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02/18/92

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Kennedy: Stanford fees still competitive

STANFORD -- An overall 7.5 percent increase in student fees should help Stanford University provide a quality education and not impair its ability to attract top students, President Donald Kennedy told a campus radio audience Wednesday, Feb. 12.

In his quarterly interview on student-operated KZSU-FM, Kennedy said the 1992-93 tuition of $16,536, an increase of 9.5 percent, "won't even take us into the top 20" among private research universities. (The Board of Trustees raised room and board 2.5 percent; the total costs per student next year will be up 7.5 percent to $22,850.)

Kennedy said the fee increase was unavoidable after delaying staff pay raises and cutting millions of dollars from the administrative budget.

Kennedy also discussed the negative effects of a "selectively punitive" indirect cost recovery rate; talked about outgoing Provost James N. Rosse and the newly appointed interim provost, Prof. Gerald J. Lieberman; reacted to recent Stanford controversies over questionable compensation for top Bookstore managers and a hate-speech incident; and commented on the seemingly endless stream of negative publicity for the university.

The interviewers were Sonya Crawford, news director of KZSU, and Howard Libit, a reporter for the Stanford Daily. Some of the questions have been paraphrased.

Q: What is your response to student anger over the tuition and room and board increase?

A: Nobody likes it. We don't like it, the Board of Trustees didn't like it.

What we tried to do is balance two things that we always think about when we increase tuition and room and board rate. The first is affordability; the second is the quality of a Stanford education.

I think everybody knows that in the past two years we've experienced some tough things, some of them shared with other institutions, some of them our very own. Everybody's had a recession, everybody's experienced the drop in indirect rates this past year, both negative in terms of revenue. Everybody's experienced downturns or stabilizations at least in research volume. And, unique to Stanford, we've experienced the very bad effects of an arbitrarily set indirect cost recovery rate, and of the aftermath of an earthquake that caused us to revise our debt requirements and produced some disappointments in terms of support from the Federal Emergency Management Agency.

So we've taken a lot of actions to try to deal with that. We've taken $21 million out of the administrative budget, (and) now $43 million - out of a combination of mainly administration but some academic budgets.

We've tried to leave the quality of a Stanford education intact. We've shared the pain by postponing salary increases for staff. So everybody is stepping up to this problem, and we've discovered that we simply have to increase student fees some to make that balance.

We're going to put more financial aid back to try to ease the pain and certainly we believe that we've preserved the quality of a Stanford education.

Finally, let me note that . . . because of the restraint we've shown in the past 10 years, this won't even take us into the top 20 private research universities in terms of total student fees.

Q: What effect will this have not only on the current student body but on prospective applicants?

A: We will still look very competitive with the other institutions with whom we share the largest number of joint applicants, which are, in order, Harvard, Yale, Princeton, MIT and Brown. We will have still the lowest total fees in that group. I think that everybody's disappointed to see an increase of this kind in a single year. But I think you have to focus on the amount and the comparison.

Q: Two years ago, the board set a policy of not increasing tuition more than one percent above inflation, and in your Oct. 22, 1991, letter on the budget, you said that policy would continue. What happened since then to change the situation?

A: First of all, there was a lot of hope that preceded disappointment. It's plain from recent events that interest rate drops, research volume and particularly doubts about our ability to negotiate the indirect cost rate back up have all been in the negative direction.

Q: The atmosphere on campus is particularly tense; students, faculty and staff are upset over the budget cuts and now the tuition increase. Protests have been held in your office and at the board meeting over specific proposed cuts. How is Stanford going to make it through this negative phase?

A: You need to realize that although we're particularly sensitive to what the publicity Stanford gets, some Eastern institutions, Harvard and Yale particularly, have had even larger budget reductions than we've been having.

We've gone the extra mile to concentrate the pain in administrative functions, to conserve the quality of a Stanford education and to minimize the impact on the total student bill. We think the position we're left in, even at the end of this increase, is one that is quite favorable compared to other similarly situated institutions.

As to demonstrations and concerns about the budget cuts, everybody cares about things around here and they care passionately. We got a strong message from some students about the self-defense class, and we're exploring ways in which that could perhaps be offered in a different venue. I think we're going to get messages of that kind from time to time and I think we have to understand that it's simply an expression of the degree to which people care about the quality of what they get here. So we'll listen.

Q: With the indirect cost controversy, is the government changing its commitment to research universities?

A: No. I think that the system in which two-thirds of the basic research that's done in the country is done in the universities has been a fabulous success, both for the quality of American science and for the quality of education. I don't think that thoughtful policymakers are going to turn their backs on that.

