Ted Simons: Good evening, and welcome to "Horizon," I'm Ted Simons. The Arizona Board of Regents is pursuing a plan to realign the state's universities into an enterprise model. It's an effort to help universities deal with new budgetary realities while meeting the needs of students and contributing to Arizona's economy. The Board will consider streamlining operations, expanding access to baccalaureate degrees, providing new low-cost options for students, and privatizing certain self-sustainable academic programs. Here with more is Regent Anne Mariucci, chairman of the Arizona Board of Regents, and vice chairman, Regent Fred Duval. Realigning the state’s universities, what are we talking about here?
Anne Mariucci: Most Arizonans are familiar with our three fine universities. What they don't realize is that they are all overseen by the Arizona Board of Regents. Especially in times like this with our state facing the many challenges it has, it's really important that we have a strategic plan that allows the whole to be greater than the sum of the parts. For the first time we're looking at how all three of these universities roll up together for the best interests of the state's economy, the state's residents and students who attend the universities.
Ted Simons: Thus, an effective and efficient enterprise model?
Fred Duval: That's right, as efficient as possible, synergy in the system, more public-private partnerships brought to bear, holding the presidents as a group, as a council to outcome goals for the system. We have record enrollments, but no new money so we have to do more with less.
Ted Simons: Outline the specific deals. Sounds as those you could have all three doing the same thing and sharing but this is not the case here, correct?
Fred Duval: Certain programs you want to have at all three universities. A high demand program like teaching, you want as much as you can possibly get. We're looking to shake out the less productive programs and try to capture those costs.
Ted Simons: What does enterprise approach mean?
Anne Mariucci: Enterprise approach means looking at the group as a whole, so the whole is greater than the some of the parts. And so that we can achieve the excellence we want, in terms of the access and the affordability of students, to make a choice at varying price points that we will increasingly differentiate over time at different campuses, so they can make a choice where the academic programming is right for them, at the price point they and their families can best afford.
Ted Simons: The idea of the universities getting together -- and I think it was mentioned, the presidents and CEOs of the deal, that means cooperation. Are you getting cooperation?
Anne Mariucci: Absolutely. We crack the whip every day. And it is a new model and it is an exciting new model. The Board is very behind it. We also brought in a new president of the enterprise that will expressly deal with achieving that kind of cooperation among them all. That's something new and different, so we have a council of presidents that basically has their own board of directors reporting to the regents to ensure that those things happen.
Fred Duval: A really important part of this is the relationship with the community colleges. We've historically had high-cost research institutions and two-year community colleges. We're leveraging across those relationships more aggressively so more students can find points of access, move towards a four-year degree as efficiently as possible. The more students that take advantage of community college offerings on pathways that get more college credit, we can move more students through the system.
Ted Simons: How does that help with degrees? You know as well as anyone, the critics say there's too much research going on, not enough reading, writing and arithmetic, even at the college-university level. How does that help with degrees?
Fred Duval: Research is about quality, making sure you've got really talented faculty, teaching students, showing them what the academic enterprise can really be about, advanced degrees, Ph.D.s, et cetera. We're in the business of creating new ideas, new products, figuring out how to get them out to market, creating new jobs for the 21st century. And that requires a workforce, which is degrees, and ideas to capitalize the jobs, as well.
Ted Simons: Folks say that research is not necessarily -- should not necessarily be such a top priority at Arizona state universities, in toto. How do you respond to that?
Anne Mariucci: We're a three-legged stool. We create knowledge. We disseminate knowledge. And we teach knowledge. In order for any one of those things to be good, you've got to do them all. I think we've seen countless examples where students get to work in the bench lab, an undergrad student in a lab, a Ph.D. researcher who might be world renowned, and provides the intellectual spark that sustains that student for life and sustains that student's career, is not as tangible. It's more difficult to measure than many other aspects of education. But also, by and large, research pays for itself. The grants to do the research are coming from federal agencies, the National Institute of Health, the National Cancer Institute, et cetera, et cetera. They are providing the direct economic dollars into Arizona to conduct the research.
Ted Simons: The fact that it's not tangible, is that message getting out?
Fred Duval: We try to make that argument, to be sure. To a great extent, research drives the reputation of the institutions. The reputation then translates into the quality of degree and the value of the degree, as our students graduate and go out into the workforce. It pays dividends.
