THE UNIVERSITY OFCHICAGO 9 EECOEDMarch 3, 1971 An Official Publication Volume V, Number 4CONTENTS67 THE STATE OF THE UNIVERSITYBy Edward H. Levi, PresidentTHE UNIVERSITY OF CHICAGOFOUNDED BY JOHN D. ROCKEFELLER©1971 by The University of Chicago. All rights reserved.THE UNIVERSITY OF CHICAGO RECORDTHE STATE OF THE UNIVERSITYBy EDWARD H. LEVIFebruary 24, 1971In the report to this Senate on November 4,1969, I felt compelled to emphasize economicproblems which our university and similar private universities faced. Academic budgets at ourinstitution over the prior ten years showed aplanned, considerable increase. Total budgetshad gone up 168 per cent; student fee income,189 per cent; student aid, 394 per cent; totalfaculty compensation, 174 per cent; and average faculty compensation, 91 per cent, with thegreatest percentage increase at the instructor-ship level.The increases in expenditures were less thanwe thought could have been used to good effect.In part, the increases only mirrored changes inthe measures of the economy. Yet in total thebudgets reflected the strong attempt of theUniversity to enhance its academic excellence —an effort, I believe, we can judge to have beengenerally successful.The flow of income making these budgetspossible was dependent, in part, upon the support of the Federal Government, in the mainfor individual faculty research and student support. But because we are a private university,the flow depended, to a large extent, upon private funds in the form of gifts, endowment, andendowment-like revenue, and on tuition receiptsagainst which student aid of a variety of kindshas to be offset. Moreover, the viability of theenterprise was contingent upon the successfuloperation in certain segments of the University'slife of intricate arrangements intended to achieveself -balancing or at least manageable and limitedsubsidies.An overview of the sources of income whichmade possible the University's total budget wasas follows: Government and overhead, 33.45per cent; gifts, endowment and sundry, mainlyendowment^frke income, 29.19 per cent; tuition,18.70 per cent; and patient fees, 18.66 per cent.The Search for FundsThe University had been greatly assisted, andstill is, by the successful completion of its effort to raise $160 million for current operations,endowment, and capital expenditures. Thissearch for special funds was the first leg of aplan to raise $360 million over a ten-year period.It is unthinkable that we will not achieve orsurpass this result.Nevertheless, there were obvious causes forconcern. One was the University's budget reliance upon what was left of the Ford Foundation challenge grant. At the level of its thencurrent use, substitute funds would have to befound to replace approximately $5,690,000 annually — an amount then equal to 20 per centof the combined regular budgets of the College,the Divisions, the Schools and the Library.There were other reasons for anxiety. Costswere continuing to rise. Some major sourcesof hoped-for income were, at best, uncertain.In general the private institutions of higherlearning have been the hardest hit by changesin Federal funding patterns. We were then inthe midst of what has turned out to be a continuing precipitous decline in Federal supportfor graduate students. Approximately 1,030 ofour graduate students in 1968-69 were supportedthrough Federally-financed fellowships, trainee-ships and assistantships. This number declinedto between 850 and 900 in 1969-70 and to 680this year.A special Deans' Committee, appointed inJuly, 1969, to review our situation and to makerecommendations for the 1970-71 budget, suggested that the regular University budgets beheld to a 3 per cent increase, and the facultybe limited in size to not more and perhaps lessthan the number of faculty in 1969-70. TheDeans' Committee concluded it was essentialthere be a tuition increase of $225 for all students in the 1970-71 academic year, and $150per year in each year until further notice.The Budget Adopted for 1970-71When the 1970-71 budget was adopted, itcontained an increase of 3.1 per cent for theacademic areas, and relied upon the recommended change for that year for tuition charges.But the overall increase for general funds was676.7 per cent, in part because of the greater costof expanding physical plant operations.Faculty size, limited by this budget, declinedby fourteen positions as of this January. Thebudget, when adopted, did make possible a 4.3per cent increase in average faculty salaries,plus fringe benefits. Underlining our concern tomaintain the University's quality, and to respondas wisely as we could to a changing situation,Provost John L. Wilson (following a specialreport on the University's budget published inthe University Record in December, 1969) inJuly, 1970 sent a memorandum to each member of the faculty explaining the course we werefollowing.Two Versions SubmittedBecause the uncertainties were greater thanusual in planning this 1970-71 budget, our recommendation to the Trustees took the unusualform of disclosing a pessimistic and an optimistic version, with a spread of approximately$10,500,000 for the year-end result of deficitor surplus. Lest you decide this exercise in candor stamps us as even more incompetent thanusual, let me remind you of the variable factorsof endowment