10/25/94
CONTACT: Stanford University News Service (650) 723-2558
STANFORD -- Recent good news bodes well for the future of Stanford, President Gerhard Casper told a gathering of 250 middle and senior managers Tuesday, Oct. 18.
"We are moving forward, not looking back," an obviously upbeat Casper said after breaking the news that Stanford had settled the four-year indirect cost dispute with the federal government (see Campus Report, Oct. 19).
That capped a "great week," he said, that included a $77.4 million gift from alumni David Packard and William Hewlett to complete Stanford's science and engineering quadrangle, release of the report from the Commission on Undergraduate Education and the first meeting of the new standing Commission on Technology in Teaching and Learning.
The university is proceeding with its mission of teaching and research "and we shall do this confidently," he said.
Casper reviewed for managers eight important areas on his 1994-95 agenda:
He encouraged the managers to convey two basic facts to those who might believe that Stanford is a wealthy institution:
In the 1994-95 consolidated budget, just 13 percent of expenditures are covered by endowment income. "Some other universities are [financially] much healthier than we are, but I don't want to name them because that's the only thing they have going," he said to laughter.
Also, 23 percent of expenditures are covered by tuition, and this is a figure that cannot be increased much, he said.
The remainder must be raised anew every year, he said. Stanford's consolidated budget now stands at $1.2 billion.
Separately, he said, the university must consider the issue raised last spring about ethnic programs and the “much larger question of eventually rethinking residential education.” Another issue is "yield improvement: how we make sure that we absolutely get the best students in the country."
Meanwhile, Stanford Health Services must focus "very hard on market developments that in California remain breathtaking," he said, citing as an example the case of a health maintenance organization that demanded a 73 percent discount to continue bringing its business to Stanford. It will take its business elsewhere.
"We are now expected to operate an academic medical center at prices that may be below that of community hospitals," he said. "That cannot happen - it's just not possible."
Another important element is the use of technology in the classroom, and the commission chaired by philosophy Professor John Etchemendy, associate dean of humanities and sciences, has just begun its work.
Major challenges continue in raising money, especially for restoration. "Remember that five years after Loma Prieta, we still have parts of the campus as a ghost town,” he said. “The enthusiasm out there for supporting restoration, including the historical buildings on campus, has been underwhelming."
Casper also said the university must do a better job convincing current students that they have a "moral obligation" to support the university in the future.
Stanford also "must do a better job in telling the world what university research and teaching do for the country," Casper said.
"Higher education and the major research universities do not have a large number of friends and supporters out there," especially in Washington. Many believe that research institutions such as Stanford are wealthy, and often the all-purpose criticism is thrown at Stanford that it is "arrogant."
As legislators look at budget tradeoffs, "they don't quite know why they should support research."
"We have been major beneficiaries" from the partnership between government and science that prevailed after World War II. "That partnership is now more in question than ever, and we all . . . have to do a much better job in communicating what universities are all about.
"That will be the longest march we will all be marching," Casper said.
Provost Condoleezza Rice took over the dais as Casper left the forum to conduct business relating to the indirect cost settlement.
Citing work done on the consolidated budget and reengineering, Rice thanked staff for the hard work "you did last year and will do this year."
She expanded on several of Casper's points, saying, for instance, that it is difficult in Stanford's decentralized environment to comply with external regulations. But "regulation is growing and we must comply." Stanford's Environmental Health and Safety Office is available to help, she said.
On the topic of sexual harassment, Rice said emphatically, "we will not tolerate sexual harassment at Stanford in any form." It is the law, but it is also "an issue of the nature of this place." Rice said training in dealing with sexual harassment issues will be available from Laraine Zappert, appointed last year to coordinate sexual harassment issues.
Rice acknowledged that Stanford's budget cuts have taken a toll on staff morale. She asked managers to take responsibility for communicating about budget cuts to all levels of staff in their units and for communicating within their units and to other units about decisions they make.
