Remarks by President John J. DeGioia
Faculty Town Hall, Fall 2008
September 25, 2008
I am grateful for this opportunity to meet with you today. This year is off to a very good start at Georgetown. We have exceptional new classes of students on all three campuses…we have welcomed distinguished new faculty colleagues…and we have tremendous momentum as we move toward the public phase of our Capital Campaign. At the same time, the extraordinary changes in the financial sector of the American economy—and the equally extraordinary responses here in Washington—do present new challenges for our community…and I will focus my comments on these challenges today.
In my remarks this afternoon, I wish to speak to you about three strategic imperatives that organize our work and that will be key aspects of our upcoming Capital Campaign.
We organize our work particularly in anticipation of a new fundraising campaign along three strategic priorities. These priorities will not be new to you because, as a community—faculty, administration, boards—we’ve been addressing them for some time. The imperatives emerge out of a vision for Georgetown that share—Georgetown is an institution that seeks to improve the world—that enhances the common good—through knowledge, scholarship, and leadership. We make this vision a reality through the creation, discovery, and application of knowledge across the global community…and by preparing leaders with a profound understanding of the nature of our world—and the responsibility they have to improve it. In other words, we do it through the work that each and every one of you does every day.
As we move forward, our continued ability to fulfill our promise depends on pursuing a set of strategic priorities:
• Strengthening academic and research quality;
• Leverage our assets to address selective, crucial, issues of our age;
• And strengthening our financial platform.
Strengthening Academic and Research Quality
We all know—and you live with this reality every day—that universities are highly competitive in terms of students, faculty, ideas, discoveries, and fund raising. We are in constant competition to attract the strongest students...to recruit and retain faculty that make a disproportionate difference…to generate proposals that will ensure the greatest contribution. The universe that we operate in is one where each institution must be more strategic…more effective in fulfilling their missions…more conscious of evolving standards of excellence…than at any time in our histories.
There are many ways, of course, to compete—but the key for Georgetown is to continue to strengthen our academic excellence. Nothing is more important to our ability to make the kinds of impacts we seek than to sustain and strengthen our commitment to excellence in our academic mission. That’s why I’m so pleased in the quality of recruitment…that the undergraduate Class of 2012 has the deepest and strongest pool of candidates for admission—an 18% selectivity—the most selective class in our history… that the same could be said for the strength of our pools in law and medicine…and that the Medical Center recruited Lou Weiner to lead Lombardi. Those are the kinds of achievements I point to when I tell our Board of Directors that we have a community of academic leaders committed to enhancing our excellence in one of the most highly competitive sectors of American culture.
We are at an extraordinary moment in the history of our community. In 2003, we completed a $1 billion fundraising campaign. We are now in the quiet phase of a new campaign, in which we expect to exceed significantly the goal of our last campaign. We are now raising more money that at any time in our history. As I have shared with you in previous conversations, our efforts will focus on financial aid, faculty and infrastructure.
We are now in the process of determining how best to achieve these goals. We will need to tap into the creativity, the imagination, the expertise of our entire community to identify the ideas that will best ensure our ability to fulfill our promise.
Leveraging Assets to Address the Issues of Our Age
A second strategic imperative is to leverage our assets—our location, our international character, our Catholic and Jesuit identity, and our excellence as a great American research university—to address crucial issues of our age. For us, after very careful and disciplined work, involving many of you, as well as our Board of Directors and leaders in the philanthropic community, we have identified four themes: globalization; interreligious understanding; the sciences; and public policy.
With globalization—which we’ve discussed at length—in other moments like this—we will continue to explore a whole range of initiatives: From our new transnational law center in London…to our participation in the Universia network…to deepening our engagement in China, Africa, and other parts of the global community—we will seek to identify how Georgetown can best evolve from a national university with an international character, into a truly global university.
In the area of interreligious understanding, we are engaged in efforts such as our work to develop the first annual report on the state of dialogue with the Muslim World…to hosting the third in a series of meetings in response to the Common Word, an extraordinary document presented just a year ago by Muslim leaders inviting a new dialogue with Christian leaders.
