GEORGIA INSTITUTE OF TECHNOLOGY
THE EXECUTIVE BOARD
Meeting of January 11, 2005
Held in the Poole Board Room of the Wardlaw Center
Members Present: Akins (Prof Prac); Cabot (OIT); Clough (President); Evans (GTRI); Horton (GTRI); Huff (GTRI); Hughes (ECE); McGinnis (ISyE); Peterson (ECE); Telotte (LCC); Warren (EDI); Yen (BIOL); Phuong (U. Student); Alexander (Staff Rep); Abdel-Khalik (SoF).
Members Absent: Chameau (Provost); David (G. Student); First (Phys); Foley (CoC); Gentry (Arch); Schneider (Mgt); Uzer (Phys)
Visitors: Carson (Development); May (Pres. Office)
1. Leon McGinnis (Chair) opened the meeting at 3:05 PM. He called on the President to comment on matters of interest to the Georgia Tech community. The President offered the following comments:
a. The State budget outlook has improved as revenues during the first half of the fiscal year have significantly increased; the Governor’s budget (to be presented tomorrow) does not have any budget cuts; it provides for full funding of the formula which amounts to nearly $103M in new money for the University System next year – Georgia Tech’s portion is about $12M. Unfortunately, this will be partially offset by the so-called “payroll shift” (~ $7M for GT), so that the net increase for us is about $5M. The Governors budget also includes MR funding for such items as classroom renovation and upkeep, etc. (which was zeroed out last year); it also includes a 2% salary increase for “teachers” effective October 1st. We would like faculty and staff to be treated equally.
b. We do not have any major capital projects in the budget. We had proposed the Old CE building as a minor capital project (~ $5M) for next year; however, the Governor’s budget does not include funding for minor projects -- hopefully, we can successfully lobby for it. The Governor is fully committed to support the Nanotechnology research building; the State will provide $45M -- all of it may not be provided this year, but we should not lose time on the project. We are pursuing alternative tracks for private funding of the money originally committed by the initial donor with good success.
c. The Legislature has announced all the appointments for Committee Chairs /Assistant Chairs; we are very pleased with these appointments. Two committee chairs are GT alumni. Thanks to the contributions of many members of the GT community, members of the Legislature have a positive impression of GT, and we have had good relations with them. We expect the climate between the State’s higher education community and the Executive Branch to be more positive this year.
d. President Clough and IBM Chairman and CEO Sam Palmisano co-chaired the National Innovation Initiative held in Washington, DC in December. The summit was webcast by our Distance Learning Department. The Council on Competitiveness, co-chaired by President Clough, issued a report entitled: “Innovate America: Thriving in a World of Challenge and Change.” Many Georgia Tech members, including Drs. Chameau and May, participated in the study.
e. A faculty group from Harvard, and the University of Pennsylvania’s Wharton School conducted a survey of ~3200 high-achieving students applying for college to establish a ranking of colleges and universities based on student preferences. Georgia Tech ranked third among public universities (behind Virginia and Berkeley) and 24th overall -- a measure of Georgia Tech’s visibility around the Nation.
A question was asked as to whether there is a possibility for some financial relief from the budget cuts imposed by the State this fiscal year. The President indicated that no relief is expected for this fiscal year. A question was asked as to the reason for the turnaround in the State budget. The President indicated that the State’s economy is improving after two consecutive years of declining State revenues (first time in Georgia’s history), and that all indications suggest that strong growth will continue and the recovery will be robust. A question was asked as to any differences between the so-called “A” and “B” units (e.g. GTRI) in next year’s budget allocations. The President indicated that none is expected; however budget allocations are decided by the Board of Regents. A question was asked if the Perdue Administration is expected to undertake any major economic development initiatives similar to the Yammacraw Initiative of the previous administration. The President indicated that he does not expect any major initiatives since the Governor has focused on creating an “efficient State Government” during his first term; however, there may be an infusion of funds through the Georgia Research Alliance in areas such as nanotechnology. He indicated that several economic studies have recently been conducted, including studies by the Metro Chamber, the Governor’s Commission for a New Georgia, the Georgia Research Alliance, and the City of Atlanta. We have been involved in, or consulted about, these studies; all of which have recommendations that will benefit Georgia Tech. A question was asked as to whether a report has been issued by the student preferences ranking study. The President indicated that a public report has been issued [Christopher Avery, Mark Glickman, Caroline Minter Hoxby, and Andrew Metrick, "A Revealed Preference Ranking of U.S. Colleges and Universities" (October 2004). http://ssrn.com/abstract=601105 ].
