Remarks by President John J. DeGioia
Faculty Town Hall 2003
September 24, 2003
It's a pleasure to be here today and to welcome our staff and faculty back to Georgetown University. I can't remember when a semester got off to a more exciting start-- and that was before Hurricane Isabel came through town. With the opening of new residence halls, a new dining hall, the Jesuit community, and welcoming an extremely talented class of students and terrific new members of our faculty and staff-- the vibrancy of our community has never been more palpable.
As we begin this new academic year, our 214th as a community, I'd like to share some thoughts that might focus and give context to our work together in the coming year. I believe that great institutions sustain themselves and ensure their enduring strength by embracing three responsibilities, seriously and all at once.
First, any institution that seeks to sustain a level of excellence must attend to its financial health. In this category, Georgetown has considerable assets even as we compete against institutions with vastly more wealth, in an economy full of uncertainty. In the fiscal year that ended in June, we have raised more money than in any year in our history-- more than $146 million, bringing us very close to the billion-dollar goal of the Third Century Campaign. To even conceive of raising $146 million in one year would have been unthinkable just five for six years ago.
Both the Main Campus and the Law Center are operating in the black. Their resources and revenues allow them to deliver academic excellence while generating modest budget surpluses. The Medical Center has also delivered on its academic mission while meeting its budget projections in each of the last three years. As we all know, the budget remains in deficit, as we are in the fourth year of our multi-year restaging plan that we hope will steadily bring the Medical Center back to break-even financial status.
While the Medical Center hits its targets, the targets become more challenging in the years ahead. The financial challenges for our partner-- MedStar Health, which supports our academic mission at the Medical Center by operating our clinical enterprise-- have become more difficult. While we bear no financial responsibility for the losses that MedStar has experienced, we want and need for them to succeed financially to ensure that clinical education at Georgetown remains strong.
As we move forward with restaging and managing the transition from a clinically-based economy to a research-based economy at the Medical Center, we are grateful for the leadership of Richard Pestell, recruited last September as director of the Lombardi Comprehensive Cancer Center, and Dan Sedmak, who joined the University as executive vice president for health sciences and executive dean of the School of Medicine in July. Our many outstanding faculty members and researchers position us for a very distinguished future.
As you know, the recession in our national economy had an immediate and direct impact on the University. Our endowment declined by $59 million in FY '01, by $80 million in FY '02, and by $15 million in FY '03. This affected the overall financial position of the institution and was a significant reason why the Moody's rating agency recently lowered Georgetown's debt rating by a notch.
I believe the debt rating will have minimal impact because Georgetown has been very effective in managing its debt load and its servicing. We have close to $700 million dollars of debt outstanding, almost all of it used to construct our classrooms and other buildings. Most of the interest rates are fixed and thus are not worsened by changes in our rating.
The downward economic turn has also increased the overall cost of benefits for the University. Besides impacting our endowment, capital market declines also reduced the value of our pension trust assets-- assets that cover our staff in their retirement. Most significant in the benefits costs arena, however, has been increased health care costs, a rising cost trend certainly not unique to Georgetown. These are among the issues we'll be wrestling with in the next few months. Jim O'Donnell is leading the Main Campus faculty through rigorous budget planning, recognizing the financial impact of these various elements, including the impact of higher benefits costs.
That said, our financial situation really has not changed significantly over the last few years. We've always been highly leveraged. And we've always been tuition-dependent, and an institution with the smallest endowment in our peer group.
At this moment in time, we must confront three fundamental financial challenges. First, can we keep pace with the urgent need to expand our physical infrastructure? While we've just completed the biggest construction project in Georgetown history and next week break ground for the Royden B. Davis Performing Arts Center, the projects that comprise the mid-campus plan are critically important as we move forward.
Just two weeks ago, the Board approved the necessary funds to design the infrastructure for this mid-campus project and specifically, for the design of a new home for the McDonough School of Business. We've raised more than $45 million for the School of Business project, and expect that we can fully raise the funds necessary to cover the cost of the building. But our ability to address the urgent needs for the sciences has proven to be difficult and remains a central focus for us in the coming year.
A second financial challenge: can we keep pace with peer institutions in the compensation that we provide our faculty, many of whom our competitors seek to recruit away from us? We have worked very hard over the course of the last few years to protect our academic quality by increasing the overall compensation for our faculty. I think we've reached some of our goals, but we have not closed the gap with our peer institutions.
