Remarks delivered by President Robert H. Edwards to the Brunswick Rotary Club
December 9, 1996
Story posted December 09, 1996
Good morning. It's a pleasure to be with you today. I propose to share with you some thoughts about Bowdoin College, focusing on the institution from an angle of vision that may be somewhat similar to the one you adopt as managers and entrepreneurs when you think about your own business organizations.
First, how does the president of a college spend his time? I'd estimate that I spend about 20 percent of my time on day-to-day management, putting out brush fires, and generally keeping the ship under sail. Another 20 percent, I think, I spend on genuine long-term, future planning: the imagining and speculation that goes on with a relatively small number of senior staff colleagues, trustees, and faculty committee chairs, and that keeps us on our toes and avoiding surprise. But more than half my time, say 60 percent, is spent on the medium term: situating Bowdoin in the firmament of higher education, not next year and not twelve-fifteen years from now, but in the intermediate future, that we can see with some but not perfect clarity. The principal job of college presidents, I think, given the rather stately -- some would say glacial -- pace at which we move, is to select the action agenda for that period.
As one of Brunswick's major industries, and because the College has lately been in the news, due to the intense interest of the community about the nature and possible impact of its expansion and building plans, I thought to share some ideas about that medium-term future. This means dwelling on some of the principal issues that the college faces. This may be of interest to some parents among you, although I fear that to the parents of college- age students, I offer little financial solace!
For Bowdoin, the issue boils down to one major question: how over the next decade or so can the college maintain or improve its competitive position in attracting and educating the most promising young people in our society -- those with the intellectual and moral capacity for leadership in their fields? This question in turn boils down to two sub-issues that, in some degree, compete with each other. The first is quality: what educational and related programs do we need, what sorts of students, faculty, and staff do we recruit, what facilities do we require, in order to retain our competitive position? The second is affordability: can we pay and support our faculty and staff such that we can attract the best, and, then, after paying everyone and buying and maintaining the physical plant and instruments and library materials (not just books but computer hard- and software), can we remain a real choice for excellent young people, whose families could not afford the so-called "sticker price." And we have that concern notably here in the State of Maine, from which we draw 15 percent of our students some 75 percent of whom need financial aid.
What, in fact, is Bowdoin's field of competition -- or its niche, as some would put it -- in the national higher education scene? The percentage of American high school graduates entering higher education rose between 1980 and 1993 from 49 percent to nearly 62 percent. Nearly three-quarters of these students attend institutions charging less than $8,000 a year in tuition and fees; nearly one-half attend four-year colleges and universities that charge less than $3,000 a year.
Of this national enrollment, Bowdoin, and undergraduate colleges and university colleges like us that charge more than $20,000 a year, constitute about 2 percent. We track quite carefully the expenditure patterns and the fees of two groups of institutions that set themselves educational goals and standards roughly like ours. The first is a forty-college comparison group; and then there is, more intensively, a set of eighteen "National" colleges with whom we compete most actively for students and faculty. If you take out the two extremes -- the least and the most expensive college from this eighteen-college group -- you'll find that the most expensive is $27,066 and the cheapest is $25,810. This is a modest difference of $1,200 in annual comprehensive fees that average $26,500 -- exactly Bowdoin's price.
The best of these residential, liberal arts colleges, such as Bowdoin, offer a certain kind of educational value. This is not to deny the important, serviceable and frequently excellent education offered by a state university or a community college. But our type of education presupposes certain characteristics: small classes, accessible professors, libraries and labs that are truly available to undergraduates, decent food, pretty good residential arrangements, career centers, counseling and health centers, campus security, 25 or 30 well-coached intercollegiate sports, outing clubs and social clubs, green fields, historic campuses, and so forth. We believe that this sort of education -- services of such density and intensity -- presents an able, highly motivated student with astonishing opportunities for intellectual growth, social experience, and leadership. At the heart of this value is a standard of educational rigor and seriousness, which has become known over the years to employers and graduate schools; and associated with it is a body of successful, loyal alumni, who advise, assist and support the institution and its graduates.
The price comparisons I've mentioned indicate these colleges compete, in the main, not by price but by the quality, variety, and singularity of their overall programs. Financial aid (or by another description, a discounting of their educational price ) has traditionally been provided only to students with demonstrated financial need, and then in order to sustain the exceptional quality and character of the student body these institutions seek.
Today all these colleges face the same two problems: competition based on program quality and price. In recent years all of them have gotten better. For example, from virtually no computing budgets twenty-five years ago, we are all spending many millions each year on fiber-optic networks, hardware, software, and staff to bring every residential student onto both the campus network and the Internet. We are all building or have built modern science centers. And we have built campus centers and athletic facilities, in the belief that social life and athletics help develop the personal and moral dimensions of a student's character.
