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AUBURN UNIVERSITY STRATEGIC PLANNING SITUATION ASSESSMENT October 2006 Messina & Graham DRAFT FOR DISCUSSION.

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Presentation on theme: "AUBURN UNIVERSITY STRATEGIC PLANNING SITUATION ASSESSMENT October 2006 Messina & Graham DRAFT FOR DISCUSSION."— Presentation transcript:

1 AUBURN UNIVERSITY STRATEGIC PLANNING SITUATION ASSESSMENT October 2006 Messina & Graham DRAFT FOR DISCUSSION

2 Contents Messina & Graham I. Overview of Strategy-Development Process II. Profile of the Environment Summary Slides Implications III.Auburn University (AU) Profile - Students Research Extension Finances Assessment of Strengths, Weaknesses, Opportunities, and Threats (“SWOT” Assessment) Strategic Challenges and Implications

3 Contents (Continued) Messina & Graham IV. Auburn University Montgomery (AUM) Comparison of Auburn University and AUM Profile Assessment of Strengths, Weaknesses, Opportunities, and Threats (“SWOT” Assessment) Strategic Challenges and Implications V. Next Steps Appendices Auburn University Strategic Planning – Profile of the Environment, July 2006 (separately bound) Ranking Methodologies Selected Information Sources

4 I. Overview of Strategy-Development Process Messina & Graham 1. SITUATION ASSESSMENT 2. OPTION GENERATION 3. OPTION EVALUATION 4. STRATEGY SELECTION 5. EXECUTION Profiling the environment Profiling Auburn - Main campus - AUM Identifying strategic challenges and implications Candidate strategic objectives and directions Rationale for each option Detailed assessment of each option Comparison of options Rationale Full description, including goals and action initiatives Implementation plan, responsibility assignments Progress measures, review milestones Adjustments and adaptation 4

5 Key Elements of a Strategy Messina & Graham DISTINCTIVENESS RESOURCE COMMITMENTS EXECUTION Special attributes and their sources Differentiation that confers relative advantage Consistent with vision and mission Choices about allocating scarce resources Fact-based decision-making Coherent set of initiatives Implementation plans, responsibility assignments Progress measures, review milestones Adjustments and adaptation 5

6 II. Profile of the Environment Messina & Graham 6 Summary Slides - Pervasive Trends - Forces Affecting Higher Education Implications - For all universities - For AU (Illustrative)

7 PERVASIVE TRENDS FORCES AFFECTING HIGHER EDUCATION Globalization Information Revolution Natural-Resource Demands and Environmental Strain Aging Populations and Increasing Minorities Enrollment Growth Affordability Challenge Demands for Quality Improvement Efficiency Imperative Diverse Perspectives on the University in the Twenty- First Century Summary Messina & Graham 7

8 Pervasive Trends Messina & Graham GLOBALIZATION Transforming worldwide commerce and employment Generating global competition for knowledge work Information technology, telecommunications, connectivity Dramatic and ubiquitous impacts Aging populations in developed countries Rapid rise in U.S. minorities, especially Hispanics INFORMATION REVOLUTION NATURAL RESOURCES DEMOGRAPHICS Demand increasing because of global economic and population growth Environment under strain 8

9 Implications of Pervasive Trends for Universities Messina & Graham GLOBALIZATION Ensuring competitiveness of graduates Increasing students’ international awareness Multiple challenges and opportunities in teaching and learning, research, extension, and administration and operations Enriching lifelong learning Embracing greater diversity INFORMATION REVOLUTION NATURAL RESOURCES DEMOGRAPHICS Teaching and learning, research, extension and operations opportunities Examples: alternative energy sources, conservation, agricultural technologies 9

10 Implications of Higher-Education Trends for Universities Messina & Graham ENROLLMENT GROWTH Focusing on enrollment objectives Ensuring diverse access Implementing proven business practices to reduce cost growth Innovating and experimenting with new curricula and teaching approaches Measuring performance in learning and teaching AFFORDABILITY CHALLENGE QUALITY IMPROVEMENT EFFICIENCY IMPERATIVE 21 ST CENTURY UNIVERSITY Re-examining vision and mission Redesigning business model to adapt to dramatic change 10

11 Implications for Auburn University Messina & Graham Pervasive Trends Ensure implementation of technologies that enable cost and quality improvements TREND / IMPLICATIONSPOSSIBLE AUBURN RESPONSE GLOBALIZATION Competitiveness of graduates Students’ international awareness Raise performance expectations for students and measure results Develop new approaches to undergraduate education Increase international course and language skills offerings and requirements INFORMATION REVOLUTION Challenges and opportunities across the enterprise 11 ILLUSTRATIVE

12 Implications for Auburn University Messina & Graham Pervasive Trends Advance teaching and research in alternative energy sources, conservation, agricultural technologies Promote energy-efficient building design and operations Explore distance learning for specific markets (e.g., alumni, seniors) Prepare for challenges resulting from growth in Hispanic students NATURAL RESOURCES Opportunities across the enterprise DEMOGRAPHICS Enriching lifelong learning Embracing greater diversity 12 TREND / IMPLICATIONS POSSIBLE AUBURN RESPONSE ILLUSTRATIVE

