department of urban and public affairs padm 600 padm 605 november 4, 2013 dr. james ramsey...
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Department of Urban and Public Affairs
• PADM 600• PADM 605
NOVEMBER 4, 2013
Dr. James RamseyPresident, University of Louisville
L O U I S V I L L E . E D U2
I don’t get to teach economics anymore, but I did find my notes from Econ 202
My notes from Econ 202
My Dean...
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Some ask me about my leadership style:Heck, I’m just an economist/econometrician “I am what I am”-Popeye
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Still Basic Economic ConceptsImportant as we face University decisions
A. Specialization / division of labor
B. Opportunity costsC. Cost / benefit
analysisD. Risks / return
analysis (risk lovers vs. risk averse)
E. Data / Data / DataSo this is how I think...
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A. Specification/division of labor
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B. Opportunity costs
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C. AND the “ole” T-Charts approach
+ –Pros
BenefitsConsCosts
Quantitative
Qualitative
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D. AND trying the assess “risks”
Is it:80% vs. 20%
OR20% vs. 80%
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E. Data/Data/Data
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With apologies to a Dallas Federal Reserve Economist who I heard 14 years ago
• The Business Cycle Still Exists!
So let’s look at a case study
L O U I S V I L L E . E D U11
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-10
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
2.5
The Last Decade or so
The “recession!”
Quarterly Change in GDP (measure of macro economic activity)
L O U I S V I L L E . E D U12
We know that nationally times have been unprecedented…11 post WWII recessions
*Lowest level during the current recession. The next two quarters (2009: III and IV) have been positive.
- http://
books.google.com/books?id=g-L0iLH5u34C&pg=PA408&lpg=PA408&dq=Real+GDP+November+1948&source=bl&ots=1eT_Am6PKI&sig=hkYMPbaa6BWiE92o-tg8Z8DPBI4&hl=en&sa=X&ei=2gEJUrDyE-Hg2AX384DYDQ&ved=0CDcQ6AEwAQ#v=onepage&q=Real%20GDP%20November%201948&f=false
Peak Decline in real GDP
Dec-07 (IV) -5.1%*
Mar-01 (I) -0.5%
Jul-90 (III) -1.3%
Jul-81 (III) -2.9%
Jan-80 (I) -2.2%
Nov-73 (IV) -3.1%
Dec-69 (IV) -0.6%
Apr-60 (II) -1.6%
Aug-57 (III) -1.2%
Jul-53 (II) -2.7%
Nov-48 (IV) -1.7%
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Just when we thought recoverywas taking hold
2011 “Black Swans”• Tsunamis/Nuclear Meltdown
Japan• Civic unrest
Tunisia/Egypt/Libya/Yemen/etc.• Europe Economic Meltdown
Greece/Spain/etc.
2012• “Sandy”• Sequestration
2013• And now shutdown
So, we are recovering – but we are not back! Yet.
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The real problem!
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Slow recovery continued – September 2013
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
-1000
-800
-600
-400
-200
0
200
400
600
-830
148
Net monthly change in nonfarm payrolls, in thousands
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National Employment
136,290,000
US jobsDecember 2007
137,982,000
Jobs lost in the recession
Jobs gained in the
recovery
5.787 million
US jobsSeptember 2013
Still 1.69m fewer people working today
http://beta.bls.gov/dataViewer/view/timeseries/CES0000000001http://www.deptofnumbers.com/employment/us/
7.479 million
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What does all this have to do with UofL, being Prez., etc
Well, Kentucky’s Economy is Dependent on National Economy
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Kentucky’s Economy “A Quick History”
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But since 2000Kentuckians working
1,745.0
1,765.0
1,785.0
1,805.0
1,825.0
1,845.0
1,865.0
1,885.0
1,846.9
1,870.6
1,814.4
1,750.6
August 2013
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But there is more to itKentucky Manufacturing Employment
Why Important? WAGES!
August 2013
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
200.0
220.0
240.0
260.0
280.0
300.0
320.0
225.2
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So, in Kentucky things are better but we are not back yet from the depths of recession
U.S. KY
Jobs Lost 7,500,000 120,000
Jobs Regained 5,787,000 96,300
% of Jobs Regained 77% 80%
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“I am trying to hang with you but work with
me …What’s this have
to do with UofL?”
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We are a “State” Institution!
Kentucky State General Fund
$9.3B 100%
Individual Income Tax $3.7B 40%
State Sales Tax $3.1B 32%
Combined $6.7B 72%
Income Tax/Sales Tax highly correlated with economic activity —i.e. Employment! People working!
