USC Pullias Lecture

February 18, 2015

President Janet Napolitano gave the 37th Pullias Lecture at USC in Los Angeles, CA on Feb. 18, 2015. Here are her remarks as prepared for delivery:

A Trifecta for the future: Higher education, California and innovation

It is an honor for me to be here to present the 37th Pullias lecture.

You might suspect that this is a sort of Nixon-to-China moment for me — the President of the University of California, home to Bruins and Bears alike, venturing into the heart of Trojan country.

In fact, however, there is precedent.

David Gardner, the 15th President of the University of California, delivered the 1986 installment of this prestigious lecture series.

Richard Atkinson, the 17th UC President, did the same in 1997.

And now you have me—Number 20 to my more veteran UC colleagues.

In his lecture, President Gardner addressed a nascent global transformation that, he forecast, would internationalize both the creation of and quest for knowledge, and ultimately alter the reach and mission of American research universities.

He was a prescient man. The technological advances and economic shifts of the past three decades have only accelerated the changes President Gardner saw coming. At UC, we are waist-deep in efforts to keep the University ahead of the curve — in research, in instruction, and in public service — as the forces of change and realignment re-shape the world at large.

President Atkinson, in his Pullias lecture, discussed the migration of research activity in America away from private enterprise — the Bell lab model, if you will — and into the realm of research universities, both public and private. He was of the view that research, particularly university research, is not truly understood, and therefore not appreciated, by the broader public.

He closed his lecture with remarks that seem eerily current today. What he said was this:


“We need to have a passionate conversation about higher education in California.

“This conversation” — he said — “should encompass more than just the role of research universities in economic growth (though that remains a critical topic for California).

“But this conversation should also recognize that the discovery and application of knowledge are not at the periphery, but at the heart of what research universities are all about.

“To remind Californians of that fact is not to devalue any other mission of the university. It is simply truth in advertising.”

End quote.

At this point, I find myself tempted to simply add, “What he said.”

And then call it a day.

As it turns out, however, the close of President Atkinson’s lecture provides an apt starting point for me to share the main message I want to bring to you this afternoon.

That message is this:

We need to have a passionate conversation about higher education in California today.

And in particular, that conversation needs to focus on the unique role research universities have played in making California a bastion of innovation, and a world leader in its own right.

You see, California was given one great gold rush. The world rushed in and almost overnight, it seemed, California found itself on course to become the nation’s “great exception,” to borrow a phrase from that great social commentator Carey McWilliams (USC law, as you may know, Class of 1927).

But the easy pickings were gone in a relative flash. And in the 165 years that have followed, Californians have done the hard work of building and nurturing an iconic society known to the world as a beacon of progress, hope, and opportunity.

They built it with a native creativity and ceaseless innovation, introducing to the world everything from the silicon chip to fine Napa Valley wine to the wet suit.

They built it with a strong sense of common purpose, fostering a true commonwealth where those with dreams and ideas and notions about the next big thing found themselves on equal footing with those born to privilege.

And, in the spirit of a commonwealth, they built it with a deep commitment to education and research — particularly public education. That commitment, in time, would give rise to the 10-campus University of California, to the Cal State system, and to the California Community Colleges, as well as to private universities such as USC and Stanford and Caltech and the Claremonts and all the rest.

These were the institutions that in large measure produced the innovators and propelled the innovation. Collectively, these were, and still are, California’s best idea.

So, now let’s turn to the present, and to the urgent, and still unabated, need for the conversation President Atkinson proposed in his Pullias lecture of 1997.

Today—as I am assured by our folks with the green eye shades and sharp pencils — the University of California is funded by the state, in constant dollars, at the same level as it was in 1997 — the very year President Atkinson came here to plead for a better public understanding of the myriad and vast contributions research universities make to California.

At the same time, and with that same level of funding, the University of California educates 75,000 more students than it did in 1997.

Same level of funding.

Seventy-five thousand additional students.

That’s the statistical equivalent of adding an additional UCLA and UC Berkeley into the mix – without receiving a dime more from the state.

I find this to be a startling fact, and I believe it tells us many things.

One thing it tells us is that, as I referenced earlier, the need for the urgent and passionate conversation about higher education in California that Atkinson referenced has not gone away. It has only grown.