13 Implications for Auburn University Messina & Graham Forces Affecting Higher Education Strengthen image of value to compensate for possible reduction in applicant pool Constrain expense growth through improving efficiency and applying technology Increase resources available for need-based aid ENROLLMENT GROWTH Focusing on enrollment objectives AFFORDABILITY CHALLENGE Ensuring diverse access 13 TREND / IMPLICATIONS POSSIBLE AUBURN RESPONSE ILLUSTRATIVE

14 Implications for Auburn University Messina & Graham Forces Affecting Higher Education Raise performance expectations for students Innovate and experiment with new teaching approaches, including beyond the classroom Focus on learning objectives and measure results QUALITY IMPROVEMENT Developing innovative teaching and learning approaches Measuring performance in learning and teaching 14 TREND / IMPLICATIONS POSSIBLE AUBURN RESPONSE ILLUSTRATIVE

15 Implications for Auburn University Messina & Graham Forces Affecting Higher Education Perform a comprehensive review of cost elements and processes Implement focused technology solutions that reduce or contain costs Examine approaches to help enable the faculty to become more productive in their teaching and research activities EFFICIENCY IMPERATIVE Implementing proven business practices to reduce cost growth 15 TREND / IMPLICATIONS POSSIBLE AUBURN RESPONSE ILLUSTRATIVE

16 Implications for Auburn University Messina & Graham Forces Affecting Higher Education As a key building block for creating a twenty-first century vision for Auburn, perform an assessment of the University’s strengths and weaknesses, and profile the opportunities and threats it faces (“SWOT” assessment) 21 ST CENTURY UNIVERSITY Re-examining vision and mission Redesigning business model to adapt to dramatic change 16 TREND / IMPLICATIONS POSSIBLE AUBURN RESPONSE ILLUSTRATIVE

17 III. Auburn University * Messina & Graham Profile Assessment of Strengths, Weaknesses, Opportunities, and Threats (“SWOT” Assessment) Strategic Challenges and Implications 17 *Acknowledgment: The Director and staff of Auburn’s Office of Institutional Research and Assessment were extremely helpful in compiling and critiquing selected data presented in this profile of Auburn, and in suggesting additional sources. Even so, the selection of data to be presented, all judgments expressed, and any remaining errors are the sole responsibility of Messina & Graham

18 Profile of Auburn University Messina & Graham 18 1.Students 2.Research 3.Extension 4.Finances

19 Student demographics. AU’s demand outlook (in terms of projected numbers of high-school graduates) is relatively flat, and its current acceptance rate is above 80 percent. It may be challenging for Auburn to maintain enrollment levels while at the same time raising tuition and the target scores of entering freshmen In-state competition. Reasons for strong students to choose in-state competitors likely include family allegiance, cost, and preferences for certain campus environments or programs Out-of-state competition. Out-of-state students face a high financial penalty for attending AU. This is especially true for strong students from Georgia, Tennessee, and South Carolina who qualify for HOPE or similar merit scholarships Value proposition (real and perceived quality of the institution and benefit of attending, relative to cost). Overall, AU’s value proposition is in the middle range of its regional peers. But several AU programs have compelling value propositions Messina & Graham Students

20 Scope for selectivity. AU’s scope for greater student selectivity is limited because, given its large size in a relatively small state, it enrolls a higher fraction of its home state’s high-school graduates than competitors in Georgia and Florida enroll from theirs Value-added (impact of the undergraduate program on building students’ skills). AU’s current value-added performance evidences significant opportunity to improve. This observation applies to many peer institutions as well Distribution by areas of study. AU’s distribution of students by area of study is similar to that of Alabama’s leading universities overall and to that of a highly- regarded land-grant institution in another state, Texas A&M Tuition trends. Over the past decade, AU’s tuition increases have far exceeded inflation as measured by the Consumer Price Index (CPI) Messina & Graham Students (Continued)

21 STUDENT DEMOGRAPHICS The regional demand outlook for university attendance appears reasonably level over time. Alabama’s public high-school graduate numbers are projected to peak in 2007, and by 2015 to be five percent below their 2005 level. After their recent rapid growth, Georgia’s and Florida’s numbers of high-school graduates are projected to level off between 2010 and 2014, and then to begin growing again. (It is worth noting that there are significant variations among demographic projections). In total, Georgia produces approximately two times as many, and Florida more than four times as many, public high-school graduates as Alabama. Chart 1 Messina & Graham 21

22 Public High-School Graduates Source: National Center for Education Statistics (NCES): Projections to 2015, Table 24 Alabama Messina & Graham Chart Down 5% from Number of Students 37,400 35,000 37,100 37,900 35,300

23 Public High-School Graduates (Continued) Source: NCES: Projections to 2015, Table 24 Georgia Messina & Graham Alabama Chart ,300 78,900 62,500 73,700 80,500 37,40035,00037,100 37,900 35,300 Number of Students 2015 – Up 10% from 2005

24 Public High-School Graduates (Continued) Source: NCES: Projections to 2015, Table 24 Messina & Graham AlabamaFlorida 24 Chart 1 Number of Students 37,40035,00037,10037,900 35,300 89, , , , , – Up 10% from 2005

