.Studies conducted by an outside consulting firmspecializing in advising major research universities showed that the University of Chicago, thoughdoing more to maintain its physical plant than mostuniversities, would have to increase spending inthis area to achieve financial equilibrium. Theproblem did not lie in the construction of newbuildings, for a number of new buildings have beenadded in the past decade, but rather in the repairand renovation of existing buildings. It was estimated that an increase in the annual rate of spending on existing physical plant on the order of $2.0million would be required to keep it at its presentlevel of usefulness. Failure to make such expenditures would merely put off the day of reckoning,resulting in much larger expenditures later. Thebudgetary situation did not permit an adjustmentof $2.0 million in the budget base in a single year,but an increase of $0.5 million in the rate of spending is included in the 1980-81 unrestricted budget.An overriding priority has been, and will remain, the maintaining of the quality of our facultyand indeed its enhancement. The quality of facultycannot easily be measured, but we know that inthe competitive world of higher education qualitycannot be maintained over a period of years unlessthe level of faculty compensation is appropriateto that goal. Among the criteria by which the adequacy of faculty compensation can be assessedare the trend of compensation measured in realterms over time and the comparison of facultycompensation here with that at comparable universities.The statistics confirm what every faculty member knows. Faculty salaries have not kept pacewith inflation. Indeed, as Table IX demonstrates,the high inflation rates of recent years, coupledwith the stringency of recent budgets, have accelerated the decline. In an effort to arrest andeven reverse this deplorable trend, the president228TABLE IX: AVERAGE FACULTY COMPENSATION BY RANK1 970-71 THConstantCurrent 1979-80Dollars Dollars(in thousands)Professor1970-71 $26.6 $52.21971-72 27.5 52.11972-73 28.8 52.41973-74 30.7 51.21974-75 31.9 47.91975-76 33.8 47.51976-77 35.1 46.61977-78 37.2 46.21978-79 39.9 45.21979-80 42.5 42.5AssociateProfessor1970-71 $18.5 $36.31971-72 19.2 36.41972-73 19.7 35.81973-74 20.8 34.71974-75 21.9 32.91975-76 23.4 32.91976-77 24.4 32.41977-78 25.5 31.71978-79 26.8 30.41979-80 28.4 28.4 ConstantCurrent 1979-80Dollars Dollars(in thousands)AssistantProfessor1970-71 $14.4 $28.21971-72 15.2 28.81972-73 15.6 28.41973-74 16.6 27.71974-75 17.3 26.01975-76 18.3 25.71976-77 19.7 26.11977-78 20.7 25.71978-79 21.7 24.61979-80 23.7 23.7Instructor1970-71 $11.7 $22.91971-72 11.5 21.81972-73 12.1 22.01973-74 13.3 22.21974-75 14.2 21.31975-76 15.6 21.91976-77 16.9 22.41977-78 17.9 22.21978-79 18.8 21.31979-80 19.9 19.9*Changes in average compensation should not be compared to changes in salaries since the fringe benefit rates have increasedover time. Compensation figures include fringe benefits.and the trustees took the bold step, in the face ofthe substantial deficits before us, of increasing faculty salaries for 1980-81 by the largest averagepercentage in the history of the University. Whenthis decision was taken in late 1979, it appearedthat for the first time in some years most salaryincreases would be at least equal to the rate ofinflation. Unfortunately, the acceleration of inflation to unprecedented levels in 1980 raises thequestion whether still further slippage in the reallevel of faculty compensation will not have to berecorded when this budget message is writtenagain next year. Nevertheless, we may hope thata return to small increases in real terms may soonbe achieved. Much depends, of course, on the rateof inflation in the economy. The financial equilibrium of universities depends upon equilibrium inthe economy.A comparison of compensation at the University of Chicago with that at several other univer sities, displayed in Table X, presents a somewhatmixed picture. At the assistant professor level, ourrelative position improved between 1978-79 and1979-80. These statistics go hand in hand with theview that our new junior appointments are secondto none in quality. However, some slippage in relative salaries occurred at the associate professorand professor levels. At the rank of professor wenevertheless remain ahead of all universities except Harvard and Stanford. The latter' s marginover us perceptibly widened. These are, of course,averages and do not take into account our willingness, within funds available, to compensateoutstanding faculty members in accordance withtheir accomplishments.Although it is unreasonable to expect the University to be ahead of every other university atevery rank, and although on balance we are probably ahead of every other university except Stanford if one averages across ranks, we must never-229UJ8 *H ZZ <UJ ccOccUJ £0. CO<Q UJ< t?•* COo CCUJ5^§3 o00UJ0.2 CCUJX r^o tOO X> -J aH < -)-JD ccUJ occXr-9>< UJ"- COICAGO ONATX mmm r-o 5U. 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I believe we cando so.If true equilibrium demands that faculty salariesrise at rates far in excess of those possible in the1970s, then we must keep other expenditures instrict control. The prices of some things we mustbuy are rising rapidly and hence steps must betaken to control our consumption of them. Energyis an illustration. The 1980-81 budget is based ona projected increase in electricity and natural gasprices of 15 and 19 percent, respectively. Althoughefforts and investments to improve energy conservation are beginning to pay off and despite thehigher projected prices, the budgeted increase inutilities in the unrestricted budget has consequently been kept to 9.0 percent for 1980-81.Electricity prices have, however, been rising evenmore rapidly than projected in recent months. Asof September, they were running about 35 percentover last year's prices. Moreover, consumptionthrough September was slightly ahead of lastyear.18The need for improved faculty compensationsquarely raises the issue of faculty size. It is notmerely an arithmetic proposition that faculty compensation is the product of faculty size and individual salary levels. Equally important, if notmore so, is the size of the staff of the University.Long-range budgeting, therefore, raises squarelythe appropriate size of the University of the 1980s.In view of the increased dependence on tuitionincome for the activities of the University and withreduced job opportunities for Ph.D.'s having ledto lower enrollments in some of the divisions,some reduction in the overall size of the University is a precondition to financial equilibrium. Wedo not accept the inevitability of further graduateenrollment decreases and we believe that throughactive recruitment and an effective financial aidpolicy they can be avoided. Nevertheless, theUniversity has not yet fully adjusted to thechanges that occurred in the 1970s. The declinein federal research expenditures in the early 1970sand their failure to grow in real terms more recently emphasize that we cannot expect to bebailed out by the government. Financial ^equilibrium seems certain if we do not adjust the sizeof the University to the past decline in the size ofour student body and to the all-too-apparent limitations on our resources.In attempting to achieve a modest reduction inthe overall size of the University, considerableemphasis has been placed on the reduction in thesize of the supporting staff. The Parkinsoniantendency of staff to grow has been resisted even in the face of greatly increased demands imposedon the University by, among other things, government regulation. A goal was established callingfor a reduction in the size of staff by 200 from the'October 1978 level. If one excludes the staff of theHospitals and Clinics, which has grown to servicea considerably increased patient load (and whichthereby pays for itself), then one may tentativelyconclude that the goal of a reduction of 200 hasbeen achieved.19 The measurement of the decreaseis, however, somewhat problematical. The full-time, nonhospital staff fell from 4,790 in October1978 