University Presidents

Jan. 21, 2009

Transcript:

Ted Simons:
Lawmakers are proposing huge Cuts to the state's three Universities. Legislators are suggesting cuts of upwards of $243 million just this year, prompting talk of drastic action including the possibility of closing entire Campuses. Here to talk about that is Arizona State University President Michael Crowe, University of Arizona president Robert Shelton, and Northern Arizona University president John Hager. Thank you so much for joining us tonight on "Horizon."

Michael Crow:
Thank you.

Robert Shelton:
Thank you.

John Haeger:
Thank you.

Ted Simons:
President Crow, let's start with you. You've heard the numbers. You have seen the numbers. You commented on the numbers. Tell us, what will universities Do if these cuts go through?

Michael Crow:
The basic response we have to these types of budget recommendations is to redesign the institution and repurpose the institution on the assumption that the state is pulling out of its Constitutional duty to support the institutions, so it requires us to move and position ourselves in a completely restructured way.

Ted Simons:
Does that mean the possibility of closing entire campuses?

Michael Crow:
At the most extreme level of the recommended cuts coming from the joint budget committee it absolutely means campuses of Arizona State University will be closed.

Ted Simons:
President Shelton, you've seen the plans, the numbers. Your response.

Robert Shelton:
Well, my response is of course very similar. While each university of structured differently and each has different core activities to protect to serve the people of Arizona, when we get to the extreme levels in the J.B.L.C. document, $100 million just to the University of Arizona this fiscal year, that necessitates closing actual units, making surgical decisions rather than across the board decisions.

Ted Simons:
President Haeger, from the University's standpoint are you ready to make these kinds of cuts that may have to be made?

John Haeger:
I don't think you are ever ready to make cuts that would have catastrophic effect on the University's mission. I think the way we're trying to engage leadership in this discussion is to say basically the universities have to be part of the solution, but we also do not want to set the state back so far in terms of its economic and educational development that we can't come out of this recession.

Ted Simons:
President Crow, you have said these plans would reverse Progress made by ASU and set it back quite a bit. Talk to us more about that. What kind of progress and how Far would it be set back?

Michael Crow:
The thing that we don't understand with these particular recommendations is they reverse the funding level of the university by the state to the levels of the 1990s. So it's not at a recommended level where there are some cuts that are associated and we understand this relative to the Fiscal realities of the moment. These are deeper and in a sense are a policy shift in the way that they are recommended. So the legislative leaders that have recommended these cuts believe the universities should be financed in a different way than through public support. It takes us a while to absorb that reality and move forward. That's the scale of this.

Ted Simons:
Does that make it more abrupt if you see an ideological shift does it make it more abrupt in Terms of changes?

Michael Crow:
I'm not certain what the rationale is behind things. We understand completely and are prepared to make whatever budget adjustments we immediate need for make. We're sensing not just a movement in a new direction because a range of other things have also been put on the sidelines including our stimulus Package which we think could be useful and a range of other things. We think there's a shift in the way that legislative leaders view the universities and their Importance to the state.

Ted Simons:
President Shelton, do you see a policy shift as well and how much is that a factor of what's going on here?

Robert Shelton:
Let me pick up on that. I think that is a fundamental concern that we all have. We are all prepared to take budget cuts. We understand we're part of the state. We are ready to take our fair share. That's not in question. We have made plans. We have mottled out different ways to handle it. This fiscal year and next fiscal year. The question is what does this state want to be when it comes out of this deep, deep financial crisis? We feel strongly that education, and of course we're speaking for higher education, must be part of the solution, must be part of the positive aspects to bring the state out of this situation. We are essential, we feel providing a talented work force, essential in attracting businesses here. They want to know that they have that work force, that their employees will have a great educational opportunities for themselves and for their families. So in every dimension of economic growth and economic development, assuming we want to do more than just be a tourist destination, universities are essential part of the solution. The cuts at this level eliminate the universities' ability to perform that function and service to the people of Arizona.

