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The Flight to Quality: Leadership in Challenging Times

Shirley Ann Jackson, Ph.D.
President, Rensselaer Polytechnic Institute

Spring 2009 Town Meeting
EMPAC Concert Hall
Rensselaer Polytechnic Institute, Troy, New York

Thursday, March 5, 2009

Good morning. Thank you for coming.

We are at a time of unprecedented uncertainty and change. The global financial landscape continues to evolve. Financial market events and their ensuing economic impacts — echoed in markets and economies around the globe — have forced everyone to relinquish past assumptions and former remedies. The U.S. banking system is vulnerable. Credit is scarce, if available at all. Corporate profits are sinking. If you have been taking in the daily news, you have been subject to crash course in global and domestic economics.

The new Administration has moved quickly to address our national economic challenges, but it is far too early to predict what the effect of those actions — or any other actions taken by governments around the world — will be.

In such a time, we wish for the one thing we cannot have — certainty and predictability.

In a time of global uncertainty, volatility, and stringency, there is a corresponding flight to quality: in markets, investors seek long-term value — buying gold and silver, Treasury Bonds, and top-rated municipal bonds. The U.S. dollar is rising against every other currency.

A flight to quality is similarly true in the realm of higher education — as I will explain in more detail, shortly.

It is within this greater context that Rensselaer will sustain itself, and always, will protect the core enterprise of Rensselaer — to provide a superb academic and living experience for our students, and to enable the highest levels of research and scholarship by our faculty.

And, we adhere to The Rensselaer Plan because the transformation we have executed over the past ten years — guided by The Plan — has given Rensselaer a unique capacity to withstand the vicissitudes of this difficult time. Our transformation is built upon quality. Consistently, it has enhanced quality.

One revealing picture of the quality of Rensselaer vividly is reflected in our enrollment statistics — confirming that during economic crisis there is, indeed, a flight to quality.

We see vastly increased interest in Rensselaer among high school seniors, with senior inquiries increasing from 22,000 in 2003 to 96,200 in 2009. The application pool has increased by more than 120 percent since 2005 — from 5,500 to 12,300, to date. Diversity continues to increase, as well, with a 109 percent growth in underrepresented students, and a 54 percent increase in incoming freshmen women since 2004.

In sum, since 2005, interest in Rensselaer has increased 300 percent, overall applications have shown a 124 percent increase, and early decision applications have increased 725 percent.

The figures mean that people know quality when they encounter it, and students are clamoring to come to Rensselaer.

Although we are encouraged by these numbers, we are taking steps to provide additional financial assistance to current students and entering students as necessary.

Rensselaer Response to the Economic Crisis
Early last fall, just as the economic crisis commenced, Rensselaer took immediate steps. We implemented portfolio contingency budgets, including portfolio vacancy management, a faculty and staff hiring freeze, and non-salary cost reductions in travel, procurement, advertising, and consultant services. Later, as it grew evident that the crisis was deepening, we instituted layoffs of nonacademic staff.

The contingency budgets and employee actions resulted in a total budget reduction of $24 million, and reduced Institute staff positions by a total of 13 percent.

These have been the actions taken to the present. As we prepared an Institute budget for the next fiscal year, we took into account the continuing economic down turn, and planned for, as always, a balanced budget

Over the past six months, the Rensselaer leadership team has anticipated and evaluated — to the extent possible — the risks and opportunities before us. The actions we have taken in recent months to mitigate the impact of the economic crisis on the Institute have been effective. While the reduction in force which we implemented in December was difficult for all of us, it enabled a budget reduction in the necessary amount. Our job, now, is to position the Institute to mitigate potential risks, and to take advantage of opportunities. And, we are moving forward with confidence.

You already are familiar with what I will review this morning. Much of it was covered in my letter of yesterday to the Rensselaer Community — summarizing key points of next year’s budget. Much of it is available on a new website which we launched on Monday to provide context and a clearing house of information to keep you up-to-date on an ongoing basis. Some was included in yesterday’s Poly. And, last fall, the FY’10 Student Life Performance Plan was shared with Student Government, and the Poly, and then reviewed at the annual, public cross-cutting session that was organized by the GM and PU in mid-November.