to 4,510 in September 1980. However, thisdecrease of 280 has been partly offset by an increase of part-time staff of 106 (from 741 to 847).It will be necessary to analyze these figures moreclosely to be certain what is actually happening.When a final October count (which will includebeginning-of-quarter new hires) has been completed, we will be better able to judge whether thegoal has been achieved. Nevertheless, it can besaid with certainty that a considerable reductionin staff has occurred. Although that reduction insome particular instances may threaten efficiencyand may reduce amenities and assistance for faculty, one can hardly conclude that the overall quality of the University has been affected by the reduction in force. Nevertheless, the impact of staffreduction on the University is an important factorin view of the likelihood of some additional enrollment reductions in some areas in the courseof the 1980s. If those enrollment reductions occuror if they can be avoided only by a compensatingincrease in student aid from unrestricted sources,then some further shrinkage in the overall size ofthe University will be an unavoidable necessity.As the foregoing review illustrates, the widelyheld belief that staff grows while the facultyshrinks is wrong as far as staff growth is concerned. But it is also not entirely correct withrespect to the faculty. The decline in faculty sizethat was experienced earlier in the 1970s has beenarrested. In view of the indisputable need toachieve financial equilibrium and to arrest the decline in real terms of faculty compensation, a hardlook must be taken at faculty size and distribution.The size of the faculty declined from 1,167 in1970 to 1,066 in 1978. The size in 1979 and 198018. A report by William B. Cannon, Vice-President for Business and Finance, analyzing this year's energy consumption andthe University's energy conservation program in greater detailappears in this issue.19. Even with the hospital staff increase, the total number ofstaff in the University as a whole is no greater now than twoyears ago.231was virtually unchanged, namely, 1,062 and 1,065,respectively.20A close look at the changes between 1979 and1980 shows a considerable degree of movementin the composition of the faculty. A total of 109new appointments, more than 10 percent of thefaculty, were made during that one year. Ofcourse, a large proportion of the newcomers,forty-two to be exact, were instructors. But therewere forty-eight new assistant professors as wellas ten new appointments from outside at the associate professor and nine at the professor level.In addition to the forty-eight newly hired assistantprofessors, another twenty-four were promotedto the rank of assistant professor. This influx ofseventy-two new assistant professors is not an insignificant infusion of "new blood" at a time ofstringency in academic budgets. Moreover, at theassociate professor rank, there were, in additionto the ten new outside appointments, thirty-sixpromotions; in short, there were in 1980 a total offorty-six associate professors who had not beenin that rank at the University before. It was, in20. In discussing faculty size it is important to understand theway in which the faculty is counted for budget purposes. Othermethods of counting may be appropriate for other purposes, butthe dictates of the budget lead to the conclusion that facultymembers should be included in what is known as the "facultycount" only if they are actually on the academic budget (whetherrestricted or unrestricted funds are involved). Those facultymembers on leave of absence for two or more quarters duringthe academic year are not counted. Moreover, for comparability,all faculty counts are as of June in each particular year. Thefaculty count includes only professors, associate and assistantprofessors, and instructors. Other academic ranks such as lecturers and research associates are not included. For comparisonwith earlier years, the total, 1,065, given for 1980 has excludedfourteen Harper instructors. These fourteen instructors in former years had been Harper Fellows not included in the facultycount. fact, only at the full professor level that attritionwas experienced.The perception of a tightness in appointments,particularly in the arts and sciences faculty, nodoubt stems from the fact that the rate of appointments is somewhat lower on average than it wassome time ago, particularly in the 1960s whenrapid growth in faculty size occurred. But the difficulty arises largely from a decline in the numberof faculty members leaving the University. Thechange in the retirement laws as well as the agedistribution of the faculty suggest that relativelyfew faculty members will be leaving the Universityfor some years to come. This is especially the casein view of the well-established policy at this University to make tenure promotion decisions on themerits without regard to budgetary considerations.The balance among the various elements of thebudget is vital to the future of the University. Yetmost of the important decisions are not budgetdecisions as such. The question of the appropriatesize and distribution of the faculty is, for example,one that must be, and that is being, discussed ina much broader context. Certainly faculty willinevitably participate in faculty size decisions inthe appointments process. And decisions on faculty size cannot be taken apart from decisions affecting tuition, student aid, faculty compensation,and the like. Issues of this character are currentlybeing debated within the Faculty Advisory Committee and the Commission on Graduate Education.The resolution of these issues is vital to financialequilibrium. Nonetheless, it is not enough toachieve financial equilibrium. That goal must bepursued in a way that will further enhance thequality of the University.232REPORT ON FUWD-RASSING RESULTS IN 1979-80, PLANS FOR1980-81, AMD THE STRATEGY FOR THE 1980sDecemlbeff 1, 19$©introductionIn 1979-80 the reorganization of the University'sDevelopment Office was completed under theleadership of Director William R. Haden. Now atfull strength, the staff includes people with extensive professional experience who are committedto working for the University of Chicago in theperiod ahead. All goals of the University's Development Operating Plan for 1979-80 were metor exceeded.The Trustee Development Planning Committee,under the chairmanship of Charles Marshall,worked with the officers of the University to design the long-range fund-raising strategy describedbelow. That strategy calls for the University toraise about $275 million in new gifts and pledgesfrom private sources during this and the next fouryears. While at least two-thirds of that sum willbe necessary to maintain the quality of existingprograms and to achieve financial equilibrium,perhaps a third will be available for strengtheningthe central University.1979-8© Results on Fend-Ralsimg ProgressIn 1979-80 the University recorded $40.47 millionin fund-raising progress,1 7 percent more than thegoal of $37.65 million. This represents a growthof 32 percent over the 1978-79 results of $30.74million. Table I shows the sources of these monieswhich include all gifts to the University, restrictedand unrestricted, from private sources.Of the money raised, $4.1 million was used insupport of the University's unrestricted budget.The central alumni fund contributed $2.1 millionof that amount, a growth of 21 percent over lastyear. The increase in the level of participation continued as Table II reveals.Of particular significance in measuring lastyear's achievements is the extent to which manylarge gifts served the University's academic priorities. For example, the Joyce Foundation pledgeda million dollars in support of graduate educationat the University. This grant will help make possible significant increases in financial aid to graduate students from the University's unrestricted1. Fund-raising progress is a measure of new gifts, pledges,and irrevocable trusts. It is not a measure of cash income to theUniversity in a given year. Almost 90 percent of the fund-raisingprogress was in restricted