Faculty Senate minutes Jan. 9 meeting

TO THE MEMBERS OF
THE ACADEMIC COUNCIL
THIRTY-FIFTH SENATE
Report No. 5

SUMMARY OF ACTIONS, JAN. 9

At its meeting on Thursday, January 9, 2003, the Thirty-fifth Senate of the Academic Council heard reports and took the following action:

By a unanimous voice vote, the Thirty-fifth Senate on a seconded motion adopted a Resolution on Universities and Anti-terrorism legislation.

Resolved that:

In the aftermath of the attacks of September 11, 2001 the United States government has acted to limit the threat of further terrorism in the United States. The need for an effective response to terrorism is clear. Some of the actions taken, or contemplated, by the federal government, however, may harm the fundamental educational and research missions of colleges and universities. These include some aspects of restrictions on who may use certain biological materials, some limitations on visas for foreign students, the discussed possibility of going beyond the existing security classifications to restrict broad set of vaguely defined "sensitive" information, and the broadened range of monitoring of public and private communications.

Therefore, the Senate of the Academic Council of Stanford University calls on the Administration of the University, on leaders of other colleges and universities throughout the United States, and on executive and legislative leaders of the government of the United States to work together to ensure that governmental actions against terrorism do not compromise research and education.

EDWARD D. HARRIS, JR., M.D.

Academic Secretary to the University

MINUTES, JAN. 9

Call to Order

Senate Chair Hank Greely gaveled the meeting to order promptly at 3:15, and welcomed the senators and guests to this first meeting of the winter quarter in 2003. Greely announced membership changes, relating to faculty returning from leaves.

Leaving the senate

Jeffrey Koseff, Eric Roberts, David Botstein, Ramon Saldivar; at the Dean level, Lynn Orr

Arriving to serve

Ron Hanson (Mechanical Engineering), Richard Luthy (Civil Engineering), Roeland Nusse (Developmental Biology), Debra Satz (Philosophy), Pamela Matson (Earth Sciences), ex officio

It was noted that the Representative of Emeritus, Al Hastorf, will be seated in the alphabetical sequence just like everyone else, putting him beside President Hennessy. At today's meeting J.B.D. Mark, alternate emeritus representative, was seated in Hastorf's place.

There were 43 voting members, 10 ex officio members, and several guests in attendance.

Approval of Minutes

Chairman Greely noted with some discontent that because of budgetary restrictions, the Academic Secretary had made the rather arbitrary decision not to photocopy the many pages of minutes for all senators, ex officio members and others. The minutes are available on the Faculty Senate web site: http://facultysenate.stanford.
edu, or in the December 4, 2002 issue of the Stanford Report. After this meeting, all minutes will be transmitted as an attachment on

e-mail to each senator on the Tuesday following each Senate meeting. Greely promised review of this process at the next Steering Committee meeting.

The Senate approved unanimously the minutes of the November 21, 2002 meeting, despite the new distribution system. Ted Harris, the Academic Secretary speaking from a Board meeting in Philadelphia, was grateful for this..

Action Calendar

With assurance from the Registrar, Roger Printup, that there were no changes in the list of baccalaureate degree candidates presented by the Committee on Undergraduate Standards and Policy (C-USP). These students completed their degree requirements during the fall quarter; accordingly, degrees were conferred by unanimous consent of the Senate (SenD#5398).

Similarly, advanced degree candidates were presented by the Committee on Graduate Studies (SenD#5399), and these advanced degrees were conferred by unanimous consent of the Senate.

Standing Reports

Steering Committee

Chairman Greely announced that at the 2:10 pm Administrative Session of the Senate (to which all senators are invited), four annual reports (2001/2002) were heard and accepted. These committees were:

Committee on Libraries (C-Lib)

Committee on Graduate Studies (C-GS)

Committee on Undergraduate Admissions and Financial Aid (C-UAFA)

Committee on Academic Appraisal and Achievement (C-AAA)

After pointing out that C-AAA is no longer in existence, its duties having been taken over by two new committees, Greely emphasized that the entire University is grateful for the hard work of these and the other committees of the Academic Council.

