PRESIDENT WILLIAM E. KIRWAN
The President’s Report to the Board of Trustees
October 5, 2001

Thank you, Mr. Chairman.  Members of the Board of Trustees.

Thirteen days after we last met, our nation suffred one of the most tragic days in its history.  As we would expect, the members of our university community responded to this tragedy in an exemplary fashion.

-- The football game scheduled for Sept. 15 was immediately postponed in a move later adopted by most other intercollegiate and professional teams.

-- In its place, we joined with the Dispatch Companies and the American Red Cross to sponsor a “Show You Care” Telethon at Ohio Stadium that has raised well over $800,000 for the Red Cross Disaster Relief Fund. 

-- The atmosphere at that event, with over 10,000 people present and waving a sea of American flags, is hard to describe.  It was among the most inspiring experiences of my life.

-- Also inspiring was the candlelight vigil at which thousands of students, staff, and faculty gathered on the Oval on Sept. 19 for a very moving candlelight vigil to commemorate the tragedies.

-- Through teach-ins and other programs, faculty and staff engaged our students in discussions about the tragic events and their implications.

-- Expanded counseling services were quickly made available to students and others.

I should add that we have also taken steps to assure that our many international students continue to feel safe, comfortable and welcome here. 

I am pleased to report that at this point, just 23 of 4,000 international students elected to return home and that there have been very few reports of verbal harassment or threats and no reported physical harm.

In addition, we have communicated with the 218 U.S. students who are studying in 25 countries, passing along safety precautions, and have notified embassies in the affected nations.

Finally, we continue to facilitate opportunities for all students to learn more about other cultures and to be tolerant of and respectful toward people who are different from themselves.

Throughout this period, the show of unity, respect, community spirit, and feelings of mutual appreciation have been extraordinary.  I am proud of how our community reacted.

The events of Sept. 11 will affect our nation and state in many ways, including our economy.  This will, in turn, have a significant impact on the university and/or progress with the Academic Plan.

You will recall that last spring, because of fiscal constraints at that time, we identified four primary initiatives on which to focus in implementing the Academic Plan.  Given the importance of rewarding and supporting our outstanding faculty and staff, and given our current position relative to our aspirational peers, we identified compensation as Job One for the next several years.

Recognizing that state funds will be scarce, at least in the short term, we said that, if necessary, we were prepared to generate compensation funds internally.  We still are.

We also identified three initiatives, vital to the goals of the Academic Plan, with establishes sources of funding.  These are:

-- A series of enhancements to our undergraduate program through use of the “over-the-cap tuition” funds;

-- A major biomedical research initiative drawing in part upon the Tobacco Settlement funds; and

-- Creation of an Institute for the Study of Race and Ethnicity in the Americas, using funds earmarked last year.

While these plans remain intact and will move forward, events of recent months have made our task much more difficult and our future much less certain.

As we know, the economy was weakening even before Sept. 11. 

State receipts in Ohio were below estimates by over $215 million in the first three months of this fiscal year. 

The most recent Supreme Court decision requires additional state spending on K-12 education of as much as $1.24 billion per year, retroactive to July 1, 2001. 

This morning’s Dispatch reports that the Governor will enact a 6 percent recision on all state agencies for the current fiscal year.  For us, that would amount to approximately $18 million.

Despite these discouraging economic developments, we believe it is essential that we both address this anticipated budget recision and forge ahead with the implementation of the Academic Plan.  I say this not only for the university’s sake, but for our state as well.

>As you know, our pursuit of academic excellence was designed in part because the state must have a distinguished flagship university if Ohio is to prosper in the knowledge economy.

To respond to the anticipated recision, to move forward with the Academic Plan, and most especially, to reward and support our talented faculty and staff, we must undergo a major redirection of existing resources.  This is a daunting task and will require every unit at the university, starting with the President’s Office, to prepare plans for a significant reprogramming of its budget.

