MIT Reports to the President 1997-98
At this time during each year of my tenure as president, I have written an essay of relevance to MIT, but speaking as well to a larger audience beyond our campus This year my report is directly addressed to the MIT community alone, because I believe that we have reached a watershed and must craft a more explicit vision of our future and an intellectual and financial plan for realizing it. What follows is a personal statement and framework, yet one that is informed and influenced by many others. The work of many of my Faculty, Administration, and Corporation colleagues is embedded within it. I hope it is useful.
MIT is the quintessential American research university, and the world's preeminent institution focused primarily, though not exclusively, on science and engineering. We are dedicated to serving our nation and world by discovering fundamental knowledge of the natural, social, economic, and aesthetic realms; by working in concert with others to bring this knowledge to bear on the world's great challenges; and by preparing a highly talented and diverse group of students to deeply understand science and engineering and developing their ability, values, and passion to apply this knowledge wisely and creatively to the betterment of humankind.
We can take great pride in our accomplishments, and we do. Yet this is precisely the moment when we must reach for our promise. The times and the needs of the world are changing rapidly, and in the years ahead MIT must redefine itself and the very nature of the research university if we are to best serve our students, our nation, and the global society of which we are a part.
The Cold War era has receded into history, and we find ourselves in a new, fast-paced, globally-interconnected, knowledge-driven age. This age presents its own instabilities and dangers, but also is rich in promise and opportunity driven by an unprecedented acceleration of knowledge, understanding, and technology. In the coming century, as the information and genetic revolutions gather momentum, and great environmental challenges loom ever larger, society will, as always, look to MIT graduates, faculty, and staff for fundamental research, and for creative understanding and application of science and engineering. But society also will expect MIT and its people to play an increasingly important leadership role in many dimensions of world affairs. We have begun to prepare for this by increasing our understanding of, and partnership with, business, industry, and governments in new endeavors of learning, research, and problem solving. This will be an important element of the research university of the future. It is an exciting moment for us.
LOOKING TO THE FUTURE
MIT is uniquely poised to be the preeminent university in shaping and serving an emerging new age. We are blessed with an intellectual environment of remarkable creativity - generated by the synergy among world-class programs in science, engineering, and management together with extraordinary programs in the arts, humanities, architecture, and the social sciences. This provides an ideal educational setting at the dawn of the 21st century. Our faculty, students, staff, and graduates will make breakthrough discoveries and redraw the intellectual map in areas that will define the quality of our future. We will bring our talents to bear on the toughest challenges and most exciting opportunities before us. We will reinvent ourselves and our institutions along the way.
Our plans rest on several assumptions about the future - of science, society, and universities themselves. What are some of these assumptions?
A VISION FOR MIT
Upon the strong foundation of our institutional heritage, but informed by these assumptions about the future, we can build a vision - a set of defining goals - for MIT. MIT can and must:
These, I believe, are the essential goals that will enable MIT to be the quintessential research university of the next century, as it has been in the past.
MIT IN THE '80s AND '90s - STRENGTHS TO BUILD UPON
The 1980s were a decade of remarkable accomplishments at MIT: We developed an exceptionally diverse student body; maintained and strengthened the excellence of our programs across all five Schools; continued a deep, though often insufficiently recognized, commitment to undergraduate education; led American academia in internationalization, through such activities as the MIT Japan Program; established a new paradigm of education, research, and industrial interaction through the Leaders for Manufacturing Program; launched Project Athena, the first really large-scale academic computing environment; embarked on an unusual and highly successful venture with a newly created, affiliated research organization - the Whitehead Institute; entered a new level of private fund raising through the successful Campaign for the future; and realized one of the very best investment performances among university endowments.
Our path through the 1990s has been marked by exciting progress in numerous aspects of education, research, and campus development, despite the pressures of shifts in federal research funding policy, the world economy, and public support of higher education and research.
The following highlights offer a picture of an energetic, dynamic institution oriented toward and investing in the future.
MIT's excellence in mathematics and the basic sciences is a defining strength of our institution. In the 1990s, the life sciences have continued and expanded their world-class excellence, and now play a major role in the education of all MIT students. The emergence of neuroscience and the study of the mind and brain as major new intellectual arenas is reflected in the establishment of the Center for Learning and Memory and the reorganization of Brain and Cognitive Science as a department in the School of Science. The development last year of the "atom laser" is yet another example of how faculty at MIT are inventing the future.