"All of these committees handled important matters last year, some of which have found their way to the Senate as action or discussion items in the course of last year or this year. You will, no doubt, all recall our lengthy discussion of advanced placement, placed before us by two of those four committees from last year.

"The committee chairs, the former committee chairs, all presented their reports and were questioned by the Steering Committee. The Steering Committee accepted the reports on behalf of the Senate and gave those committees and their members our strong thanks for the important service they give to the University by being willing to put time, effort, energy, and emotion into these issues, without which the Academic Council, the Senate, and the University itself ultimate could not run well."

Greely enthusiastically advertised the January 23, 2003 Faculty Senate meeting. "We will present a recommendation concerning the extension of principal investigator status have the annual report from the Committee on Research, and in addition, C-Res to the professoriate in the Medical Center Line. If that won't be exciting enough, we also have the annual report of C-ACIS, the Committee on Academic Computing and Information Systems. Its subcommittee on Administrative Computing will present a report requested by the Steering Committee of the 34th Senate that reviews Stanford's administrative computing systems."

Committee on Committees

The chair, David Kreps, was not present but had no report to present.

Report from President Hennessy

President Hennessy had no report, but was pleased to respond to questions.

Professor Holloway was curious about what the President and the University should hope to accomplish with the Resolution on terrorism that was coming up for a vote later in the meeting. President Hennessy appropriately passed that question back to Hank Greely, who assured him that at the proper time, an answer would be forthcoming.

Report from the Provost

Provost Etchemendy had no formal report, but wanted everyone to realize that, "...I had very few complaints prior to the holiday break about the university's closure during that period, but I had about five times that number of pleased reports after the holidays, all saying, 'We should do this every year!'"

Open Forum

Announcement of this opportunity to talk briefly about just about anything was greeted by silence.

Other Reports

Report from the Graduate School Council Representative ASSU -- Dr. Grace Chang

Dr. Chang was commended for her patience at being "bumped" twice from the senate agendas earlier in the year. Greely pointed out that, "Dr. Chang is working on her third degree from Stanford, having earned an undergraduate degree from Stanford, a masters degree from Stanford, a Ph.D. in neuroscience from some institution down south, and has returned as a second-year M.D. student to Stanford."

Dr. Chang introduced herself as "...the chair of the Graduate Student Council on campus. The Graduate Student Council represents all the students in all the departments in all of the schools at Stanford. We have 15 members, but all graduate students are members of the Graduate Student Council. We represent all the student issues, from housing, health care, and advocacy, to academic ones.

"There has been much change since I was first at Stanford in the late '80s. Since then, a number of things have happened. We've had three presidents at the University. Some of my Professors have become Deans, such as Professors Dutton and Plummer...and throughout all this, I remain a student!" This was greeted with understanding laughter.

"Because of this dubious honor of longevity as a graduate student," she continued, "I can say I have some perspective on graduate student issues and can represent them to you.

"Professor Greely has asked me to talk about the academic issues most important to graduate students...in ten minutes or less. I'll do my best. There are three topics that our Council considers the most important ones. They are:

(1) advisor/student relationships;

(2) the quality of teaching; and

(3) interdisciplinary programs across schools.

"For the problems we face, we believe that there are solutions. The good thing is that there are mechanisms to implement these solutions already available, but they are poorly utilized, and some are in danger of being cut. First, the advisor/student relationships. An advisor is not necessarily a mentor, but can be one. An advisor is the principal person who helps a student progress towards a degree and is crucial for success.

"The Faculty Senate, when Mark Zoback was chair, examined this issue on April 13, 2000. This led to guidelines for behavior for both faculty and students, rolled out in a Good Practices document generated by George Dekker, the associate dean of Graduate Studies. I have a number of copies here for anyone interested. It could be very useful, because it's an effective guide to the behavior of both faculty and students, what each should expect from the other and give to the other. Specific directives are given to students for getting the most out of weekly meetings with advisors, and what the expectations should be for these."