funds. budget. The additional financial aid is aimed atattracting the very best quality of students to theUniversity and at stemming the rate of decline inthe enrollment in the graduate divisions. IBM andStandard Oil of Indiana made gifts of $1,000,000and $900,000 respectively in support of the Graduate School of Business and the Fund for the Physical Sciences. That fund is designed to providefunds for laboratory set-up costs associated withthe recruitment of new faculty and "seed money"for fresh research initiatives that do not fall withinexisting categorical programs of government agencies such as the N.S.F. Other gifts to the GraduateSchool of Business included a pledge of $1.2 million from the Charles Kellstadt Foundation to establish a chair in marketing and a $150,000 endowment from Sears Roebuck for a research fundassociated with the professorship.In 1979-80 the Medical Center Campaign secured several significant "leadership gifts." Bernard A. Mitchell pledged $14.5 million dollars toward the campaign (of which $2.5 million has beenreceived and counted in the fund-raising progressfigures for 1979-80).Other selected large gifts affecting importantprograms within the University's current prioritiesinclude:Strengthened Undergraduate Education: a four-year grant of $400,000 from the Pew MemorialTrust to help strengthen the College's growingconcentration program in economics; a $500,000pledge of support from Mr. Max F. Roy for endowment of the Viola Bower Scholarship Fund;Graduate Student Aid: a renewed grant of $90,000for aid to dissertation-level students in the humanities from the Mrs. Giles Whiting Foundationand a renewed grant of $200,000 for doctoral andpostdoctoral researchers in the Division of thePhysical Sciences from the Robert R. McCormickCharitable Trust;The Library: in addition to completing the successful matching of a $1 million challenge gift tothe library, which brought forty-five new bookfunds to the library's acquisitions program, theUniversity received Ludwig Rosenberger's25,000-volume collection of Judaica;Research in the Social Sciences: a grant of$450,000 from the Alfred P. Sloan Foundation asthe University's portion of a joint postdoctoraltraining program in cognitive studies between theUniversity and the University of Michigan over233TABLE I: CUMULATIVE FUND-RAISING PROGRESS FOR FISCAL YEAR 1979-80 THROUGH JUNE 30, 1980Source 1979-80 Goal 1979-^80Achievement Variance Percent ofGoalAchievedFoundationsCorporationsMajor Gifts/DeferredAnnual FundsCentralProfessionalOther $ 7,000,0006,500,00014,500,0002,100,0001,285,0006,265,000 $ 8,458,4787,045,27314,599,1622,102,2501,397,6726,869,147 ( + )1, 458,478( + ) 545,273( + ) 99,162( + ) 2,250( + ) 112,672( + ) 604,147 121%108100100108109Total $37,650,000 $40,471,982 ( + )2,821,982 107%the next three years; several grants totaling $630,800from the Spencer Foundation to fund a number ofindependent studies in cognitive science, education, and behavioral development in children;Endowment and Capital Improvements in theGraduate School of Business: a gift of $250,000from Conoco, Inc., to assist in the revitalizationof the interior of Walker Museum, which will become a wing of the school; the creation of theJoseph W. Sullivan III Scholarship Fund in theschool, through gifts of $100,000 from the ChicagoBoard Options Exchange and a number of itsmembers; gifts of $250,000 from IBM, of $200,000from the Amoco Foundation, and others to establish a variety of research funds in fields such asmarketing, futures markets, and applied mathematics;The "Renewal" Campaign for the Medical Center: in addition to $2.5 million as the first installment on the $14.5 million Mitchell gift, the MedicalCenter Campaign received large gifts of $1 millionfrom the Mother's Aid of Chicago Lying-in Hospital and $250,000 from the Goldblatt BrothersEmployees Nathan Goldblatt Cancer ResearchFund;Endowed Professorships in the Law School: University Trustee William B. Graham added a newprofessorship to the school's twelve existing endowed chairs.TABLE II: CENTRAL ANNUAL FUNDPARTIC PATIONNumberofDonors PercentageofGrowth PercentageofCumulativeGrowth1977-781978-791979-80 10,58414,67416,444 38.6%12.1 38.6%55.4 1980-81 Fund-Raising PlansThe University expects to receive $45.5 millionin new gifts, pledges, and irrevocable trusts during1980-81. This represents a 12 percent increaseover fund-raising progress achieved last year. Table III compares 1980-81 goals with last year'sresults by source.The following observations can be made aboutthe 1980-81 goals:— $45.5 million will represent the largest amountof money ever raised in a single year at the University.—As of December 1, 1980, $23.75 million (52.2percent of the goal) had been raised.— The Medical Center Campaign and the advanced gift phase2 of the Graduate School of Business Campaign are making important contributions to this goal.— 39.6 percent of the funds to be raised is projected to come as major gifts from individuals. Wehope to build substantially on this 5.7 percentgrowth since 1977-78. Gifts from individuals havebeen Chicago's chief weakness in the past relativeto the performance of other major private researchuniversities.— $14 million is projected to come from gifts of$50,000 or more from individuals to the major giftprogram. This compares with $8.9 million in1977-78, an increase of 57.1 percent, and reflectsthe emphasis on raising large gifts from individuals.— Fund raising from all sources except privatefoundations is expected to increase. The foundation program remains essentially stable in view ofan exceptional year in 1979-80.2. In any large capital campaign, it is customary to securemajor leadership gifts in advance of the public announcementof the campaign. These gifts may account for a total of anywherefrom a quarter to a third of the goal for the campaign.234TABLE ES9: 1980-81 FUND-RAiSIWG GOALS COMPARED WITH 1979-80ACHIEVEMENT BY SOURCEl§7f-» 1980-ttL Increase/ VarianceS©iirce Total Goal ©©crease JBcrceiitFoundations $ 8,458,478 $ 8,300,000 (-) 158,478 (-> i%Corporations 7,045,273 7,750,000 ( + ) 704,727 (+)10Major/Deferred Gifts 14,599,162 18,000,000 ( + ) 3,400,838 (+)23Annual GivingCentral Annual Fund 2,102,250 2,500,000 ( + ) 397,750 (+)18Graduate School ofBusiness 558,268 654,000 ( + ) 95,732 (+)17Law School 565,475 640,000 ( + ) 74,525 (+)13Biological SciencesDivision 192,513 200,000 (+) 7,487 (+)4School of Social Service Administration 81,415 93,000 ( + ) 11,585 (+)14Other 6,869,147 7,363,000 ( + ) 493,853 ( + )7Total $4»54715§82 w§5§§§5§§§ (+) 5,i2IMMS (+)12%i StrategyDuring the past year the trustees and officers ofthe University established the framework for theUniversity's long-range fund-raising strategy.Studies were done assessing future fund-raisingcapacity. Those studies were then integrated withthe financial plan for the next five years and witha judgement about the needs of essential areas ofthe University that require strengthening. The keypoints from these studies are:— $275 million in new gifts and pledges from private sources over the next five years representsan ambitious, but we think realistic, goal. TableIV shows the recent growth in fund-raising progress.— At least two-thirds of that amount is necessaryto maintain the quality of existing programs andto achieve financial equilibrium. Perhaps as muchas one-third will be available to strengthen thecentral core of the University through applicationto faculty compensation, scholarships and fellow-1ABLE IV: GROWTH IN FtJWO-RAiSINGPROGRESS: 1977-18 THROUGH 1980-81Al- live(in Jreffceiit Percentmafioms) Imcrease Unerase1977-78 $26.29 — —1978-79 30.74 16.9% 16.9%1979-80 40.47 31.6 53.91980-81(goal) 45.5 12.4 73.1 ships, the library, a fund for the sciences, etc.— About 40 percent of money raised from privatesources will come as large gifts from individuals.— In light of recent experience it is thought thata large University-wide campaign for $275 millionis not the most sensible way to organize the University's fund-raising efforts. Rather a series ofspecial-purpose campaigns, perhaps four to six ata time, aimed at particular donors, would represent a stronger appeal.