But there are other implications in this statistical compass point.

For starters, there are national trends at work. There are trends involving demographics, competing priorities, economics, and a diluted faith in common purpose. Put another way, nobody in this country suddenly woke up and said let’s stop funding public universities.

But there are only so many taxpayer dollars to go around, and public higher education finds itself competing with health services, public safety, and corrections.

And so it came to pass that, in the recent recession, 30 out of 50 states whacked their state university budgets. In California alone, nearly one billion dollars in funding for UC was cut after the economy went into freefall in 2008. Put another way, the state cut its funding for UC’s core budget by 30 percent. Only a portion of that has been restored as we recover. More precisely, the state has restored only about half of the recession cuts even as UC continued to meet demand and increase enrollment.

Also contributing has been a societal drift away from the concept of a commonwealth. Taxpayers who used to view education at the University of California as a public investment increasingly now see it as a private good — one that ought to be paid for by those individuals who derive a direct benefit from it, the students, rather than as a public good to be provided by the state, for the state.

As educators, we might disagree, passionately, with this view. And we might come to the conversation with a quiver full of proof points demonstrating how research universities touch and transform individual lives, and society as a whole, far beyond their campus borders.

But as advocates — as advocates — we should know going in that this is not as simple or as easy a case to make as we would like to believe.

Now, there are a few more points, more granular in nature, to be extracted from the fact that the University of California today educates 75,000 more students than it did in 1997 — but with the state level of state support.

First, despite the national clamor about the rising costs of college, the “cost” (in quotes), of educating a student from freshman year to graduation has not gone up.

In fact, our numbers at UC suggest that the cost of producing a degree has been flat or even diminished for some time. Our numbers are supported by external studies, including those from the ongoing national Delta Cost Project and the California-based PPIC.

One factor contributing to this flat cost curve is positive. As administrators, and as educators, we’ve become more efficient. At the depth of the recession, for example, the University of California launched an efficiency initiative called Working Smarter that to date has created more than $660 million in annual savings and improved fiscal performance.

The quest for efficiencies in a public institution must be a perpetual task, like repainting the Golden Gate Bridge, that never comes to a finish. After arriving in the fall of 2013, I launched an ongoing efficiency review of my own in the central office. In this environment, every dollar that can be saved must be saved. Every potential stream of new revenue must be explored.

But “waste” and “cost” are not interchangeable terms. Blindly cutting costs for cutting’s sake can lead to loss of quality. At the University of California, it sometimes can feel as though our challenge from the state is to cut our way to excellence.

Serving 75,000 more students at a 1997 level of funding makes it more and more difficult to preserve, let alone enhance, the academic excellence that has long been the secret sauce in UC’s recipe for success.

The professor-to-student ratio becomes stressed — there are fewer instructors, and more students per class. And there is greater difficulty for students to secure the classes they need to graduate on time.

Rock star professors and researchers, who serve as magnets to attract more of their kind, become tougher to recruit and, once on board, to retain.

Needed maintenance gets deferred — and in a seismically challenged state such as California, neglecting the facilities for too long can prove to be risky business.

And finally, yes, there is the matter of tuition.

So let’s talk about it.

There’s a tendency to conflate the terms “rising tuition” and “increasing cost.”

What has changed at the University of California, as I noted earlier, is not the cost of producing an education. It is the amount of that cost borne by students. In other words, a UC education was never free. It’s just that, with a strong commonwealth spirit, taxpayers in previous eras underwrote that cost in full.

They no longer seem inclined at present to do so, and my sense is that their elected officials in Sacramento are fully aware of this disinclination.

That is why, in relatively short order, the amount paid by our students has come to exceed the contribution from the state in UC’s core budget — 46 percent to 42 percent. That’s another startling marker of where we find ourselves today: A public university where the students invest more than the state in their university.

Now, let me clarify: when it comes to tuition, there is the sticker price, and there is what is paid going out the door, so to speak.

Our annual tuition now stands just north of $12,000 a year. To put that in perspective, the price of four years at UC is equal to what students would pay for one year at an Ivy League school or, for that matter, USC or Stanford.