One major priority in the Academic Plan – but not the only one to be addressed through this reprogramming effort – will be a multi-year competitive compensation plan. 

As you know, our faculty salaries have fallen to near the bottom in comparison to our benchmark peers.  Similarly, the average salaries for many categories of staff have fallen below the median of their benchmark comparison groups. 

I know the Board shares our view that we must address our compensation issues and address them in a timely manner.  Our goal is to achieve – within the next three or four years – the median level in faculty compensation among our benchmark institutions and the median level in compensation by job category among the designated staff comparison groups.

We estimate that, at present, our salaries are on average 3 percent to 4 percent below that goal.  Thus, over the next several years we must not only increase salaries at a rate that keeps pace with our benchmarks, but also add, each year, roughly an additional 1 percent. 

In carrying out this salary plan, we will be guided by the following six principles:

1. The Academic Plan will be the driving force behind everything we do.

2. Individual compensation will be based on merit.

3. Compensation markets are differential.  Therefore, compensation targets may vary among the colleges and units.

4. The responsibility for generating resources must be shared between the central administration and the colleges and support units.

5. Compensation decisions must be carefully coordinated with the budget restructuring initiative.

6. We must give priority to protecting the academic core and academic excellence in these uncertain and volatile financial times.

I will have more to say about the details of this redirection-of-funds strategy in my State of the University address to the Senate next Thursday.

However, I do want to make two points very clear today.  First, our compensation strategy will be more than just the development of a competitive structure in a statistical sense.  We have a large body of people – ranging across all disciplines and support units –who make important contributions to the university.  We must recognize their good work in our compensation plan.

In short, all faculty and staff making contributions to the advancement of the university goals will receive compensation increases that move them to more competitive levels.

And second, we will pursue this strategy in an open and consultative fashion.  We will ensure that funds are redirected within each college and support unit in a way that most effectively meets that unit’s compensation and other needs as it advances the Academic Plan.

As far as the timing of this redirection is concerned, the colleges and academic support units will provide us with detailed information and specific plans in January.

Between now and then, we will extensively discuss and consult on such topics as compensation targets with faculty, department chairs, deans, Senate leaders, and vice presidents.  College and support unit plans will be discussed thoroughly and in detail throughout winter quarter.

As usual, we will ask this Board to adopt salary levels in May for FY 2003.

We will also continue our drive for increased external funding.  Support for higher education continues to build across the state, and one day, our efforts will pay off.  We intend to do all within our power to see that this day comes sooner rather than later.

The coming year will test us.  We must do the very best we can with what we have. 

In order to give our faculty and staff the support they deserve and to move the university toward its ambitious goals, we must demonstrate leadership and be willing to make tough choices.  I want to assure the Board and this community that we will do precisely that!

Our resolve in these difficult times is inspired by our progress to date.  In recent years, this university community has demonstrated the capacity to make hard choices that promote excellence in a focused and collaborative way.  We will not be deterred by the difficult times that surely lie ahead.

Recently, we pulled together information on our Academic Plan accomplishments over the past year.  I think you will find this list impressive.  It will be part of an updated Plan to be issued later this fall. 

This new academic year is also starting off well.  We once again welcomed the best-prepared freshman class in the history of the university.  Average ACT scores reached an all-time high of 25.2, compared with 22.8 in 1995 and a national average of 21.

A third of this class was in the top 10 percent of its high school class.  Two hundred and 50 were valedictorians.

We’re also making progress in diversity.  Our new freshman class is the most diverse class in our history, with about one in five members of a minority group.

On Wednesday, we dedicated a Multicultural Center that will spur dialogue and learning about the myriad cultures that make up this campus.

And during halftime tomorrow night, we will celebrate our fantastic Ohio State faculty – recognizing 26 faculty members who received our most prestigious awards last year.

Past progress aside, the environment going forward will be challenging.  But our vision and priorities are the right ones, and we will prevail.

Mr. Chairman and members of the Board, that completes my report.