At the same time, we have initiated a second revolution in engineering education, characterized by increased emphasis on integrative aspects of engineering and real-world considerations involving production, process and design. We continue to be at the heart of the information technology revolution through many endeavors such as the leadership and management of the World Wide Web. Of particular note is the establishment of the new Division of Bioengineering and Environmental Health, which organizes faculty, research, and education outside of traditional disciplines in recognition of the future role of cell and molecular biology in engineering.
The MIT Sloan School of Management now is clearly recognized as being in the first rank of business schools. It has astutely built synergy with many other schools at MIT, totally redesigned and expanded its MBA program, emphasized entrepreneurship in new ways, and established coherent new international initiatives, such as the World Business Curriculum project with Tsinghua and Fudan Universities in China. Its eminence in quantitative and international matters and its strong interfaces to technology are excellent comparative advantages today.
HUMANITIES, ARTS AND SOCIAL SCIENCES
The role of the humanities, arts, and social sciences has expanded in recognition that these are essential intellectual and cultural components of the creative spirit and ethos of education and scholarship at MIT. The humanities and social science faculty have played leadership roles in extending the global reach of many of our programs and in broadening the perspectives and expertise needed to engineer, manage, and set policy. MIT's world-renowned strengths in economics and linguistics continued to build and evolve. Writing and the performing arts have continually expanded their importance and, in addition, have played a notable role in developing an appreciation of the role of diversity in living and learning. The visual arts have evolved in new directions and have expanded their strength and centrality in our institution.
ARCHITECTURE AND PLANNING
The School of Architecture and Planning has undergone a renaissance, as it has begun to define the new technology-based modes of practice and education. There is a rededicated emphasis on design in Architecture; Urban Studies and Planning is at the forefront of using technology to inform the planning, management, and delivery of services in urban settings; the Media Laboratory is better integrated into the activities of the School; and the School has established new and increasingly important links to other elements of MIT.
A number of large, highly interdisciplinary programs have been formed across the Institute, many of which focus on the environment. The Joint Program on the Science and Policy of Global Change, the Alliance for Global Sustainability, and other activities have set new standards of effectiveness in bringing sound scientific understanding and more effective policy contributions to important discourse among industry, government, and academia on a national and international basis. Educational and research programs requiring effective partnership between the School of Engineering and the Sloan School of Management emerged as a nearly unique comparative advantage of MIT. We have made progress toward more efficiently and effectively realizing our full potential in bringing new scientific and engineering techniques to the practice of human medicine, but more remains to be done in this regard.
The office and role of the Dean of Students and Undergraduate Education was dramatically changed by combining all elements of service for our students: Academic support, admissions, athletics, bursar, career planning, counseling, dining, financial aid, housing, and student records were combined into a single, more integrated organization. Through this change and through substantial process reengineering, we are establishing an organization to support the improvements in the quality of student experience that will be important to accomplish in the years immediately ahead.
Over the years, MIT's physical plant has evolved through a combination of new construction, periodic major renovations, and rework of existing buildings. During the 1990s, we constructed the Biology Building, widely regarded as the best facility for biological research and education in the world; completely renovated Buildings 16 and 56; rebuilt the interior of our oldest residence hall, Senior House; constructed the Tang Center for Management Education; and carried out a prudent schedule of maintenance and reuse. There is much to be proud of on our campus, but much remains to be done if our campus in toto is to inspire, reflect and support the excellence and creativity of MIT and function better as a means for enhancing the student experience and building a sense of community and pride of place.
Our greatest challenge is to bring to MIT the best students, the best faculty, and the people and infrastructure to support them. And we must provide the physical facilities and information infrastructure that enable them to live, learn, and work within an effective and inspirational environment. Increasingly, we must compete with other, often more heavily endowed, institutions for these students and faculty. We must make continued investments in people and facilities in order to remain great, yet our financial underpinnings and opportunities are changing rapidly.
MIT, more than any other university in America, built its financial structure on the foundation of federal support. In the early 1990s, federal support for our universities in general, and MIT in particular, began to erode. Despite this, the MIT faculty succeeded in maintaining strong research support. However, a series of changes in federal cost reimbursement policy, including the reduction of financial support of graduate students, and other mechanisms for shifting costs of research from the federal government to universities, seriously reduced our operating revenues. Financing MIT's future requires a rebalancing of public and private support.
There were other sea changes during the decade as well. The pressures of world economic competition shortened both vision and time horizons in research and development. The public became deeply concerned about rising costs of education, both real and perceived. The arts and humanities were devalued. Continuing racial and economic schisms in our society, together with failures in many elements of American primary and secondary education, reduced educational opportunity for many and thereby deprived society of their full talents. The costs of continuing our deeply-held commitment to need-blind admissions and need-based financial aid grew.