So, this will not come as a surprise. Nevertheless, it is important that we all understand what the Institute faces in terms of external economic realities, and how best to shepherd the university through the next fiscal year in as secure a way as possible, all the while preserving the core academic enterprise. It, also, is important that we talk about it together.

At its meeting last weekend, the Rensselaer Board of Trustees approved an Institute budget for the 2009-2010 Fiscal Year that has been constructed within the context of the current economic realities.

As the budget was prepared, we adhered to four continuing commitments — sustaining the Rensselaer Education Enterprise, supporting Rensselaer students by minimizing tuition increases and meeting additional financial needs of students impacted by the economic crisis, continuing faculty recruitment and essential staff hiring, and preserving the Rensselaer total compensation program by meeting required increases in defined benefit pension plan contributions that support our current faculty and staff, as well as retirees under the plan.

The overall operational budget amounts to $378.4 million, a decline of 5 percent from the current year — FY’08-09 approved budget. The budget incorporates the continuation of cost reductions made in the last six months, a spread of other measures, and, as always, is a balanced budget.

Tuition Increase
The Board of Trustees approved the smallest tuition increase in 12 years — since 1996. The approved 3.1 percent increase in undergraduate and graduate tuition for the 2009-2010 academic school year was made possible by the steps we took since the onset of the economic crisis in September. Tuition for full-time undergraduate and full-time graduate students will be $38,100.

Room and board rates will increase, on average, by 3.9 percent.

These increases are in line with those being enacted by our peer institutions.

Financial Aid
Beginning in 2005 — long before the economic downturn — we took major steps to enhance our financial aid resources. We have added significant resources to our financial aid programs to assist students who need additional help.  We increased the financial aid budget by $20 million, to $83 million, made major improvements in the effectiveness of the work-study program, and opened a new range of housing options to students with higher financial need.  Over the last several years we have established, and have increased annually, a special aid pool for upperclassmen or -women who experience changed financial circumstances, or hardship, during their years at Rensselaer.

Our overall goal is to continue to provide financial resources to those who need it most, using our resources to maximize the educational experience of students receiving the aid, and of all students.

Academic Enterprise
The academic enterprise lies at the heart of our ability to provide the best educational experience for our students. All of our instructional staff make important contributions to the university, but the tenured and tenure-track faculty anchor the intellectual vitality of our scholarship and teaching at Rensselaer. They provide the permanence and stability on which we continue to build our academic stature.

In keeping with our goal of building long-term academic strength, we are moving away from hiring faculty on a temporary basis from year to year. This means that more of the responsibility for the curriculum and course offerings must be assumed by the tenured and tenure-track faculty. We will be relying increasingly on these faculty, who must be both strong teachers and leading scholars in their fields.

In FY 2010, we will recruit to fill eight Constellation faculty positions, as well as hire the academic Deans and Vice President for Research. We also expect to hire tenured and tenure-track faculty to assume the positions of Director of Research at EMPAC and Director of the Computational Center for Nanotechnology Innovations. This will add a total of 14 new tenured and tenure-track faculty. This transition to a greater reliance on the core strengths of the Institute is an important investment in the future of Rensselaer.

Employee Raises
Consistent with our fiscal needs in the coming year, we will offer salary increases to only a limited number of employees for FY2010. Employees earning less than $50,000 will receive raises — consistent with performance. The salaries of all other employees will remain frozen through the 2010 Fiscal Year.

The President and the Cabinet will take 5 percent and 2.5 percent reductions, or make equivalent givebacks, respectively, in the 2010 fiscal year. These funds will be contributed to a scholarship fund.

Student Experience
Our commitment to the Rensselaer student living-learning experience is of primary importance — and all of the changes to student life are designed to strengthen and enhance the student experience. Building on the success of the award-winning First-Year Experience, the Division of Student Life will move forward on several new initiatives to elevate the undergraduate experience. The new student life model is based on the concept of “Clustered Learning Advocacy and Support for Students” (or CLASS). The CLASS initiative will support enhanced residence life programming, based on clusters of residence halls (or commons), with faculty deans of residence commons, live-in commons deans, and with assistance from upper-class and graduate student resident assistants, the initiation of individual class year deans, and infrastructure for the development of an international student experience and a student life arts program.