It also is about what their families might pay for a nicely equipped Ford pick-up. And a degree, unlike an F150, does not depreciate the moment you drive it off the lot. In fact, the opposite is true. And it remains true for life.

That said, half of UC’s tens of thousands of California resident undergraduates pay no tuition at all. For those whose families earn $80,000 in income or less, their tuition is covered fully through a financial aid program that blends university-generated scholarship money with state and federal grants.

It’s called the Blue and Gold Opportunity plan. And, as the promise embedded in this plan has seeped into consciousness of more and more California communities, it has helped push our application rates to record levels, year after year.

This financial aid guarantee also means that our student bodies are increasingly filled with a large percentage of Californians who are of the first generation in their family to attend college. Fully 42 percent of our undergraduate students are the first in their families to attend college. That’s 79,000 students. And hopefully, as these students graduate and later go on to start families of their own, they won’t be the last.

This is how a society transforms itself, individual by individual, family by family, community by community.

And this suggests to me, strongly, that a robust University of California provides something far greater than a private good to those who attend one of its campuses.

Add in the matter of creating new knowledge through research, and moving the innovations borne of that research to market, if you will, and the university’s value to the state expands by limitless multiples.

And so the stakes are high — very high — when it comes to the University of California. And given both those stakes and the hits we took in the recession, the stewards of the university — myself included — have come to the conclusion that action is demanded.

With that in mind, this past November we at UC made the decision to move forward with a new tuition and financial aid plan. This plan will add 5,000 more California students to UC. It will invest in academic quality. And it will ensure a necessary — and currently absent — stability to the budget-setting process for the University.

Critically, we looked to a longer horizon line than just the next budget cycle when we formulated this plan. The plan is capped at a 5 percent tuition increase for each of five years, but this is only a contingency. The state can reduce or eliminate those increases with additional funding. In fact, just $100 million from California’s $113 billion budget would eliminate the need for any tuition increase next year.

Today, members of my staff are testifying before the State Senate Budget and Fiscal Review Committee. I am engaged in ongoing meetings with Governor Brown. The UC Regents have appointed us as the two members of a Select Advisory Committee. And in talking with our state leaders — including Speaker Atkins and President Pro Tem de Leon — I am optimistic that this collective process will end in a good place not just for the University of California, but for all Californians.

The Regents and I are serious about maintaining the affordability of a UC education. We are also serious about maintaining the quality of a UC education, and we are serious about increasing the enrollment of California undergraduates. The Select Advisory Committee discussions are significant and in depth. They represent a serious collaboration between me and Governor Brown.

Because these discussions are still ongoing, and because the legislature is still at work putting together the state budget, I am announcing here today that UC will not implement a previously approved tuition increase of up to 5 percent for the summer quarter.

We are doing this as a good faith gesture, optimistic that the ongoing negotiations will bear fruit. It is our conviction that all parties engaged in these negotiations want tuition to be as low as possible, and as predictable as possible. Moreover, as a matter of fairness, we want potential summer quarter students to enroll free from any uncertainty and unpredictability inherent in a fluid and still unresolved budget situation.

Appropriate notices to this effect have been sent out. We are gratified by the many legislators who have expressed support for increased funding for UC. And it is my most fervent hope that we will be able to reach a funding agreement with Sacramento that will be sufficient to forestall any in-state tuition increase for at least the next academic year as well.

In a larger sense, however, our negotiations with the state over funding for UC are not about dollars. They are about a down payment on the future of California. Full investment in UC is ultimately a full investment in the California dream.

You see, there is only one thing worse than charging families more to send their children to the University of California.

And that is providing a University of California education that is of deteriorating quality. It is a decline in the robust research that, beyond the new knowledge it creates, is integral to the educational experience at a research university. It is putting the University on a pathway to mediocrity that, in time, will ripple out through the California economy, through the California society, and, ultimately, may tear asunder the very idea of California itself.

We are in a struggle for both the beating heart and brainstem of what makes California what it is.

My peers at California’s great private research universities certainly know this. A few months ago, Thomas Rosenbaum, the President of Cal Tech, and Stanford President John Hennessy co-published a piece in the San Francisco Chronicle that made what at first blush might seem to be a counter-intuitive point:


“You might think,” they wrote, “that as the presidents of Stanford and the California Institute of Technology, we might view UC campuses primarily as rivals. This is not so. Our campuses are partners in making the state of California the economic and innovation powerhouse it is today.”