Ted Simons:
President Haeger, do you think lawmakers in particular and Arizonans in general understand, appreciate or even want that essential nature that we just heard President Shelton talk about, universities that Universities provide. Do they want that?

John Haeger:
In many ways I think lawmakers do understand the relationships between education and economic development. I think they are facing what are huge budget deficits. Arizona may be the worst state in the union in terms of the budget deficit, but we have to remember why that's the case. In order to diversify the economy of the state, which is the message we need to take to citizens in particular, you have to have 21st century students educated to take jobs in a diversified economy. So in many ways as both presidents mentioned I think the universities are the fundamental economic engine that gets us out of this recession.

Ted Simons:
President Crow, you have been quoted as saying these cuts would create a third world education and economic infrastructure. Talk to us about that. What do you mean?

Michael Crow:
What's happening around the world is that the reordering of who are the economically competitive countries is under way as we speak. While the United States is a powerful economy and while we have huge resilience, the key to success has always been creativity, education and Innovation. You can't continue to drive that forward as we grow into a competitive situation with other countries and begin cutting you're capacity to educate. Reducing your capacity to innovate, reducing your capacity to be creative and hope that we can retain our status as a leading economy on the planet. As we move in the other direction, the direction of the countries below us, are underperforming economically with massive social issues and social problems, so it's which direction of the road are you moving on, up or down. In America we have always moved up. We have always moved up because people make hard decisions relative to investments. It's time for those hard decisions.

Ted Simons:
Lawmakers will say, President Crow, that the money simply is not there and now is not the time to move as much forward or move forward as quickly as perhaps you would like. Your response.

Michael Crow:
In Salt Lake City, a state that has conservative political history, they are taking three actions as they face these financial crises. They are making cuts which we anticipate everyone should make. There making investments and raising new revenue because they know that is the way you have to move forward.

Ted Simons:
President Shelton, the idea that the state is spending has increased, tax collections, the Revenue simply is not keeping up. Something has to be done. Lawmakers will say that over and Over again. How do you respond when they say we would love to keep you going. We just can't do it.

Robert Shelton:
Let me reiterate first of all we understand we need to take cuts. But that is just one pillar on which a solution needs to be based. President Crow commented that in other states with difficult financial situations, they are trying to cast, form a multi-dimensional solution. If you look at the two budget suggestions that are out now, you have basically two extremes. One says we are going to cut everything out that we can think of. Then former Governor Napolitano's forms the other end of the spectrum. There's a lot of room for creative thinking between the two ends. That's what we need to see. President Crow mentioned the United States and its global competition. Don't forget the state of Arizona is also in competition with other regions of this country. We fight every day, and I'm sure my sister institutions do as well, to keep the most talented faculty we have here. They can be lured away to other states, states with difficult financial situations. We're fighting off bids from the University of California system right now. We have to keep in mind if we want Arizona to be part of this solution, if we want Arizona to grow, investments will be necessary. Lastly, I would say last spring both houses of the legislature and the governor made a very prescient, authorizing monies to get people back to work, to create jobs, to create taxes that come from those jobs. That's what's being considered at the federal level and in many other states around the country. We were ahead of the curve, but for whatever reasons, that's on hold right now. I think that was an example of far-reaching thinking that we need to implement.

Ted Simons:
President Haeger, the idea of university qualified people, businesses coming out here because of an educated work force, these sorts of things, How much of that really is in play and compare and contrast with lawmakers who say we have to keep taxes low to attract businesses and the better industries out here. How does the dynamic work between those two poles?

John Haeger:
Obviously there is a middle ground. The universities are more than willing to work with the legislature to find that, but attracting businesses is first and foremost about an educated workforce. Most citizens in Arizona, when they understand the difference between just cutting our way out of this or doing some of the other strategies like whether It's taxes or bonding or whatever, when you put those two things out there I think you'll get a different answer from business and the citizens of Arizona. The point I would make is that if we only cut our way out of this, what will happen is it will drive the economy further down. It can't possibly move the economy in a positive direction.