Dr. Chang has estimated that only 50% of faculty have heard of this document, and perhaps only 20 to 25% have seen it. Dr. Chang continued, "I did an informal survey of graduate students; very few had either heard or seen the document. It has had virtually no impact. The question is, how can we increase the impact?

"We think the distribution really needs to be improved. When I was trying to hunt for it at first, I had to look really hard and it wasn't that easy to find. It's in the Graduate Student Handbook, but it doesn't seem to be really well known or appreciated. Also talked about during that 2001 Faculty Senate meeting was methods for conflict resolution. There is no evidence that this has changed at all. A logical next step, after having wider distribution of this document, would be to request contractual agreements between advisor and student as the relationship begins. Contracts would be signed by both parties.

"Another need is to help graduate students develop better communication skills through didactic sessions. I talked briefly to Professor Etchemendy really a long time ago. He said that many senior administrators do this and they find it very useful. For our purposes, the Graduate School of Business already has classes on developing good communications skills, and they are very highly recommended. They are run by Ann Porteus. After the Graduate Student Council had attended one of the GSB communications course sessions, we strongly recommended to all faculty to try to implement it across all the schools. The combination of wide distribution of Professor Dekker's document, developing a culture that encourages formal contracts of expectation between student and advisor, help and formal advice about conflict resolution, and formal help to students in developing communication skills, would be very desirable.

"I am asking the Faculty Senate, perhaps through the C-GS, to get involved in this need to improve advisor/student relationships. Professor Greely, could the Faculty Senate help us by implementing a survey among the graduate students?

"Second, teaching seems to be a chronic problem across campus. In academic pursuits, there is the acquisition of information and then the distribution of information. Distribution is managed through the writing of papers and books, and by teaching. And, of course, the acquisition of knowledge for a graduate student is accomplished by doing research as well as attending classes, reading books and journals, and meeting with one's advisor.

" Although effective teaching should be a requirement for a faculty member to achieve tenure, it is not uniform and we believe that there are programs in which tenure doesn't depend on teaching at all. The quality of teaching is not uniform across schools and departments. The Council of Graduate Students asks for more uniform evaluation of teaching for appointments and promotions. We recognize that the styles of teaching in different schools are diverse. For instance, in the medical school, we have a lecture style. And I know that in the law school the professors use more of a Socratic method. How to evaluate teaching is going to be an issue. But we do think it can become more uniform.

"Similarly, for graduate students, the teaching experiences vary tremendously across departments. Some can be teaching assistants (TAs), some get a lot of lecture experience, but others may be asked only grade problem sets and never interact personally with any students. Since most graduate students are planning on careers in academia, they need both training and experience in being effective teachers.

"Compounding this problem for us is that the resources for teaching at the Center for Teaching and Learning have been cut. In the past, students could go there, present a lecture, have it taped, and get feedback on it....apparently that resource no longer exists. We believe that the Center for Teaching and Learning can play an important role in the development process for uniform evaluation of faculty as well as student teaching. Perhaps a subcommittee on oversight of C-GS could work carefully with the Center for Teaching and Learning and design effective guidelines and expectations across departments for minimal standards of good faculty teaching. We want the University not to cut the Center's budget, but to increase it.

"My last point... Mark Zoback urged the GSC stay far away from getting immersed in trying to change interdisciplinary programs, implying that they are a total mess. But as you know, we have top programs in every single school that is at Stanford. It is awesome to see all the knowledge that's in this room right now, for example. Most students have zero interaction with faculty in schools other than their own, and most faculty admit that they don't interact academically with faculty of other schools. Stanford is one of the few universities that has all the various schools on one campus. So, from the standpoint of local geography, inter-school interactions are accessible. In the future, interdisciplinary knowledge and research is going to be very important for the freshly-minted Ph.D. Engineers have been telling me about their desire to want to know about patent law, and physicians want to learn more about ethics from professors such as Henry Greely."

Dr. Chang ended by sending forth a plea that financial resources could be found to back the initiatives that she has presented.

