April 27, 1998
Volume 50, No. 30
Emory's history, goals, opportunities, and resources are factors that will influence success
Many factors, of course, will bear upon the degree of success that we shall attain in our endeavor. Of these factors, three are particularly important and bear some reflection: how well we understand and build upon the history and traditions of Emory; how well we understand our own aims and thus how we respond to the opportunities and challenges presented by our environment; and how well we use our fiscal resources to stretch for the highest possibilities.
A historical perspective
Although there are pitfalls in telescoping a complex story, Emory's history can be described in four epochs, each of which has left its distinctive mark on us. The first epoch began with the founding at Oxford in 1836 and ended with the refounding in Atlanta in 1915; the second began with the establishment of the university in Atlanta and continued until about World War II; the third began with the end of the war-which launched a new epoch for all American universities-and continued until the late 1970s; and finally, the current epoch can be dated from the $105 million Woodruff gift in 1979.
From this 162-year legacy come many attributes of which we are justly proud. The founding epoch clearly stamped Emory with a sense of moral purpose and a commitment to high academic standards. Both of these convictions run continually through the utterances of Emory's leaders, from the Methodist founders to the present time. These standards have become a vital part of who we are today.
In other ways, though, this first epoch was a period of searching for our identity that had indeterminate results. Alternately, Emory enjoyed periods of relative prosperity and near financial ruin; we experimented with being a manual labor school, a high school, and a four-year college, with emphasis variously upon a classical curriculum or upon professional education. Overall, this was a fragile and inconclusive period, insofar as it might have established a clear sense of our academic character. There are probably many reasons for this-the disruptions of the Civil War and Reconstruction being prominent among them. And surely the discontinuity of physical relocation to Atlanta that came at the end of the period contributed to the ambiguous outcome of this initial phase of Emory's formation.
Next came the refounding of Emory in Atlanta. The relocation of Emory College to Atlanta was an essential part of the establishment of the university, but the college seems not to have played as strong a role in the subsequent shaping of the character of Emory as was true, for example, of the colleges at Princeton or Yale or Harvard. Indeed, the first step of the move to Atlanta was not the relocation of Emory College but the creation of the School of Theology, the merger of the Atlanta Medical College with Emory, and the founding of the Schools of Law and Nursing. Our status as a university began with this epoch. It was then that a commitment to high-quality professional education was clearly established as a distinguishing characteristic of Emory. The emphasis upon preprofessional and especially theological education is illustrated by a quotation from the minutes of a 1934 meeting of a Special Committee of the Board of Trustees concerning the School of Theology:
We consider the School of Theology the heart of this institution. Without it there could not have been the development of the other schools of the university existing under the patronage of the Church. This school must be kept in the central place of interest and influence of the whole system.1
On the other hand, by failing to establish the college as the dominant idea of Emory, the stage was set for the ambiguous status of the arts and sciences, vis-à-vis the professional schools, in the overall mission and character of Emory. From this era, too, may have sprung the disconnected relationship among Emory's individual schools-a matter of current concern to students, faculty, staff, and administration. Amplified by the excesses of specialization that followed World War II in all of American higher education, the fragmented nature of the Emory community that continues to the present day thus was imprinted upon the character of the institution. It might be further noted that at the time of the move to Atlanta, the site on which Emory is located was virtually a wilderness. This fact undoubtedly contributed to the insular image of Emory that has persisted for decades despite the vast current involvement of the university community in the city and the region.
In the third epoch-post World War II-Emory experienced the same changes undergone by other American universities: an explosion of enrollments, rapid growth in the size of the faculty and the physical facilities, a greater emphasis upon research, and a growing tendency toward specialization and fragmentation. One of the most significant developments of this period was the establishment of the first Ph.D. programs at Emory. Thus, a critical step was taken toward our current status as a research university.2 Yet while Emory grew much in size and stature during this period, it was not enough to catapult Emory into the forefront nationally, as it did some of our great public and private universities.
Again, the reasons are complex: the same problems that delayed the emergence of Atlanta and our region into national prominence held us back-problems associated with segregation, social conservatism, and delayed economic development. Moreover, there were obviously periods of ambivalence within the leadership about whether Emory should or could aspire to such heights. In any case, owing to a combination of inadequate means and perhaps some lack of consensus about the vision, Emory's star lagged behind as others' rose. While we became an elite and well-respected regional teaching institution, we did not then rise to the top ranks of American universities.