As part of our focus on the sciences, over the past six months, the main campus community—under Jim O’Donnell’s leadership—has been working to forward the new Science Building, as well as to explore new opportunities for research and teaching.
Our fourth area of emphasis—public policy—has emerged out of some extraordinary work involving so many of you in a project that goes back a few years now, called Reflective Engagement in the Public Interest—an exploration into how Georgetown can further our engagement in the work of public scholarship.
One of the most important ideas we are exploring is the potential of developing a new School of Public Policy. This is an opportunity of extraordinary promise for Georgetown. Most other schools of public policy were established during the period following the Great Society in the 1960’s…or as a response to phenomenon at the state level. We have a chance to expand upon our existing strength in this field and to create, in the epicenter of democracy, a policy school that responds to the changes and challenges of the 21st century.
Georgetown is ideally located at the crossroads where policy and politics meet. We have a global presence and a Catholic and Jesuit identity that offer truly distinct resources in support of this purpose. We also have a Board of Directors and a philanthropic community that has signaled to us that now is the time for Georgetown to take a step forward in this area.
I’ve been engaged in many conversations with a number of colleagues—including Jim O’Donnell, Alex Aleinikoff, Howard Federoff, Tim Barbari, Bill Gormley, Gerry Mara, and colleagues from GPPI. The basic question we will explore as a university community in the coming months is what distinctive role such a new school could play for our country, for our city, and for our university.
These four areas—globalization; interreligious dialogue; the sciences; and public policy—are, of course, very different fields of inquiry. But they also have much in common that distinguishes them as areas of opportunity for Georgetown. They are all areas of profound significance…they are areas of potential growth…they are areas which have garnered major investments from the philanthropic community…and they are areas where Georgetown’s location, identity, prestige and faculty position us for important steps forward.
Strengthening Our Financial Platform
Of course, everything we do on the Hilltop depends on a firm financial foundation, and that brings me to our third strategic imperative: Strengthening our financial platform.
Efforts to enhance our financial platform—including the creation of a five year financial plan by Senior Vice President Chris Augostini and our financial management team…a stronger balance sheet…and solid fundraising efforts—were all factors in the decision by Standard & Poor’s earlier this month to raise Georgetown’s credit rating from a BBB+ to an A-. This could not have happened at a better time.
As I mentioned, fundraising is on an upward trajectory. I’m glad to report that in fiscal year 2008, we raised $147 million in new commitments—the second-best year in University history for new commitments. We also had the best year, ever, for cash raised— $109 million.
Extensive research on the University’s alumni donor base, conducted by Vice President for Advancement Jim Langley and his team, has played a pivotal role in our fundraising success. An important dimension of this research has been conducted through what we call the “Discovery Initiative.” The program connects current students and recent graduates with alumni in order to learn more about alumni’s experiences with the University since graduating…and how these experiences have impacted current engagement with Georgetown. It is our hope that through this effort we can begin a process of more deeply engaging a broader group of our alumni.
Two other things bode well for the Campaign. First, the Office of Advancement has increased the major gift prospect base by 125% in two years…and has doubled both the number of signed gift agreements and the average dollar amount per agreement in the last year.
Although this is all excellent news, strengthening our financial platform will require focus in four major areas:
• We must increase revenue—including growing our endowment and looking for opportunities to expand our existing framework to generate new revenue through philanthropy and investment management.
• We must continue to enhance our advancement efforts—including successful completion of our Capital Campaign and forging stronger relationships with alumni;
• We must continue to improve the financial performance of our Medical Center;
• And we must strengthen financial management and planning efforts across the institution.
Over the past several months we have experienced some of the impact of the changing financial conditions. Increased costs for energy, disruptions in the market in which we have placed our debt, volatility in the student loan market, higher inflation — all have demanded an exceptional diligence in how we manage our financial affairs. I am grateful for the leadership of our Senior Vice President and Chief Financial Officer, Chris Augostini for providing a steady hand during these turbulent times, and for the deep engagement of several colleagues who work with Chris on the Faculty Budget Committee. We are also supported by a superb group of Board members with whom we are in regular contact.