Anne Mariucci: I'm sympathetic to that argument, especially in a time like that when we need to marshal our resources so carefully. We can't just create knowledge for the sake of creating knowledge. It's got to have economic relevance, workforce relevance and relevance to Arizona. We have to create performance metrics that evaluate our research programs before we go out and apply for them, and to target the areas we think would be good for Arizona, and go out and compete, and being on the front end of the most important thing we need to do in the state, which is diversify our economy.
Ted Simons: Restructuring the investment model, what does that mean?
Anne Mariucci: I think today we have a model that has been very heavily dependent on state appropriation, and the more students we had, the more money they gave us. That changed over the last three years as the state has run into the financial difficulties it has. We've had a 28% reduction in our state appropriation per student. We have had to make up for that by a combination of significant tuition increases that are large in percentage, but still relatively small in dollar. We'll talk about those in a minute. And a drive for every imaginable operating efficiency and savings of expense that we can achieve. We've got many metrics relating to that in our model, and we hold our presidents accountable for that.
Ted Simons: Regarding expanding student enrollment and such, that seems to be part of the plan, as well. What's going on here?
Fred Duval: Degree production is a huge part of our long-term vision. United States is 16th in the world in degree production and falling. Arizona is 48th of the 50 states. We're falling behind. We have to find a way to figure out how to get students to their degree. Knowledge is the coin of the realm, that's how we compete. That's how we diversify our economy, so future recessions aren't nearly as devastating as this one has been.
Ted Simons: We keep hearing the law school might be on this track. What's going on?
Fred Duval: That'll be the first one that we try. U-VA has done it with their business school and UCLA is looking at doing it with their business school. We're talking about taking the off-state investment. Can it survive, can we allow tuition to be priced to market and basically take it off state investment. The dean of the law school believes he can do that and sustain its value.
Ted Simons: Can it do that? Can it survive? You mentioned Virginia and these areas with a grand history of philanthropic endeavors. We don't have that here in Arizona quite yet. Can these things survive on their own?
Anne Mariucci: We wouldn't be doing it if we didn't think they could. The jobs that are generated are the high-paying jobs that can afford to reinvest and can support a higher level of financial aid and loans and all of those things. That's specifically why law schools, business schools and other professional schools are the natural target for this. I suspect 10 years from now this will be a very prevalent structure that we see in all public universities across the country.
Ted Simons: What does all this mean to tuition costs?
Anne Mariucci: Well, our costs have taken a steep rise, as any parent or student knows, over the past two and a half years. The regents are very, very sensitive to it. On a percentage basis, it's high. We've increased tuitions arguably 40%, plus or minus, over this period of time. But in dollars -- in dollars, you know, we believe it's one of the all-time great bargains around. ASU, for instance, is barely $6,000. And over 25% of our students in the entire system are going with scholarships, not loans, scholarships. They are attending for less than a thousand dollars a year. That is a remarkable bargain. We're trying to segment the college-going population based on ability for success and ability to pay, measuring carefully against our peer group and who we're trying to aspire to, in terms of our equality. We are still 30% to 40% less expensive than our strategic peer group. It's not that we feel it gives us a right to raise tuition by any stretch of the imagination, we're very mindful of it. But we don't have financial aid in this state. We are the lowest in the country of financial aid from state government. As a result, we have to use aggregate tuition dollars in order to put some money in the other pocket, in order to provide financial aid for deserving students.
Ted Simons: We will get letters and cards from students and some parents saying, the tuition has still gone up too quickly, too fast. Something's got to be done. The realignment plan, is that being done?
Fred Duval: Absolutely. We are doing our level best to recognize that we can't continue to do the business the same way. Tuition becomes one of the options. We're also going to be looking at where we can extract more costs out of institution. We will tackle this all the way across the board.
Anne Mariucci: This is an area where how fast we're growing is really an asset. We have an opportunity to segment our product offering. We call this system architecture. The universities are the most expensive to operate. What we want to do is differentiate product offering and have more of a state college option. Then we want to have two plus two degrees in partnership with community colleges. All of this enables us to offer different points of entry at significantly different price points, lower price points to students and families who would choose that option. Our estimates are 25% to 30% of our student population will choose those lower cost options as we role out the facilities for a state college system and 10 other facilities like it.
Ted Simons: Last question: We've had guests on the program who say that the university system in Arizona is just too big. The better way to education is more choice, more colleges and universities get a better selection, more choice. Improves education, brings down prices, the whole nine yards.
Fred Duval: You don't want to eliminate your high quality brand name. You want to create an a la carte menu so people have different choices, while at the same time putting more people into the system and creating more degrees. We think we can do both.
Ted Simons: We've got to stop it right there.