Ted Simons:
President Crow, do you agree with that? Again, we have lawmakers coming on this program saying they have got to keep taxes low to keep The economy moving and to draw industry and business here.

Michael Crow:
So what's interesting one should ask those lawmakers about the tax reductions authorized by the legislature since 1992. Then look and correlate a range of things with that. I think that this financial moment that we are in is not a function of tax policy. Tax policy is too narrow of a policy fragment to look at. It's a function of economic development is a function of tax policy; it's a function of education policy, a function of quality of life. It's a function of a range of things. So this focus on only one small read in the complex set of policy options is probably insufficiently robust to actually derive a solution. It's just too simple an approach.

Ted Simons:
There's a line of reasoning regarding options that says that the universities have an option In terms of revenue with tuition hikes. How much is that going to be in play, tuition hikes, if the budget cuts go through, and is that a valid line of reasoning?

Michael Crow:
One, it is a valid line of reasoning. That is if the representatives of the people feel that they have met their constitutional duty by reducing the investment In universities by 50% in two years, then the institution will have no choice but to go to the Board and ask for an adjustment to the investment from the families to make up the losses proposed in the JLBA. Proposal would be in our case slightly more than $4,000 of additional tuition per student to give you some idea of the magnitude.

Ted Simons:
President Shelton, the idea of raising tuition to cover costs, your response.

Robert Shelton:
Well, I think you phrase it exactly right. If forced into that situation, we have to think about additional revenue sources to cover some, not all, again, there will be cuts. We know that. This is part of I think a larger, almost philosophical question that has been running across the country for at least ten years now. That is the question of whether an education is primarily an individual benefit, an individual good, or whether it's a societal good. Of course it's both but we have seen certainly in Arizona but across the nation the shift of this responsibility, of this good, from the public over all to the individual student and his or her family. Now Arizona, the three Universities have been able to keep tuition and mandatory fees at a relatively low level. I say relatively because if you don't have the dollar you can't spend it. But relatively low level. That does give us some leeway provided we are able to back stop that with some financial support to maintain access to those students who are qualified to come. But yes, I think that is a strategy that's definite lip under consideration. The extent to which we go to the regents to utilize it will depend on the extent and depth of the cuts that the state makes to our budgets.

Ted Simons:
President Haeger, as far as tuition increases how do you see this as a way to get revenue that otherwise may not be able to come in?

John Haeger:
I think it's one of those strategies we would need to use as universities. As part of a balanced approach, both with some state cuts, some increases in tuition, some other devices used by the state such as tax policy, if you use all in the arsenal you can come out of this with minimal or minimum tuition increases, but the fact of the matter is if there's catastrophic state cut then tuition becomes that other source of revenues that the University depends on. I might make just one other quick point about tuition increases that's very important for Arizona citizens to understand. Even with a tuition increase, we take 17% of that tuition increase and drop it down to build a financial aid pool for our students.

Ted Simons:
Okay. President Crow, we have like 30 seconds left in the program. Very quickly, you met with house leadership. The president met with house leadership today. What did you tell them? What did you hear?

Michael Crow:
We focused on what the impact of these cuts might be on the institutions. It would have been our preference to have an opportunity to do that before these proposals were proffered, but we had that opportunity today.

Ted Simons:
Was it encouraging discussion?

Michael Crow:
All discussions about working toward some kind of solution are encouraging because they are one step closer to a solution that has not yet been derived.

Ted Simons:
We have to stop there. Thank you for joining us. We appreciate the discussion. Thank you so much.

Michael Crow:
Thank you.

Robert Shelton:
Thank you.

John Haeger:
Thank you.

Ted Simons:
Coming up on "Horizon" we talk to the new chair of the Arizona corporation commission, Kris Mayes. That's Thursday at 7:00 on "Horizon." That is it for now. I'm Ted Simons. Thank you so much for joining us. You have a great evening.

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