income (gifts which may or maynot be restricted for particular purposes, enrollment figures, and Federal funding amongothers) which had to be taken into account, aswell as contingencies in cost, in a consolidatedbudget of more than $151 million.Our pessimistic thought — the harrowing nature of which was relieved only slightly by thepressure of other distractions — was that thedeficit might be as high as $9,535,000. Ourstated conclusion was that we believed thedeficit would amount to $4,195,000. This figurerepresented an opportunity for friends of theUniversity for added help in fund-raising, anda commitment somehow to find this sum properlywithin the resources of the University if thisshould be necessary. In terms of its relationshipto total regular expenditures, the only deficit towhich I can compare this figure in the not sorecent University history is the deficit of$917,000 of 1947-48.The willingness of the Trustees to accept abudget with this kind of stated deficit and uncertainties speaks eloquently of their determination not only to see the University through thisdifficult period, but in such a way as to helpthe University maintain its academic strength.At the beginning of the autumn quarter wediscovered that one justification for the 1970-71budget was incorrect. The budget had been constructed on the basis of an estimated studentenrolment of 8,240. The actual enrollmentturned out to be 614 less. The drop from theestimate was largely in the four graduate divisions, and somewhat in three of the professionalschools. This decline resulted by itself in anupward revision of the deficit by $1,200,000.As the year progressed, it became increasinglyapparent that the Division of the BiologicalSciences and the Pritzker School of Medicineprobably would fail to meet the budget requirements, and would increase the deficit gap byanother million dollars. Capital expendituresnot normally carried on the current budget, butwhich had to be made, for the rehousing of theBookstore in what had been the Press Building,and the consequent rehousing of the Press, wereadded factors contributing to a more dismal picture. The stated deficit was revised to approximately $6,500,000.This deficit, whatever it turns out to be, willhave to be met. In addition, to meet both thedeficit for this year and the needs for the budgetnext year, the University has changed its investment policy to place greater emphasis on currentincome, and also to pay out a higher percentage,where permitted, of capital gains. The result canbe read as using as current income between 6.3per cent and 6.5 per cent of the average marketvalue of the endowment.The Ford Challenge GrantFurther, steps have been taken to phase theuse of the remaining amounts of the Fordchallenge grant over this year and next. Theprogram has been arrived at after a good dealof thought and soul-searching. It seems to usthe best possible response to our present problem. It does take somewhat from the future topay for the present, and perhaps more so because of the conditions under which this shifthad to be made. But it is not careless about thefuture. The curtailment of academic budgets isalways painful — and I do not welcome this curtailment, although this is one of the things onesays on such occasions, as bringing us closer tothe reality of choice. But the increased amountsof usable income made available for next yearshould help us maintain, if we are wise, theacademic excellence which is our main asset.In the face of this changing economic situation, it is important we have as much perspective as possible on our present condition. Onecan look at the growth in terms of five-yearperiods. If one takes the totals for the academicareas, but does not include student aid (because68this changes in terms of the levels of tuitioncharges), the increase in these area budgets —regular, restricted, and Governmentally funded was 84 per cent for the five years startingwith 1956-57. It was 70 per cent starting with1961.Qrowth Levels OffIn making our plan in 1965, we estimatedthat the five years between 1966 and 1971 wouldshow an increase of 26.5 per cent. But it is nowexpected to be only between 16.4 per cent and19.9 per cent. Obviously, we have not made ourgoal. We estimated that for the ten-year periodfrom 1961, the growth would be 115 per cent.It now appears that this increase, in fact, will beslightly less than 104 per cent. It is apparentthat in planning the University's pace, we realized that there would be a . leveling-off duringthis period. The leveling-off has had to be considerably more drastic than we predicted. Butwe must remind ourselves that in this we arenot alone. And, of course, while there is a relationship, we must not assume that the greaterthe expenditure, the greater the academicstrength.I am sure I need not remind you that faculty-student ratios have an economic significance.Overall the University moved from a faculty-student ratio of 1 to 7.1 in 1961-62, to a ratioof 1 to 8.3 in 1965-66, to a ratio of 1 to 6.7 for1970-71. A change from our present situationto the 1965-66 level, without including theclinical area, could result either in the reduction of faculty by the number of 169, or anincrease in students by the number of 1,774. Iam sure that you and I cannot help but beinterested in the observation