25 Hispanics, currently a very small portion of high-school populations in Alabama and Georgia, are projected to make up ten percent of Alabama’s and 26 percent of Georgia’s high-school graduates by Hispanics historically have attended and completed college at much lower rates than whites and African-Americans, potentially reducing the applicant pool unless this group can be integrated more successfully into higher education. Hispanic students are expected to account for over one-third of Florida’s public high-school graduates by 2018, equivalent to twice the number of African-American graduates. Chart 2 Messina & Graham 25

26 Minority Shares of Public High-School Graduates Source: SREB Fact Book on Higher Education, 2005; AU OIRA Alabama Messina & Graham Note: AU 1.5% Hispanic enrollment in 2005 Chart % 30% 1% 10%

27 Minority Shares of Public High-School Graduates (Continued) Source: SREB Fact Book on Higher Education, 2005; AU OIRA Messina & Graham Georgia Chart 2 27 Alabama % 30% 1% 10% % 27% 2% 26% African- American HispanicAfrican- American Hispanic

28 Minority Shares of Public High-School Graduates (Continued) Source: SREB Fact Book on Higher Education, 2005; AU OIRA Messina & Graham Chart 2 28 AlabamaFlorida % 30% 1% 10% African- American Hispanic % 18% 17% 36% African- American Hispanic

29 Over 40 percent of AU's out-of-state freshmen entering in fall 2006 were from Georgia, down slightly from Chart 3 - This high dependency on Georgia as AU’s main out-of-state market does not provide much opportunity for diversification in case of a policy or economic change that affects AU’s enrollments from that state - However, AU captures an impressive 31 percent of all Georgia students and 19 percent of all Florida students who leave their states to attend a public research university in the southern region. Chart 4 - Out-of-state freshmen score at levels slightly below those of Alabama residents on the ACT. The other states’ flagships will naturally tend to attract the strongest students from their own states. Chart 5 Messina & Graham 29

30 Source: AU OIRA Messina & Graham AU Freshmen by State – 2006 Chart 3 Alabama 61% Other 12% Tennessee 4% Florida 6% Georgia 17% % = 4,077

31 Source: AU OIRA Messina & Graham AU Share of Freshmen Leaving Their Home State for an SREB Public Research University – 2005 Chart % 19% 14%

32 Source: AU OIRA Messina & Graham Equivalent ACT Scores of AU Freshmen – 2005 Chart

33 With an acceptance rate at above 80 percent, there is little room for Auburn to increase enrollment by admitting more liberally. Chart 6 At 26 percent, AU’s yield on out-of-state acceptances is half of its in-state yield. Chart 7 Messina & Graham 33

34 Source: AU OIRA Messina & Graham AU Total Applications, Acceptances, and Enrollment – ,616 Chart 6 4, Note: 81.5 percent of applicants are accepted, with a 36 percent yield 14,249

35 Source: National Student Clearinghouse; AU Office of Admissions & Records Messina & Graham Yield Rate of AU Admitted Students In-State and Out-of-State – Average, Chart % 52%

36 IN-STATE COMPETITION University of Alabama (U of A), University of Alabama at Birmingham (UAB), Southern Union State Community College (SUSCC), University of Alabama at Huntsville (UAH), and Troy represent the main competition for Alabama students, together accounting for half of all AU admits who enrolled elsewhere. It is worth questioning whether prospective students who decided to attend much less academically strong schools were actually an appropriate admissions match for AU. If practicable, declining admission to the least-qualified candidates would lead to a lower acceptance rate, which would both present a stronger image of AU and result in a higher US News & World Report (USNWR) score, at minimal cost in numbers enrolling. Charts 8, 9 The three U of A schools, along with Samford and Birmingham Southern (BHAM S), enrolled 350 of the best-prepared AU admits in 2003, compared with 960 who chose Auburn. Reasons for strong students to select these competitors likely include family allegiance, cost, and campus-environment and program preferences Messina & Graham 36

37 Top 10 Competitors for Alabama Students: Schools Attended by AU Admits Not Enrolling at Auburn – 2003 Source: National Student Clearinghouse; AU Office of Admissions & Records Messina & Graham University of Alabama (U of A) University of Alabama at Birmingham (UAB) Southern Union State Community College (SUSCC) University of Alabama at Huntsville (UAH) Troy University (Troy) University of South Alabama (USA) Birmingham Southern University (BHAM S) Samford University (Samford) University of North Alabama (UNA) Auburn University Montgomery (AUM) Combined Total (Ten Schools) Other Institutions All AU Admits Best-Prepared AU Admits (ACT 27 and Above)* Chart 8 37 *In-State and Out-of-State PercentNumberPercent