Professor Greely thanked Dr. Chang and opened the floor for questions and comments. Professor Rickford (pleased to be addressed as "Professor") asked, whether "signatures" on the contract between student and advisor would be signed by both? The answer was a firm "yes."

Professor Rickford continued, "The other thing was in relation to the comment about graduate student teaching and the taping of student lectures. If it's true (that resources for this are being cut), I think that's very unfortunate. These are a very important resource and are one of the few ways in which universities provide some training to graduate students for the craft of teaching, something that universities notoriously do not provide.

"One potential solution would be to have some facilities that can be run by graduate students on a lower scale and for pay, producing adequate if not high quality videography. I would like to say I consider that a very important resource that we provided in the past, and if we don't support it now, I would like to advocate some means of getting it back."

Professor Eammon Callan said, "Grace, one of the things that concerns me -- and, obviously, concerns the graduate students as well -- is the possibility of advisor-advisee relationships sometimes becoming so dysfunctional that they verge on being abusive.... I don't presuppose that this is a problem that arises very frequently. But, I think that even if it arises only rarely, it is a very severe problem that the University should come to grips with in a very vigorous way. It is wonderful that a document exists about good advising, and now I look forward to reading it. I knew of its existence, and you have now motivated me to read it.

"But the problem of addressing abusive student/advisor relationships is not really going to be addressed by encouraging people to read a document on good advising. Because what we're really talking about here is intolerable conduct. Those who are inclined to engage in intolerable conduct are usually not the kind of people who are highly motivated to read documents about what counts as being good in the advisor-advisee relationship.

"Think of what the University recently did in implementing a more vigorous clear standard on sexual harassment. We demarcated the limits of what was tolerable in a more precise way. We didn't just talk about what was good practice; we defined what was intolerable practice, and we raised the bar. We should strive to ensure greater clarity about what is intolerable in the advisor-advisee relationship and have a policy analogous to the one on sexual harassment that would bring some precision to an area where, occasionally, people who are not as morally upstanding as we would like them to be, abuse a relationship of trust that is central to the academic enterprise."

Dr. Chang embraced this idea enthusiastically, and offered up GSC members to help develop such policies, adding that it could be possible that attending "training sessions" for developing good advisor-advisee interactions might become required for all faculty advisors.

Provost Etchemendy (still very much a Professor), added "Grace, thanks for the presentation, which was really nice and worth waiting for. I would very much like to second your request of Hank Greely that we think about doing a survey. I'm curious what your sense is. Most departments, and at least in H & S , all departments, are required to have a teaching training program for graduate students. I think that in my department it is a very good program. I'm wondering if you have any sense for how effective those departmentally-based programs in teaching skills are; how high is the quality in most departments? Is it consistently good, poor, or very spotty?"

Dr. Chang responded that they were very variable, using recent experience of the GSC members. One problem, it seems, is the lack of adequate guidelines about how to define good teaching.

Professor Phyllis Gardner added, "My first comment comes from my experience in the dean's office at the medical school. It became apparent to me that the 'abusive relationships' are more prevalent than I think a lot of us would expect. They develop because of a power differential so ingrained that it's very difficult for a student to surface and admit that there's a problem. Furthermore, there is no clear-cut formal pathway for them to bring and present their discontent, and no method of conflict resolution that is simple because of that power differential. I second your statement that a method of conflict resolution be developed where there's a safe harbor, just as there is in sexual harassment situations.

"My second point is about teaching. Kelley Skeff in the Department of Medicine is internationally renowned for teaching teachers to teach, not only in clinical medicine but in more didactic arenas. Phil Pizzo has given him the green light to move more into teaching basic scientists to teach. In that program the professor or resident or fellow is videotaped and mentored. Of course, no one really wants to be videotaped while they're teaching a live class. He builds upon assets of each individual as a teacher, and amplifies them. It would be wonderful if his skills could be brought across campus.