And third, can we keep pace with peer institutions in assuring affordability for our students? Our undergraduates now face educational costs very close to $40,000-a-year. Embedded in these costs is a commitment that we will ensure access and affordability. We do this with our full-need financial aid policy. Some of our peers have raised the stakes and we now find ourselves in a virtual "arms race" for the best students in the country. Will we be able to ensure that the very best students-- a caliber of student that we've had the opportunity to educate for several decades-- will continue to think of Georgetown as a realistic option for their undergraduate years?
As you might imagine, having committed myself for so many years to the mission of this institution, I know we can meet these financial challenges. We are more than up to the challenge of these immediate realities, and I have great confidence that we'll be able to work together to ensure that we can expand our infrastructure, compensate our faculty appropriately, and ensure access for the very best students in our country. These remain the fundamental financial challenges that define Georgetown at this moment.
At the same time, events taking place in the world require that we give careful thought and attention to what other new opportunities we need to consider for Georgetown at this moment in our history.
As you have heard me say before, I believe this is a unique moment for Georgetown University. It is unique because of the combination of resources that characterize the University at this time; the distinctive character and identity of our university; the challenges we face in this increasingly interdependent and dangerous world; and the quality of the women and men who comprise this academic community.
At last spring's faculty convocation, I mentioned to you that as we bring the Third Century Campaign to a close, the University would begin a very careful, deliberate process of thinking through how the next campaign, which will likely begin in the next couple years, might best enable us to position the University for enduring success. At that time, I referred to a favorite passage of mine from the work of the historian Thomas Bender. In his history of the city of New York, he describes "icons of transformation, "moments such as the construction of Central Park, Washington Square, and the development of the skyscraper, when New York went from being one kind of city to another.
Such icons of transformation have also characterized the history of Georgetown-- most notably in decisions to establish new schools to complement the College-- the Medical School in 1850, the Law School in 1870, the Nursing School in 1903. In 1919, after the First World War had broadened our global perspective, we established the School of Foreign Service. After the Second World War, we created a Business School in response to the postwar economic boom. These were all moments when the University "became something else."
This year, we're going to begin that strategy work, to be organized around a set of questions that resonate with the nature of our identity. That identity has four elements: we are the nation's oldest Catholic and Jesuit university; we are located in the heart of Washington, DC; we are international in breadth and scope; and we sustain a level of academic excellence that places us among the very best institutions in the world.
Which brings me to what I consider our second responsibility to ensure institutional excellence, and that is to identify and respond to the most significant social, and indeed global, needs that Georgetown is positioned to address. It is the responsibility of a great institution to ask deeply probing questions about defining changes in our world, our nation, and our culture. If Georgetown is to continue to make a disproportionate difference and continue to be an institution that matters, we have to be strategic about creating new projects and programs that resonate with our mission and our identity, icons of transformation that may present themselves at this moment in our history.
Let's begin by looking at the type of questions that I believe inform this moment at Georgetown-- questions that are derived from an understanding of our identity and may shape strategy formation over the next few years.
First, as a Catholic and Jesuit institution, we are called to address a range of questions. For example, most of the world looks to religion to make sense of existence, so how does Georgetown-- an institution conversant in the language of faith-- provide a bridge between religions and cultures?
What is our responsibility, as the nation's oldest Catholic university, to the development of the Church? How do we participate in the unfolding identity of the Jesuit order and of the Roman Catholic Church, which is still implementing the fundamental transformational elements of the Second Vatican Council? How do we ensure that the resources of the Church and the Academy strengthen and enhance one another?
This is the 40th anniversary of one of the key Papal documents of the 20th century, Pacem in Terris, "Peace on Earth," an Encyclical Letter by Pope John XXIII. A critical question embedded in that document is whether a nation like ours, a university like ours, can be a source of social justice in the world. We must ask, what are the embedded structures that sustain poverty and the huge gap between rich nations and poor nations.
Second, as a university founded in this city in the same year as the Republic, another set of questions faces us. As university, what is our contribution to the construction of civil society both in our nation and in this city? What is our contribution to the development of social capital-- the glue that holds together our republic, the glue that holds together this very city? We live in a metropolis of great resources-- but also a troubled city-- and we have a responsibility to ensure its vibrancies. Its destiny and ours are inextricably linked
Third, being located in the epicenter of democracy, we need to ask questions like, what is the place of our nation in the world? How do we view our role as the world's only superpower? How do we understand the role of religion in our conduct of international relations? What is the role of the nation-state? How do we understand the behavior of nations in a changing global economy?
