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Loyola University Chicago

President's Office

September 2002

State of the University Address
President Michael J. Garanzini, S.J. 

I want to thank all of you for coming to this State of the University address. I appreciate your taking the time from your schedules to be here. We come together as a University community on ceremonial occasions which are important -- like the Mass of the Holy Spirit celebrated earlier today on this campus and yesterday at the Water Tower Campus. These were and are occasions to celebrate our common work and, in this particular case, to ask God's blessing on our education and health care mission.

Today, of course, we are also very much aware of the anniversary of the tragedies of last September 11th. The memorial service this evening is something to which I invite you as well. I want to thank all those, especially in University Ministry, who have arranged for these services and commemorations. The richness of the diversity of this university are never so much in evidence as they are at events like these. Loyola is truly one of the most diverse -- ethnically, racially, socially, economically, and religiously -- of the Jesuit institutions, and we should be proud of that.

Thanks to the work of so many of you and others who are not here today. Our university is a welcoming home for the races, the faiths and the ethnic backgrounds that, in fact, mirror the diversity that is Chicago.

There are two chief topics that I want to address today. The first is a review of our fiscal and academic health and the second concerns some thoughts about the challenges that lie ahead, a stock-taking regarding where we are and a look ahead at some prospects and challenges in the future. While a forum such as this does not lend itself easily to questions and answers, I hope to find venues for you to ask questions, perhaps in affinity groups, such as when I visit gatherings of faculty, departments and divisions, students, or mixed University groups.

I want to begin with some bright news. Our enrollments, as you may have detected by the increased foot traffic on campus or the larger than usual class sizes, is up. Overall, we are up in enrollment this fall from last year by almost 10% in the undergraduate population. Last year's record freshman class of 1,424, was superseded this year by more than 200 students, or an incoming freshman class of 1,640. This is a 15% increase over last year. Our target of 1750 freshmen by next fall may not be a stretch after all. Thanks is due, once again, to the work of Terry Richards who heads up our enrollment management efforts and the excellent support he receives from his staff, and Eric Weems and the staff in Student Financial Assistance. Without this united, dedicated and efficient operation, we would be more financially challenged than we are.

Enrollments in Law, Business, Education, Social Work and Nursing are also up. In total numbers of students we are fairly constant (a l.1% increase in headcount). We are recruiting fewer part-time students, certificate students and cutting back on some doctoral program admissions. I believe we would be extremely healthy if we were back to our record overall numbers with a total student population of 14,000. However, as we move toward that number, we are doing so with quality uppermost in mind. The quality of our student population, in every program -- from Ph.D., to Law, to Medicine, to our undergraduate population, and so forth -- is increasing on objective measures of academic performance. Law, for example, now not only had a bumper crop of new students but the LSAT scores for the average entering first-year student went up. Another way of saying this is that we have maintained our overall size, and grown our undergraduate student population, while we have become more selective. This is a testament to the perceived quality of the programs we offer, the general reputation of the University and its faculty, and the hard work of the recruitment professionals.

There have been other successes as well. We were able to secure the sale of the Mallinckrodt Campus to the Park District of the Village of Wilmette. The total price was what we had hoped we would receive. It allows us to pay the debt owed for the purchase, finance the move of the School of Education to the Water Tower Campus, something that was successfully completed this summer, plus recoup our investment there over the past few years. Wayne Magdziarz and others have done a superb job in working with various publics and with internal constituencies to make this and other transitions devoid of the bitterness and posturing that can come when real estate and its values are involved.

We have been successful in raising funds in the first part of a proposed $42 million campaign to build the new facility for teaching undergraduate science, which will be constructed here on our Lake Shore Campus, adjoining Flanner Hall. To date we have raised nearly $32 million of the $42 million needed. We launch the public phase of the Life Sciences Building Campaign this winter, with more than 75% of our goal reached. We asked our Board to take the lead in this effort and to support us on the condition that we could raise the money needed for the project by the end of its completion and opening. Board members, friends of LUC, and the efforts of Phil Hale who sought help from our friends in the State of Illinois and the federal government brought us to this point, and so we will break ground this March. The building should then come on-line in the fall of 2004, or approximately 18 months after we begin construction. This gives us two more years to raise the last $10 million.

Constructing this new facility allows us to offer first-rate teaching and lab facilities to our science undergraduates, and it allows us to expand our efforts in faculty research, especially as these efforts involve undergraduate and graduate students. You will be hearing more about this exciting development since it includes in the years ahead an upgrade to several other science and science-oriented programs. Loyola attracts one of the largest percentages of science majors for an institution of our size in the country. We are obligated to keep our competitive edge in offering first-rate undergraduate science education to our science majors and students in science-related fields. I am very grateful to the work of the members of the Biology Department, the Dean of the Graduate School, Bill Yost, and Dr. Slavsky for developing the concept of the gateway to science program and launching other science efforts such as a national center for teaching science which is drawing considerable interest from foundations, the Chicago Public Schools and corporations from throughout the region.