38 NA Competition for Alabama Students: Schools Attended by AU Admits Not Enrolling at Auburn – 2006 Source: USNWR, August 2006; Messina & Graham Messina & Graham AU---- U of A23 7 UAB 9 2 SUSCC 8-- UAH 6 3 TROY 5-- USA 5 1 BHAM S 4 2 Samford 4 2 UNA 3-- AUM 3-- TOTAL ,400 NR -2,600 -3,800 -2,800 17,000 8,700 -4,000 -3,530 % Attend 1 88 th best*, more selective, large, public Selective, large, public Community college More selective, mid-size, public Selective, mid-size, public More selective, small, private, Utd Methodist More selective, small, private, Baptist Selective, mid-size, public Less selective, mid-size, public Cost versus AU ($) 3 % Best ≥ 27 2 University type (USNWR Category) 4 Avg. GPA NA 3.4 NA NA ACT Range (25% - 75%) 6 Likely Reason (M&G Assessment) 7 -- Loyalty, price Price Price, work Price Prefer small private Price Chart Data Notes to this chart are on the next page

39 Messina & Graham 1 Percentage of AL resident admits to AU who instead attend each listed school 2 Percentage of ACT 27 resident and out-of-state admits to AU who instead attend each listed school 3 Cost equals the total of tuition, fees, room and board (NR denotes non-residential schools). Difference in dollars per year between AU’s full-pay tuition and living expenses and those of listed school. Negative number indicates school costs less than AU 4 Type of institution based on USNWR categories 5 Average of entering freshmen’s high-school GPAs 6 Lower and upper quartiles of ACT scores of entering freshman class 7 Messina & Graham judgment regarding why student might chose the listed school over an offer from AU Chart 9 39 Competition for Alabama Students Schools Attended by AU Admits Not Enrolling at Auburn – 2006 (Continued) *Ranking versus all schools. For public schools both AU and U of A were rated 39 th Notes

40 AU’s combined in-state, full-pay tuition, room and board are 18 – 30 percent more than those of public-university competitors. AU tuition is almost twice SUSCC’s. For the best-prepared students that AU would probably seek to capture, there is no survey evidence, but price would be a logical factor in some of their decisions to decline AU for a place at U of A or at the less academically-strong UAB, UAH, or USA. U of A, UAH, and UAB are on Princeton Review’s “Best-Value” list, while Auburn is not. Chart 10 Messina & Graham 40

41 Cost of Attending for Alabama Students – Source: USNWR, August 2006; SUSCC website; Princeton Review Messina & Graham AU U of A “Best- Value” UAH “Best- Value” TroyUAB “Best- Value” SUSCC Chart Combined Tuition, Fees, Room and Board – Dollars 5,500 5,300 4,800 4,300 4,800 2,700 7,500 5,400 5,700 4,900 9,200 10,500 10,700 13,000

42 Using USNWR’s overall scores as a reasonable proxy for how students and their parents value universities, AU appears to represent a good value tradeoff for Alabama students compared to out-of-state flagships, even those that rank much higher academically. Similarly, AU seems to offer a better value proposition than the state’s premier private schools, which nevertheless attract well-prepared students. There may be an opportunity to further develop and position AU’s Honors College as a strong alternative to these small private schools. Chart 11 Messina & Graham 42

43 Note: Scores for Troy, Birmingham Southern, Samford and UAH, not ranked among top national universities in USNWR, were assigned using judgment based on other USNWR scores, graduation rate, ACT score and student-faculty ratio Price/Value Map – Alabama Students’ Perspective Source: USNWR, August 2006 Messina & Graham Combined Tuition, Fees, Room and Board Chart 11 Troy UAH U of A UTN Samford USC BHAM S GA Tech Clemson UGA UFL Good value at various price points Value, measured by USNWR scores* *USNWR score is based on a blend of peer assessment, retention/graduation rates, class size, faculty ratio, freshmen ACT scores, percent in top ten percent of high-school class, and alumni giving. See appendix for more detail 43 ILLUSTRATIVE AU

44 OUT-OF-STATE COMPETITION University of Georgia (UGA) is the leading competitor for Auburn admits from out-of-state; otherwise, many universities each command small shares. The principal rivals are other states’ flagships. For the strongest AU admits who enroll out-of-state, UGA, Georgia Tech, Clemson, and the University of Florida (UFL) enroll the largest numbers; but in this best- student group as well, several institutions each account for small shares. Chart 12 Messina & Graham 44

45 Top 10 Out-of-State Competitors – 2003 Source: National Student Clearinghouse; AU Office of Admissions and Records Messina & Graham University of Georgia (UGA) Clemson University (Clemson) University of Tennessee (UTN) Georgia Institute of Technology (GA Tech) University of Florida (UFL) Florida State University (FL S) University of Mississippi (UMS) University of South Carolina (USC) Georgia Southern University (GA S) Kennesaw State University (KSU) Combined Total (Ten Schools) Other Schools Chart *In-State and Out-of-State All AU Admits Best-Prepared AU Admits (ACT 27 and Above)* PercentNumberPercent

46 Out-of-state students, especially Georgia students who qualify for HOPE, and their families face a high financial penalty for attending AU. Chart 13. Financial considerations probably factor into the college choices of a segment of these students. AU ranks highest among competing schools on USNWR’s “Most-Debt” list. According to this source, 65 percent of AU graduates incur debt averaging $21,000. At the regional “Least-Debt” winner, UGA, 43 percent of graduates incur an average debt of $13,000 A Georgia high-school graduate who is admitted to Georgia Tech or UGA may not choose AU over those schools unless attracted by a specific program with a strong reputation. In general, the implication is that it is difficult for AU to attract many top students from Georgia A Georgia high-school graduate who is not admitted to UGA can choose either to attend an in-state school that ranks lower than AU or to pay a substantial premium to attend school out-of-state. To such students, UTN and U of A may appear to offer superior value compared to AU, family allegiances aside Messina & Graham 46