To provide ongoing support for second-year students as they continue to acclimate to college life, beginning in the fall 2009 semester, the Institute will phase in the Sophomore Year Experience. Beginning with the Class of 2013, freshmen and sophomores will be required to live in Rensselaer housing, or in fraternities and sororities that partner with the Institute on regulations and on room and board fees. The goal of the program is to provide students with a greater sense of belonging and community through living-learning experiences, leadership development opportunities, and increased interaction with faculty under the CLASS initiative model.

Two new residence facilities will help to meet the increased demand for university housing. Beginning with the fall semester, students will have a new housing option in the heart of downtown Troy. The Sixth Avenue Residence Hall — formerly the Best Western Rensselaer Inn — has undergone a complete renovation and modernization to convert it to a state-of-the-art student residence. We, also, have entered into an agreement with The Polytechnic Apartments on Congress Street to lease additional rooms for upperclassmen.

Overall, our plans for Student Life will enable more, and more responsive, help for students in crisis — whether academic, psychological, or health; more academic and career and life counseling; more living/learning experiences; more deliberate progressive leadership and community growth experiences; more student/faculty/administrator interactions — both inside and outside the classroom, and more global exposure. We are ready to develop a sophomore mentoring program for first-year students. We will continue to offer more robust and more broad student activity programming through events such as the Winter Festival.

Web Site Clearinghouse
As I referenced earlier, you already may have visited the new Web site with information on the latest details about our approach to the economic crisis. The site will serve as a central resource and clearinghouse for news, information, and updates on our actions and responses.

To Summarize
In sum, I know that the steps taken in the last six months have been successful, and the measures we have put into our next fiscal year’s budget are prudent. We do not anticipate additional layoffs.

Nor are we alone in this struggle. Many other universities are making across-the-board reductions. Harvard, whose endowment at the end of Fiscal 2008 was 46 times the size of the Rensselaer endowment, has been forced to respond, drastically, to current economic conditions, including putting on hold the completion of a $1 billion science center in Allston and adding to its debt with a $1.5 billion bond offering. It has offered voluntary retirement to 1,600 employees, and is holding salaries flat for faculty and exempt staff. Harvard Management, which oversees the endowment, is laying off 25 percent of its staff.

Yale, too, is delaying many planned construction projects, and, this week, predicted about 300 layoffs. MIT is working to achieve institute-wide savings of $50 million in next year’s budget by asking academic units to reduce their base budgets by 4.9 percent and administrative units by 8.7 percent — leaving layoff decisions to the discretion of individual departments. Cornell is shrinking its faculty through attrition, offering early retirement to 1300 employees, and has said that layoffs are inevitable.&

Brandeis University is eliminating 74 positions by July 1, 2009 through layoffs, attrition, and not filling scheduled positions, is closing its Rose Art Museum, and has considered selling some of its very fine modern and contemporary art collection.

We know that some of the steps we have taken to respond to the economic downturn have been painful for our Rensselaer community. But these actions have been designed to protect our core academic enterprise in the midst of unprecedented turbulence in the financial markets. Our students and faculty remain our top priorities. Teaching and research are the very essence of the Rensselaer mission, and we have taken every measure possible to minimize the effects of necessary budget reductions on our academic programs. We are better positioned, now, than ever to manage the unusual worldwide financial circumstances that are affecting institutions everywhere.

While we have postponed a variety of capital expenditures, there is brief news regarding those projects with which we are moving forward.

Rensselaer at Hartford opened classes in January at a new site at Mystic Executive Park in Groton, moving facilities from the Trails Corner Professional Center. The site has new classrooms, a computer room, a student lounge, and wireless access. Rensselaer has served students in southeastern Connecticut since 1977, and in Hartford since 1955.

Phase 1 of the East Campus Athletic Village is on track for completion in the fall, with an opening celebration planned for October.

I, already, have mentioned the 6th Avenue Commons with 296 beds for students, and where renovation is substantially complete. Site work will begin in the spring, with occupancy ready for the fall academic semester. Likewise, the Polytechnic Apartments, with a capacity for 144 students, will be ready for occupancy next fall.

We have completed the restoration and adaptive reuse of 90 College Avenue for Artists-in Residence. The once vacant and severely deteriorated property provides studio apartments to house EMPAC’s Artists-in-Residence, and the project has made a significant improvement to the College Avenue streetscape. It is funded, in part, through a private donation.