that such a decreasein the number of faculty on an average salarybasis would amount to $3,235,336. The largernumber of students would increase net tuitionby only $2,845,161.Enrollment Less Than PredictedThe enrollment in the College is about 1,000less than was predicted in the ten-year plan.In 1969, in part because of the effort to upgradeliving conditions in the residence halls, therewas an intentional reduction in the number ofentering first-year students in the College from730 to 500 students. This year the facultyrecommended a slight increase to 560; thenumber actually went to 608. But we are belowthe ten-year planned enrollments in the fourdivisions as well, and all of these Divisions aresignificantly down from 1967 levels. These de clines reflect a variety of factors ranging fromsimple decisions by Departments to admit fewerstudents, to the inability of students to affordthe costs, and to changes in career plans.It is well known that faculty-student ratioscannot be used to characterize the operations ofsome of the areas of the University. A smallratio of students to faculty has a good deal tobe said for it. It has been, in many ways, anenormous advantage to the student. Unless,however, there are countervailing circumstances— and there may be — eventually it has an effecton the limits of the budgets. We have testedthose limits.Raising The FundsThis description of financing would be mostincomplete if reference were not made to thecontinuing, and on the whole successful, effortsof Trustees, alumni, friends and other public-spirited citizens to find and to give the fundsnecessary to support the operations of the University. In 1969-70, the University received incurrent gifts and new pledges $31,192,994. Thiswas $259,000 more than was received in theprior year. Excluding bequests, $12,975,128 ofthe amount received last year came to the University in the period from July through December. The comparable figure for the first half ofthis year is $14,855,600.It does not lessen in any way the importanceof these funds to point out that they do not, bythemselves, directly solve the particular budgetproblems we have been discussing; much of thefunds are for special purposes or off-the-budgetcapital expenditures. The support is most encouraging, most needed. Alumni giving is slightlyhigher than a year ago. There appears to be ageneral recognition of the importance of thisuniversity and its role, and a growing awarenessof the difficulties faced during this period byprivate institutions of higher learning.In addition to the gifts which have alreadybeen announced, I should mention the bequestof $2 million for medical research purposesexclusively from the estate of Miss Muriel Fors-land. Miss Forsland, a graduate of the University of the class of 1922, was a retired schoolteacher who had taught at Senn High Schoolfor 46 years. I should mention also, because ofits continuing importance and its insatiableappetite, the special President's Fund, createdsome years ago by the Trustees when Mr. Beadlewas appointed, to enable the University to makefaculty appointments of exceptional merit. This69fund continues to be successful in achieving itspurpose.I have spent this much time on our budgetproblems, contrary to the advice which I havereceived from some faculty colleagues I greatlyadmire. They perhaps feared the recital wouldbe too gloomy, and that the emphasis, in anyevent, would give a distorted picture of whatthis university is all about. But I believe it isimportant we understand, as best we can, thechanging conditions which affect private education generally, and this university in particular.Commissions CreatedThis is a time of opportunity; at least it is atime for choices as well as a period of pressures.With this in mind, I suggested last year thecreation of an Economics Study Commission,composed of an equal number of Trustees,faculty and outside experts, to initiate a seriesof studies on various economic aspects of theUniversity. The staff director of the Commissionis William B. Cannon, Vice President for Programs and Projects. The studies have begun, andin one form or another, they should becomeavailable to enlighten us. The aim of the Commission is to help us identify the economicfactors and the possible arrangements we canmake with respect to them so that the economicswill work better for the academic well-being ofthe enterprise.This fall the Educational Review Commissionwas appointed with twenty-four faculty members and Chauncy Harris as chairman. Its mandate is to look at the University as a whole, andthe interrelationship among its parts, to suggestnew directions which might be taken, and theaccustomed ways which might be better abandoned.If these commissions are effective, they willbe so because of their insights and persuasiveness. They are protected by having no legislative, administrative or ruling body authority.The work of these commissions is difficult, perhaps impossible, but important.This kind of recurring inquiry is much in thetradition of our university. I am reminded ofthe elaborate University of Chicago surveywhich received funds in 1923, began its work inearnest in 1929, and published its reports in1933. There is, in fact, much of interest in thosereports for us today, but I hope we will nothave to wait for a similar