I’d like to speak to four aspects of the impact of the financial challenges of the past several months and to offer a few reflections on the implications for Georgetown. First, a word about the work taking place on the Main Campus, second, on faculty salaries, third, the science building, and fourth, on the implications of the events of the past week and what they might mean for us as we move forward.
Throughout the summer and early part of this semester, the Main Campus has been engaged in efforts to strengthen its financial plan. Earlier this year it was becoming clear that the Main Campus was not on target to achieve its budget for FY 2008 and that the underlying assumptions in the plan were not likely to be met in the coming years. I asked Jim O’Donnell to begin work to address these concerns and over the past months he has been working with many colleagues on the Main Campus in addressing the underlying fundamentals in the plan. Why is this important? Embedded in the financial plan are commitments to faculty salary growth and to the construction and operation of a new building for science. Our ability to sustain these commitments is dependent upon our ability to achieve the targets in the Main Campus financial plan. It is important to remember that when we open the new science building, we will incur an additional $12 million annually in operating expenses. We need to know that when the building opens, we will be able to absorb these new operating costs. Our means for ensuring that we can absorb these costs is to achieve the goals in the financial plan. The work taking place on the Main Campus is to ensure we are on track to achieve the financial plan.
Second: Faculty salaries, specifically, for the Main Campus. This has been a significant commitment over the past several years. The faculty salary plan adopted in FY 2000 has been in effect for nine full salary cycles and Wayne Davis has shared with me his analysis of the impact through eight years of the ten-year plan. We have exceeded the benchmarks at all ranks – by every measure the plan has been a success. We have continued the plan into this, the ninth year. In our current financial plan that includes FY 2010, we have as our goal 4.75 %. As you would no doubt be concerned given the volatility we are experiencing in our global financial system, it is our intent to do everything in our power to achieve this goal and provide a faculty salary pool of 4.75 % for the year that will begin in July, 2009.
The science building... To date, we are on track for construction of a new science building. We are expanding our utilities plant and infrastructure to accommodate this new building. Spiros Dimolitsas has been pursuing the necessary permits – the construction permit application is moving through the District of Columbia approval process.
This is however, one area where the volatility in the capital markets is creating uncertainty for us. Because we will need to borrow significantly to cover the costs of this building – in the range of $50-75 million, we need to be able to get access to affordable capital. Typically, we go to the capital markets and offer to sell debt. In essence, we are borrowing money to cover immediate expenses. Investors look at us and the interest rate we are willing to pay and make a judgment regarding whether to invest. The decision by Standard and Poor's to give us an upgrade in our rating, means we are evaluated as being worthy of lower interest rates. Right now, the capital markets in which we would seek to sell our debt are not functioning in an optimal manner. This is the challenge we face with the science building.
I will ask Chris to join me in a moment to offer further thoughts on the current context in which we are operating, but a last word on how we interpret the events of this past week. For us, the challenges actually began much earlier in the year, when we saw the first signs that the capital markets were not functioning in a predictable manner. Chris has worked with our Board to anticipate and respond to challenges in the capital markets and the potential for concerns in the student loan markets. I will ask Chris in a moment to speak to both of these issues.
A final concern is philanthropy. Jim Langley has shared with us that although moments like this will create some concerns, there is an extraordinary resiliency for philanthropy.
I hope that all of you found it helpful that I built my presentation today around our three academic imperatives—strengthening academic and research quality; leveraging our assets to address crucial issues of our time; and strengthening our financial platform, even in a period of financial turbulence.
These are themes that inform all of our work…that will certainly shape our next Capital Campaign…and that are the building blocks of the next phase of Georgetown’s extraordinary ascent as a world class research university.
…And now I’d like to hear any questions or comments you may have…