BOARD OF TRUSTEES PRESIDENT’S REPORT - Eric J. Barron



BOARD OF TRUSTEES PRESIDENT’S REPORT May 4, 2018Slide 1 – President’s Report to the Board of Trustees ~ Developing Metrics to Measure ExcellenceSlide 2 – Dashboard Considerations and CategoriesInstitutional Metrics and RankingsPenn State FoundationsOutcomes and InitiativesSlide 3 – Rankings and Quality IndicatorsAcademic ranking of world universities. Penn State is in the top 1 percent.US News and World Report ranked Penn State 52 among national universities and 14 among public universities.Penn State is ranked number in in A+ schools for B Students.18 graduate programs in the top 10.Number 8 for best online bachelor’s programs and number 9 for graduate programs.Ranked number 10 in Military Times for the best military friendly schools.Ranked number 1 in disciplines in Top 10 research funding.Slide 4 – Student Report from Application to GraduationWe might also look at a whole set of metrics for which we're looking from the application process all the way to graduation, and, again, there are many here, but I would just like to give you some examples of going through this space that may be important in our decision-making process. This is undergraduate and graduate enrollment.Slide 5 – Undergraduate and Graduate EnrollmentIt's relatively flat, some slight drift over the last few years. Commonwealth campuses had a dip that moved on towards the fall 2012 time period. We're very proud of the fact that our campuses are such an important part of our structure and we integrate across the entire state that those enrollment -- those enrollment levels have been flat for many, many years, even in the face of declining Pennsylvania graduates from high school.Slide 6 – World Campus Headcount and EnrollmentsThe growth is in the World Campus. So you see clearly here in terms of the number of enrollment in World Campus that this is driving today the growth at Penn State University. It's a good thing to separate out World Campus and take a look at it, and you see both a head count for World Campus students and residential students head count that are taking World Campus classes. The strongest growth are the number of courses that are being taken in the World Campus. This is something that tells us not only do we have a robust online program but we're making the education -- access to education to be more efficient, have more opportunity to take classes because it doesn't matter whether you're sitting in residence or you're taking it online.Slide 7 – PA Student Application RatesThis is the Pennsylvania student application rate. So we look at the numbers of our students and we can be quite satisfied, but we know that the number of high school graduates from Pennsylvania are in decline, so given the fact that we educate such a large number of these students, we have to pay close attention to how we're doing.19 plus percentage of Pennsylvania student graduations apply to Penn State University. That difference in 1% is significant, but basically, this is a sense that this top tier of Pennsylvania students are applying to come to Penn State.Slide 8 – PA Student Yield RatesHere's a yield rate, 50% in 2008, 46% in 2017, so now we start to realize here how important and what the level of risk is for a Pennsylvania student to come to Pennsylvania if we're consistently getting an application from 19% to 20% of the population and our yield numbers are not that -- not that different, this would imply that unless you were changing the students you were accepting, we could expect downward pressure on the number of Pennsylvania students. So this is a type of metric that not only indicates some level of the quality of our programs and the interest in our program but allows us to take a look and make decisions because of the evolution of the student population. We have two choices. We could change that yield rate, we could change the number of students that are interested, or we could dip into a pool of students and accept more.Slide 9 – International Students at Penn StateHere's the evolution of international students at Penn State University, and it includes this bilevel undergraduate in blue, graduate in gray, and you can see the extent to which international students are becoming a more and more important part of the evolution of Penn State University. From 2008 to 2017 the number of international undergraduate and graduate students grew from 6,490 to 10,160.Slide 10 – Pell Grant Recipients and Student EconomicsWe don't want to look just internationally. How about those students that are economically disadvantaged? Are those students the ones that we're attracting? If you remember from one of the presentations in prior board cycles, we have more and more states in this nation for which the majority of high school graduates are federally defined as need-based. A couple years ago we crossed 21 states in the United States for which this category was the majority of high school graduates in those states, and they're also the fastest growing states while the northeast is in decline, and you do see, since 2011-12, a slow drift downward in terms of the number of Pell Grant recipients at Penn State University. This is, perhaps given the demographics, something that's important, and it directly goes to the reason why things like Open Door scholarships are so incredibly important to the success of Penn State, because it's accepting a signal that this growing population of students that are need-based can come to Penn State and be successful, especially when you realize that we're number one as an A+ school for a B student: So these two things combined, that if you can combine the economic resources for this situation plus our graduation of students, this is a part of the ticket to our future.Slide 11 – Undergraduate Retention – First to second yearThe undergraduate retention rates is an incredibly important metric to think about the success of Penn State University, because this is going from first year to second year, and the more students you lose along the way, obviously, your graduation rate will go down, and our graduation rate is a key metric to the success of our student population. From the graph you can see we had a low point from 2010-2011 university wide at University Park and the Commonwealth campuses. And starting in 2014 there was a plateau but a higher level of retention.Slide 12 – Course Section SizeAnd