2. The Chair called for approval of minutes of the November 16th, 2004 meeting of the Executive Board. The minutes were approved without dissent. (See Attachment #1 below).
3. The Chair called on President Clough to present an overview of the upcoming Capital Campaign. A copy of the slides used in the presentation is attached (see attachment #2 below). The President began by summarizing the history of major fund raising efforts at Georgia Tech. The first Campaign (the Centennial Campaign) was a centralized campaign run by alumni in the mid eighties with the goal of raising $75M; they ended up raising $200M. When the President arrived in 1994, the development office staff was nearly half its current size, and we had relatively modest expectations; we planned to kick off a Capital Campaign immediately after the Olympics. Our goal was to raise $300M; we ended up raising $712M after five years. The President stated that it is important to meet, or exceed, the overall goal of the Campaign, as well as the targets within the goal (i.e. goals for specific units or specific purposes, e.g. endowed Chairs or scholarships). The Campaign ended in 2000 and was clearly successful (the initial goal may have been understated); we were able to raise funds for new buildings (since State funds could not meet our expected needs).
It has been five years since our last Campaign ended; most people wait about five years before starting another Campaign. About a year ago, we began to evaluate when it is appropriate to undertake another Capital Campaign and what the goal should be. We started by examining what the competition was doing and evaluating the direction of the economy (do not want to start a campaign in a falling economy). We also began to think about specific targets within the goal; for example, as a result of State budget cuts, we had to raise tuition which made it difficult for economically-disadvantaged students to remain at Georgia Tech. We want to maintain economic diversity in our student body; talented people should be able to attend Georgia Tech even if they are economically disadvantaged. So, clearly one of the upcoming Campaign targets will be aimed at raising funds for need-based scholarships (we raised $50M for merit-based scholarships during the last campaign). Six months ago we began to hold a series of retreats with some of our alumni to provide them with a big-picture overview of Georgia Tech, trends in State funding, and expected needs. The aim is to identify major donors and volunteers to help run the Capital Campaign. Three such retreats have been held so far in Texas, Colorado, and North Carolina. Presentations were also recently made to the Georgia Tech Foundation Board and the Alumni Association Board to inform them of our plans. Capital campaigns require organization, money, and, most importantly, ideas, i.e. inspiring goals/purposes for which we want to raise money. We will soon contact our Faculty, Staff, and Students to get their ideas of things we should be trying to raise money for during our capital campaign. We will start with the Deans and Vice-Presidents and ask them to solicit input from the units; everyone will be asked.
A list of recent activities by peer institutions/competitors was provided; private funding was the key to these activities, among which are Berkeley’s $162M Biosciences and Bioengineering facility, Perdue’s $100M Discovery Park, MIT’s $50M gift for brain research, and Michigan’s $44M gift for diabetes research. A list of ongoing peer institutions/competitors capital campaigns with goals of $1B or more was provided (see Attachment 2); among our peer institutions capital campaigns are underway at Michigan, Illinois, UCLA, MIT, Johns Hopkins, Washington, Purdue, Cal Tech, Stanford, and Texas A&M with goals ranging from Michigan’s $2.5B to $1B for Texas A&M. Stanford’s current $1B campaign is a “mini-campaign” specifically aimed at undergraduate education; while Virginia’s relatively high campaign goal ($3B) has been motivated by their planned transformation to a “Charter” University (i.e. essentially a private university). A chart showing the current values of endowments held by our 21 peer institutions was shown; these range from ~$8.6B for Stanford to ~$350M for NC State (Georgia Tech’s endowment is currently ~$1.3B). Twelve of the 13 peer institutions with endowments greater than Georgia Tech’s have either recently concluded or have an ongoing $1B+ capital campaign; the 13th (Cornell) will soon start a campaign.