So these national colleges are competing against one another, and, most especially, they are competing against research universities. Thirty years ago Bowdoin used to get all the best and the brightest students in Maine. No longer: at a Harvard graduation two years ago I was chastened to hear the senior oration given by a senior from a small town in northern Maine. Upon inquiring about this extraordinary lapse on Bowdoin's part, I discovered that our admissions office had tried, but failed, to trap him on his way south. High ability students are attracted by the great variety, size, and apparent infinity of choice of the universities. Most are also seeking to qualify for graduate and professional school and believe, wrongly, that the early specialization that is possible at a university will give them an advantage.
We understand the anatomy of our competition well because we track assiduously what other colleges and universities charge, how their budgets break out (because the Federal government collects and publishes this information), how our financial aid packages compare, and which admitted students we lose to whom and why. We conduct surveys and interviews without number.
How do we pay for what we spend to meet this competition? As I speak, we are debating the budget for fiscal 1997-98, which will open on July 1, 1997. It's a public, complex, tough process, and the draft budget currently shows a $1.4 deficit, as it tends to do at this point in the debate before creaking into balance around February. The expenditure trade-offs at any rate are complex: how do you weigh more micro-computers against an equity salary increase for support staff; or half an additional career planning person against support for the program to improve student writing; or, the age old trade-off between salary increases and increased financial aid
But the income alternatives are analytically very simple indeed. Ninety-five percent of what we call our Educational and General -- or E&G -- revenues (that is, all our educational costs, less such auxiliary services as dining, the bookstore, and the residence halls) come from four sources: tuition provides 65 percent; earnings from the endowment provide 20 percent; the annual gifts of alumni, parents and friends provide 10 percent; and government grants and contracts provide 5 percent.
Practically speaking, this means that a college like Bowdoin can increase its revenue really in only two ways: by increasing tuition revenues or increasing draw-down from the endowment.
The most attractive long-term solution is to expand the value of the endowment, thus producing increased income. This requires discipline. The experts tell us that, if you want the next generation to have the same benefits, in real terms, as this generation, you can spend roughly 4.5 percent of the endowment each year. (Assuming that, year in year out, you can anticipate total return earnings and growth of around 7 percent and inflation of 2.5 percent, you get a spendable 4.5 percent.) It sounds quite grand to say that Bowdoin has a $300 million endowment, but in that comparison group I have mentioned, Bowdoin's is 8th in size. This is why we and other colleges maintain able professional fund-raising staffs to see that, in addition to investment growth, the endowment grows through infusions of fresh capital.
But you can also increase your tuition. Now, for every dollar in tuition Bowdoin takes in, and every dollar of increased tuition we charge, we turn around thirty cents in financial aid. And there is also a limit, set by what a competitive market will permit, to what we can charge -- as we seek the same students, from the same families, that the other seventeen colleges and assorted universities are seeking.
An additional complication of the tuition scene has intensified in recent years -- which is entirely separate discussion -- is the effect of the gradual departure of the Federal government from grant assistance, leaving colleges to fill the gap through their own resources, while the government has turned very substantially to providing student loans rather than grants.
To turn for a moment from the budget to capital expenditures, I'd note some of the same constraints. A college either raises the money it needs for new buildings or renovations from donors, as we did for the science building and the Smith Union; or it raises the money by borrowing. (A well managed college takes care of routine major maintenance from its own annual budget.) Bowdoin borrowed funds, by selling bonds, for the new residence halls and dining facilities. And borrowing, of course, produces another budgetary cost -- debt service! So the rather glamorous array of cranes and scaffolding that may suggest a pleasant affluence up the hill is really the consequence of the most careful and stringent calculation: what we could raise from our donors (mainly an alumni body of about 15,000 and a few foundations) and what debt we could afford to service without breaking the budget -- all to meet pressing competitive needs. Non-trivial on the borrowing side is maintaining or improving the college's A-1 bond rating, since this rating has a major effect on interest rates that we pay.
Back to the budget. Now, one way that a college can generate revenue without increasing the average fee for students, is by increasing the size of the student body. That is something that you do rarely and carefully, and Bowdoin did that too: the 150 student increase over four years, which we will conclude next year, has enabled us to create twelve new full-time faculty positions, and an array of lab instructors and other posts, while also meeting with the increased revenue the debt service necessary to create two new residence halls for this population increase. This 10 percent growth in students, once again, was driven both by knowledge and competition: the need, notably, to increase the number of our faculty in biology and chemistry, whose enrollments are soaring.
Now the point of all this is to suggest something that may not at first be obvious. An institute of higher education is, at the financial level at least, and despite its glorious and noble purposes, a business. If it is not run as a serious business, the students and the quality of the academic program will gradually but certainly deteriorate. All you need to do is look at British and continental universities today.