47 Price/Value Map – Georgia Students’ Perspective – 2006 Source: USNWR, August 2006 Messina & Graham Combined Tuition, Fees, Room and Board GA Southern GA Southern HOPE UGA UGA HOPE GA Tech Tech HOPE UTN U of A AU Clemson UFL Value plays out-of-state for those who don’t get into UGA or GA Tech Georgia schools for non-HOPE students Georgia schools for HOPE students Value USNWR Score Chart ILLUSTRATIVE

48 VALUE PROPOSITION AU is in the middle range among its regional public-school competitors in the overall USNWR ranking. But AU’s undergraduate Engineering and Business programs advanced from 2005 to 2006 and are ranked as stronger than those of several competitors. Chart 14. The Architecture program is nationally competitive, and the Graduate School of Education and the Communications Disorders programs both rank well. Chart 15. There may be further scope to emphasize this program performance in marketing AU to students and parents who are attentive to quality and career value when choosing schools AU’s value proposition to a Georgia high-school student likely features big-time sports and a more personal touch than UGA, with possible draws for those interested in specific programs with strong reputations. Another potential positive is AU’s graduation rate over predicted performance, which was outstanding in 2005 and remains good in A potential negative is AU’s absence from Princeton Review’s “Best-Value” list. AU’s disappearance in 2006 from the list of schools where “students (almost) never study” should help attract stronger undergraduates. Chart 15 Messina & Graham 48

49 2629UFL 3029UGA 3029Texas A&M 3535Georgia Tech 4042USC 4742FL ST 4742UTN 5751Auburn 5760U of A 7773Clemson 8783UAB 8783UMS AU Competitor Rankings in USNWR – Messina & Graham 9 8Georgia Tech 1613UFL 1921UGA 2121Texas A&M 3430Clemson 3839Auburn 3839UTN 5039U of A 5252FL ST 5254USC BEST UNDERGRADUATE BUSINESS PROGRAMS TOP PUBLIC UNIVERSITIES Georgia Tech 1417Texas A&M 3130UFL 5760Clemson 6760Auburn 6771UTN 102 *U of A 102 *USC BEST UNDERGRADUATE ENGINEERING SCHOOLS * Not listed among top 105 Chart 14 49

50 Auburn’s Value Proposition Messina & Graham USNWR 2006 RANKINGS Ranked 18 th (4 th in 2005) in nation for retention over predicted level (but 98 th for absolute retention) Ranked 88 th among all schools and 39 th among public schools Graduate School of Education in top 100 in nation Communication Disorders program in top 50 in nation Faculty-Student ratio better than U of A, UGA, and much better than UFL and FL ST “Faculty resources” – class size, faculty pay and caliber – rank significantly lower than for Georgia Tech, UGA, U of A, and UTN DESIGN INTELLIGENCE 2006 RANKINGS Architecture program 15 th in nation (no regional competitor) Interior Design 7 th in nation (LSU 10 th, no other regional competitor) Industrial Design 3 rd in South (after Georgia Tech) Chart Source: USNWR; Design Intelligence

51 Auburn’s Value Proposition (Continued) Messina & Graham PRINCETON REVIEW LISTS AU RANKREPRESENTATIVE COMPETITORS RANKED ON LIST Best-Value College (“FabulousNOT LISTEDNOT LISTEDU of A, UAB, UAH, Clemson, Education at Reasonable Price”)University of South Carolina, FL ST, GA Tech “Town-Gown Relations are Great”#9#11 Samford, Clemson, Texas A&M “Students Pack the Stadiums”#11#13UGA, UFL, UNC, UTN, UT Austin U of A, Clemson “Their Students (Almost) Never Study”#10NOT LISTEDUGA, UFL, UMS, UT Austin “Best College Library”#14#15 Chart Source: Princeton Review LIST

52 AU’s ACT scores in 2005 were no longer the highest among Alabama public schools, as they had been in U of A’s scores matched those at AU, and UAH’s scores were higher. AU’s scores are closer to those of lesser-ranked Georgia Southern and GSU than to Georgia’s flagships, UGA and Georgia Tech. AU’s number of National Merit Scholars is lower than that at regional competitors including UFL and Georgia Tech. Chart 16 Messina & Graham 52

53 Freshmen ACT Scores for Leading Competitors – th to 75 th Percentiles Messina & Graham Chart GA Tech UFL UGA Clemson FL ST USC UTN UAH GA Southern AU U of A UMS Number of National Merit Scholars Source: USNWR, August 2006; National Merit Scholarship Corporation Annual Report,