The support, authority, and convening power of MIT must be continuously earned, and this requires that we recognize and address these realities as we strike out on the path to our future.
THE PATH TO THE FUTURE
Our path to the future will be guided by our vision and assumptions. We will chart a course to meet the priorities established by our academic leadership and will address the challenges and obstacles before us. In so doing, we also will be informed by various task forces and councils which have worked throughout the past two years to chart our course and to outline the principles and directions that will lead to an enhanced campus environment for learning, working, and living.
As always, the new intellectual directions of the Institute will be determined by the faculty. Our institutional goal is to create the infrastructure of services, facilities, and support to enable them to pursue their ideas and activities in as vigorous a manner as possible.
Even though evolving faculty pursuits will drive our intellectual future, there is a clear sense of several overarching themes that characterize much of the Institute's emerging research and educational agendas. It is clear, for example, that our faculty have every intention of leading the continuing revolutions in information technology and the intelligence sciences; in the study of neuroscience, the brain, and the mind; in basic biology and its application to engineering and medicine; in the environment and sustainable development; in 21st century business practice and entrepreneurship; in understanding the nature and social impact of new digital media; in visual and performing arts; in the understanding, design, and operation of large-scale, complex systems; in blending technology, management, economics, and policy; and in the development of new modes of teaching and new uses of technology to enhance learning.
Our faculty's commitment to deep, fundamental research and scholarship is matched by a desire to transfer new knowledge, insights, and technologies into the world in important and positive ways. We will pursue a number of strategic educational and research initiatives that will create a new paradigm for the research university - one dedicated to bettering the human condition through partnerships among industry, government, and academia. These partnerships will have the goals of improving our environment, advancing health, creating new products and services, and enhancing productivity. Many of these initiatives will be global in scope and will increase the exposure of our students to different modes of thought and activity throughout the world.
We must clearly define our place in the changing galaxy of educational institutions, activities, and alliances. There can be no doubt that emerging information technologies with enormous storage, bandwidth, and display capabilities will profoundly affect the way we all work, live, and learn. Institutions and groups of institutions will provide various educational services, from specific training and the updating of skills to high-quality degree programs. MIT will define an appropriate balance between using these new capabilities to help educate those beyond our campus and bringing a wealth of information and interaction to those on our campus. We will do both, but likely will emphasize the latter. We must be certain that we define the most advanced concepts and operate at the cutting edge of new learning modalities.
Above all, MIT wants to make it possible for its remarkable students to achieve their full potential as scholars, innovators, and leaders. The residential campus will remain the best environment for the education of the most talented young men and women, and it is they we must continue to attract.
THE LEARNING ENVIRONMENT
We will take a number of steps to enhance the quality of life for students, faculty, and staff, recognizing the Task Force on Student Life and Learning's formulation of an MIT education built on a triad of academics, research, and community. The learning environment will be enhanced by specific commitments of resources to improving the freshman year, expanding and improving housing for undergraduate and graduate students, enhancing our athletic facilities, and establishing a cutting-edge computing and digital media environment as well as state-of-the-art library/information facilities. The arts will further strengthen their place in MIT culture and experience. We will raise a major endowment for enhancing undergraduate education and student life, create new alternative pathways through the MIT undergraduate curriculum, and increase opportunities for leadership training and experiences.
RESIDENTIAL CAMPUS LIFE
The magic and synergy established by bringing together bright, motivated, interesting, and dedicated young men and women in a residential campus is the essence of the best in American higher education. To do so within an intense research university that additionally enables them to be part of many electronically-extended learning communities, both within the campus and throughout the world, creates the potential for an unparalleled social and educational experience. Yet student years remain times of intense personal development, value formation, and individual exploration and growth.
We will draw on the many strengths of our diverse housing opportunities in campus residence halls, fraternities, sororities, and independent living groups to create a diverse yet enhanced and better-integrated residence system. The living experience must simultaneously nurture and support individual needs and build an extra-ordinary common experience that defines MIT and bonds all to it. Students, faculty, alumni/ae, and administrators will work intensely to forge this system and its detailed objectives as we move toward Fall 2001. From that year forward, greater coherence of purpose and community for our students' years here will be manifest, with all MIT undergraduates sharing the experience of residing on campus during their first year.
The distance between living and learning at MIT has become too great. For many, the components of education have become too compartmentalized. Building on the foundation of the report of the Task Force on Student Life and Learning, we must assure every student of personal engagement with scholars and advisors, and with more inherent avenues for serious dialogue and mutual learning. Residential and dining experiences must contribute to this.