Before I conclude, I would like to share with you several highlights of things — recent or soon to come.

Sustainability Charrette
I am extremely proud of our Student Sustainability Task Force which has produced a comprehensive report outlining the past and present state of sustainability at Rensselaer, giving us a baseline for reducing the Institute’s carbon footprint.

The next step is a Sustainability Charrette — a two-day intensive group brainstorming session open to all — students, faculty and staff — focused on creative and impactful ideas that we might implement to reduce Institute carbon emissions, become more cost-effective in energy usage, and more sustainable as a community. This is the kind of helpful focus which moves us forward, as a community, and I look forward to the suggestions which emerge.

“Molecules to the Max”
You may have seen our exclusive sneak preview of the new Molecularium movie — “Molecules to the MAX.” The 40-minute movie, aimed at elementary school-aged children, follows the adventures of Oxy, Hydro, Hydra, Carbon, and other characters as they navigate the colorful world of atoms and molecules in search of life. With the help of the Molecularium — a spaceship than can shrink to nanoscale sizes — the group explores the "secret worlds" and molecular structures of everyday objects including a snowflake, chewing gum, a penny, and even a human cell.

The movie is being distributed by SK Films, and will be released this year to IMAX and other giant-screen theaters. Plans are underway for a national premiere later this year.

Rensselaer professors Dr. Shekhar Garde, Elaine S. and Jack S. Parker Chair in Engineering and Head of the Department of Chemical and Biological Engineering, and Dr. Linda Schadler, Professor of Materials Science and Engineering, and Dr. Richard Siegel, Director, Rensselaer Nanotechnology Center, and Robert W. Hunt Professor of Materials Science and Engineering, are executive producers of "Molecules to the MAX" and the Molecularium project. The atomic environment of nearly every scene is derived from simulations provided by Dr. Garde and his research team. Some are among the most ambitious and intricate simulations ever undertaken.

Slumdog Millionaire
While we are on the subject of movies — some of you may have seen “Slumdog Millionaire”, and more of you know that it won eight Oscars during the Academy Awards last month. One of those Oscars was for best cinematography. The cameras used to film the action scenes were developed Ari Presler, a 1987 Rensselaer graduate, and CEO of Niskayuna-based Silicon Imaging. Mr. Presler launched his company in 2000 at the Rensselaer Incubator.

Cinematographers, using his compact, yet powerful, digital cameras and software, could to get into the midst of crowd action scenes because they were not using more bulky film cameras. Although still prototypes, they worked so well that the filmmakers used them for about 60 percent of the filming. The cameras were plugged into Apple MacBook Pros, packed in dry ice to keep them cool, and carried in backpacks as photographers worked in Mumbai's streets.

Commencement Speaker and Honorands
Finally, we will announce the 2009 commencement speaker and this year’s honorands in the coming weeks.

We are living in extraordinary times. Change — sometimes radical change — is taking place all around us. Some historians contend that the 20th century actually began in 1914, with cataclysmic world war, the end of monarchies and empires, redrawing of the maps of Europe and the Middle East, first attempts at international cooperation, and with astounding technological advances that vastly bettered daily life.

I believe we stand at a similar point today — at what is, perhaps, the true beginning of the 21st century — amid great change and great challenge. How we tackle national and global economic security, how we heal our planet’s climate, how we contend with energy security challenges and seize economic opportunities inherent in them, how we manage the interactions between and among nations — will tell our future.

The Rensselaer of yesterday and the Rensselaer of today tell an amazing story of excellence, of perseverance, of determination, and, yes, of change. All of us have reason to be proud to be a part of this transformational institution which has withstood the great challenges of the past, and yet, has remained a place of the very best of teaching, and of research, and of learning over nearly two centuries.

And, how we manage ourselves and our university in the current challenging times, also, will tell our future. I have no doubt that Rensselaer is a secure part of that future — but it is up to each and every one of us in the Rensselaer community to work together toward this future — for Rensselaer, and for every member of the Rensselaer Community.

Thank you.

I will be happy to take questions.

Source citations are available from the division of Strategic Communications and External Relations, Rensselaer Polytechnic Institute. Statistical data contained herein were factually accurate at the time it was delivered. Rensselaer Polytechnic Institute assumes no duty to change it to reflect new developments.

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