54 SCOPE FOR SELECTIVITY AU has limited scope for greater selectivity, because its enrollment is large in relation to the total number of Alabama’s high-school graduates – a far higher share than the flagships in Georgia, Texas, and Florida educate, for example. Charts 17, 18 With two relatively large flagship institutions in a comparatively small state, as a matter of arithmetic AU cannot hope to attain the elite undergraduate status of a Texas A&M or Georgia Tech. AU and U of A enroll numbers equal to 18 percent of Alabama’s high- school graduates, while UT and Texas A&M enroll numbers equivalent to only six percent of the Texas class. Other things equal, the Texas flagships can be three times as selective as AU. The picture for Florida’s flagships is very similar to Georgia’s: their combined share of high-school graduates is ten percent, but also one institution is clearly academically stronger than the other, able to draw the better students and rank much higher Messina & Graham 54

55 Scope for Selectivity Freshmen as Percent of State’s High-School Graduates – 2005 Source: USNWR; NCES Messina & Graham Chart 17 Alabama *Percent From Top 10% of High-School Class 35*24* % 8.9% 18.4% GA TechUGABoth Flagships 66*50* Georgia 3.6% 6.3% 9.9%

56 Scope for Selectivity Freshmen as Percent of State’s High-School Graduates – 2005 Source: USNWR; NCES Messina & Graham Chart 18 Texas *Percent From Top 10% of High-School Class 66*49* % 3% 5.8% 85*26* Florida 5.5% 4.6% 10.1%

57 Reportedly, 35 percent of AU students are from the top ten percent of their high-school class. Because Alabama is a small state with two relatively equal flagships, this level is almost inevitably lower than the 50 to 66 percent achieved by the Georgia and Texas flagship schools, not to mention the University of Florida’s 85 percent. To reach UGA’s level of 50 percent of students coming from the top ten percent of their high-school class, Auburn would have to capture about half of all Alabama high-school graduates who finish in the top ten percent, which would be exceedingly difficult Messina & Graham 57 But South Carolina shows more similarity to Alabama: it is a small state with two top national, public universities. Clemson's share of its state’s high-school graduates is similar to Auburn’s, and USC’s share is actually higher than U of A’s. Yet despite this “market share of talent” challenge, Clemson ranks considerably higher academically than Auburn, gaining much higher marks for selectivity. It appears Clemson has achieved this by working to position USC as the clear second in the state, enabling Clemson to attract the stronger applicant pool. Chart 19. Auburn’s particular challenge is that it is viewed as equivalent to U of A academically, diluting both Alabama universities’ selectivity

58 Scope for Selectivity Freshmen as Percent of State’s High-School Graduates – 2005 Source: USNWR; NCES South Carolina Messina & Graham Chart Percent From Top 10% of High-School Class 9% 12% 21%

59 Another perspective on this limited scope for selectivity is that if AU aspired to reach Clemson’s ACT scores, (i.e., to move the ACT lower-quartile point up to 24), it would have to replace 900 low-scoring freshmen in its current class profile with new students scoring 24 or higher. But the pool of higher-scorers is finite (absent any marked improvement in Alabama’s quite weak high-school performance), and AU competes with other institutions to recruit from this pool. Adding 900 higher-scorers would require increasing AU’s share of all such Alabama students from 25 percent to 37 percent, largely at the expense of U of A, UAB, UAH, Samford, Birmingham Southern, and Troy. While there probably are incremental opportunities to gain some market share, a goal of 50 percent share gain in a rather mature “market” seems unrealistic. (Note: The foregoing analysis is based on data reported in In the August 2006 USNWR report, Clemson has moved its lower-quartile ACT bar one point higher and AU’s has decreased by one point, making catch-up that much harder). Chart 20 Messina & Graham 59

60 Alabama ACT Scores Distribution Source: ACT; USNWR Messina & Graham Chart % 20% 23% 7,400 target students for improving freshmen scores at AU 60 AU 25% U of A 21% UAB 8% Samford 6% UAH 6% BHAM S 4% Troy 3% Other 27% Shares of Those with ACT of 24 and Over* *2004 Number of Students 18,2636,4677, or below and over 57% 23% 32,122 20%

61 The State of Alabama receives a D- grade from the National Center for Public Policy and Higher Education on the measure of “High-School Student Preparation to Succeed in College.” Relative to other states, a smaller fraction of Alabama high-school students perform well on the ACT and Advanced-Placement tests. Chart 21. This makes it more difficult for Auburn to be as selective as universities in many other states Messina & Graham 61

62 Alabama High-School Student Preparation Source: Measuring Up, 2006; Advanced Placement Report to the Nation, 2006 Messina & Graham Chart ACT Performance Percentage of Students Scoring in the Top 20% Nationally 2005 Advanced Placement Performance Percentage of Students Scoring 3 or Higher On At Least One AP Exam % 20% 5.3% 14.1%

63 AU’s 25 percent share of the state’s National Merit Scholars, while much lower than that of rival U of A’s, is similar to UGA’s share of Georgia’s National Merit Scholars. Increasing the number of in-state National Merit Scholars at AU would largely have to occur at the expense of U of A, since Alabama’s other schools enroll only 16 percent of the total. Chart 22. National Merit Scholar finalists are those high-school students who score highest in their states on the Preliminary SAT test in junior year and whose school record does not disqualify them. 1 This designation may not be a necessary and / or sufficient marker for a university that is intent on targeting a desirable group of academic stars. Moreover, the National Merit Scholar designation does not reflect any of the non-academic strengths – such as participation or excellence in athletics, arts, student leadership, community service and so on – that leading universities typically seek to recruit to their student body. Recruiting more National Merit Scholars would have no impact on AU’s position in the leading rankings 1 Only six percent of these top-scoring semi-finalists are disqualified, so the screening of in-school performance does not provide universities with much evidence of academic excellence. Messina & Graham 63

