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President's Winter 2008 Report to the Board of Regents

A key responsibility of the Board is to ensure adequate resources for the University. Most universities rely upon fundraising (endowment building and annual giving) coupled with a responsible tuition setting policy that pays attention to internal and external factors as the two most significant means of achieving this task.

At Pacific, over the past 12 years we have had remarkable success in building our endowment - from $63 million in 1995 to $225 million in 2007. The increase in endowment earnings from this growth, however, now about $10 to 12 million per year, is modest when compared to increases in our annual operating budget over this same time period. Sizeable increases in our annual operating budget, $90 million in 1995 and now about $190 million, were necessary so that we could make a number of significant key investments. These areas of investment included faculty/staff compensation, which was far below comparable universities; information technology infrastructure, which was substandard until we began to address it in the late 1990s; and facilities, with over $200 million in improvements for sorely needed renovations and new buildings for Visual Arts, Biological Sciences, Geosciences, the College, the Library, Athletics, and Residence Halls.

How have we paid for these investments? Enrollment growth has been only a part of the answer to date. Pacific continues to be heavily tuition dependent, with new income dependent upon enrollment, tuition levels, and financial aid discount.

With the strong endorsement of the Board over this time period, we have worked tirelessly to keep tuition increases to a minimum compared to peer institutions, always mindful of the diverse financial profile of students that are attracted to Pacific. We have also been attentive to how our tuition level compared to competitor institutions. We are proud of the progress we have made in the last ten years, growing our enrollment, increasing selectivity and quality of the student body, and reducing financial aid discount level.

Enrollment trends, however, are becoming less predictable, as reduced yield, an applicant pool characterized by large numbers of students who apply to several schools and for whom Pacific is not the first choice, and new, technology-based ways of interacting with prospective students give us reason to be increasingly conservative in our projections for growth. For these reasons, I encourage the Board to engage in discussion about the factors that influence tuition-setting. Your guidance will help us stay the course that is essential to Pacific's ambitious goals for the future.