time span for theon-going critical essays which these commissions will spawn. In the meantime, the existenceof these commissions is, of course, no substitute for the kinds of discussions, inquiries and decisions which must go on within the UniversityThere are a great many problems requiringimmediate attention.The Significance of TuitionAs I have indicated, we followed the recommendations of the Deans' Committee that tuition in the College be raised for this year from$2,100 to $2,325, and in the graduate and professional schools from $2,250 to $2,475. Fornext year, the tuition goes up an additional$150. I am sure we find some comfort that thisupward movement is slightly less than that whichappears to be taking place at most comparableprivate institutions.Nevertheless, low tuition is one of the principal reasons why private institutions are inserious financial difficulty and, not paradoxically,it is also one of the reasons why the actualcosts of education, both public and private, areso high. The tuition charges are substantiallybelow the cost to the institution of the student'seducation; this is particularly true for the graduate and professional schools. The levels set givedeceptive signals as to the costs and, therefore,as to the distribution of the costs, and theyconfer hidden and unknown scholarships uponthe rich and the poor alike, and upon the lesstalented and the talented. There are, of course,obvious desires, which we all share, to keeptuition low.Loans Tied To Later EarningsFor many years there have been discussionsconcerning a variety of programs, private andGovernmental, which might result in a moreadequate coverage of the costs of the student'seducation. A recurring proposal has urged theefficacy of loan programs tied to the student'sfuture earnings. The plan has been in considerable controversy, and I must confess I sharethe concern of those who do not believe thevalue of the pursuit of knowledge, understanding and appreciation is to be set solely by theeconomic benefits this brings to those who engage in it.A pioneering step has now been taken byYale University to try out a loan-earnings program. Yale has announced a $350 tuition increase for next year, together with a $150increase in board and room charges. It hasstated it intends to raise tuition charges anadditional $300 each year for the followingfour years. The student will be permitted toborrow to pay for these increases, and up to70an additional $300 per year; the amount is tobe repaid on the basis of 4/10 of 1 per cent ofhis adjusted gross income for each $1,000 borrowed for each year for thirty-five years, commencing after he has ceased to be a full-timecandidate for a degree. This is not a full statement of the plan, but it gives the direction of theeffort. Yale has announced it will not makeavailable any form of traditional aid to coverthese increases in university charges.The Yale plan is an interesting and importantexperiment; it is a creative venture, long due,which may turn out to be most important forprivate higher education. It has features whichmake it somewhat comparable to a binding commitment by students to be alumni contributors.Indeed, if a sufficient number of contributorsgave sufficient scholarship aid, tuition chargescould be advanced to more realistic levels without all the enforcement mechanism which theloan-income plan requires.An argument for the plan is that studentswho achieve a greater earning power will assistin paying for the education of those whose income, for whatever reason, turns out to below. The surgeon in private practice will pay forthe classicist in the library. Thus, the plan isbased upon and contains a kind of unifyingview of the joint responsibilities of interrelatedbut different segments of the educational enterprise.The great danger is that the Yale plan mightbe regarded as a substitute for other essentialforms of financial aid and support to the studentand to the institution. But in its present formit is an added increment. Perhaps I should mention that among the well-known authors of theidea behind the income-loan plan is a professorof economics at The University of Chicago.Having stated my admiration and interest inthe Yale program, as an added increment whichmay make possible, at the least, more adequateknowledge of the costs of education and instruction, I wish to state a cautionary concern.There is a deceptive entrepreneurial qualityabout such arrangements which, in further orfuture developments, may lead to unintended orin any event, in my view, harmful results. Themechanism of these programs may further compartmentalize the universities, making interdisciplinary arrangements more difficult. This isnot inevitable, but if it happens, the economicswill be working against and not for the intellectual purposes of the institution. And the unifying view of the combined strength of joint responsibilities will disappear into a strugglefor separate advantage.The program is necessarily based on an ideaof cost allocations, and this may lead, and perhaps it should, to a proliferation of separatetuition charges throughout the institution. Somecurrent discussions involving one of the schoolsof our university have included the suggestionthat along with the increased tuition and loanincome features, the increased revenues