Finally, we come to the current epoch. The decisive combination of events that launched Emory firmly into contention to become one of the nation's top institutions was the Woodruff endowment in 1979 and the ambitious and enlightened leadership of President James T. Laney. Much credit is due also to the prior generations, particularly to leaders such as President Sanford Atwood, Board Chair Henry Bowden, and Vice Chair Bishop William Cannon, and the many faculty, alumni, and friends whose commitment and determination prepared Emory to take advantage of the largesse it was about to receive. Fundamentally, though, it was the new level of resources and vision that came together in 1979 that gave us the privilege and responsibility of emerging preeminence today. With that emergence, inevitably, have come also the same tensions and conflicts of commitment that afflict every major research university in America.
From the many threads in the fabric of Emory's 162-year history, five stand out for their defining quality and for their capacity to shape the pattern of our future development:
Taken together, these threads form the cord from which our incomparably bright future hangs.
One additional point is worthy of comment: from our current perspective, the "holding back" that Emory experienced in the three decades following World War II had the effect of throwing Emory out of phase with the dominant American research universities. "Held back" then, Emory now finds itself in a favorable position to take advantage of today's somewhat depressed academic marketplace. In that opportunity lie our most basic challenges: on the one hand, how to use our resources to achieve the highest attainable levels of excellence; and on the other, how to do so in a way that strengthens teaching and moral purpose as well as scholarly research, publication, and professional service as integral parts of our mission. The degree of success that we attain in meeting these challenges will depend upon the determination with which we pursue our current vision and, in particular, how well we balance our ambitions for academic excellence and prestige with our broader social mission.
The external environment
First, to what extent will economic conditions and changing family priorities limit our ability to continue to increase tuition income and remain accessible to students of all economic strata? In an era when the diploma sometimes seems to be valued more than the educational attainment that it symbolizes, and when a flood of suppliers stands ready to exploit any market that arises, how will we differentiate ourselves in the academic marketplace? High-quality education, outstanding reputation, and strong connections-three of the many values offered by Emory and other strong universities-will continue to open doors for our graduates that others cannot so easily open. However, escalating costs, increasing ambivalence about the value added, and the availability of less-expensive options will for many make the choice of Emory and similar institutions less obvious than it once was.
Comparison of Emory with several of its peers suggests that we have some latitude here. On the other hand, public opinion and our sense of responsibility suggest that, even as we continue to offer instruction of the highest quality, we must both reduce the rate of tuition growth and continue to support robust financial-aid programs. It will surprise many people that this-more than any other factor-will limit revenue growth in the future compared to the past decade and a half.
Second, to what degree will growing public disaffection with higher education limit our capacity to increase other sources of support for education and research? Like all other institutions, from the government to the church, universities have fallen under the harsh light of public cynicism. The overall public attitude toward universities is still, in fact, positive; nonetheless, a higher level of skepticism, if not cynicism, exists now than ever before. To meet its full potential, Emory will have to convince its constituencies of both its commitment to serve responsibly and its continuing need for revenue growth. This difficulty will be increased by exaggerated assumptions about the impact of Emory's large endowment upon its total operating budgets.
Third, in an uncertain and changing political, economic, and health-care climate, how do we balance risk against caution as we continue to build the research enterprise at Emory? This problem is particularly poignant in medicine. The public's demand for more and better health care in a managed-care environment is placing overwhelming demands upon the time of the faculty and the resources of the institution. Yet the need for new knowledge and technology never has been greater. To be nationally competitive, we must add more research facilities and more faculty, both largely supported by federal, corporate, private, and clinical revenues. If we underinvest, we will fail in our goals; if we overinvest, we will encumber ourselves with debilitating liabilities. To make the right decision, continual vigilance of this environment is essential.
Fourth, as public disaffection has risen, so too has the public's expectations of universities. How should our faculty balance their workload among teaching, service, and research; between traditional forms of scholarship and the applications that can help solve the great problems of our time? This is a complicated question that involves at once being responsive to public need and clear about our intellectual mission. The short answer is: even as we address contemporary problems, public-service programs also must advance the academic mission of the university.
Fifth, how will we deal with growing diversity? Complicated issues of social and educational stratification and of gender, race, age, and cultural bias will continue to play themselves out with special intensity on university campuses. We must be concerned with the growing gaps in access to private higher education because of the uneven distribution of wealth in our country and a K12 system of public education that often prepares students inadequately for college work.
Sixth, how shall we deal with the information and knowledge revolution? This revolution has been created by the emergence of digital technology and by the rapid expansion of information and advancement of knowledge. Both are making our traditional disciplinary organization increasingly anachronistic. Moreover, the intellectual organization of universities is being challenged as much by the growing gap between traditional disciplinary structure and real-world situations as it is by the dissatisfaction of faculty and students who have moved beyond tradition. How creatively we deal with the restructuring that is coming will have much to do with where we emerge among our peers in the next two decades.
