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President's Spring 2004 Report to the Regents

April 19, 2004

In January the Board spent considerable time discussing the increase in undergraduate tuition.  Concern was raised about the increase and the potential consequence for enrollment.  I asked the Provost and his staff to assess our progress in undergraduate admissions and enrollment.  That work began in earnest this spring and is nearing completion. 

With a new and better understanding of the enrollment issues facing Pacific we will be better prepared to discuss tuition policy.  I am convinced one cannot be separated from the other.  I suggest we first take a careful look at where we are today and consider where we want Pacific to be in the future.  Once we have done that work I believe we can more thoughtfully turn to the question of tuition-setting policy.

Your questions at the last meeting and my observation of the current situation suggest to me that we are at an important choice point. What we choose to do will define Pacific for future generations of students and alumni.

I have previously written in these board reports about Pacific's fiscal limitations. In terms of revenue, our three campuses are highly dependent upon tuition revenue.  This condition will not change in the immediate future.  Today, the relationship between the number of students and what they pay constitutes the primary source of institutional revenues.  It is important to understand that, except for dental and pharmacy students, few rarely pay the published tuition.

Undergraduate enrollment over the last seven years has increased from 2732 to 3357.  Tuition has increased modestly compared to our peers, from $17,550 to $23,600.  With more strategic assignment of financial aid we have been able to moderate our increases in the financial aid budget.  These factors have permitted us to make much needed investments in faculty/staff compensation, technology, markedly better facilities and improved service to our students.

Our investments are paying dividends and Pacific is increasingly attractive to potential students and their families.  The public perception of Pacific has greatly improved.  In part, that progress can be measured by the surge in undergraduate applications, which grew by over 42% from 2001 to 2003; the largest percentage gain of any peer institution in California.

When measured by any standard indices our success at Pacific on a year-to-year basis is obvious.  Applications and selectivity are both up substantially.  Student quality is at record highs and fundraising is as well.  Our bond ratings continue to improve and we have made dramatic progress in National rankings.

A little more than two years ago the board met and discussed an enrollment plan for the current decade.  We agreed to pursue a plan of modest increases in enrollment and student quality.  The plan projected a goal of 780 freshmen with average SAT scores of 1175 in 2010.  In part, because of the success I noted earlier we enrolled 818 freshmen in 2003 and we will exceed that number this fall.  We have also shown gains in quality.  This fall SAT scores were at 1160 which was the 2008 target.  Thus, we are achieving our stated goals at a pace exceeding expectations.  This success points to the possibility of seriously considering our goals and our position as a selective institution for the future.  Should we become more ambitious in our expectations?

Taking such a course will not be as easy as it first appears.  First, we should consider the make up of enrollment, particularly on the Stockton campus.  Upon closer examination the gains we have realized are not proportional by program.  Undergraduate enrollment in some programs in the social sciences, humanities, and education have not been strong, while science and engineering majors are rapidly increasing in number.  The success of the Thomas J. Long School of Pharmacy and Health Sciences is a major factor in the equation as more and more highly talented undergraduates take advantage of accelerated entrance into a high-income profession.  At the same time, an increase in the number of pharmacy programs and more flexible licensures may ultimately reduce our advantage.  Limiting our growth and achieving more balanced enrollment among academic programs may be the prudent long-term strategy.

Expanding undergraduate enrollment is testing other limits.  The Stockton campus infrastructure can not support this population in terms of adequate food service and meeting space, making the University Center a critical priority.  Growing enrollment is also creating a demand for a larger faculty and staff. 

The current state budget turmoil will end eventually but it is unlikely that the University of California system, our principal competitor, will be unchanged.  I have observed, coming from outside California as I do, that the public perception of higher education is different in this region.  On the other Coast, private education is typically a first choice over state funded education.  The timing of Clark Kerr's master plan for public education in California coincided with a growth in population which positioned the UC system in a primary role for California college-going students.  In California, private, higher education has played a back-up role and witnessed wide enrollment swings in relation to the California economy, among other factors.  A few highly selective independent institutions are able to establish a geographically diverse enrollment and avoid these cycles.  Given the impact of the budget crisis on public institutions in the state, it is possible that the perception will now shift.  Applications are up at most independents in the state.  Pacific seems well positioned to increase its selectivity if we prefer to moderate enrollment growth for the long term.

The profile of our undergraduate students is also changing.  The Stockton campus has traditionally drawn students from the local region.  Those students have generally been academically qualified students with high financial need.  Five years ago, over 35% of the entering freshmen class were Pell Grant eligible, meaning they came from families with parental, annual income less than $34,000.  That figure today is closer to 25%.  Many of these students are attracted to Pacific by programs which provide accelerated access into professional careers.

The robust nature of the Cal Grant award to low-income, academically qualified students has been an important factor in our ability to serve this population.  Further increases in state and federal financial aid are not likely and short-term cuts in Cal Grants are predicted.  While Pacific continues to invest substantially more in institutional financial aid in support of its students than peer institutions, this decline in public support will certainly influence the shift in the student profile.  Fewer high-need students will attend Pacific because our financial aid cannot meet their total financial need.

When I arrived in 1995, Pacific had been through two decades of financial distress.  There is no need to rehash this unfortunate story.  The simple fact of the matter is that Pacific has been under-resourced for a very long time.  In part this condition stems from the fact that every year we take nearly $30 million out of the operating budget and return it to students so they can afford a Pacific education instead of investing in academic and other programs.  A $600 million endowment would be required to fund this level of scholarships.

Three years ago we purposefully decided to expand our geographic reach and seek greater numbers of applicants from outside California with the capacity to pay more of the published tuition.  This effort has shown some modest gains but what priority should we assign to increase our national profile?

Earlier, I touched briefly on the influence of high-demand programs on our enrollment success.  As I understand the history of the three campus model, shifts in student interests have influenced the growth of professional schools.  This diversity has assumed that enrollment shifts in one area can be offset by greater interest in another.  For example, law school enrollments were expanded at a time when the Stockton campus was losing students.  Currently the University benefits greatly from strong enrollments in the health sciences.  Is this a strategic practice that makes long-term sense?

My intention at our Board meeting is to discuss these and other related issues with you.  We can continue on our current course and be reasonably certain that our current position can be maintained.  But is that a path to greatness?  I look forward to our discussion.