Online editor's note: The following is the text of Kansas University Chancellor Robert Hemenway's testimony today to the Senate Ways and Means Subcommittee for Education. For more on this story, return to this site later and pick up a copy of Friday's Journal-World.
Thank you, Senator Morris and members of the subcommittee, for this opportunity to review the governor's budget proposal and other issues that affect the University of Kansas.
I am joined today by David Shulenburger, executive vice chancellor and provost at the Lawrence campus, and Barbara Atkinson, who succeeded Don Hagen on January 1 as executive vice chancellor at the KU Medical Center, while continuing to serve as executive dean and vice chancellor for clinical affairs in the School of Medicine.
All three of us can respond to any questions you may have at the conclusion of my prepared testimony.
There are three basic themes I want to address with you today:
- Our success in fulfilling KU's mission as a state institution;
- Our efforts to provide an excellent return on the state's investment in us; and
- Our case for appropriate state support, including the governor's budget recommendations, as well as our willingness to be held accountable for the results.
Fulfilling Our Mission
First, KU continues to focus rigorously on fulfilling the mission we've been given by the Board of Regents, the Legislature, and the people of Kansas. And we continue to do it well.
For example, enrollment this year is at an all-time high -- 29,590 -- representing one-third of all regents university students.
We conferred a record 6,129 degrees last year, and the one-year retention rate for returning members of KU's 2003 freshman class was 83 percent, also the best in history.
Finally, KU has more Kansas residents enrolled as students -- a record 20,379 -- than any other regents institution.
We also have 72,000 living alumni -- in every county and corner of the state -- whose lives "testify" to the value of KU.
You've entrusted us with a three-dimensional mission of teaching, research and service that I see at work every day, whether it's:
- Professor Don Worster (described in the New York Times as "one of the most eminent environmental historians of the West") co-teaching a class on Agriculture in World History with Ruth Anne French, KU's 25th Rhodes Scholar; or
- A three-year, $1 million U.S. Department of Energy research grant aimed at increasing domestic oil production while promoting the beneficial reuse of agricultural waste products; or
- A five-year, $16 million federal contract with our Kansas Masonic Cancer Research Institute to operate an expanded Cancer Information Service that can serve the needs of more than 6,000 people a month in Kansas and 16 other states.
These are just three current examples of how KU fulfills its mission in ways that benefit the state of Kansas.
KU's Return on Investment for Kansas
Second, KU accomplishes all this with a relatively small investment of state resources: about 25 percent of our total revenues. Basically, you give us $240 million and we leverage it into $880 million. For every dollar the state invests in KU, you get $3 to $4 in return.
What does return on investment look like at KU? In 2003-04:
- Our 29,590 students chose to provide $136.4 million through their tuition and fees -- and all "auxiliary enterprises" account for another $116.7 million -- an amount that, combined, was greater than our state appropriation of $232 million.
- Total research funding is at an all-time high -- $258 million from all sources during FY2003, largely federal grants, enabling KU to undertake productive work in a broad range of fields, such as medicine, engineering and the life sciences.
- Private giving reached a historic milestone -- $653 million was raised during the recently concluded KU First: Invest in Excellence campaign, exceeding our original goal by 30 percent.
- Creative partnerships -- involving state-supported bonding, private gifts and research overhead dollars -- helped us build the new Structural Biology Center at Lawrence, as well as major new life sciences research buildings now under construction at the Medical Center and in Lawrence. These facilities will help develop the state's biosciences workforce, and the biosciences discoveries that result are part of the vision of the Kansas Economic Growth Act.
The second way we've leveraged the state's investment is through proactive efforts to manage our state resources more effectively. For example:
- Last month we announced the closing of our Printing Services operation at Lawrence. The simple fact is we can save money by bidding printing jobs in the free market. While the closing eliminates 20 jobs, we will save a significant amount of money that can be reallocated from administrative functions to the classroom.
- Through a contract with an energy services company (ESCO), improvements were made to 79 buildings at the Lawrence campus. Savings from energy conservation helped fund 25 deferred maintenance projects at a cost of $8.6 million. These improvements were completed last summer. In effect, we've been able to create $8.6 million in energy savings without costing the state a dime.
- The Medical Center's ESCO contract will reduce utility consumption by 15 percent per year, making possible a $12 million investment in critical infrastructure. Again, that is $12 million without costing the taxpayers anything. The ESCO is currently 50 percent complete and will be finished in April 2005.
- At Lawrence and the Medical Center, we've closed central storerooms, saving at least $230,000 per year, replacing them with vendor desktop delivery, reducing staffing and improving service, again a significant savings in operating costs that will create investments in the classroom.
- Another example: KU buys Internet 1 and 2 service through the Great Plains Network and KANREN, saving an estimated $60,000 per year via bulk purchase. We also saved $150,000 a year by moving to self-maintenance for certain Information Services telephone functions.
Additional Support, and Accountability
While we have made great strides in advancing our mission and effectively supplementing state appropriations, we are a public institution and we do require certain kinds of support from the state.
Support takes two forms: base levels of funding and sufficient management flexibility to get the most out of those resources, consistent with what the Legislature expects us to deliver.
While appropriations have not always been what we hoped for, we recognize the difficult challenges faced by the governor and the Legislature. We appreciative the support you have provided.
Last year, in particular, you provided additional funding for salaries, along with a future source of support for biosciences research through the Kansas Economic Growth Act.
Again this year, new funding and some changes in how we do business would give us the opportunity to provide even greater benefits to the state. You can help make that happen.
The governor's budget builds upon the work of the 2004 legislative session and is another positive step for Kansas and KU.
For the six regents universities, her budget includes:
- Funds for a 2.5 percent salary increase and employer death and disability benefit contributions;
- Fulfillment of the promise made in SB345 for faculty salary enhancements;
- Funding of the 27th payroll period for state workers; and
- Funds for the KU Medical Center to continue the existing Kansas Medical Student Loan Program at its current size.
The other form of support that is critical to KU is greater management flexibility. In recent years, the Legislature has taken significant steps to enable KU and other regents universities to operate our institutions more efficiently and effectively, including tuition retention and block grant funding.
I would also like to highlight four other ways that the Legislature could empower us to give Kansas taxpayers more for their money:
- Allowing interest earnings on tuition and fees to benefit the funds that generate the earnings, rather than the State General Fund;
- Allowing universities to convert their state civil service classified employees to unclassified, university support staff positions, if the institutions so choose and the regents approve;
- Removing the $1 million project cap on research foundation capital improvements; and
- Working with the board to address the serious and growing deferred facilities maintenance backlog in the state. Everyone understands this issue.
If the Legislature provides this additional financial and management support to KU, I want you to know that we fully expect to be held accountable for the outcomes.
Each regents institution has entered into performance agreements with the regents. If we don't perform as promised, our funding will be cut. They are called "performance agreement goals."
Accountability doesn't stop with the board. KU is accountable to advisory groups, professional societies and licensing boards, in addition to current and prospective students.
For example, KU took part this week in the ultimate form of institutional accountability: a site visit by an external team of faculty and administrators, part of the lengthy and exhaustive North Central Association accreditation process.
In summary: We are fulfilling KU's mission and providing an excellent return on the state's investment in us. We support the governor's budget recommendations for the regents universities and are willing to be held accountable for the results.
We are proud to be the University of Kansas and proud to contribute to the economic, educational and cultural life of our state.
I'll be glad to answer your questions.