State Funded?OR
State assisted?FY 13
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Year ($000,000) % Change2005 7,645 9.56%2006 8,376 9.56%2007 8,573 2.35%2008 8,664 1.06%2009 8,426 -2.75%2010 8,225 -2.39%2011 8,759 6.49%2012 9,026 3.05%2013 9,348 3.44%2014 9,578 2.4%*
* Forecasted
Recessionaryyears
Modestrecovery
KY General Fund
http://www.osbd.ky.gov/NR/rdonlyres/1ADF4A09-F159-40BE-9DD0-2156ACCD0276/0/1214BOCBudInBrief.pdf
Legislative (budget) Session
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State Revenue Growth
Public Pensions Medicaid Debt Service Corrections/Adult Prisons
K-12 Base Higher Ed-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
10.0%
63.5%
41.9%
32.8%
15.3%
-1.0%
-14.0%
http://www.ksba.org/protected/PrintArticle.aspx?iid=50GAYB&dasi=3UBI
So, While Modest Economic Recovery, State Budget (2008-14) Continues To Be Ugly Because of Expenditure Side of Budget
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So as a result of the national economic activity and its impact on Kentucky
and Kentucky’s budget issues, we are a very different institution
…
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Budget: UofL Revenues
$ %
FY 1997-98 FY 2012-13
State Funds 126.5 M 141.2 M 12%
Tuition and Fees 63.3 271.0 328%
“Other” General Funds 37.2 62.1 67%
Clinical/Research Income
127.3 509.1 300%
Philanthropy 22.1 142.6 545%
Athletic Association, Inc.
17.6 77.2 339%
“Pass Throughs” 37.8 33.3 —
TOTAL 431.8 1,236.5 186%
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Fiscal Year 1997-98
UofL Net State Ap-propriation
29.3%
UofL Tuition and Fees
14.7%
UofL Other General Funds8.6%
UofL Re-search
Foundation, Inc.
29.5%
UofL Founda-tion, Inc.
5.1%
UofL Athletic Association,
Inc. 4.1%
QCCT1.7%
UofL Medical School Fund,
Inc.0.7%
State Supported QCCT, Debt Serv.6.4%
UofL Net State Appropriation11.4%UofL Tuition
and Fees21.9%
UofL Other General Funds5.0%
UofL Re-search
Foundation, Inc.
41.2%
UofL Founda-tion, Inc.11.5%
UofL Athletic Association, Inc. 6.2%
QCCT0.6% UofL Medical School Fund, Inc.
0.3% State Supported QCCT, Debt Serv.1.8%
Fiscal Year 2013-14
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1. Continuing re-engineering of processes and expense management
2. Aggressively improving balance sheet management, with an emphasis on converting underperforming assets3. Increasing clinical income to support education and research4. Increasing contract research and commercialization income5. Creating private sector partnerships6. Being creative in expanding the research mission through innovative financing tools like the tax increment financing plan7. Enhancing fund raising
What we have been out doing to move forward “Our Seven Strategies”
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Strategy one –“Pick low hanging fruit.”$114.8M in cost efficiencies
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Strategy two –Taking “underperforming assets and making them perform.”
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Strategy three –Increasing value from our research/IP
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Strategy four –Use private sector to do what we are not good at
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Strategy five –Generate clinical income to support teaching/academics
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$5.5 M
Strategy six –Being creative and clever,what no other universities do
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And biggest yet
Belknap Research Park
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An aside
Oh, by the way, Manoj Shanker says that in 2013 UofL
contributed $1.7 billion to state budget and is responsible for 20,000 jobs
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$600 M$750 M
$940 M$1B
Strategy seven –You – our friends/alums/donors – increase philanthropic support
“Hot shot” consultant
2010Our BOT
Today June 30 2014
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So – we must do more –
“The University of the 21st
Century”
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But now, in addition to fiscal challenges, we face• Market challenges• Questions about
efficiency/effectiveness of education delivery models
• Pricing issues• Integrity issues
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So – we must do more –
“University of the 21st Century”
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Our trajectory
1. Continue on our trajectory – 2020 Plan
2. Trajectory slows down – push out date in 2020
Plan
3. We accept where we are – flatline
4. The “unthinkable.”
Possible Paths of Future
L O U I S V I L L E . E D U43
Second – Next step in campus discussions of “University of 21st Century”
1. “Clusters” of excellence
2. Reviewing education delivery models that are student
centered
3. Look at organization/structural/financial processes
4. Build culture of excellence
L O U I S V I L L E . E D U44
So againI say that despite my Dean not letting me
teach...
I really am still an economist
L O U I S V I L L E . E D U45
Thank you
Questions?