Finally, how will Emory react to the opportunities of globalization? Academics have, in principle, long been oblivious to location and national boundaries. However, the enmeshment of everything from art and culture to the economy and the environment in a global network of social issues and the explosive spread of access to information through digital technology have given a new reality and urgency to the principle. International education cannot be approached merely as a special program, but must be understood as universalization of the problems, skills, and ideas with which we deal every day.
This report cannot provide definitive answers to all these questions. Our strategy for responding to them must be reshaped continually as conditions change. Nonetheless, awareness of these questions in our planning is essential insofar as they frame the limiting conditions within which we must work.
The research university
Emory has attained the status of one of the nation's major research universities. While the external factors discussed in the preceding section will have a great effect upon what we can and must do in the future, it is largely the intrinsic characteristics of the research university community that will determine how we respond to such environmental circumstances as these.
The differences among universities, and between them and other kinds of higher-education institutions, can be summed up by four characteristics. First, research universities generally are of greater size and complexity and offer more variety in their programs than other institutions. This complexity poses enormous challenges in setting priorities and evaluating the progress of the university as a whole.
Second, the primary responsibility of the research university community is not just the transmission of knowledge and training in professional skills, but the discovery and criticism of knowledge. Whether in the classroom, the research laboratory, the library archives, or the clinical setting, the dominant ethos is the spirit of inquiry.
Third, in the research university community, a culture of skepticism takes precedence over faith in the established canon. This same skepticism, paradoxically, sometimes encourages a certain intellectual conservatism among scholars, since the merit of new ideas and new interpretations must be tested by their capacity to overturn paradigms that often have been built up in the course of many generations of scholarship.
Finally, like any other profession, the scholarly enterprise is governed by certain assumptive norms.3 For example:
Lack of emphasis on such things as the importance of students and teaching, the purposes and ethos of the university, community-building functions such as communication and mentoring, and the worth of a broader intellectual life illustrates that the values of the scholarly profession are not entirely congruent with the values and priorities of the research university. Nor are they viewed as unmixed virtues either inside or outside the academy. Nonetheless, it is through adherence to these norms that America has built the most successful system of higher education in the world. Still, much of the reform that is brewing in American universities today is directed at ameliorating the imbalances and incongruences that have come about between the narrower professional norms of scholarship and the broader purposes of the university.4 Emory's challenge is to find a way to excel in this environment and yet help to redefine what it means to be a successful research university.
With a net worth now in excess of $5.5 billion and debts just slightly more than 10 percent of our net worth, Emory's overall fiscal health is indeed excellent.6 Such facts surely would place Emory among the ten wealthiest universities in the nation, especially if adjustment were made for the relative size and scope of the institutions being compared. This robust financial condition puts Emory in a more favorable position than most American universities as we face the coming decades.
Yet, as we contemplate the further development that is necessary to place Emory on an equal academic footing with the finest American universities, we will encounter greater resource limitations than these numbers would lead some to suppose. As we plan for the future, we would be foolish indeed to count on continued financial growth at the pace we have enjoyed for the past two decades. Already we are experiencing significant declines in the rate of growth of some revenue streams and a slower pace of development as compared to the recent past in key arenas such as faculty growth. So, notwithstanding our strong position, we must approach the next phase of our development with restraint and caution as well as optimism and verve.
Why does our financial capacity seem limited in the face of such apparent wealth? There is, of course, the obvious fact that an academic community of more than 25,000 talented and ambitious students, faculty, and staff always will find legitimate needs for additional resources as they pursue their agendas of scholarship and service. Still, there are more basic reasons we should understand as we consider our plans for continued development.
First, the extraordinary growth and sheer size of our endowment has the paradoxical effect of creating unrealistic expectations. The notion that Emory is so rich that it can do anything it wants is simply wrong. Endowment payout-even though it now has attained the magnitude of approximately $132 million per year-fuels only about 20 percent of the basic educational and general budget of the university and a bit more than 30 percent of total expenditures for the university's academic programs.7 Moreover, much of this money is restricted for the use of particular programs, such as the more than 35 percent of the endowment that is assigned to programs in the Woodruff Health Sciences Center, or designated for specific purposes, such as amortization of debt and construction of urgently needed buildings. Thus, much of the apparent wealth of the university is either restricted or already committed to specific purposes and is not available for discretionary use for new initiatives in program improvement and development.
The market value of Emory's endowment increased by more than $500 million between August 1997 and March 1998. It has more than doubled in the past five years and quadrupled in the past ten. The full impact of this recent growth has not yet been felt; in fact, it will help sustain our momentum for a few more years. However, we cannot expect the endowment to continue to appreciate at the extraordinary pace of 20 to 30 percent per year. Rather, we should plan on annual increases in endowment spending not greater than 7 to 10 percent.8 Moreover, as remarkable as the performance of our endowment has been and as strong as it undoubtedly will continue to be in the future, we must keep clearly in mind that-in terms of rate of growth-these numbers translate into a significantly smaller impact upon the total level of spending than the university is capable of sustaining.