Universities are raising private funds to counter the cuts in state funding; during the past two years, 28 states have reduced funding for higher education. For 2004-05, tuition for 4-year public colleges increased by an average of 10%; the third consecutive year of double-digit increases. In response, several states have undertaken new initiatives, including construction of new facilities (e.g. North Carolina’s $3.1B bond referendum), increasing need-based student aid (10 states), and exploring new models to support higher education (Colorado, Virginia, and Ohio). A chart for 2004-05 in-state tuition at public peer universities was shown; it ranges from ~$7,300/semester at Michigan to ~$1,700/semester at Georgia Tech. Concerns regarding future funding for the HOPE scholarship have limited tuition at Georgia Tech; additionally, since tuition at Georgia universities is considered “state money,” we cannot use part of the tuition increase to assist economically-disadvantaged students -- this, and many other state policies on higher education need to be changed.
A chart showing actual state funding for Georgia Tech during the past four years, along with funding levels without budget cuts, was shown; the cumulative shortfall in state funding for FY05 is nearly $50M -- a large sum which could have been used to hire more faculty and provide a better education and additional support services for our students. During the past ten years, Georgia Tech’s total budget expenditures increased from ~$400M/yr in FY95 to ~$800M/yr in FY05; during the same period, enrollment increased from 12,900 to 16,813 students, while the fraction provided by State funds decreased from 34% to 25%. The increase in our budget is primarily due to the increase in our research funding made possible by the hiring of outstanding faculty and staff and construction of new state-of-the-art facilities. During our alumni retreats, it became clear that many of them were unaware of these state budget challenges; private funding will be needed to address these challenges. As tuition rises, there is a demonstrated increase in student financial needs; other universities have addressed this issue by setting aside part of the tuition increase to help economically disadvantaged students, which we are not allowed to do. Pressure from peer competitors is growing; an increasing number of faculty are being recruited by our competitors -- our competitive position is weakening and our ability to attack targets of opportunity has significantly diminished.
With input from our alumni, we have developed a comprehensive strategy as we proceed toward a capital campaign. Among the tenets of that strategy are: (1) we should not give up on state funding (we should fight for our share of state resources dedicated to higher education); (2) generate initiative funding that will help the state and Georgia Tech (e.g. GRA, nanotechnology, etc.); (3) develop a compact with the state including a commitment for base funding and an ability to use tuition to maintain level support (avoid surprises and initiate serious discussion with the state similar to those which took place in Virginia, Colorado, and Ohio); (4) increase revenues from non-traditional sources (intellectual property); and (5) begin the next capital campaign. The next capital campaign will generate forward momentum and will allow us to address areas of growing need. It will allow us to build resources to retain top faculty, support strategic initiatives, and improve our competitive position. Georgia Tech’s reputation has significantly risen since the last campaign started ten years ago; we should be able to capitalize on our new reputation status.
In preparation for our capital campaign, efforts are already underway to broaden our donor base; the Global Leadership Identification programs has identified over 6,000 alumni as prospects for the new campaign (these alumni did not participate in the last campaign and will likely participate in the new one). Work has also been done to lay the groundwork for major corporate, friends, and foundation support (many foundations are now interested in us because of our reputation). Donors are anticipating the next campaign and would like their donations to be a part of the campaign; we have opened the door so that some major gifts can be captured now. Now is a good time to start the campaign to take advantage of the stronger economy. The question is what should our campaign goal be? We raised $712M during the last campaign which lasted five years; had the time frame for that campaign been stretched to eight years, we would have raised $1B. The campaigns of our peers and competitors are all in the $1B+ range and last longer than five years (usually 7 to 10 years). We can readily justify needs for a $1B+ campaign (expect ideas provided by the campus community to be well above that target); hence, we have decided on a seven-year, $1B campaign, which represents a reasonable level of expectation to be balanced with the targets/expectations of the various units.
The start date for the campaign (time to begin counting toward the goal) was set as July 2004 (to take advantage of several large gifts including $15M challenge grant and $15M matching grants to the college of management, and private funds for the Nanotechnology Research Center); the quiet phase will continue till December 2006 (relatively short period; quiet phase for other campaigns sometimes last several years). The campaign roll-out (presentations at different cities) will take place between December 2006 and June 2007; the public phase of the campaign will end in December 2010. The President indicated that we will likely raise more than $1B, and that campaigns of this size need a few large donations (~$50-100M). Barrett Carson (Vice President for Development) stated that for most campaigns, 20% of the donors provide 80% of the funds; however, during Georgia Tech’s last campaign, 80% of the $712M raised was provided by one tenth of 1% of our donors. This means that we need to focus on individuals, corporations, and foundations with the greatest capital capacity; we have two prospects with the capability of $100M gifts.