Vice Provost (and Professor) Pat Jones phrased a question similar to that of the Provost. "I believe it is, in fact, a Senate-passed requirement that all departments offer TA training to graduate students. And I believe there was a phase-in period and then there was to be some oversight or review of department teaching and graduate student teaching activities. Was that to be monitored by C-GS or by Charles Kruger and his associate deans, or whom?"

Professor Wasow, whose memory, he admitted, was getting "fuzzy" about these things, also admitted to being chair of a subcommittee that was to oversee the implementation of the Senate mandate. "As I recall, some department were doing a very energetic and impressive job and others were dragging their feet. And we felt somewhat frustrated at our inability to do anything about the departments that were dragging their feet."

Professor Godfrey Mungal attested to the continued existence and quarterly meetings of that committee.

Professor Malcolm Beasley spoke from his experience as a department chair, when he interviewed every student who when through the department, and focused on the importance of providing feedback to faculty to help remediate the more modest as well as egregious apparent dysfunctional teaching or advising.

Dr. Chang responded to this and to Dr. Gardner's comments by emphasizing how difficult it is for the student to criticize a faculty member from whom he/she is getting a good evaluation is particularly important. "We need to explore the mechanisms for student evaluations of faculty. Feedback mechanisms are necessary, but how can it be made certain that it doesn't backlash onto the student?"

In response to this, Professor Pat Burchat said "In the Physics department, we have an ombudsperson for the graduate students. I served in that capacity for the last three years. The number of visits I get is definitely not zero. I think it works." She noted that most of the issues involved graduate student-advisor relationships, but occasionally were grad student/grad student relationship problems. Professor Fortmann pointed out that having an ombudsperson who is a faculty member is problematic, because that individual is, in a real sense, more a part of the administration that an independent counsel.

Professor Andrea Goldsmith emphasized the worry that students have about backlash and retaliation when they bring complaints, and how difficult it is (as in any other abusive relationship) to have the courage to bring the complaint.

Dean Matson changed the subject a little bit, asking Dr. Chang whether the problem in a lack of interdisciplinary relationships was that there is no mechanism for the demand to be stated and heard, or if the demand is well heard but there is no incentive for faculty to do the teaching?
Dr. Chang, holding up very well through to the end of the presentation, felt that "it seems to be a combination of both, actually." Dean Matson's interest in this problem seemed to be growing, and she expressed hope that a mechanism for determining the true road blocks to interdisciplinary programs can be sorted out.

Professor Steven Galli raised another side of the issue, how graduate students select their advisor in the first place. "If you do a survey," he added, " it might be useful to include questions about how students are currently acquiring information about the mentoring/advising aspect of a particular professor and whether they have any suggestions, consistent with privacy and all the other considerations, about a better mechanism to acquire information about how they should select an advisor in the first place."

Professor Gardner grumbled with frustration about reports to the Senate that don't have follow-up. She implored the Steering Committee to get involved with the Provost and carry through on the ideas and requests submitted today. She also described in detail an anecdote that supported her belief that a non-faculty ombuds office doesn't work in practice, because of the need to have someone in that position who truly understands that specific field.

Chairman Greely was firm in his statement: "I'm certainly happy to commit the Steering Committee to talk about this at our next meeting and see how we can best go forward, " and he agreed with Pat Jones that Luis Fraga, Chair of C-GS, would be an ideal person to commission to begin moving in the right directions. Professor Fraga agreed! For those interested in having a voice, offering a solution, or answering a question, Grace Chang's e-mail address is (simply) grace@stanford.edu

Hank Greely expressed warm thanks to Dr. Chang, and the Senate responded with abundant and enthusiastic applause.

Resolution on Universities and Anti-Terrorism Legislation (SenD#5396)

Chairman Greely reminded the Senate of the complex discussion at the last senate meeting, and the detailed word-smithing that was initiated in revision of the resolution submitted by the Steering Committee, and that the Steering Committee had indeed submitted a revised revision that is moved and seconded.