Lest you feel we have forgotten you, I am concerned that facilities for the humanities and the arts are, indeed, crowded and out of date. We are beginning the preliminary phases of study of the infrastructure needs and potential uses of the Skyscraper Building, the building we are in. Enormous possibility exists here for enhancing student performance, amalgamating and coordinating student services, and enhancing the learning environment once we have done the necessary infrastructure work. Space would then open up in places such as the Crown Center and other buildings for expansion of programs. We would also be able to remove from use buildings which are obsolete and inefficient -- even if quaint.

The plans for the Water Tower Campus also promise to change the academic learning environment and the way we interact with the downtown professional community. We have completed plans for moving all activities out of Siedenburg and Marquette Halls and are offering this half-square block to developers who will, in exchange, offer us a development that complements our campus and its activities. This will also become a revenue stream that will allow us to move forward with the development of a parking facility, a residence hall for undergraduates, a student center that will include a health and fitness program, conference facilities and retail space on property we already own. A revitalized downtown campus will allow us to attract undergraduates from throughout Chicago, as was once the case, and allow us to build a better sense of community at Water Tower, in a way that is in keeping with our goal to finance projects that will be self-supporting, read: do not add to the debt.

Our financial picture continues to improve, but herein lies a major challenge. After years of deficits that were as high as $50 million, camouflaged until 1996 by hospital earnings, and which we continued to cover by spending down earnings from the investment pool, we have reached the end of our ability to live in a manner that is not in keeping with our actual revenue. The markets, as you know, have not only NOT produced numbers that can assure us of paying our bills, but they have actually taken financial strength from our investment pool. As many of you know, the previous budget (the .02 budget ended on June 30) was built on projected revenues of $273 million, from all sources, including gifts, research grant income, auxiliary enterprises, and even projected endowment income. A projected $36 million shortfall is where we began two summers ago -- a figure that was actually higher because of projected earnings from investments that we soon realized would not materialize.

Actual expenses last year were less than budgeted because of a series of economies instituted as the year began. We ended up spending $309.5 million, or $24.7 million in deficit. Through hard work, we saved money and further trimmed our expenses in the present budget, the .03 budget, which is projected to be $17.4 million of operational deficit, or half what it was last year at this time. Of that amount, $15.0 million is in the Lakeside schools and colleges operations and $2.4 million is projected as Medical School operational deficit. Cutting the deficit in half was certainly a positive step, but the final result of our audit will reveal further erosion of resources and financial health due to a negative 7.5% return on investments, and a series of charges that we decided needed to be honestly booked this year, things like defaulted tuition payments, some potential charges against our self-insurance at the Medical Center, items that I feel were miscalculated in the past for a variety of reasons.

I have outlined for the Budget Review Team, which will begin presenting its proposals to the University Budget Committee later this month, and put the deans and vice presidents on notice that the following needs to occur in order for us to achieve financial stability and become more responsible with our endowment and other investments.

The budget which we are about to create, the .04 Budget, needs to be balanced and we must do so within the following nine assumptions or parameters:

  1. We will continue to grow our student body incrementally, by targeting a larger pool of students, by developing our recruitment efforts at the masters level in a manner similar to the way we have done so with undergraduate students.
  2. We cannot depend on income from investments. A five-year moratorium on spending investment income will be put in place so that we can, when the market turns around, recoup some of our investment strength. This does not mean we will ignore our commitments to spend where true endowment dictates we spend. For instance, an endowed scholarship or chair will continue to be funded but without revenues from the investment of that endowment, as is the case this year and last when those investments have produced little or actually lost in value. Rather, we will need to find other revenue sources to subsidize these endowed programs. This is the case throughout higher education where endowments are simply not producing. Our circumstance is different in that we did not grow our endowments during good times, but spent earnings we did not pour back into the endowment pool.
  3. We will work to hold down the growth in benefits spending and seek help from the benefits committee on how the institution will do so.
  4. We will continue to hold back hiring replacements except from within in every way possible.
  5. We will increment tuition reasonably and in keeping with our competitive peer group.
  6. We will continue to offer modest salary raises based on merit in order to keep our faculty and staff from falling behind and in order to reward those who work hardest among us.
  7. We will aggressively pursue debt reduction. The sale of Mallinckrodt to the Village of Wilmette, the sale of the Health and Fitness Center at the Medical Center to the Loyola University Health System, the proposed lease or sale of the Administration Building at the Maywood Campus, the examination of off-campus properties in Rogers Park for their sale value, bringing Granada Center into the campus housing stock and thus taking it off the tax rolls, the leveraging of property at the Water Tower Campus are all intended to reduce the debt load that we carry and thus reduce our interest payments. It has taken a year to get our arms around this issue, to examine our past methods for amassing and holding debt, but we intend to aggressively change our approach to this issue.
  8. We are studying our previous approach to shared services. This is the complex set of intra-company payments -- what the University charges the Medical Center, what the Medical Center charges the Stritch School of Medicine, what the University pays LUMC for services and so forth. As you can imagine this is a quite elaborate set of charges about which there has rarely been complete agreement or comfort. These charges have led to conjecture and erroneous assertions of one side of our operation getting a better or a worse deal than the other. In fact, we can make sense of all these charges and obligations and we can agree on acceptable formulas for calculating these charges. Nevertheless, clarity and fairness have been in some instances difficult to achieve and our intention is to make that aspect of the budget as fair and reasonable as possible.
  9. We will continue to study the possibility of re-engineering certain processes and bureaucratic functions, to consider out-sourcing services and operations in order to achieve efficiencies in our overall operating expenses. This will require that we continue to ask ourselves: can this be done better and more efficiently in another manner, or in coordination with another unit, and even to ask: should we continue to do this at all?