How do we ensure that Georgetown students can function and eventually lead in an increasingly global workplace?
I can't imagine a more exciting time to be part of the academy, especially here at Georgetown. A fourth set of questions goes to the very foundation of the nature of an academy. How will the disciplines evolve? What kind of students should we seek to educate? What is the future of scholarly communication? The Internet has opened up so many new possibilities for us. Will we realize the capacity for new levels of analysis, new forms of argument that will come as a result of new developments in hypertext? Will we have a place in the advances that will define the next decades in the life sciences?
This region has one of the highest concentrations of bioscience activity in the world. How can Georgetown scientists contribute to this knowledge explosion? Will our faculty engage and critique this developing scientific knowledge from their informed perspectives of ethics, public policy, and law?
This is by no means the full universe of questions that this academy must address to realize our promise. But my hunch is that the great universities of tomorrow will be those that think through such questions today, from the strategic perspective of how and where we choose to grow.
We'll select some of these questions as having more relevance at this time, questions that may make more sense for us as a way of developing this academic community. This will be some of the work that we undertake in the year ahead.
It matters that we live with these questions. It matters. Many factors alter the context in which we operate, and we change and adapt to those factors. We modify our curricula. We develop new programs, such as executive education and the Communication, Culture and Technology Program. At considerable expense, we purchase new technology for our students and scramble to keep up with them in its applications.
But we also have to remember that, while pressures come to us from various sectors-- from the corporate sector, from government, from the demands of social justice, from the opportunity to help shape domestic and foreign policy-- if we ever give up the elements of our fundamental mission that make us distinct among all other institutions that constitute the world in which we live, we will ultimately fail to sustain ourselves.
Thus the third responsibility: We have to continuously enhance those defining elements of our core mission that make us who we are. We have to ensure the excellence of those enduring commitments, day in and day out, year in and year out.
Fundamentally we teach. We transmit knowledge from one generation to another. We also learn. We engage in research and scholarship. We create knowledge. This is what we do. And here we do so in our own distinctive way. We teach an elite group of young people. We engage in a very high level of research and scholarship and discourse. And in that discourse, we want to influence. We want to have a say in the way things will unfold in our world.
But we must also sustain the capacity to step back and-- regardless of the consequences-- evaluate, assess, critique. Engage in critique of what is happening. Consider and propose alternatives. Alternative interpretations, alternative approaches, alternative methodologies.
We have a luxury here. The luxury is time. Some of you engage in projects whose impact we may not know until long after you are retired. It may be a brick in a building that isn't even being constructed yet.
This luxury of time allows members of our community to contribute to the public discourse in different ways over the course of a career. For example, some members of our faculty will be drafters of federal legislation, will be involved in the crafting of foreign policy. And other faculty will be the leading critics of that very legislation and of that very policy. And the roles may shift. Today's critic may be tomorrow's drafter. Today's drafter may be tomorrow's critic. This is one of the great strengths of the academy.
We will find ourselves continuously challenged by changing dynamics in the world. Changing dynamics involving intellectual property and licensing issues, partnerships, new opportunities for pedagogy, and we'll find ourselves engaged in all kinds of new and different activities. We'll be innovating and creating. We'll be partnering in new and exciting and different ways. The boundaries that define the university are blurring and expanding.
But we can never lose sight of the fact that we bring the perspective of time and a reflective capacity to the practices of the day. That reflective capacity is not provided in any other sector of our public life. Not by the think tanks committed to presenting a certain kind of idea. Not by research labs that have as their goal certain kinds of applied research. Not by government agencies that privilege a certain set of priorities.
As an institution, as a community, we have to sustain the capacity for that reflective perspective, that reflective awareness, that reflective assessment of what is happening in our world today and to look without concern for the consequences. We must ensure that here we can live the questions as deeply and for as long as necessary so that we can get to the truest grasp of reality.
This is the third responsibility of a great institution: to never lose sight of the fundamental, defining, and utterly unique characteristics of the Academy.
What an exciting time, and extraordinary time to be engaged in the mission of this university. Thank you to those who make our mission come alive in your classrooms and in your research and scholarship. And thank you to all whose work provides the support and sustenance our mission needs. Thank you for everything you do to sustain this unique-- this great-- academic community.