The piece continued:

“As research universities, the University of California, Stanford and Caltech” — and here let me add USC — “all undertake basic research and translate the discoveries into products and companies, powering an engine of innovation and economic growth.

“Universities act as magnets for talent, making California schools the destination of choice for many of the most creative people in the world. The inventions, medical breakthrough and products that emerge from their research benefit communities across California and beyond.”

And then they wrote this:

“Much of the world-class research conducted on our campuses is inextricably linked”—inextricably linked— “with research emanating from UC. If California is to remain an economic dynamo, then it needs the full capability of its research universities to be well supported.”

Let me repeat: “If California is to remain an economic dynamo, then it needs the fully capability of its research universities to be well supported.”

Once again—what they said.

There are ten UC campuses, all public research universities in their own right, and three major private research universities in California. And we are all in this together. This is why earlier this afternoon, when I met with President Nikias [Nih-KEE-us], we discussed ways in which the thirteen leaders of those California research universities can work together as advocates, and lead the conversation about the unique contributions research universities bring not only to our great nation, but also — crucially and specifically — to our great state.

Our universities already collaborate in other ways.

USC and UCLA, to name one example, co-run the Center on Biodemography and Population Health, which is housed on both campuses. The goal is to understand better the demographic trends and differences in population health. And this collaborative effort is making important strides in this research arena.

Then there’s the partnership between UCLA, UC Irvine, and USC to develop and refine new treatments for stroke prevention, acute therapy, and post-stroke recovery. Stroke is the leading cause of death in Los Angeles County. And so two years ago, these three institutions received an NIH grant to research, together, these important new treatments.

And just this past August, UCLA, Caltech, and USC received a three-year, multi-million dollar NSF grant to facilitate a technology and innovation hub in Southern California. The new center will offer training for faculty, provide guidance for university-bred startups, and connect those within our universities to investors on the outside.

We may hash it out on the gridiron as spirited rivals, but when it comes to research and education, the relationships between these research universities, public and private, are far more seamless and symbiotic.

Collaborative efforts that pair the private sector with the academic world, generate new ideas, and drive innovation are nothing new in California. Consider the story of James Lick, told by the aforementioned Carey McWilliams in his book The Great Exception.

Lick was something of an eccentric. He came to California from Pennsylvania two years before the discovery of gold and began buying real estate.

(Smart man.)

At one point, as McWilliams reports, Lick owned both Santa Catalina and Lake Tahoe.

For reasons unknown, this millionaire became obsessed with the stars and the cosmos. A year before he died, in 1875, he donated $700,000 to the University of California — with a single string attached.

That string was this: the University was required to build an observatory on Mount Hamilton, above San Jose. It would be the first observatory in California.

Before the century was out, the University of Southern California was in pursuit of its own observatory. It was to be built on Mount Wilson. The pursuit was inspired by a $50,000 gift from a Los Angeles booster named Edward Spence.

“If Northern California had an observatory,” Spence reasoned, “then Southern California must have one.”

The work on Mt. Wilson, and the scientists it attracted to the San Gabriel Mountains and Valley below, ultimately led to the founding of Cal Tech, to be followed by its nearby neighbor, NASA’s Jet Propulsion Lab.

This was McWilliams’s main point in this section of his treatise: California, early on, moved away from exploitation of its natural resources, and re-shaped itself as a state and economy and society built on research, creativity, innovation, and bold dreams. And at the center of its reshaping were institutions like UC, and the University of Southern California.

Let’s get real.

California is never going to be a smokestack state.

It is never going to be a call center state.

It is never going to be a warehouse state.

California, if it is to pay its dream forward to future generations, must never abandon its sense of itself as a society built on innovation, and it must never abandon the institutions that seed that innovation.

California the Innovation State is the California those who followed the 49ers set out to build, and it is the California their successors fostered across the ensuing generations. That California is the California we are fighting for.

Thank you for your attention, and for the honor of speaking here today. And — dare I say it — Fight On!