RESOLVED that...In the aftermath of the attacks of September 11, 2001, the United States government has acted to limit the threat of further terrorism in the United States. The need for an effective response to terrorism is clear. Some of the actions taken, or contemplated, by the federal government, however, may harm the fundamental educational and research missions of colleges and universities. These include some aspects of restrictions on who may use certain biological materials, some limitations on visas for foreign students, the discussed possibility of going beyond the existing security classifications to restrict a broad set of vaguely defined "sensitive" information, and the broadened range of monitoring of public and private communications.

Therefore, the Senate of the Academic Council of Stanford University calls on the Administration of the University, on leaders of other colleges and universities throughout the United States, and on executive and legislative leaders of the government of the United States to work together to assure that governmental actions against terrorism do not compromise research and education.

He reiterated that "this resolution came up not from any expression of interest or pressure of any sort from the administration, but because the Steering Committee, when we first set the agenda for the year, thought that looking at the implications of these actions upon the University would be an interesting and potentially important thing to do....The Steering Committee thought it would be useful for the University, and for universities around the country to go on record as saying we thought these should be looked at. When we brought this up at the last Senate meeting, there were basically two directions of concern expressed. One worried about the term "necessarily hindered" -- or "unnecessarily hindered." And the other worried about a lack of a firm statement of the legitimacy and appropriateness of antiterrorism actions. The Steering Committee has redrafted the resolution with those two in mind and made the changes that were laid out in the electronic communication to you."

In response to Professor Holloway's earlier question about the potential "uses" of the resolution, Professor Greely said, "We haven't fully set it, but we talked about distributing it to, certainly, our administration, distributing it to the federal administration in Washington, distributing it to other universities, and particularly to the faculty governance structures in other universities around the country. Perhaps we could put out a press release saying that we have adopted this in an effort to get some publicity to the recognition of the basic point that we're concerned that there are some negative side effects to this legislation that really could do damage to the important missions of higher education."

The floor was opened to questions. Professor Tom Wasow (who had started the tedious word-smithing of the first resolution) said "I wanted to commend the Steering Committee for putting together an excellent resolution!" This was greeted with hearty and relieved laughter. Wasow continued, "You attended to the concerns that were expressed on the Senate floor the last time. And I hope people will follow your advice and endorse it." Debra Satz agreed, and added, "....Nobody is going to be pleased with every word, but this seems to get on the table the core idea of protecting the integrity of academic institutions against measures that might critically compromise their mission....We're not binding on any governmental agency. We're not even binding on individual conscience. But as a statement of the importance and the integrity of academic research and education it is an excellent statement."

Professor Goldsmith urged the Steering Committee to publicize it as widely as possible and reminded the senators that "since there are states that are passing similar resolutions, if there's enough input from governments and academics and the general public that these unintended consequences can be severe, it could very well have a significant impact!" At that very moment a cell phone beeped. Greely suggested that it be answered only if it was the White House on the line.... It was a wrong number, so in the next minute, the motion was passed unanimously.

Report from the Provost "Why We Have Budget Cuts" (SenD#5405)

Ever able to control and entertain his audiences, Provost Etchemendy began by hoping that..."you all watched the state of California address last night by Governor Davis.... This will seem much better. The numbers are much smaller!" Worried laughter met this statement.

"This is not my budget report. That happens in May. I am trying to explain to the Senate why we have a budget problem." After the usual PowerPoint problems were solved, he was off and running, while urging that since the numbers were estimates, they should not be quoted.

He continued in a fashion useful even for those challenged by the simplest of budgets. "We have two kinds of budgets at the University. One is the consolidated budget: one budget for the entire University, every dollar that comes into the University and every dollar that is spent at the University. It includes auxiliaries (~16%), which are the units that are self-supporting and do not receive any general funds money. They collect revenues and cover their own expenses, and include housing and dining, the intercollegial athletic program, and so forth Those auxiliaries are separate. They're not budgeted by the Provost's Office.

"Grants and contracts (~30%) comprise a large portion of the consolidated budget. But, again, that's obviously not something that we control from our offices. Restricted funds (~22%) are a large class of funds that are legally restricted. Their use is determined by some legal stipulation set, usually, by the donor. Again, we do not decide how to use restricted funds.