In sum, my hope is that we will clean up our operating budgets with a chart of accounts that we can all read, to address our accumulated debt problem, to leverage our capital resources to their maximum, to reassess our operations for more efficiencies and less duplication of services, to grow our student body without loss of quality and invest in new programs or projects that guarantee a payback or that keep us competitive in those ways that are strategically important for our future and that are in keeping with our legacy in this greater Chicago community.

We need to do all this mindful of the fact people are our best resource for moving us into the future, that our faculty and staff are the reason our students come here and pay dearly to receive a diploma from Loyola University Chicago. Our reputation as an institution that has a significant and worthwhile vision and set of operational values must remain intact as we reshape ourselves to be more competitive and more focused.

In Advancement, we had a difficult year in attracting gifts due largely to the repercussions of 9/11 and the market. We were close to our targets yet still slightly behind. The new year has begun on a more positive footing. Our public relations efforts, under the leadership of Bud Jones, garnered us some extremely positive stories, one of our best years for attracting public interest in Loyola. A new look at Advancement, by focusing on involving our alumni -- we have over 105,000 alumni worldwide, with 90,000 of these in the United States -- and at how we win and keep friends -- is in the works. While we are looking for a new Vice President for Advancement we have been able to do some reworking of alumni relations. In addition, we've picked up Fr. John Costello to work with us to build good will and friendship. Fr. Costello worked in development at the offices of the Chicago Province of the Society of Jesus.

In the area of shared governance, I want to thank the Faculty Council for its dedication and its contribution to continuing dialogue and improvement in decision-making and advice. The successful searches for a Dean of Libraries, Dr. Karla Peterson, for a Dean of the School of Business and Administration, Bob Parkinson, for a new dean of Mundelein College, Dr. Bob Hasenstab, and, of course, a new Dean of the College of Arts and Science, Dr. Fred Smith, our new Vice President for Student Affairs, Fr. Richie Salmi, and our new Provost, Dr. Pete Facione, were the result of faculty-administration committees. I want to extend an official welcome to them and assure them that we are eager for their success and look forward to all the ways they will contribute to our University community. Each of these individuals has already begun to impact our community with new ideas and proposals for new ways of working together and meeting the needs of our students.

I should note as well that, besides Fr. Costello and Fr. Salmi, Fr. Dave Stagaman joins us as our new Chair of the Theology Department.

Phil Kosiba and those who work in our Facilities Department continue to do an excellent job in keeping our physical campuses in good working order. Elevators, residence halls, classrooms, gardens, parking lots, dining halls, and the infrastructure that keeps our building cooled and heated, wired and fixed, fall to Phil and his crews to care for. There was an extraordinary effort and investment this past summer to improve our residence halls and students have been most pleased. There is work to be done, for sure, but we have completed a thorough study of our halls this past winter and have embarked on a program to improve them. The same is true of campus security. All of you are aware that we are taking certain measures to improve our security situation and more will be forthcoming as we are able to study a nearly completed security audit.

Thanks, too, to collaboration among members of the Faculty Council, the Staff Council and administration, we are circulating for your review and comment, should you chose to do so, a document that was jointly constructed by that group. It is posted on our website. This joint statement of principles of shared governance lists key values or principles that should guide our work in creating a better University, one built more solidly on trust and a spirit of collaboration.

We have more work to do in the year ahead, but the support and help orienting our new administrators, including myself, to the issues of the University are much appreciated. This is true of all major participatory and advisory groups and committees. Each has been useful, helpful, supportive, as well as challenging at times, but in a word, necessary for building up the University.