Bowdoin's budget is very finely balanced. It was in grave deficit until fairly recently, and it has shown wafer-thin surpluses in recent years. It took shrinking our staff by sixty people to get there. This is why the discovery that the towers of the 1840 chapel -- our fine Upjohn chapel -- may be shaky keeps me awake. (How could you possibly assimilate these costs into the annual budget? Who among the alumni would be interested enough to pay for it?). It is why the idea that taxing the college or requiring some property-value-based service fee worries me. And on balance, the tax idea worries me more because it would become an additional annual cost, while chapel towers probably have to be addressed only every hundred and fifty years or so. I've suggested to Governor King that adding a tax to a college would be like putting an export tariff on a Maine produced product. The world out there can buy high quality education in Massachusetts and Vermont and New Hampshire. Digesting another major cost would require us either to reduce services or pass the cost along in our price, creating a competitive disadvantage.
Now what of the future. The College's formal 10 percent growth will be completed by 1997-98; one hundred fifty additional students will have been absorbed, as planned, into the academic program, dining and residences. The sciences will be set, we hope, after the current capital campaign (which is going fine -- $113.5 million is the target; $75 million in hand with a eighteen months to go).
Our immediate and intermediate-term goals are now qualitative. As I commented in this year's annual report to the Trustees I am persuaded that the greatest qualitative need of residential colleges today is not intellectual or academic, but moral and social: can we invent structures of self-discipline and responsibility in a student body coming from a great variety of backgrounds, and from a society with few common standards of self- discipline and responsibility? This is the great experiment that Bowdoin will take on for the rest of my tenure at the College. Because Bowdoin students are so able, and have such promise -- they represent America's very best -- it is an experiment that has implications broadly for our society. We approach it with wonderful new resources -- a well-led and newly staffed office of the Dean of Student Affairs and our Commission on Residential Life, led by one of our most able former Overseers.
We have got to improve the residential life of our students, for their good and for that of the community of Brunswick. We have one of the best student bodies in the country, and it always pains me whenever I hear them characterized as somehow malign or dangerous. Many of you know them individually as friends and as volunteers, and many of you have been wonderfully hospitable to them. But I -- as many of them do -- agree that collective social behavior of some residential buildings has been unacceptable. I and Craig Bradley and our Board are determined to change things. My own feeling is that fraternities -- independent, self-perpetuating and self-administering social organizations -- have outlived their educational value, even though we can point to constructive elements about them. This year, the College, through its Commission on Residential Life, is considering qualitatively different models of residential life.
This inevitably means that we've got to bring more of our students back to the campus to live in appropriate college residences. The two new residences completed last fall appear to be popular and working well. It is unclear at present whether or when the College will have access to fraternity structures -- which themselves need major investments on the order of $3 million to meet standards of health and safety.
But at present we have a major problem in siting the residence halls we need, even on land owned by the college. And of course we've got to calculate very finely the debt service question before undertaking a fresh building program. Somehow we're going to have to solve the residence hall siting problem, and I must say here, as these difficult deliberations have gone on, how truly appreciate we are of the remarkable and strenuous work done by members of this Rotary club that are on the Zoning Task Force. Their mediation between the College's needs and neighborhood sensitivities has been thoughtful, intelligent, and incredibly generous of their personal time.
Longer term, although there is at present no growth planned, I think it is most sensible to get some guide to the future by looking backward. As I commented in my talk to the Zoning Task Force, Bowdoin in 1970 was a college of 900 males. Seven or eight years later it was a co-educational campus of approximately 1250 students. When I arrived in 1990 it was a campus of 1485 students, and by next year it will be a college of 1550 students. The forces of competition, the growth of knowledge, the economies of scale required by extraordinarily expensive computer systems and science facilities all militate toward continuing growth. Every good college in the country is growing and, to return for the last time to that group of eighteen colleges with which we compete, Bowdoin is fifteenth in size out of eighteen -- and will be so even after this current period of growth. It is inevitable that, to preserve its vitality and its competitive position, the College will continue, carefully and publicly, to grow in the years ahead. I believe that, as an attractive, clean industry, with many benefits in its programs and facilities for the citizens of Brunswick and Topsham, Bowdoin's continuing vitality is important to a vital municipal area. Neither the College nor Brunswick wants to be the place where, metaphorically, the train no longer stops.
I'm optimistic that we'll work things out and that Bowdoin will continue to flourish. Colleges always have constraints on their growth. At Carleton we had the flood plain of a river. Here we have worried neighbors. On balance, I'd rather have neighbors you can work with, rather than a geological phenomenon!
As a business Bowdoin must seem a bit odd. We grow like the rings of a tree, not strictly rationally; we rarely shut down an unprofitable line; we are highly competitive, and yet we are not brilliant at differentiating our products from others, leaving it to people like Mel Elfin at U.S. News to do it for us -- and we carp at him; we have a labor force expected to be on the leading edge of knowledge, but we give it contracts for life; and we cheerfully add capital per unit of output, rather than the other way around (our science building will improve the quality of our science programs -- but it will not increase the number of students we teach and graduate).
For all that, I believe that we are educating today the Mitchells and Cohens of the future. Bowdoin will grow, as I have mentioned, carefully, consultatively, and publicly, because growth and quality and competitiveness are related. And we will do so, by the grace of God, with the blessings of the community.
Thank you all.
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