— A campaign for the Medical Center ($35 milliongoal) has already raised $22.6 million. A campaignfor the Graduate School of Business (tentativegoal: $18.5 million) is in the advanced gift stage;a campaign for the Law School is the subject ofa feasiblity study; a campaign for the Colege anddivisions (tentative goal: $80 million) is in the planning phase.— In addition to these campaigns, whose goalsmay total about $150 million, fund raising for ongoing programs of education and research willcontinue.The planning process for the campaign for theCoiege and divisions has involved consultationwith the deans of the divisions and the College,the chairmen of the departments, and the Committee of the Council. From these conversationshas emerged clear support for the proposed campaign which will focus on maintaining andstrengthening the quality of the central core of theUniversity.lonatkam F. FantonVice-President for Academic Resources andInstitutional Planning235REPORT ON ENERGY CONSUMPTION AND COSTDecember 11, 1980SummaryThe University used a lot less energy but paida lot more for it in 1979-80. As a result its totalbill increased over 1978-79 by $1,091,000 to$10,601,000 or by 11.5 percent. However, only17,477,000 therms were actually consumed — morethan 6 percent below the previous year. Our calculations show that much more than the cooperation of the weather was involved in this favorableconsumption outcome — not the least of which wasthe continuing cooperation and sensitivity to theimportance of energy conservation of those on thecampus.Thus fiscal year 1979-80 saw a substantial reduction in consumption due to conservation andtemperate weather, especially last summer. Thesedid not, however, fully offset price increases. Thisis to say that past trends continued. But what maybe more significant is that there is nothing in thepast year to indicate a betterment of the University's budget position in the future — no indicationthat the rate of price increases will be reduced(which is the best that probably can be hoped for).In fact, the full impact of the phased removal ofcontrols over natural gas prices arranged by thegovernment in 1978 has not yet been felt. Electricity prices for the second half of the last fiscalyear and for three months into this fiscal year havesurged ahead of prior year rate of increases.As prices show this unwanted growth stability,there are suggestions that the stepping up of conservation to offset price increases will becomemore difficult. We are reaching the limits of thethings that are easy to do (for example, lower-wattage lighting, lower temperatures in the winter,higher in the summer, classroom timers) — the"quick fix" things. And this year also seems tobe an in-between one in that various major capitalconservation improvements have not yet begunto bite fully.Major future gains appear to lie along twofronts:1 . Substantial and costly capital improvements(over $1 million for the immediate future) andchanges in building usage and processes, for example, storm windows, insulation, computer monitoring and control of H VAC (heating, ventilating,air conditioning) systems, repair and replacementof the same, general retrofitting, cutting off ven tilation during nighttime hours, and changing thehours and patterns of usage of particular buildings.It is a pleasure to report that the Universityreceived $900,000 in government grants to applyto capital improvements for energy conservation.To date the alteration of usage has been significant but limited (and carried out only after fullconsultation with building occupants). However,as the utilities budget pressures continue to growand if other conservation actions do not take upenough of the slack, undoubtedly we will have toexamine the schedule of usage of additional buildings. The schedule of operation of two researchbuildings (Cummings and Hinds) has been alteredby shutting down ventilation during the nighttime.As far as can be told, such action has not hampered research. The Christmas interim policy ofshutting down whatever buildings we can duringthat period by moving occupants to other buildingsis another step. Still others may have to be explored — such as consolidation of classes in certainbuildings both in summer and winter and reducingthe hours some buildings are open. Such steps (aswell as a number of others) have been or will bethe subject of discussion with the Faculty-StudentEnergy Committee under the chairmanship ofR. Stephen Berry of the Chemistry Department.2. Continuing campus-wide effort to encourageeveryone to practice conservation by turning offlights, typewriters, copying machines, by settingand keeping office and area thermostats withinheating and air conditioning policy limits, etc. Wecannot prove it arithmetically, but our experienceconvinces us that the aggregation of individualactions could cut consumption by 10 to 15 percent. A 10 percent reduction below the last fiscalyear's level would have meant about a $900,000savings.We will continue to follow the approach of concentrating conservation efforts on the thirty buildings (other than the hospitals) that consume morethan half the campus energy. The theory is thatpriority attention to such major users will pay offfaster than trying to pay equal attention to allusers. But after several years of doing so we arenow in a position to pay more attention to smallerusers and will begin to do so.We wish to stress the need for an extra conservation effort during the next six months. Our projections through November indicate an unrestricted energy budget deficit of over $500,000. We236have a chance of holding to our therm target of17,105,000 therms, but electricity prices are exceeding our estimates substantially. Gas prices arethus far staying within our projections. Keepingin mind the unpredictability of the weather andtranslating the $500,000 into therms, it is highlydesirable that we cut our already reduced rate ofconsumption by another 200,000 to 300,000 thermsduring the last six months of this fiscal year. Ashas been said there is probably a far greater potential than this in the aggregation of individualactions to conserve.In the current year and in the two years aheadwe are working under conservation targets whichput considerable pressure on the University. Theyare low but, we believe, achievable targets. Weare relying mostly, as discussed below, on majorstructural or building-use patterns and are designing, planning, and installing those that appear tomake the most cost/benefit sense. There are otherconservation steps, which at this point appear distant, involving new technologies that could savethe day. But we cannot count on these now. Asa practical matter we have to rely on structuralchanges or usage changes and on a continuingcampus-wide sensitivity to and practice of conservation.This means: turning off every electrical deviceif it is to be off for fifteen minutes or more (unlessthere are instructions to the contrary on the equipment); not offsetting the heating policy with spaceheaters or the cooling policy with fans; reportingto the Plant Department overheating, overcooling,or any other conditions that seem to be using excessive energy; pulling blinds and curtains; consolidating functions, etc.AnalysisRecent Trends in ConservationSince fiscal year 1976-77 when the present conservation program was launched, the followingtrends have developed:TotalTherms % Differ % ReducConsumed ence tion(in thou Previous Previoussands) Year Target Year1975-76 16,9201976-77 16,8171977-78 18,631 + 10.7%1978-79 18,654 0 18,6001979-80 17,477 -6.3 18,030 -3.0%1980-81 17,300 17,105 -5.1(est. 11/80) The figures clearly show that 1979-80 was abanner year. Further, we estimate that 20,839,000therms would have been consumed in 1979-80if there had been no special conservation effortin the intervening years. From that angle the17,477,000 therms consumed represent aconservation effort in 1979-80 of not just 6.3 percent but of 16 percent.The table shows a surge over 1976-77 in 1977-78,in 1978-79, and to some extent even in 1979-80.The 1977-78 year reflects a 1.2 million-therm