shouldbe allocated to the particular teaching area involved. Thus the income-loan plan becomes anincentive program to induce or reward particularareas of the University for taking on morestudents. As we all know, all kinds of incentivescould become important to faculty and to unitswithin the Univesrity.Comparable arguments for goals and advantages for other areas of the University mightbe built, for example, upon the Federal financingof contracts and grants through individual professors, or upon the special demands of servicefunctions made upon some of the faculty, asin the clinical areas. These strains and arguments are not unknown. This kind of compart-mentalization may make less difference in amulti-university where there is little alternative.For our kind of institution, each separate arrangement of this kind requires the invention ofother devices, as well as a strong spirit, to keepus together because this is important to us. Weshould remember, if I may misquote a recentfaculty report, that when a university flies apart,the whole will no longer amount to more thanthe sum of its parts, and the parts will diminish.This should be a matter of particular significanceto our university, because more than any otherin the United States, we have gained strengthfrom cohesion.A Research UniversityThe University of Chicago is a research university. For some, these may be fighting words.I believe the antagonism is misplaced. We areinterested in new knowledge. We wish to be ableto state what is true and to share this recognition. More than that, we want to give trainingto others in the means of rinding out so thatthis process will be kept going, our errors corrected, our ignorance diminished.The research ranges across the fields of inquiry: from the treatment of arteriosclerosis tostudies on insulin, the development of the scanning electron microscope, the analysis of molecular and atomic structures, the further comprehension of the physics and chemistry of the71deep universe, the discovery of effects in theconditions of learning, the invention of thecadre system for the preparation of teachers,the analysis of the economic productivity ofeducation, a better awareness of the nature andmeaning of stories — imaginative, mythical, religious — a greater understanding of the historyof the Far East and the nature of the revolutionin China and, of course, the always continuingwork on the great Chicago Assyrian Dictionary,begun in 1921 and now in the hands of itsthird generation of scholars.I have kept this list short to make the pointthat it is only suggestive. The research not onlyfollows the disciplines; it creates them. In asense the research is highly professional. It involves the ability to find a problem and to workwith that problem with an appropriate accuracyand craftsmanship. Because we are interestedin research, in problem finding and solving, incraftsmanship and the ability to do, in the personal act of the recognition of knowledge, whichis in itself a creation and a discovery, this environment should have special advantages, ifproperly organized, for the instruction of students, including undergraduates."The Craftsmanship of Discovery"1 do not suggest for a moment that if weconcentrate on research, the teaching at all levelswill take care of itself. I do not believe that ifeach faculty member does what he prefers to dothis makes a good curriculum. I am suggestingthat research and undergraduate instruction arenot natural enemies, that the attempt to explaincan be a helpful contribution to the scholar's ownunderstanding and itself be a contribution toknowledge, and that this university, in partbecause of its size and balance, provides a favorable setting in which to share with graduatesand undergraduates the craftsmanship of discovery and recognition.Some time during the last summer, the threemillionth book was added to the collection ofthe University Library. On October 31 theJoseph Regenstein Library was dedicated. It has253 faculty studies, 19 seminar rooms, 3,700sets of locking shelves for student books, andover 1,000 carrels. It has an ultimate capacityfor shelving between 3,800,000 and 4,200,000volumes. At the time it was built, it was probablythe largest single library facility, taking all factors into account, in the United States. There isno doubt that in size it will be surpassed, if ithas not already been. But it is probably thegreatest library of its kind in the world. Such greatness is perhaps always an accident, a coming together of fortunate events, the consummation of plans and designs which turn out tofit perfectly with the needs to be met.But the accident could not have occurredand such good fortune could not have beenours, without the perceptive and informed planning by Herman Fussier, the Director of theUniversity Libraries, the creative responsivenessof Walter Netsch, the architect, the munificentand understanding generosity of the JosephRegenstein family, and the help of the HarriettPullman Schermerhorn Charitable Trust whichmade the initial grant. Those who worked tomake this library possible — and there are many— have the satisfaction of knowing that theyhave created a working facility which, in theperspective of time, will be recognized as havingassured the enduring quality of this university.The opening of