The President indicated that following the Centennial Campaign, most of the development staff was laid off. However, following our last campaign, we have kept most of our staff (reduced only by about 10%); our fund-raising efforts have continued. Our “base funding” after the last campaign has been about $70M/year; we would like to double that during the campaign so that by 2010 we can raise ~$140-150M/year. We have kept our regional offices in place; they have remained in touch with alumni around the country. Our Deans and School Chairs know all about raising money; many of them participated in the last campaign, and are ready to do this again. During the next six months we will get back to the campus community in order to get ideas on the types of targets for which we want to raise funds.
Carson stated that we are targeting the annual meeting of the Georgia tech Foundation (June 2005) to present the final proposal. The end date has been set for December 2010 which makes it a 6.5-year campaign. We have yet to decide on how the overall target will be internally subdivided among the various units and target initiatives (ideas proposed by the campus community will likely be well in excess of $1B). Some ideas, e.g. need-based scholarships, will cross unit boundaries. There will also be some campus infrastructure that will appeal to environmentally-conscious donors (foundations, corporations, and individuals), e.g. the greening of the Georgia Tech campus (the Eco-Commons), which will also cross unit boundaries. He stated that by the end of the last capital campaign, the base-line funding level was tripled; this campaign will offer a relatively modest increase above that level. We would like to build the institute’s capability to sustain a cash flow level in the $140-150M/year range by 2010. He stated that there is no need to change the distributed model used in the last campaign with participation from various Deans and unit Chairs; it worked well and they were pleased to be able to keep the money raised for their units.
A question was asked as to whether gifts to fraternities and sororities are counted as a part of the Georgia Tech campaign. The President indicated that such gifts are not counted. A question was raised as to why the goal was not set higher than $1B, especially since several of our peers and competitors have much higher goals. The President indicated that it is important to announce a goal that does not “scare” donors, which can be met or exceeded; he indicated that he would be disappointed if we did not raise $1.5B during this campaign. The idea is to gradually elevate the sights of our alumni. Carson stated that we will have an opportunity to modify the goal when the public phase of the campaign starts in June 2007. Depending on our success level during the next two years, we may be able to extrapolate to the end 2010 and adjust the goal accordingly.
A question was asked as to the balance between donations from donors’ current assets versus estates. The President indicated that we would like to do both. Planned giving often facilitates endowment growth which can be used for long-term goals such as endowed chairs or need-based scholarship programs; however, we also need money that can be spent immediately (e.g. for buildings). Carson stated that, currently, planned giving gifts are approximately 10% of our total new gifts and commitments. Typically, that fraction ranges from 10 to 25%; in some cases the ratio may be much higher (e.g. William and Mary’s campaign has a 50% ratio). In our case, with a 10% ratio, we have the cash flow which can also be used for endowments. He indicated that he would be satisfied with a ratio up to 25%. The President indicated that most planned giving comes from alumni and friends, and that corporations and foundations do not like to simply “transfer” money from their endowments to our endowment; instead, they like to see their contributions used quickly. We expect to do well with corporations and foundations which will increase our cash flow. A question was asked regarding the performance of Georgia Tech’s endowment. The President indicated that we had an 18% gain last year. A comment was made that the last capital campaign has made a large difference on our campus, and that we should all be thinking about “inspirational needs” to include in this campaign, which will be attractive to the donors and have a lasting positive impact on the institute. The President indicated that Dr. Chameau will present a similar talk to the Deans next week, in order to start the process of identifying the needs by seeking input from the units and individuals within each unit. Student needs will be organized through the Offices of Bob McMath and Bill Schafer; library needs will be done by the Library. There are special units, e.g. Ferst Theater, which have to be handled separately.
A question was asked as to whether “Centers” can be viewed as inspirational needs. The president indicated that this will depend on the donor; many donors, particularly those with the capacity for large gifts, are looking for interesting ideas (e.g. multi-unit, cross disciplinary centers); this is good as long as it does not divert us from our true mission. He stated that many people would consider need-based scholarships to be inspirational, since they themselves may have had a hard time getting through economically. A question was asked regarding the focus on “environmentally-conscious” donors. The President indicated that many corporations are interested in “green buildings,” and that we started doing so several years ago. Six months ago GTRI submitted a proposal to a foundation to renovate one of GTRI’s buildings in Cobb County in an environmentally-conscious manner; the proposal appealed to that foundation and they provided funds to do the planning. The Eco-Commons described in the Campus Master Plan is an idea that will appeal to many donors (see presentation on Campus Master Plan by Les Saunders at November 30, 2004 Academic Senate Meeting). The President suggested that members of the community should read the strategic plan and the campus master plan so that they can come up with ideas that are consistent with the overall institutional goals. The Chair thanked the President for his presentation.