this graph shows the size of our courses that we're teaching. The more personal it is, the more we have an enough faculty that we can teach a smaller class, it's certainly a factor in terms of our retention rate and then graduation rate, and you do see some rather significant changes here that we have had a shift from classes that are fewer than 20 students to more classes that are in the 20-49 range and more classes that are in the 50 or more students. This is not a good thing and not a particularly good thing for our rankings, but what's going on here is the fact that we've had a couple of years where far more students came here than we intended, so our student population grew, and what that does is that crowds our classroom, but it's part of this reason why we work so carefully to have a target for the number of students that we bring in to the university and we balance that with the number of faculty members, so things like student/faculty ratios and course section sizes are indicators of the degree to which we make an investment in the success of our students, and it becomes a key part of national rankings.Slide 13 – Student to Faculty RatioThis graph shows the student/faculty ratios at University Park and at the Commonwealth campuses. And when you're in that neighborhood of 14 to 15, you are closer to what's expected from an upper echelon university, and we certainly don't want to slip into that range where that ratio starts to go up because you've had more students than you anticipated and you're not hiring faculty to match up that because you're trying to rebalance it. So, again, the same kind of factor here is providing this change in the ratio recently.Slide 14 – Six-Year Graduation Rate: Actual vs. PredictedThis is one metric for which Penn State has a lot of other universities taking note because our predicted graduation rate and our actual graduation rate are significantly different. Typically in U.S. News and World Report, predicting graduation rate, that prediction for the top 100 universities is a point or two off from actuals. Sometimes the predicted graduation rate underestimates by a percentage point; sometimes it overestimates by a couple of percentage points. There are two universities where that number is in excess of ten where they miss. No one in the top 100 misses by as much as Penn State. Our actual graduation rate far exceeds what's predicted. This is a great pride point. It's one of the reasons why that other ranking occurred that was earlier. It's a factor in why we're a top 14 university in the country. Look how slowly the actual graduation rate is changing. It's a six-year process if we start to change that retention rate. If we have those open-door scholarships that help those students succeed and be retained and then get their degrees, if we can make those changes, we'll see that number begin to follow an increased retention rate. Already something to be proud of, but we realize with those programs and it gets to open-door scholarships, this is a number -- that top line is one we can move even further, and believe me, it's something that other universities notice, how are you graduating those students. The U.S. News and World Report believes you shouldn't be able to graduate.Slide 15 – Average Loan Debt at GraduationThis is an important one to all of us. This is the average loan debt at graduation. Now, it would be nice to just put this up here and not explain it to you because there's this dip in the student loan rate, but this is a factor associated with the calculation of the loan rate and the access to some data, so we cannot claim that it actually dipped, but one of the things that's most noticeable here is the difference in debt between out-of-state students and in-state students. Out-of-state students have a substantially higher debt. It's one of those things that gives you pause when you think about how many out-of-state students that you attract, and exactly what the reason for this is, that the average family income of a typical in-state student coming to Penn State is the same as the average family income from an out-of-state student that comes to University Park. So if the average income is the same but the tuition is much higher, we expect the debt loads to be higher, and you see that change. And, of course, we'd like to get to the point with things like Open-door scholarships, that we actually -- we see actually a decrease in the student debt loads.Slide 16 – Diversity and InclusionPercentage of Minority FacultyPercentage of Minority Staff and AdministratorsMinority Student Graduation RatesStudent Sense of Belonging and SafetySlide 17 – Percentage of Minority Faculty MembersDiversity and inclusion is an important objective of that university. There are a lot of things that you can think about that might be good metrics in this space, minority faculty percentages, minority staff administrators, graduation rates of minority students. The students' sense of belonging are all important in this particular space. And I would say if you look at 2010 through 2014, the change in this institution in terms of the diversity of the faculty has barely moved, but it is something that looks promising that we're beginning to see this number edge upward.Slide 18 – Percentage of Minority Staff and AdministratorsIn this graph we also see the same thing for the staff and administrators with a gradual increase in numbers.Slide 19 – Minority Student Graduation RatesBut look at the graduation rates for our students in terms of differences between white students, Hispanic students, Asian students, and black students. There are significant differences here, and this tells us we have a lot of work ahead of ourselves to make sure that every student that comes in our door, which we already know is a bright student, has the opportunity to be retained and to graduate.Slide 20 – Students Sense of Belonging and SafetyThis is another type of metric that we might look at whether or not they would recommend Penn State to another student. The number here is very high and very promising, but what about their sense of belonging and safety? So fortunately, we're seeing that number of sense of belonged, if there's a trend, there's been some upward trend, but we do see differences between underrepresented minorities and the majority population as having less of a sense belonging and less of a sense of safety.Slide 21 – Financial HealthFinancial health is something that we are all interested in.Slide 22 – Penn State’s Institutional Credit Rating (Moody’s)We can look at Moody's ratings and financial stability. This is Penn State's institutional credit rating for the last decade, and you can see we've bounced between an upper medium ranking for credit rating and a high credit rating, so this is very important that we maintain this institution as a financially robust institution because this guides what our cost of borrowing is, and there are many metrics that look at financial stability and compare us with that Moody's ranking, so on the left side is total cash and investments to total debt, and the lower line is what it takes to be within the range, so a combination of factors, for what it takes to be in the range of that AA1 ranking. Slide 23 – Financial StabilityThis next graph shows to the right, total cash and investments to operations. It shows a robust picture of a healthy financial institution, which is exactly where we want to be.Slide 24 – Financial Stability – Penn State operating margin per Moody’sThis graph shows the Penn State Operating margin per Moody’s database from 2007 through 2017. Slide 25 – Alumni EngagementAlumni Association MembersAverage Attendance for AthleticsFundraisingSlide 26 – Alumni EngagementIn this next graph you see, alumni engagement measured by the number of paid Alumni Association members. Of course, we know how to brag about having the best Alumni Association in the country and very engaged alumni and the largest member-based Alumni Association in the U.S. This is a very robust increase. Year after year, we are seeing growth in the number of our alumni that want to be part of the Alumni Association.Slide 27 – Average Attendance at Athletic EventsSome might like to look at the average attendance at athletic events, and you can see some changes, and we're up for football. Average of over 106,000 people at a football game. But this is also a very robust picture in many cases of people coming back to our institution and feeling like this is home and they want to participate in football or the other sporting events. Fundraising, incredibly important, multiple metrics. The one on the right is significant because that's the growth in endowment, that we have the resources to spend on things that really take this university from being a good university -- you can only be a good university if you've built a university on tuition dollars or state support, but can you be a truly great university if you have a strong philanthropic component, and we have had a steady growth in terms of the amount of endowment funds that we're managing in this university.Slide 28 – FundraisingOn the left side of this graph is the fundraising commitments, and to the left of the vertical arrow is the last campaign, and what you see is up and down in a period of ten years. From 2013 to 2017 we exceeded the $2- and $300 million dollar mark. One of those, the all-time record is when Terry and Tim Pegula gave $102 million, and the next one is when all the stops were pulled out at the end of the campaign in its very last year.We've taken a little bit of a different approach with this campaign that started 22, 23 months ago, and that is we're looking to have sustained giving over $300 million every year, and you see that last year we crossed that $300-million level. We still have two months to go, and we've crossed the $300-million level again. So the first time in our history we will see two data points that are above the 300 level, and, you know, if we're at 307 and we have 1/6 of the year to go, and if you just happen to do that map, you might perhaps dream of an all-time record. We'll see. I always put pressure on Rich here every chance I get. But these are good numbers that suggest something extremely important. Our alumni are giving to the things that Penn State's doing, and this is a great story.Slide 29 – Research EnterpriseResearch enterprise, source of funds. I'm constantly saying, are we going to hit a record this year, are we going to hit a record this year, and last year at $863 million in research expenditures was the all-time record for Penn State University. It's a very strong -- very strong number, very solid federal support, and hopefully you noticed that the new Department of Defense contract for ten years for Penn State is $2.1 billion is what they have provided as the base for which to transfer funds for research. That's an incredible vote of confidence by the Navy in the strength of Penn State research.Slide 30 – Research ExpendituresSlide 30 shows research expenditures by funding sources, federal funds, university funds, Commonwealth funds, and industry and other funds. In 2007 combined funds totaled $665 million dollars and in 2017 that total was $863 million dollars.Slide 31 – Examples of InitiativesSome of Penn State’s initiatives are Invent Penn State and Sustainability. Slide 32 – Invent Penn State21 LaunchBoxes across the stateFirst reporting year of 2016-2017 with only five hubs open2500 faculty, staff and students were engaged in entrepreneurial activity.Hundreds of community entrepreneurs were supported.80 new products were developed.79 startups were launched.110 student internships were created.Second annual IP Conference and FairThere were 611 attendees.80 plus startups in venture connection.40 plus VC’s in venture connection.Slide 33 – Number of Disclosures, Patents, Licenses and StartupsSlide 33 shows a graph of the number of disclosures, patents, licenses and startups from 2007 to 2017. Slide 34 – Sustainability on our CampusWe reduced campus greenhouse gas emissions by 18 percent since 2005 and set an ambitious new reduction goal of 35 percent by the year 2020.Ongoing programs have saved or avoided energy costs in excess of 62 million dollars since 2003.Energy procurement strategies save 11.8 million dollars annually.Additional strategies can be found at sustainability.psu.eduSlide 35 – Summary and next stepsContinue to develop Institutional Dashboard Metrics.Use those metrics to assess the performance and success of the University, promote transparency, and identify trends.Group our metric around strategic goals.Consider quantitative vs. qualitative metrics and survey data.Slide 36 – This concludes my remarks. I now have time to take questions. ................
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