64 Competitor Shares of National Merit Scholars Source: National Merit Scholarship Corporation Annual Report, 2005 Messina & Graham Chart Alabama (116 Students in total) Auburn 29 U of A 68 UAB, BHAM S, UAH, Other 10 Samford 9 59% 25% 8% Georgia (208 Students in total)* * Georgia colleges import a net 19 Scholars above the 189 state winners Other 3 Emory 56 UGA 49 GA Tech % 24% 27% 1%

65 VALUE-ADDED Input measures such as admission yields, ACT scores, USNWR rankings, and tuition do not indicate how well the university educates its undergraduates – its “value-added.” In terms of the competition among peer schools to enroll students, that neglect of value-added is currently appropriate, since prospective students, parents and high-school counselors have limited access to (or understanding of) comparisons of value-added. The informed student prospect will consult USNWR and Princeton Review and form a subjective impression from a campus visit and conversations with friends, but that is the extent of his or her information about a university Still, as suggested in Chapter II, “Profile of the Environment,” value-added is a natural way for Auburn to consider responding to many of the external forces at work. These possible responses include raising performance expectations for students, developing new approaches to undergraduate education, strengthening AU’s value image, and focusing on learning objectives and measuring results Messina & Graham 65

66 AU has been among the fairly early adopters of the two main assessments of value-added that have received widespread national support and a degree of validation: the Collegiate Learning Assessment (CLA) and National Survey of Student Engagement (NSSE). CLA results so far show that AU is roughly at parity with most other participating schools but behind the best schools in terms of developing desirable skills in its undergraduates. Relative to the top 10 percent of participating schools nationally, Auburn earns a B or C grade on its educational approaches, as broadly measured by the NSSE. Chart 23 Messina & Graham 66

67 Measures of Auburn’s Value-Added Messina & Graham Source: AU OIRA COLLEGIATE LEARNING ASSESSMENT (CLA) 2005 – 2006 Chart Analytic Writing Make an Argument Critique an Argument Performance Task At Expected Level (on par with 60-75% of CLA-participating schools) AU’s OVERALL RESULT SENIORS’ PERFORMANCE BY TASK (RELATIVE TO EXPECTED LEVEL) Below Expected Level At Expected Level Below Expected Level At Expected Level

68 NATIONAL SURVEY OF STUDENT ENGAGEMENT (NSSE) Academic Challenge Active, Collaborative Learning Student-Faculty Interaction Enriching Experiences Supportive Campus Implied Improvements More Assigned Reading and Writing More Time Preparing for Class More Emphasis on Developing Higher-Order Cognitive Skills Measures of Auburn’s Value-Added (Continued) Messina & Graham Source: AU OIRA Chart AU Scores – 2006* FreshmenSeniors *Where 100 equals the average score of the top 10 percent of participating schools

69 A gross measure of a university’s educational effectiveness, cited by the Spellings Commission among others, is its students’ six-year graduation rate. Against this measure, AU has performed well relative to graduation rates predicted from the ACT scores of entering students. Even so, it must be considered a disappointing result that only 62 percent of the 1999 entering class had obtained their AU degrees by This level is below that of most of AU’s research university competitors and below the figure for U.S. four-year schools overall. Chart 24 Messina & Graham 69

70 Six-Year Graduation Rate AU versus Selected Competitors Source: USNWR, 2006; Spellings Commission final report Percent of 1999 Entering Class Receiving Bachelor's Degree Messina & Graham ClemsonFL STUSCGA Tech UFLAUU of AUGA Chart National Average = 66% UTNUMS 56 57

71 Messina & Graham 71 DISTRIBUTION OF STUDENTS BY AREA OF STUDY Auburn’s current distribution of undergraduates by college or school generally reflects that of the state’s top four universities taken together (AU, U of A, UAH, and UAB). Liberal Arts is the most popular field of study, followed by Business, Engineering, and Science / Math. The traditional land-grant studies account for about 40 percent of the undergraduates. Chart 25. This pattern is consistent with AU’s long-established breadth of studies as well as its position as a relatively large university in a relatively small state

72 Distribution of Undergraduates by School Source: AU OIRA; U of A system State of Alabama 2005 AU, U of A, UAH, UAB Messina & Graham Chart 25 Education 7% Liberal Arts 25% Business 22% Engineering 16% Human/Social Science 9% Science/Math 10% Other 11% 100% = 48, Auburn 2005 Education 8% Liberal Arts 24% Business 19% Engineering 15% Architecture 7% Science/ Math 13% Agriculture 5% 100% = 19,250 Human/Social Science 6% Nursing 3% Source: AU OIRA Traditional Land Grant Studies