"Designated funds (~7%) are those that are not legally restricted, but have been restricted by decision(s) of the University. For example, if you get a gift in your department that is technically an unrestricted gift, it becomes a gift to the University. Nevertheless it was given by a donor to your particular department, or perhaps you get a membership for industrial affiliates program as an unrestricted gift. Legally, it is ours and we could spend it for anything. But, of course, we don't. You and we spend it for the purpose that the donor intended.

The last section is our General funds (~25%). General funds are those that we actually do budget with conscious effort. Some general funds (~21% of these dollars) go by formula to what we call "formula schools", such as the School of Medicine and the Graduate School of Business.

"Now, let me tell you a bit about a comparison of the last 12 years' growth in the consolidated budget and the general funds budget. What has happened over these 12 years is that we've had in the consolidated budget really quite spectacular growth. And, in particular, in these last six years, we've had a 9.4 percent annual growth in the total consolidated expense, and a 6.7% annual growth in the general funds. With inflation, however, that basically means the general funds budget did not grow much at all.

"The bad news is that FY 2002 brought the first consolidated budget deficit in a decade, as we brought in less revenue than was expended."

The Provost went on to show that a major driver on the expense side has been a growth in non-teaching staff of 20% in the last four years. During this same interval, undergraduate and graduate student numbers have not grown. The faculty grew modestly except for the burgeoning Medical Center Line faculty, and this latter group do not receive general fund income; theirs is from reimbursement for patient care and from clinical research grants. Professor Etchemendy believes these growth rates in staff are not sustainable.

As for the budget forecast for '04, the one that is in planning stages now, the net projected income is +1.8%, whereas the total expense projection is +6.2%. That deficit amounts to an estimated $25 million in general funds. On the revenue side, a growth of 2.1% in tuition (the largest source of income for general funds) is estimated. It would be larger, except for a continuing drop in the registration of full-time graduate students. More are enrolling part-time, and currently (for various reasons) there is a substantial underrecovery of tuition from these part-time students.

Indirect cost recovery is one area where there has been a significant increase in revenue, for several reasons. One is the 5% forecast for increase in research volume in the medical school, and 3% in the non-medical departments. A second is the increase in the indirect cost rate (IDC) from 58% to 60%. The IDC is the sum of a facilities rate and an administrative rate. The Provost explained that the facilities rate is the facilities cost (i.e., depreciation on research buildings, plus the operations and management costs for the research portions of the buildings) divided by the on campus research base. The relevant research base is the total of on-campus sponsored research, including institutionally-sponsored research. The administrative rate is the administrative cost of research divided by the research base (on and off campus). This is capped at 26%. Largely because of the cap on administrative IDC, Stanford suffers an underrecovery of about $21 million.

The Provost then gave an example of how a new research facility impacts the IDC. "You first look at the incremental depreciation that is going to be contributed by the building when it opens up. The depreciable cost of the Lokey Lab, a new building that's going up for the chemistry department, is roughly $51.3 million. It's a highly research-intensive building (85%, very high percentage for a building). The depreciable research space cost is ~$44 million. Given a 25-year life, the annual depreciation is $1.75 million. The incremental O&M is calculated at least initially at, roughly $16 per square foot. And so in this case, the result is about $700,000 annual O&M IDC. These two numbers, added together ($2.45 million) and divided by the on-campus research base ($2.66 million) is 0.92 points, or ~1 percent.

"The moral here is that if you have a $50 million research building that is highly research intensive it will add approximately one point to the indirect-cost rate if it does not increase the research base. That's a big 'if', of course." The increase to 60 percent from 58 percent is due to several new facilities that are coming on line."

Professor Etchemendy then explained the expendable funds pool. It is the cash available to be spent at any given time that is sitting in accounts around the University. For example, a departmental gift account, unspent, is in the expendable funds pool. For those complaining that most gift accounts don't return interest to the department but rather to the University...the Provost has an answer: "The gift money interest that you don't see is called your salary!"