the Joseph Regenstein Libraryhas permitted the remodeling of the Harper-Wieboldt area for the purposes of an undergraduate reading room and book collection, andeventually as a College center with study areas,lounges, seminar and class rooms and facultystudies.The Albert Pick Hall for International Studies, the Cummings Life Science Center and theBen May Cancer Research Laboratory are allnearing completion. Each of these structures,made possible by extraordinary gifts, is an expression of confidence in the work of our faculty.The Currency of DoubtThis is, of course, a time when many doubtsare being expressed about the general systemof higher education in the United States. Wemust ask ourselves whether these doubts applyto what we are doing. The criticisms concernmany aspects of education. There are doubtsabout the time requirements for degree programs, the lack of coordination among undergraduate and graduate programs, and the pur-posefulness of general education.These questions probably would not havearisen if the student population was not so largea proportion of their age group. The prestige rewards of mere attendance have declined. Weshould welcome this change, for it producesmore questions as to what education is about.Many of us would insist these questions alwayshave been asked at The University of Chicago.The frequent changes in the College, and possibly somewhat less frequent revisions in theDivisions and Schools, are some evidence ofthis. In our view, a critical student body is a72mark of our success. In this we seem to havesucceeded most or all of the time.It was not true 25 or 30 years ago that 75per cent of the College students at The University of Chicago assumed they would go on tograduate or professional schools. Not so longago, the number was around 20 per cent or 30per cent. At a prior time the Doctor's degreewas not nearly the requirement for collegeteaching it has become. The University of Chicago has always been proud of its tradition thatparticular degrees were not prerequisites forfaculty appointments, but I doubt whether ourposition is well known, and whether it is reallyhonored in many of the Departments.The ^University of Chicago, at an earlierperiod, placed great emphasis on the Master'sdegree. It had coordinated work with undergraduate programs with the Master's degree,and not only with our College, but other undergraduate institutions as well. It also sought, aswe know, to provide greater freedom to thestudents by shortening the period for baccalaureate.At an earlier time the professional schoolsplayed more of a role in undergraduate education. The Graduate School of Business, forexample, was first known as the College ofCommerce and Politics. Its withdrawal from theundergraduate curriculum began in 1942. Aslate as 1922, I tremble to report, it was still"theoretically possible" to enter the Law Schoolwith only a high school certificate. When theFlexner Report urged the academization ofmedical schools, it would have been hard toimagine that eventually the course from thebeginning of college to the end of an averageresidency would take eleven years, and thatfurther and customary specialization would takemuch longer.The consequences of the lengthening of timeare numerous. We must ask ourselves whether the withdrawal of the disciplines from the undergraduate curriculum and their emergence andproliferation as primarily graduate departmentshave removed much of the challenge of masteryfrom the undergraduate work. It is one thingto deny that the undergraduate curriculum mustfind its relevance as a running commentary onrecent events. It is much more difficult to saythat it can be only preparatory and one stageremoved from the intellectual disciplines as theyare now practiced. If our strength lies in theposing of problems and the disciplined searchfor solutions and new knowledge, do we adequately share this intensity and purposefulnessas part of the educational process? It is too easyto say this sharing must come after scholars areenlightened and trained. How does this separation cause enlightenment or training? One canchallenge also whether the proliferation of Departments within our Divisional structure is nowappropriate for these disciplines.A University's UniversityThese matters have been central in the attention of many of the faculties, and I know thatconsiderable progress has been made in particular programs. This university is a symbol andcustodian of a long tradition. That traditionincludes a willingness to experiment as well asa refusal to bow to the tastes of the moment.There is no reason to hide from our shortcomings. Recognizing them, we still must know thisis one of the preeminent universities of theworld. It is a university's university. The accomplishments of the Departments, Divisions,Schools, and College have been many. There isevery reason not to be careless about them.Because this is a time of transition, it is a timeof opportunity and choice. The course whichyou set should be in terms of the unique valueswhich are here. I know all of us will do whatwe can to accomplish this result.73THE UNIVERSITY OF CHICAGO RECORDOFFICE OF THE VICE PRESIDENT FOR PUBLIC AFFAIRSRoom 300, Administration BuildingHXwC<H*!OnEo>owooaoo*>o3ooasu>n Zm ± oc 35 n? >=i O TJ c/> no|zPO p > •vO o5si a -1> a3<O n'os22 m