4. The Chair initiated a discussion on agenda items for future Executive Board meetings/ possible retreat. He stated that during the past five years, the Executive Board has had a very busy agenda and has accomplished a great deal. It is now time to think about the agenda for the next two to five years, and identify issues that the Board should research, examine, and discuss. He indicated that he has had discussions with Joe Hughes and Said Abdel-Khalik regarding the possibility of holding a half-day retreat to discuss in detail some of those agenda items. He solicited input from Board members regarding issues of importance to them and their constituencies (either now or later by E-Mail). The Chair indicated that two “big picture” issues on the horizon are: (1) possible privatization of Georgia Tech, and (2) Evolution of Georgia Tech as a multi-campus institution. Other topics were suggested by Board members, including: the Quality Enhancement Plan; restructuring of the various faculty committees and their missions; relationship between different campuses in a multi-campus institution (are they set up to be at “different tiers”?); the role of the Global Learning Center; possibility of opening a Gwinnett campus to meet local/industry needs; feasibility of replicating the Savannah Campus model at other locations (e.g. Valdosta); demographics of Georgia Tech students and how we can increase the number of women in science and engineering; examination of the degree mix offered by Georgia Tech to identify new opportunities -- where does Georgia Tech want to be five or ten years from now; and improving faculty/student relationship.
The Chair indicated that, at this time, the aim is to identify the topics rather than discuss them. He asked members to E-Mail him additional topics they wish to include and stated that he and the Secretary of the Faculty will organize the topics and send them to the Board to prioritize them. The prioritized list will help set a direction for the Board and organize a possible retreat.
5. The Chair presented the proposed agenda for the February 1st, 2005 meeting of the Academic Senate combined with Spring meeting of the General Faculty and General Faculty Assembly (see Attachment #3 below). The main item on the agenda is an overview by Jack Lohmann of the outcome of the recent SACS off-site review and the soon-to-be-submitted Quality Enhancement Plan. Two other presentations have been tentatively included in the agenda pending confirmation by the speakers: (1) presentation by Howard Rollins on the proposed “International Plan” designation for undergraduate diplomas, and (2) presentation by Heather Surrency and Yvette Upton on the Violence Prevention and Advocacy Initiative. The Secretary of the Faculty stated that this Academic Senate meeting represents the last opportunity for approval of courses and rules to take effect in the fall, and that several action items from the two Curriculum Committees and the Student Rules and Regulations Committee will be submitted for approval. In response to a question, he stated that the Spring meeting of the General Faculty and General Faculty Assembly originally scheduled for February 22, 2005 has been cancelled; instead, it will be combined with the February 1st Academic Senate meeting. A motion was made to approve the proposed agenda of the February 1st, 2005 meeting of the Academic Senate combined with Spring meeting of the General Faculty and General Faculty Assembly. The motion passed without dissent.
6. The Chair called on Dr. Joe Hughes, Co-Chair of the 2005 Nominations Committee, to present the proposed committee membership list. A motion was made to approve the proposed membership list for the 2005 Nominations Committee (see Attachment #4). The motion passed without dissent.
7. Amy Phuong, Undergraduate Student President, announced that the Student Government Association will launch a two-week tsunami disaster relief effort beginning tomorrow. The aim is to raise $60,000 in two weeks (the one-month anniversary of the disaster) to help the victims, which amounts to ~$3 per person in the Georgia Tech community. The President complimented the students on their initiative and stated that a campus-wide e-mail will be sent out tomorrow describing the effort and inviting members of the campus community to participate. He stated that a campus-wide moment of silence in honor of the tsunami victims will be observed on Thursday, January 13, at 12:00 PM. As far as we know, no member of the Georgia Tech campus community has been directly affected.
8. The Chair called for any other business; hearing none, he adjourned the meeting at 4:35 PM.
Secretary of the Faculty
January 17th, 2005
Attachments (to be included with the archival copy of the minutes)
1. Minutes of the EB meeting of November 16th, 2004. http://www.facultysenate.gatech.edu/EB2005-111604-Minuteswp.htm