Although in a good year there is a four to six percent return out of the investment of the expendable funds pool and endowment payout, in a bad year for investments the expendable funds pool may earn even less than zero. Although there is a built-in buffer for individual years, if the bad news persists for several years (such as planning for '04), the "buffer" (e.g., unrestricted endowment-including rental income) has lost principle and the payout will be less.

So much for revenue of the up-coming '04 budget. On the expense side, salary assumptions are for a 3.5% increase for most faculty and staff...although this is not fixed; it could be less or more. The burgeoning medical care costs (~ 20% increase for the University), hit the benefits by ~7.8%. Also, and not surprisingly, students' families have economic problems and the need for scholarship aid increases. In '04 that will add up to $3.2 million for undergraduate aid and $2 million for graduate student aid. Utilities and operations and management will increase ~$5 million, although this pays for itself in part because it contributes to that projected 2% increase in the IDC. In addition, as in any large corporation or not-for-profit institution, there is debt service. Because of an increase in interest rates and increased debt service for new facilities, there is an additional $4.5 million increase in what the general funds budget must pay.

"Not considering the elements of income and expense that the budget office has no control over (e.g., NIH grant income), projections can be made for variables in expenses over which there is control," continued Etchemendy. "One is faculty and staff salaries. An increase of one percent or decrease of one percent in faculty salaries has an effect of about $1.3 million in the general funds budget. For staff salaries the same one percent is equivalent to about $2.1 million. The salary total is about $3.4 million for each percent that the combined salary program increases.

"As for managing the projected $25 million deficit for '04, one important area is salaries. President Hennessy and I have decided that we will not have differently sized programs for faculty and staff. That is, the percentage program that we have for faculty and the percentage program we will have for staff this year will be the same. There are obviously tradeoffs; we could solve close to half of the budget problem by doing a zero percent salary program." The options for managing the need for cuts in salary expenses range from the zero increase for all in a unit, mentioned above, to giving larger increases to valued employees and laying off others.

The Provost pointed out that no final decision had been made on tuition for FY '04, and thus there is no knowledge about the effect that this number will have upon the deficit. The goal is to keep the tuition increase at 5% or less. We don't want to increase our tuition over that of Harvard, even though, Etchemendy said, "we provide a better education." President Hennessy added that we provide better weather as well.

In wrapping up, Etchemendy said, "As most of you know, we've asked all of the directors of units to come in with plans for reduction within their units, for five percent, seven and a half percent, and ten percent. As I say, down here, although we've asked everybody to come in with these three level of cuts planned, we're not going to make cuts across the board."

The Provost touched on multiple other possible solutions for balancing the budget, from stopping the underrecovery in tuition from part-time graduate students, to decreasing the faculty/staff housing benefit rates (since property values seem to be diminishing in the area), altering the formula for interchange of funds to the Medical School, slowing the capital development plan (fewer buildings), and dipping more into endowment. He explained the administration's views (pros and cons) on each.

The Senate seemed strangely (?irrationally) buoyed by this presentation, in large part because of the large degree of detail of the budget that the Provost had provided, the reasons for increases and decreases in its various components, and the apparent rational approaches to the problem. Provost Etchemendy, as the clock approached 5:15, said, "The problem is not that dire that we should affect the future of the university ...So don't panic. Look, I would much rather be Stanford than U.C.!

"We will get through this. It will not have the effect of weakening this University. There were a lot of press reports when the budget cuts were announced, and I felt like Mark Twain saying, '...the reports of my death are greatly exaggerated.' Don't panic. It is a serious problem, but we will solve it."

Chairman Greely thanked the Provost, and the senators applauded warmly, apparently confident in the leadership of the University.

Adjournment

At 5:20 Professor Osgood said "I move we don't panic." Greely responded, "I move we don't panic and, as well, adjourn." All departed at 5:20 pm.

Respectfully submitted,

Edward D. Harris, Jr. M.D.

Academic Secretary to the University