addition resulting from the beginning of operation oftwo new complex research buildings, Surgery-Brain Research (SBRI) and Kovler Viral Oncology, and a 600,000-therm addition mostly attributable to the weather. These special factors maskthe trend of declining consumption. To provide abetter idea of the true conservation, we have subtracted the consumption of the two buildings inthose years. Total therms consumed in 1976-77were 16,817,000; in 1977-78, 17,433,000; in 1978-79,16,971,000; and in 1979-80, 15,137,000.Using the new totals as the base there is stillapparent a rise in consumption in 1977-78, and aslighter rise in 1978-79 over 1976-77. This is accounted for by the extraordinary winters of thoseyears. (See degree days in Table I.) The true conservation program can be gauged in a year of amore "normal" winter, for example, 1979-80which shows a substantial (10 percent) reductionbelow 1976-77.In order to estimate conservation independentlyof weather and as precisely as possible, the EnergyOffice has made the rough analyses shown inTable I.Since 1974-75 a downward trend in consumption is apparent after weather effects have beenexcluded, as the last four figures in the right handcolumn suggest, although it has wavered. A morerefined analysis, shown in Table II, reinforces thatconclusion.The rise in basal consumption in the two middleyears is distorted by the coming on line of SBRIand Kovler, making it difficult to estimate the precise effects of planned conservation. The 1979-80dip, however, suggests real conservation is occurring now (probably more than numbers indicatebecause SBRI and Kovler consumption increasedsomewhat in 1979-80 also).Despite severe weather the University generallyhas been using fewer therms to heat and cool; boththe second and the fourth column support thatinference.Thus the trends in basal and nonbasal con-237TABLE IYear AnnualConsumptionin Therms Degree Days BTUs Consumedper Building Footper Degree DayHeating Cooling Total1972-731973-741974-751975-761976-771977-781978-791979-80 16,289,00016,459,00017,451,00016,920,00016,817,00018,631,00018,654,00017,477,000 51905166526667207449702570796647 888111276090181814601925739 60786278602676218267848590047386 52.7651.1356.7643.5137.7239.0436.8441.70Note: 100,000 BTUs = 1 therm. Degree days measure amount of heat/cold: the colder the winter the larger the number of heatingdegree days, the colder the summer the smaller the number of cooling degree days.TABLE IIBTUsTherms Therms Consumed forConsumed Consumed Total Heating andfor Basal for Heating Therms Cooling per SquareFiscal Functions and Cooling Consumed Foot per DegreeYear per Square Foot per Square Foot per Square Foot Day1976-77 2.06 1.06 3.12 12.821977-78 2.16 1.15 3.31 13.551978-79 2.43 .88 3.31 9.811979-80 2.38 .72 3.10 9.79Note: Basal refers to energy consumed for all purposes other than heating and cooling; as such it is not affected by weather.sumption show a significant reduction in consumption even after the weather variable has beenheld constant. We believe this is a conservationeffect.Recent Trends in PricesRecent trends in prices are shown in Table III.This table records the well known: energy priceshave been going up very fast, much faster thanmany other University costs.The table also indicates that forecasts of theprice of electricity in the 1980-81 budget may bequite low, and since electricity accounts for abouthalf of our total bill (although less than one-thirdof the energy consumed), the total price per thermestimated in the budget is correspondingly low.The budget forecasts were based on the first sixmonths of experience in fiscal year 1979-80 (Julythrough December) and did not foresee the surgewhich began in January 1980 and has continueduntil now. Between the first and the ninth monthof calendar year 1980 electricity prices increased34 percent, which is highly unusual compared toprevious years. We do not expect this trend tocontinue during the remainder of the fiscal year,and thus the 1980-81 figures above are somethingof a "worst case." Nevertheless, it is a safe as sumption that electricity prices will be higher thanestimated and will only be offset if an intensifiedconservation effort is forthcoming.Recent Trends in Utilities Costs and BudgetRelationshipsWhile consumption has been going down andprices going up, the utility budgetary picture hasbeen as follows:Utilities UtilitiesCosts CostsCharged to Charged toTotal Budget % Change Unrestricted % Change(in thou Previous Budget (in Previoussands) Year thousands) Year1976-77 $ 6,948 $4,7251977-78 8,205 + 18.1% 5,483 + 16.0%1978-79 9,498 + 15.8 6,320 + 15.31979-80 10,626 + 11.9 7,185 + 13.71980-81 11,235 + 5.7 7,752 + 7.9BudgetIn 1979-80 the utility bill accounted for over 3.6percent of the University's total budget and about9.0 percent of the unrestricted budget. This is tobe compared with percentages of 3.2 percent and7.7 percent at the beginning of the four-year cycle.238TABLE III% Difference % Difference % DifferenceFiscal Gas Previous Electricity Previous Total PreviousYear (price/therm) Year (price/therm) Year (price/therm) Year1976-77 $ .21 $ .72 $ .341977-78 .24 + 15.6% .82 + 13.7% .37 + 9.7%1978-79 .28 17.5 .90 9.6 .43 15.21979-80 .34 22.1 1.08 19.9 .52 21.61980-81 .39 14.7 1.18 9.2 .57 8.7Budgeted1980-81 .39 14.7 1.43 23.1 .62 19.2(est. 11/80)Note: Some percentage figures will appear off because prices are rounded.Perhaps an instructive way of looking at thesechanges is to note that in them lies the majorsource of the unrestricted budget deficit: in 1979-80the unrestricted budget would have been in balance if there had not been the $2.5 million increasein utilities costs since 1976-77.Activities and Status of the Conservation ProgramFor the past three years we have moved continuously to complete all the quick-fix measures:1. Implemented air conditioning and heatingpolicies for all appropriate buildings (includingdormitories) with winter temperatures of 65 degrees during the day and lower at night and onweekends and no less than 80 degrees during theday in the warm weather. The Energy Office, created three years ago, employs students to visitcampus buildings to monitor heating and air conditioning temperatures. Paradoxically, costs canbe reduced sometimes by allowing a building suchas Regenstein Library to be cooler than the policywould call for by shutting off that part of the system which reheats cold air.2. Reduced lighting everywhere on campus — anongoing program involving lower-wattage bulbs,use of special, energy conserving fluorescent tubesand devices designed by the Plant Department,timers in classrooms and other places. Two electricians devote full time to these and other kindsof changes and replacements designed to reduceenergy usage of electrical systems.3. Tended to water temperature reductions, pipeinsulation, and the like.Capital Improvement, Building Process and UsageChanges1. The major research laboratories continue to bethe subject of both major physical changes andusage pattern changes. The "retrofitting" of theHVAC systems of the Research Institutes and theAccelerator Building is just being completed after more than a year's work and should yield energysavings of 30 to 40 percent. However, the impactof these savings will not be felt until 1981-82.The capital investment involved in the modifications of major research laboratories will amountto approximately $800,000 and the Energy Officecalculates this will be paid back in one to twoyears after completion. Though it complicatespayback calculations, it is a pleasure to report thatthe Energy Office has obtained a $400,000 grant(part of the $900,000 mentioned above) from theState of Illinois under a United States Departmentof Energy program to be applied to the above capital costs. The office has worked with the hospitalto obtain a similar ($500,000) grant for it.The next major step for research buildings is toprovide them with computers that will monitorand control the HVAC and other electrical systemsso that they are running only as much as is actuallynecessary to achieve the building goals. TheSurgery-Brain Research