BUILDING THE INFRASTRUCTURE
Even as we forge these exciting new pathways, we must overcome serious practical obstacles. We must improve our ability to adequately fund the education of graduate students, particularly in our doctoral programs. We must be able to maintain the levels of compensation, start-up expenses, and flexibility to explore new areas and seed new programs that are required to attract and retain the very best faculty. We must keep an MIT education affordable by moderating the growth of tuition, strengthening financial aid, and attenuating self-help levels. And while some might not think of this as infrastructure, we must continue to build a diverse student body, faculty, and staff in order to educate our students effectively and prepare them for leadership in our increasingly diverse society - a society that must function more cohesively and productively in the future.
Finally, we must place emphasis on improvement of our physical campus. We propose major enhancements of our facilities and infrastructure that will be efficient and functional, yet will generate a greater sense of community and pride in MIT and what it stands for. These developments will be guided by our desire to enhance the quality of student life and learning, but they also are congruent with our vision of the key areas of research and education in the coming decades.
Meeting our challenges and advancing along the path to our future requires a three-element strategy of building public understanding and support, managing our assets well, and developing new financial resources. Our strategy has been consistent for the last several years, and will continue to be so.
In order to keep the nation on a course toward a vibrant future, and to create an environment in which MIT can flourish, we have worked vigorously to increase public, federal, and business understanding and support of science, technology, research, and advanced education. We have delivered a consistent message centered on the importance of investing in the future through support of research and education. To do so, we have built national coalitions, worked with all branches of the federal government, worked with the traditional scientific and educational organizations, and have engaged the business communities, state governors, and the media. Critical to our effectiveness has been our practice of bringing MIT faculty expertise to bear on the problems and challenges faced by leaders in government and business, and of convening serious interactions across these sectors.
Our advocacy efforts are helping to create new understanding and support in industry for university research and education, and they have had a significant influence on the federal government's stance as well. There is a growing recognition, stimulated in part by MIT-based efforts, that the future strength of America's economy and quality of life depend on our ability to innovate, and that innovation in large measure depends on investment in research and education. After six years of essentially level funding, both the Administration and Congress, in an increasingly bipartisan manner, now are supporting stronger research budgets. The issue of federal entitlements, however, still threatens these budgets in the ensuing years.
FISCAL DISCIPLINE AND MANAGEMENT IMPROVEMENTS
The quality and dedication of our administrative and support staff are vital elements in our ability to realize our vision of excellence and effectiveness in education, research, and service to society. In the last several years, staff throughout the Institute have worked to rein in costs and provide more effective services. We have reengineered several of our administrative services, outsourced many functions, cut back some administrative paper flow, and reconfigured many of our operations. Fiscal discipline and our efforts to gain administrative efficiency have had positive results, involving and affecting the entire institution. This has been difficult and controversial. Much has been accomplished, but more remains to be done, and it is a tribute to MIT's staff that they continue to develop better ways to support our education and research programs.
Management improvements are but one of the ways in which we have made major adjustments to new financial realities. Others include absorbing very large costs associated with sponsored research that used to be paid for by the federal government; using Institute funds to support the full academic year salaries of almost all faculty; and reducing the size of the staff as employees leave or retire. (The retirement incentive program also enabled us to open many positions for new faculty, primarily in the junior ranks, allowing us to renew the Institute's most critical resource - its intellectual capital.) We are nearing completion of the installation of a modern financial and management information system, thereby increasing our potential for efficiency, and avoiding the costs of solving the "Year 2000 problem" in our primary systems.
We also have been moderate in tuition increases, have reduced operating budgets, have reduced our energy costs (through conservation and the construction of a modern cogeneration plant), and have extended the life of our physical plant through major renovation of existing buildings.
INCREASING PRIVATE SUPPORT
Increased private support is a dominant and absolutely critical component of our strategy. Simply put, the financial structure of MIT must change substantially. This requires that our support from traditional constituencies such as alumni and alumnae, other individual donors, and foundations must grow substantially. Happily, our intellectual agenda in many areas of research and education requires deeper partnership with industry and greater global interaction, both of which also open new avenues of financial support. We have made a good start in gaining increased financial commitment by donors to MIT, and by forging innovative new partnerships with business and industry, but this is just the beginning of the road.