The implementation of our strategic agenda moves forward. Dr. Marge Bean our Vice President of Administration and Planning works with a Strategic Planning Coordinating Council of 30 faculty, students, administrators, and staff.

Several significant endeavors are being planned that celebrate our achievements and help us examine our efforts in light of our mission and our strengths. For instance, the Faculty Council is sponsoring with several other groups such as the AAUP and the Jesuit Community, a conference on mission as a Jesuit university. That conference, entitled "Is the Jesuit Mission History" is scheduled for September 25th. I encourage all of you to attend all or part of that conference.

In addition, there are several other events coming this year which highlight our mission and its potential for distinction and service to the wider community. This spring and early in the summer Loyola University Chicago will host two conferences dealing with ethics. One, designed by the Biology Department, will address the science industries in Chicago and beyond, on topics in bioethics. It will feature Dr. Caplan of the University of Pennsylvania. The other is being planned by the Center for Ethics and Social Justice and the Considine Chair in Applied Ethics in the area of business ethics. Our considerable resources in the area of ethics advances our national reputation as an institution which is taking today's ethical challenges seriously.

I said at the beginning that there are two areas that I want to address today: the present state of the University and a reflection on our future. This second area will be more briefly addressed here, but I nevertheless feel compelled to raise the issue because we should not forget the wider climate and world in which we live. Like all universities that are true to the name, Loyola University Chicago is a community of debate and discovery. We embody all the tensions and advocacy of the larger society and the noisy and raucous debate that is sometimes generated when issues are taken seriously and traditions are examined and challenged.

We believe that competing visions and viewpoints can be discussed and examined in an atmosphere where there is a commitment to fairness, reason and civility. We believe that our tradition has a great deal to offer the contemporary world and that exploring that tradition still has enormous value. We believe that orthodoxy must never be substituted for open-mindedness and flexibility. We believe that change and reform must be grounded in clear principles and values. We also recognize that our students are growing up in a world different than the world we grew up in, and that they will face a world that can only be imagined, but will surely be radically different than the one we now inhabit. We are an institution that stands for specific values regarding the approach and even the answer to life's most enduring and critical questions.

That world, no doubt, will be more diverse not less, more conflicted not quieter and calmer, and more anxious about the obligations of those who have and the rights of those who have not. The future of our University just like the future of our students is more than a matter of academic interest. The degree of support and firmness of the foundation our students receive here will be critical to the kind of place we are known to be, the reputation we deserve to have.

We need to address more seriously than we have done in the past questions that challenge our accountability. That is, increasingly we are being asked to demonstrate that our claims to offering a liberal, values-based education is in fact true of our curriculum, that our claims to educate the whole person are founded on fact, not ideals, that our graduates are, indeed, different persons for having gone here and not somewhere else.

We need to ask ourselves if we are clear in our pedagogical goals and that our methods reflect a belief that students are not passive recipients of knowledge, that we conduct our educational programs in a manner that recognizes the way they learn best, that it utilizes the technologies at their disposal and thus makes best use of their and our time, and that the resources necessary for learning are available to them. We must examine our requirements and program offerings and ask if they truly prepare our students to join their professional peers, with skills of critical reflection, an ability to make their views known and understood, in a manner that is sensitive to the way others may see an issue, out of a value system that has been reflected upon and deliberated.

As industry and for-profits and a host of alternative educational systems and alternatives move into the market once "owned" by the University, we must ask ourselves if what we offer and what we attempt to accomplish with the time and energy we devote to our students and our scholarship are truly different and of greater value than the education that they can receive elsewhere.

I will only say that I am not convinced the answer to a self-critical examination of how we operate as a university and how we deliver our educational programs is an automatic and unqualified "best practice." While we strive to become a "better managed" business, we cannot ignore that we are about the formation of students and the creation and discovery of knowledge, two endeavors that do not lend themselves to a business approach. At the same time, we in Chicago live in an academic marketplace that is quite competitive, and at the same time one that is becoming even more pressed to compete with non-traditional forms of career preparation. If for no other reason than the increasing pressure on faculty to use their time differently, do we need to examine the fundamentals of what we think we are doing. As technologies replace the way information and knowledge have been traditionally acquired, the faculty member as mentor and guide has become more the reigning metaphor for our self-understanding.

I raise this because I believe that as we achieve economic stability, the worst thing we could do is think we can rest from the labors we are presently undertaking to make ourselves a better institution, or at least one that is maintaining its standards and its academic reputation. Undergraduate education, professional education, even the way we approach doctoral education must be re-examined in light of some new paradigms. I do not pretend to know the answers, nor all the questions, nor certainly am I offering prescriptions for the future. I am confident, however, that the people who can lead this discussion and recognize the seriousness of the challenges ahead are here, or are being recruited to join our ranks, in order that we might discover the future and clarify what we want to offer and accomplish in our scholarship and in our teaching.