Institute, Cummings,Hinds, and Searle are the candidates for installation of monitoring programs, discussed below,which should begin right after the first of the year.No research buildings have been monitored yet(because it seemed essential to obtain experiencein less complex buildings first). It is difficult toisolate the effects of a monitoring variable so it ischancy to predict an exact amount of energy conservation involved at this time. However, if ourexperience in Regenstein is a guide, we can expectperhaps a 20 to 30 percent reduction in usage.2. A significant, simple, but important usagechange has been the reduction of ventilation in theCummings Life Sciences Building and Hinds Geophysical Sciences Building by shutting down airsupply fans between 11 p.m. and 7 a.m.; Cummings is shut down 100 percent and Hinds about50 percent. Ventilation reduction in Searle Chemistry Building has been under intensive study formost of the year to be sure all potential safety239problems are considered in connection with theoperation of fume hoods and other laboratoryequipment. We expect to go to reduced ventilationin Searle shortly if the remaining studies, undertaken at the behest of the Chemistry Department,confirm the feasibility and desirability of doing so.3. The hospital has begun to make studies in theface of its special problems (for example, higherand cooler temperatures required for patients). Amajor consulting firm has completed the conservation study mentioned in last year's report andhas recommended changes in practices and plantthat may save 12 percent of total consumptionannually. The hospital has received, as said above,$500,000 to begin working on such a program tobe matched with an equal amount of hospitalfunds. A hospital group is reviewing heating andcooling temperatures for patients. If such temperatures can be brought closer in line with generalUniversity policy, savings on the order of $200,000to $300,000 a year to the unrestricted budget willensue. These extra costs accrue because certainhospital areas cannot be heated and cooled atpatient-required limits without at the same timeheating and cooling to the same extent adjacentareas where the University unrestricted budgetpays the bill.4. Eventually, the hospital and most campusbuildings will be brought under computer monitoring of building systems. This program began in1979 with an investment of $30,000 to providecomputer monitoring of Regenstein systems. During 1980 it is being extended to Bartlett Gymnasium, the Henry Crown Field Housed and theCochrane- Woods Art Center. As mentioned above,the Surgery-Brain Research Institute and Cummings are soon to follow, and then the Laboratoryfor Astrophysics and Space Research, High Energy Physics, Searle, Hinds, and Medical Centerbuildings. By the end of 1981 computer monitoringshould be controlling fully the systems of the eightto ten buildings which in 1979-80 consumed 48.83percent of campus energy. After that the hospitalprogram should get in full swing and computerization will be extended to the rest of the onehundred fifty campus buildings. This phasing is inaccord with the general approach mentioned above:concentrating efforts first on the thirty buildingswhich consume 50 to 60 percent of the campusenergy.5. Over the past year or more ten key buildingswere insulated or given storm windows at a costof $120,000 to test the cost effectiveness of doingso. Storm windows appear to be yielding energysavings of about 6.6 percent and a payback on a compounded basis of six to seven years. Such apayback schedule is acceptable but not ideal. Ingeneral, we are proceeding cautiously on stormwindows and insulation. Storm windows curedrafts but installation and maintenance costs oftenare incommensurate with their energy savings.6. To be mentioned is the Christmas interimpolicy, now to be implemented for the fourth time,reducing temperatures in some buildings below the65-degree level. Last year it saved over $1,000 aday for a total of over $20,000. This seems to ussignificant even through it did require moving people in order to close down whole buildings.7. As suggested near the beginning of this report, even this year and certainly in future yearsthe University may be faced with changing patterns of building usage. Reduction of ventilationhours in major research buildings has been cited.Also under discussion are: possible consolidationof classes next spring and summer in air-conditioned classroom buildings that do not have operable windows while shutting off air conditioningin those that do and looking harder in general atthe use of buildings from an energy-efficient viewpoint where to do so does not materially harmteaching or research. Depending on further reviews with the Faculty-Student Energy Committee, we may initiate discussions with the deansinvolved on these matters. We have also discussedwith the faculty-student committee whether itmight be advisable to reduce Harper Library hoursduring the depths of winter. Such a step would,of course, also require discussion with those responsible for and affected by a change. Severalfaculty have suggested a more far-reaching scheduling move, namely starting school in early September. To do so could be very disruptive of familyand other plans based on years of commitments;we have not been able to isolate substantial savings; research activities presumably would still goon; September is generally a salubrious month requiring little heating or air conditioning, etc.It is to be noted that since 1976-77 the University has spent or committed about $1.5 million oncapital improvements and has over another $1million at the planning stage. These costs are notincluded in the operating budgets displayed aboveprincipally because their expenditure impact hasnot yet been significant. But for the future theywill be identified and included in overall cost/benefit, return on investment type calculation.The FutureMuch of future planning has already been described or alluded to: the thirty-building concen-240tration programs, the research building retrofitprogram, the hospital program, the computermonitoring program, scheduling, etc. But somepoints may deserve more emphasis and there aresome new points.One is the general planning for additional capitalimprovement: Energy Office planning at this pointestimates a new energy investment program ofperhaps $1.5 million between 1981 and 1984.Included in this total are plans for moving beyond the thirty-building concentration program tothe entire campus but specifically to the next tierof users, namely, thirty-five buildings of over twomillion total square feet. The first stage will involve general energy surveys and technical assistance reports by outside technical consultants.Then there will be retrofits, computer monitoring,etc.A different order of future activity involves theso-called area budgets. The idea is to provide incentives to building users and those delegated control of space to conserve energy by allocating resources on a gain and loss basis: they keepwinnings and pay for losses. We are exploringother universities' experiences (for example, Stanford's); we have had discussions with the Faculty-Student Energy Committee and we will talk withbuilding users. We had a limited test along this linewith the business school during a Christmas interim period which seemed to be successful, buta generalized program may be another matter.A crucial but difficult area of future planning isnew technology. Cogeneration — using the University steam plant to generate our own electricity — is a proven if costly technology. To date theEnergy Office's cost/benefit calculations do notmake it attractive, especially if coal is used as afuel, requiring costly antipollution devices. Butvariations that could cut energy costs 25 to 30smtm/mmtSaMim percent are beginning to appear. For example, theUniversity of Illinois Medical Center has askedfor bids from private firms, including those whichburn waste (city garbage — presumably on a non-polluting basis) as a fuel. We are watching theoutcome and investigating the technology and finances very cautiously and