The outlook is good. We have set three consecutive record years for private fund raising at MIT, with cash received reaching $137 million in Fiscal Year 1998. With the addition of generous contributions and the skillful investment in strong financial markets, MIT's endowment has more than doubled in recent years, growing from $1.40 billion in 1990 to $3.68 billion in June 1998. Industrial support of research at MIT has grown from 15 percent of our research volume in 1990 to almost 20 percent of our research volume in 1998. This growth is the result in part of newly conceived strategic partnerships with industry.
FUNDING OUR FUTURE: MIT'S FINANCIAL PLAN
Realizing our vision of the future also requires a new financial plan. During the last nine months, we have worked with the Executive and Investment Committees of the MIT Corporation to develop a new vision and plan for deployment of our financial resources. This plan is evolving, but its broad aspects, assumptions, and goals are clear.
The costs of our operations, facilities, and infrastructure are funded by three sources of revenue: tuition, externally-sponsored research, and gifts and endowment income.
We have projected the expenses of realizing our goals and vision. They include funding for core needs, programmatic initiatives and improvements, and extensions of physical plant and infrastructure. They commit us to certain specific strategic directions, yet allow for some increase in the freedom, flexibility, and intellectual entrepreneurism that must characterize a great university.
The financial structure of MIT must evolve rapidly to meet the new realities of changing federal support, increased competition from our peers, and deterioration of our physical facilities. Simply put, we will become more dependent upon private resources. This raises profound policy issues about our operating budget, our capital budget, and, particularly, the long-term development and deployment of our asset base, especially our endowment.
MIT must increase its expenditures from earnings on its endowment and other invested assets, as well as from newly raised funds for both non-recurring and recurring purposes. We are confident that MIT faculty will conceive and find support for the great new ventures of the future if we continue to provide a conducive environment and infrastructure to support them.
The key factors in our financial planning fall into two categories: essential baseline parameters, and the incremental expenditures needed to maintain and expand our areas of excellence.
Before presenting these factors, it is useful to review a few background facts.
ESSENTIAL BASELINE PARAMETERS
Student tuition accounts for about a quarter of our campus revenue. The largest component of our operating expenses is salaries and wages. Our commitment to strong undergraduate student aid programs is fundamental. In addition, MIT's finances and our faculty's ability to compete for grants and contracts are very sensitive to the indirect cost rate charged to our sponsors. The plan must begin with assumptions about these four parameters.
NEW EXPENDITURES TO ACHIEVE EXCELLENCE
Recruiting and retaining the very best faculty remains one of our greatest challenges. To do so, we must be able to offer competitive salaries, state-of-the-art research and teaching facilities, and opportunities to work with the very best students. Faculty salaries are included in the baseline budget parameters discussed above. In addition to these parameters, there are three major incremental expenditures that we believe will position MIT for greatness in the coming decades.
FUNDING THE PLAN
Meeting MIT's goals will require new revenues, new approaches to use of our resources, and revised processes and procedures in our operations. Increased dependence on gifts and investment earnings requires a dynamic adjustment to economic conditions and greater control over some aspects of budgeting and expenditures.
Our ability to achieve our goals for graduate education, facility maintenance and renewal, and major construction will depend to some extent on the performance of the economy and the financial markets. Increased expenditures require improved control. We will fulfill legal and moral obligations to maintain the purchasing power of our endowment. Projects and expenditures will be prioritized and paced throughout the next decade. Our spending plans at all times will be keyed in part to investment performance during the preceding three years and to the growth of other resources. We will be prepared to suspend some of these expenditures in a pre-planned manner if our financial performance decreases dramatically.
Finally, our ability to realize our vision necessitates internal budgetary simplification and continued commitment to the quality and efficiency of services. We will improve and simplify our system of funds, budgets, and plans. We will make budgeting a clearer and more direct process for meeting our academic goals. We also will remain dedicated to improvement of our financial and management systems and processes.
A FINAL, OR BEGINNING, WORD
Together, we have the opportunity to lead the most intense period of change and redefinition of MIT since the post-war years. Now is the time. I hope that this document will provide a useful framework and agenda for this task. It is about ideas, buildings, finances, opportunities, and responsibilities. But it really is about something even more important - it is about people.
MIT - its past, present and future - is defined by people. It is the dedication, ability, and effort of our faculty, staff, students, trustees, and alumni and alumnae that have brought us to our current extraordinary position on the world stage. It will be your vision, creativity, abilities, values, sense of mission, and will to excel that will create the MIT of the 21st Century. It will be a grand adventure. I am grateful for your service, support, and accomplishments, and I look forward to working with each and every one of you to make this vision of the future a reality.
Charles M. Vest
MIT Reports to the President 1997-98