In cases where offices must be reorganized, she asked managers to "take interest in the people affected." The university has programs, she said, for outplacement and retraining and for "helping people find their footing."
Managers also should work with personnel officials to try to help laid-off employees relocate to other jobs in the university, she said.
The reaction of people in the room to news of the settlement with the government showed that the managers think of Stanford as more than just a workplace, she said. "We've all felt deeply that Stanford did no wrong, and we wanted to have that affirmed."
Widely known as a booster of Stanford football, the provost also noted that many staff sit in the stadium on Saturdays and "live and die with the football team. You wouldn't do that in an ordinary workplace."
She asked managers to continue communicating how special Stanford is to their employees.
During the question-and-answer period, Rice was asked how the university expected to save money by laying off most of its legal staff and substituting "high powered" and expensive outside lawyers.
Rice said she expected costs to go down through more careful use of legal resources.
"It is very easy to start to use lawyers to actually do management and policy tasks rather than legal tasks," she said, citing the example of committees that rely too much on lawyers to help with business decisions.
"Obviously, we don't want anyone to take any risks that are unnecessary if there really are legal issues," she said, but "we can do more with our legal resources if we use lawyers when we need legal expertise rather than as surrogate business managers."
Responding to a question about improving Stanford's relationship with the government, Rice talked about the national mood and the challenge of dealing with short time horizons that dominate most thinking in Washington, D.C. The horizon for research is quite long, she said.
"We have to make the case that the pursuit of knowledge is really good for this country.
"It is no accident that the United States of America is the [world] leader technologically and scientifically, and that the United States of America is the only major industrialized country that decided to use as its research base research universities."
All other countries separated teaching from research, locating research in special institutes, she said. The American system "has paid off handsomely," but now universities must make their case "more forcefully."
Asked what processes Stanford had in place to evaluate the usefulness to students, industry and government of its academic programs, Rice responded that the value of knowledge could not be measured that way.
She said she believes in a "permissive environment in the search for knowledge" because it is difficult to predict what will be valuable in the future. Some ideas do not have an impact "for a very long time."
Einstein's theory of relativity, for example, has opened up whole fields of knowledge, she said. "It has meant a whole range of things that just that little equation couldn't possibly have been judged to mean when it came forward."
She said to laughter that "we might have missed one of the most important breakthroughs of all time" if an earlier provost at another institution had cut off Einstein's research funding for lack of relevance.
On the subject of the breakup of libraries and information resources, Rice said, "I have no doubt that Stanford is at the leading edge in the marriage of information resources and library resources because L&IR was structured the way it was." That synergy is now sufficiently in the Stanford culture that the university will not lose by splitting the organization.
"No one has any intention" of separating the University Libraries "from the technologies that are pushing libraries into new frontiers," she said.
Asked how much the academic side of the university would participate in the university's downsizing, Rice acknowledged that budgets of academic units have gone up slightly while administrative units have been cut about 10 percent in real terms over the last six years. Academic units, however, saved about $1 million last year, she said.
The problem is that academic units have very high fixed costs - "they are called faculty, tenured faculty," she said.
Academic plans and budget cuts must be very carefully coordinated, and that takes longer and is much more difficult than planning for the administrative side of the university, Rice said.
Most academic-related costs are for personnel relating to teaching and research, and budget cuts there may harm Stanford's teaching and research mission, she said.
Rice said she has asked academic units to submit three- year plans that spell out how they will use substitution and realignment to fund new ventures. "We are not going to be able to put resources into everything," she said.
Academic units also are being asked to look hard at their administrative practices to see if they can increase efficiency. Complicating matters are university processes "that make your eyeballs roll when you try to flow-chart them."
Three reengineering teams are working on some of the problems, she said. One is trying to streamline research administration. A second a redesigning the process for buying and paying for goods.
A third, called Desktop 2000, should put technology "at the fingertips" of administrators that will enable them to order classrooms, order books, schedule teaching assistants and perform other functions all in one program rather than go back and forth in different programs.
"We think there are some redesigns out there that can really change the way we do business," she said.
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