carefully.ConclusionThere seem to be a number of misconceptionsaround about energy conservation practices thatpersist because it is hard to confute them analytically. The tendency is to rest conservation onevident major savings from tangible physical,structural, or process changes. The tendency isalso to think that small gains from individual actions are not worthwhile. While this report hasemphasized and illustrated the major gains possible from structural changes, it has also tried toemphasize the importance of individual actions.The daily experience of the Energy Office convinces them that these individual actions accumulate to a result comparable to structural changes.We ask again that you bring energy conservationproblems or suggestions you may have for improving conservation in your areas to the attentionof the Plant Department (extension 3-3076) or theEnergy Office; or call them to obtain advice andsuggestions.Finally, you may wish to contact individualmembers of the Faculty-Student Energy Committee: R. Stephen Berry, Chairman, Jeff Elton, JohnP. Gould, Jr., Kenneth W. Dam, Don Jordan, Bernard Meltzer, Charles D. O'Connell, George S.Tolley, and Peter White.William B. CannonVice-President for Business and Finance»««MBa241REPORT ON RENOVATION AND CONSTRUCTIONOF FACILITIES, 1979-80December 11, 1980Expenditures on renovation and remodeling ofcampus buildings in 1979-80 exceeded those ofany previous year. This represented the peakingof the renovation program financed in 1977 byborrowing $35 million through the Illinois TaxExempt Program at a 5.4 percent interest rate.One new building on campus land was underactual construction during 1979-80 — the additionto the National Opinion Research Center, whichis, of course, owned by that unit.Design progressed on the new 250-seat theater,on the new 468-bed hospital, and on a 600-carparking structure. (All are now in actual construction.)The major renovation program* during the yearsaw the completion of Phase I of the bookstoreremodeling, Phase II of the Henry Crown FieldHouse project, Phase I of the Goodspeed/Classicsremodeling for the Music Department, remodelingof Haskell Hall, and the renovation of the Shore-land. Work was started on Phase II of the bookstore remodeling, Phase II of Goodspeed/Classics,Mandel Hall, retrofitting the Research Institutesto achieve energy conservation, and remodelingof the Walker Museum for the Graduate Schoolof Business.Renovation of campus buildings (as an alternative to construction of new buildings) has beena policy of the University, reflecting: (1) the desireto retain a certain character of the campus and tomake more effective use of existing buildings, (2)comparative cost considerations with new buildings, or more lately, (3) a concern not to addenergy-consuming units. The major renovationsdescribed in the following paragraphs meet thesecriteria.(As a matter of policy, energy conservation improvements and handicapped access features wereconsidered in connection with each renovation.)Music and HumanitiesThe Goodspeed/Classics project is being carriedout in two phases. Phase I created new offices forthe Linguistics Department on the third floor ofClassics in former bookstack space. Constructionwas completed in October 1979.*To be distinguished from minor renovations, as discussed below, and from ongoing maintenance, repairs, and remodeling. Phase II involved renovation of Goodspeed Hallfor the Music Department to replace inadequatequarters in the early-century, temporary Lexington building. Modern classrooms, offices, studios,and music practice rooms are being provided. TheArt Library Reading Room in Classics is beingconverted into a small, stunning recital hall. PhaseII construction is nearly complete.The total renovation costs will be $2,137,000.New quarters for the department would have costover $3 million, plus greater annual operatingcosts. The Goodspeed and Classics buildings arenow being much more effectively and efficientlyused.Biological Sciences Division: Special RenovationsSix projects are involved at a total cost of $2 million, financed by the biological sciences. Three arein Abbott Hall: space for neurobiology laboratories, major upgrading of mechanical and electricalsystems, and remodeling of obsolete laboratoryfacilities. Renovation of the Erman Biology Building fourth floor is now complete. To complete thesix projects, further Biology Department facilitiesupgrading is scheduled, but the exact content hasnot yet been determined.Student ResidenceThe Shoreland renovation was completed duringthe past year, providing a dormitory for over 600students in the fifty-year-old former hotel. Theproject included extensive replacement and repairof plumbing, heating, ventilation, and electricalsystems; revision of the elevators; tuckpointingand cleaning of the exterior; replacement of allwindows; remodeling of the lower floors to provide common rooms and lounges and an apartmentfor the resident master. Student rooms and corridors were refurbished. The cost was $6.4 millionor over $10,000 per student. New construction,which student housing demand would have required, would have cost $30,000 and more perstudent, judging by other universities' experiences.Energy Conservation Capital ProjectsA series of retrofit projects and other modifications in various buildings are planned, under way,or accomplished as discussed in the Energy Report in this issue.242Physical SciencesScope estimates were prepared on the cost of renovation for Kent, Jones, Ryerson, and crowdedEckhart; and initial programming to determine theneed for and cost and characteristics of a physicalsciences teaching facility was begun.Mandel HallDuring 1979-80 this project progressed throughdesign. Bids were taken and construction startedin February 1980. Construction will be finished byJanuary 1981. The renovation will upgrade theacoustics providing acoustical "clouds" and"hardening" of wall surfaces for better sound effects. Dressing rooms, lighting, and utilities systems will be refurbished as will the auditorium'sseating and carpeting. To better accommodatemusical performances, particularly symphonic,the stage will be enlarged and extended in frontof the proscenium; two hydraulically lifted platforms will permit the projection of the full effectof the music into the auditorium. To relieve backstage overcrowding and to provide essential performance support spaces heretofore inadequate ormissing, a new structure between Mandel andEckhart will house a loading dock, storage, andsupport spaces. The renovation will provide a usable facility for music, theater, and other groupsat a cost substantially less than a new music orgeneral performance building. Together with theremodeling of Goodspeed/Classics, including theClassics reading room conversion to a recital hall,music at the University will have first-rate teaching and performing facilities. Once again majorrenovation provides for more effective use of asolid old building to carry on its purposes in acontemporary context.The project has been financed primarily froma generous $2.0 million grant from the Joseph andHelen Regenstein Foundation.Henry Crown Field House — Phase IIPhase II of the field house project added a galleryand mezzanine to the building and completed theconstruction of the ground floor to provide variousactivity spaces and extensive new locker rooms.Tuckpointing and a new roof were included. Construction work is complete, and the facility wasoccupied at the start of the winter quarter 1980.The field house project was an ingenious conception of the Office of Physical Planning, nearlydoubling the recreational space within an existingbuilding at very little additional cost for energyand operations and at costs below new construction costs. Bookstore — Phases I and IIPhase I, the renovation of third- and fourth-flooroffice space, was completed in 1979-80, as weretuckpointing, roof repairs, and other upgrading ofthe building. The second phase is under way andis scheduled for completion in January 1981. Thephase includes a new ramped entrance on 58thStreet, a handsome lobby, an elevator to make thebookstore