I think there probably will be changed rules about indirect cost recovery. I think they will reduce recovery for most institutions by a fairly substantial amount, but probably not a crippling amount - I hope not by a crippling amount. I think that once that is clear, and once we've had a chance to reach agreement with the government on some of the things that divide us over indirect costs, you'll see everybody back on a level playing field again.

But now, it's not a level playing field. Stanford, because we were first in the indirect cost controversy, is now suffering from a selectively punitive indirect cost rate, and that we really have to work hard to fix, and it's going to be a long job.

Q: Does the university have an ethical responsibility to monitor the business practices of its leaseholders, such as the Stanford Bookstore?

A: I think we may have some [responsibility], but to require that the university be a kind of ethical policeman to all of the different institutions and organizations that rent land from it would be to ask us to get out of the education business and into another business that none of us knows how to do very well.

I don't think the landlord's obligation extends to that.

Now, the bookstore is a bit different because it occupies land right on the academic reserve and because it enjoys a special relationship by old, old tradition - it is an independent entity with a board of its own composed largely of faculty members.

I don't know the details of this controversy. I don't know whether some things got away from the board or not. What I have been told is that the board has brought in some outside help to make a careful examination of the cost accounting issues and of the legal issues, and will then fix it.

I'm glad to take them at their word. Many of them are trusted colleagues and I believe that they'll do the right thing. But they're not going to do it under my direction because I think they're perfectly capable of doing it themselves and because I don't think it's a good use of our time to oversee the behavior of lessees on this campus.

Q: Are you surprised that the outside coverage of the Bookstore controversy for the most part did not indict the university administration? That has been the pattern in most other issues that have been in the news lately.

A: You guys at the Daily, who got the scoop and broke the story, were pretty careful to make the distinction, and so as a result most of the rest of the world got it straight; I suppose I should thank you for that.

As to media tendencies to be extra critical of Stanford, I think that these things are additive. When an institution gets adverse publicity, that invites more. Certainly it's true that when a person gets adverse publicity, it invites more. Some of you may have noticed that three weeks ago the Peninsula Times Tribune tried to blame the silicon breast implant controversy on a period of time when I was (FDA) commissioner; it turns out they had it wrong, but that didn't prevent them from having it in the headlines for two different editions and then having to apologize for it the next day.

So you get an extra lick or two when people sense that you're of interest to the public, and that's what's happening to Stanford. It'll be around for a while, and then it will go away.

Q: What are your thoughts on the way the Otero slurs were handled?

A: First, I think there is a deliberate, purposeful challenge being offered here by people who wish to take the university community to the very edge of its tolerance on this issue, and I think what you need in the presence of purposeful provocation is a lot of patience and a willingness to kind of sit back and sort things out, and have confidence that the strength of community here is adequate to enable decency to survive despite the wishes of people who wish to make it vanish.

Second, we've learned a very valuable lesson from this incident: That is, you don't need sanctions. You don't have to turn to somebody and say, so and so broke the law, kick him out, suspend him. . . . Community disapprobation and discussion not only improves understanding but is itself a powerful deterrent. So it seems to me we are in some ways stronger as a result of this.

Q: Let's talk about Lieberman. As interim provost, what roles will he play?

A: He'll play several very important roles.

First, Jerry's very experienced. He's been a faculty leader in all of the roles that you imagine. He's been acting provost, he's been vice provost and dean of graduate studies and research, so with a knowledge of those positions, he's able to step in and provide instant help without a lot of learning.

Second, he carries enormous faculty confidence for very good reasons. He's a deeply trusted person and he knows the cultures and the values of this place. It's very important that the first voice the next president hears is a voice that carries those messages about what Stanford is and what's important to it.

Third, I think Jerry, who has a strong quantitative bent and is very good on the numbers, can quickly fill in behind Jim Rosse and play a role in sparking the process, first of budget reduction, but then more importantly of looking at the deeper lying questions about academic organization that we need to address if we're to figure out a way to do more with less. That's the next phase of this, and I think Jerry will provide excellent leadership on that.

Q: What are your reflections on the years working with Rosse?

A: Jim and I have different strengths but a very compatible and complementary relationship. He's very strong on process. He's obviously a distinguished and very capable economist, not only in theory but in practice. He's been invaluable in working with budget and organizational matters, and he's a superb administrator.

In effect, he became chief operating officer and took responsibility for a lot of line functions in the institution and did it superbly. We'll miss him a lot.

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