Second, the rate of growth of tuition revenue has fallen sharply in the past three years and will not return to previous levels. Driven both by rising enrollments and increasing rates, tuition revenue was in fact the major source of support for much of Emory's rapid growth and development during the 1980s and much of the 1990s. Once increasing in excess of 10 percent per year, tuition growth now has declined to around 4 to 6 percent per year. Fortunately, this decline in the growth of tuition income thus far has been offset by the increase in endowment income, and so we have continued to enjoy annual increases in the educational and general budget in the amount of approximately $20 million per year.
Since we are likely to continue to hold tuition increases to levels not much above inflation for the time being and since the recent appreciation of the endowment will be fully committed soon, we can expect some further decline in the growth of our total resources in years to come. Given that other sources of revenue are either declining in their rate of growth or increasing slowly, it is unlikely that the operating budgets of the university will grow faster than 5 to 7 percent annually in the foreseeable future.
The limitation of tuition growth, it should be noted, has occurred as a deliberate policy and represents an important investment of resources in some of the most basic goals of the university. These goals include the desire to limit the size of the student body, to curtail the spiraling costs of education, and to increase both the quality and the socioeconomic diversity of the student body. However, since almost 60 percent of academic program support-and in some schools as much as 80 percent-comes from tuition revenue, this policy obviously will limit our capacity to maintain revenue growth for other purposes and imposes greater dependence upon other resources to support our continued development.
Third, as noted above, much of our endowment is either restricted or already committed to specific purposes. In general, as we consider our future needs in relationship to resources in hand, we must acknowledge that almost all our existing resources are either restricted or fully committed to ongoing programs and activities. Thus, such resources are neither evenly distributed among the units of the university nor available for discretionary use in further program development or improvement. In addition, the cost of these commitments almost always entails not only the original cost of establishing programs but also annual growth in the size of the investment that is needed to sustain them. Faculty salaries, library acquisitions, and digital technology are noteworthy examples of basic areas of institutional development in which expenditures must rise regularly, and often at a rate appreciably higher than inflation, just to maintain the current position.
How should these matters affect the way we approach our plans for the coming decade, and particularly the objectives set forth in this report? We must, of course, do all we can to maximize the sources of income that are available to us. While our accumulated wealth is great by any standard, our annual "cash flow" in support of programs suffers in comparison with some of the nation's strongest universities, such as Stanford, Duke, or Princeton. In consequence, they can support larger and stronger academic programs than Emory has yet developed.
There are a number of areas where comparison with sister institutions would suggest that Emory has considerable opportunity to expand its resource base, notably annual gifts to budget, sponsored research, industrial grants and contracts, and the development of patents and copyrights on intellectual property created by the faculty. In addition, we will continue to have excellent opportunities to solicit major gifts targeted for particular needs-notably, new buildings as well as endowments for the individual schools and for student scholarships.
Yet as critical as it is to continue to build our fiscal capital, how we deploy our resources will have a greater effect upon the degree of success that we enjoy in the future than how much we spend. Through such matters as careful attention to energy consumption and other management processes-organizational efficiencies, greater integration and sharing of services, elimination of wasteful redundancy, and the use of more cost-effective systems and technologies-we have in recent years diverted millions of dollars annually from supportive and administrative functions to academic programs. Emory's operations already are comparatively economical, and we will continue to seek greater operating efficiencies and more effective application of our resources to our core mission of teaching, research, and service.10
Nonetheless, the greatest potential gains in efficiency and effectiveness may lie in how we in the academic community see ourselves as a university-how we organize our programs more effectively to share resources such as libraries, research facilities, and technology; to build scholarly strength more through collaboration and less through the sheer size of individual programs; and to blend teaching, research, and service in ways that evoke the synergy and intellectual excitement that can come of that marriage. If anything is to be learned from the thirty years of continual expansion of American higher education that followed World War II, it is that growth whets the appetite for more growth.
If undisciplined, a culture of dependency upon growth eventually settles in and hampers the ability to look critically and freshly at one's goals and priorities. It is toward that concern that many of the recommendations of this report are aimed. And it may be that Emory's greatest advantage lies in the capacity to reconceive ourselves in relationship to the new realities of research universities.
All in all, we have every reason to suppose that if we continue to be aggressive in our pursuit of resources, and both prudent and creative in the use of them, the means of our continued rise to the zenith of the American university community are assured.