available to the handicapped, upgradingof the lower floors, and additional floor area. Thecost of both phases is estimated at $ 1 ,95 1 ,5 1 5 . Theproject was made possible by the removal of thePrinting Department to a government surplusbuilding on Cornell Avenue. Renovation will provide much better bookstore customer space andoffice space both of which should lead to efficiencies as well as better customer services. The bookstore food service has already been substantiallyimproved through taking advantage of the betterfacilities.Walker MuseumThis complete renovation of one of the oldestbuildings on campus will provide additional officesand computer facilities for the Graduate Schoolof Business. An extra floor is being inserted. Construction is well under way and occupancy isscheduled for the fall quarter of 1981. The renovation of Walker is the most extensive renovationin the Quadrangles since the complete gutting andreconstruction of Cobb Hall in the late 1960s. Itscost, which is being borne by the School of Business, is estimated at $4,080,000. Rosenwald andStuart Halls and renovated Walker Museum willprovide the Graduate School of Business withfirst-class facilities.Haskell HallHaskell Hall was renovated for AnthropologyDepartment offices, laboratories, and supportspaces to free Walker (which was previously occupied by anthropology) for the Graduate Schoolof Business. Construction was completed in September 1979. One section of Haskell remains tobe remodelled after Walker is complete. Again,the $750,000 cost is being largely financed by theGraduate School of Business.Campys PSamlug StydiesA special study of major importance was undertaken during 1979-80, namely, a campus planningstudy by Sasaki Associates. In the context of afuture that did not assume a large-scale buildingprogram, the Sasaki firm was asked to complete243the following work, restricted to the campusproper:1. Analyze and plan for infrastructures (sewers,etc.),2. Analyze pedestrian circulation and openspace needs,3. Develop a concept for the integration of thesouth campus with the main campus,4. Prepare a conceptual plan for long-range development of the south campus,5. Develop a plan for the sciences quadrangleand for physical sciences facilities, and6. Integrate the above and other elements intoa set of guidelines for short-term and long-termphysical planning of the campus as a whole.After considerable discussion with, among others, the Faculty Campus Planning Committee andthe Trustee Campus Planning Committee, SasakiAssociates completed its study in October 1979.The Sasaki study will furnish flexible guidelinesfor the physical development of the campus forthe next decade or more, permitting the development of rational siting decisions, future development of particular areas, etc.The Sasaki study and the firm itself have alreadyprovided help in connection with:1 . the siting of the new University theater,2. the addition to the existing parking structurein the hospital area,3. the design and location of the new hospital,4. the site of a proposed new science library.In summary, the study was a major step towardenabling the University to take a comprehensive,campus-wide and long-term look at contemporarydevelopments and pressures.Other special studies and projects were begunor completed in 1979-80: a first feasibility studyfor a proposed new science library and studies ofhandicapped access to campus facilities. On thelatter, to meet minimal federal access standards,building modifications were estimated at $1.5 million or more. Drawings were prepared for fourbuildings with special problems of access and forfifteen other buildings. All new renovation or construction projects will include provisions for access.Progress continued on actual implementation ofaccess for the handicapped with incorporation oframps, lifts, and other modifications in the majorrenovation projects as well as the preparation ofpreliminary drawings for specific access projectsin several buildings (for example, HutchinsonCommons) not scheduled for remodeling or renovation. Initial studies were undertaken toward development of a capital plan for the University for theperiod 1980-84.In addition to major renovation-constructionactivities and special studies, a number of minorprojects were undertaken:— The botany greenhouse remodeling was initiated and is to be completed by the end of the year1980.— Designs were prepared for the north end of thesixth floor "S" corridor of Billings Hospital andsouth end of the Surgery-Brain Research Pavilionfor laboratories and offices for surgical pathology.— Space on the first floor of Wyler was remodeledadding two new x-ray rooms and a trauma room.— Dora DeLee Hall in the medical center wasredesigned and includes modifications for handicapped access.— A new system for emergency power and firealarms was designed for Wyler Children's Hospital and the north wing; construction is now inprogress.— Alterations in Bobs Roberts, Chicago Lying-in,Gilman Smith, Goldblatt Pavilion, and Wyler Hospitals were begun to provide space and facilitiesfor the Hospitals and Clinics Financial AffairsDepartment.— A computer facility for the Medical Center Information System is under construction on thesixth floor near the intersection of the Billings andGoldblatt Hospital buildings. This facility will beable to handle all of the administrative computingof the medical center, including patient medicalrecords, billing, and accounts receivable. The system will allow nursing stations, the pharmacy, andvarious departments access to recorded data. Itwill be extended eventually to the new hospitalbuilding.— The Reynolds Club North Lounge was refurbished.— The remodeling of the Sonia Shankman Orthogenic School created four new classrooms to meetthe special needs of the orthogenic school.In a special category, the renovation of a sectionof the first floor of Regenstein Library was approved to house the Ludwig Rosenberger Collection of Judaica.Finally, looking ahead specifically, the majortask is to complete the unfinished major renovation projects listed above. This year should seethe completion of all except the renovation ofWalker Museum which should, however, be available to the Graduate School of Business beforethe opening of the fall quarter next year. The new244theater will likewise be available at the start of thefall quarter. There will be the normal run of minorrenovations. Energy capital improvements andremodeling of facilities to accommodate handicapped persons will both be ongoing assignments.We expect that several projects for new buildings,now in the early discussion stage, will be the subject of final decisions and, if the decisions are favorable, will take definite form and set in motionan architectural process. These projects are specifically a new science library, a physical sciencesteaching center (which could include renovationof existing science buildings), and a computationbuilding.Physical planning of major renovationslsuch asIda Noyes Hall may well begin. Here again theemphasis will be, wherever possible, to make oldbuildings functional in general and functional forthe current times and program of the University.William B. CannonVice-President for Business and Finance NON-DISCRIMINATION POLICYThe University of Chicago reaffirms its policy ofproviding equal opportunity in employment for allqualified persons and prohibiting discriminationin employment on the basis of race, color, religion,sex, national origin, handicapped status or veteranstatus; this policy includes the commitment tomaintain a work environment free from harassment based upon sex. If any person has a complaint, it should be taken to the individual's supervisor, department chairman, department head,dean or director. Complaints may also be takento the Director of Personnel or the AffirmativeAction Officer, each of whom also has establishedprocedures for review. All complaints will be investigated in a prompt and confidential manner.THE UNIVERSITY OF CHICAGO RECORDRoom 200, Administration Building-„ o zT* I om £ c 3DO o ¦TJ2 >3 O ¦of° 3O Fr-25 — 0) oCO0)3Q N7^ O m¦** 7T oCO 3