73 Messina & Graham 73 For comparison, even Texas A&M, in the huge state of Texas (where specialization would be relatively unconstrained by numbers of potential students), has not specialized in technology schools. Only 19 percent of A&M’s undergraduates are in Engineering, fairly comparable to Auburn’s 15 percent. Taken together, A&M’s traditional land-grant studies – Engineering, Agriculture, Science, Veterinary Medicine, and Architecture Colleges – account for 48 percent of all its undergraduates. The same schools account for 40 percent of Auburn’s enrollment (and Auburn does not offer undergraduates Veterinary Medicine). Twenty-nine percent of A&M’s undergraduates are in Liberal Arts or General Studies, compared with 24 percent of Auburn’s in Liberal Arts. Chart 26

74 Distribution of Undergraduates by School Source: Texas A&M Fact Book Texas A&M Messina & Graham Chart 26 Education 11% Engineering 19% Business 11% Agriculture 15% Architecture 4% General Education Studies 11% Science 5% 100% = 35,700 Veterinary Medicine 5% Geosciences 1% Liberal Arts 18% 74 Traditional Land Grant Studies

75 Messina & Graham 75 Auburn’s leading shares of the top four’s students are in Architecture and Agriculture – where AU has the only programs – followed by Science / Math, Education, Liberal Arts, Engineering and Business. The only two schools that have a somewhat lower share than AU’s overall share of top four universities’ students are Human Sciences and Nursing. Chart 27

76 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% AU Shares of Alabama Undergraduates by School Source: AU OIRA; U of A system Percent of AU, U of A, UAH and UAB Enrolled 2005* Messina & Graham Chart % = 76 *2003 for UAH and 2004 for UAB EducationEngineeringBusinessAgricultureArchitect.Human / Social Science NursingLiberal Arts Science/ Math 1, ,8833,53811,9967,60410,4882,2834,534

77 Messina & Graham 77 With respect to AU’s distribution of graduate students by field of concentration, Education has the largest share, followed by Engineering. Chart 28

78 Distribution of Graduate Students by School Source: AU OIRA Auburn Messina & Graham Chart 28 Education 23% Liberal Arts 13% Business 15% Engineering 21% Architecture 4% Science/Math 9% Agriculture 7% 100% = 3, Other 8%

79 TUITION TRENDS Over a decade, AU’s tuition increases have consistently far exceeded inflation as measured by the Consumer Price Index (CPI) Between and , AU’s tuition increased at a compound annual rate of 8.9 percent, 3.5 times the rate of inflation as measured by CPI, and also twice the rate of public four-year colleges in general During this period, AU’s tuition level moved from being much lower than that of the average public four-year college to about the same Out-of-state tuition has generally been maintained at 2.8 times the in-state level, very slightly less than the average ratio of SREB peers Over time, tuition increases at public universities have been larger during periods when state funding has been less, a trend also reflected at Auburn “We currently operate under a model in which educational expenditures at colleges and universities across the country are rising by about 4.5 to 5 percent annually.” (University System of Maryland Chancellor William Kirwan) Continuing increases in net tuition that are in excess of CPI carry the risks of eventually creating resistance and reducing enrollment, and – if not somewhat attenuated by financial aid to students who need it – of diminishing diversity in the student body Messina & Graham 79

80 Although AU’s research funding has increased considerably in dollar terms during the past five years, it has not kept pace with funding increases at other universities. This result reflects a much more competitive research environment, in which success depends in part on the availability of supplementary resources to cover the costs generated by the research enterprise in excess of the funding it provides. AU’s research funding is well below the Southern Region Education Board (SREB) median Total federal research expenditures are projected to be at best flat or, more likely, to decline over the next five years, driven by the latest budget outlook for large federal deficits into the indefinite future. Chart 29 - This deficit forecast in turn derives largely from a combination of tax cuts, entitlement growth for seniors, and defense / security spending increases since September At the same time, R&D does not appear to have the strong political constituency required to command a growing share of the squeezed discretionary budget Messina & Graham Research

81 - Accordingly, the American Association for the Advancement of Science (AAAS) forecasts a 10 percent real drop in funding for the National Institutes of Health (NIH), a modest increase in National Science Foundation (NSF), Department of Energy (DOE), and National Institute of Standards and Technology (NIST) funding (with a caveat that projected increases often do not translate into reality), and a decrease in all other non-defense R&D Messina & Graham Research (Continued)

82 Projected Nondefense R&D FY Messina & Graham Chart Source: AAAS Analysis Projected Effects of President’s FY 2007 Budget on Nondefense R&D

83 Alabama’s #10 rank among states for federal R&D dollars is well ahead of its population (#23) and gross-state-product (#25) rankings, driven by massive DoD and NASA intramural spending - The state’s academic R&D ranking (#23) is in line with its population. Federally- funded academic R&D ranks #20, but industry R&D lags at #32 - In Alabama, life sciences account for 69 percent of all academic R&D dollars. In the U.S., life sciences account for 59 percent of all academic R&D dollars. The difference presumably reflects UAB’s funding Research is becoming much more competitive, with lower success rates projected for applications for NIH grants (down to 19 percent in 2007 from a recent high of 30 percent). Chart 30. Scale matters – the larger research institutions generally have higher success rates Messina & Graham 83

84 National Institutes of Health (NIH) Research Project Grant (RPG) Success Rate Source: NIH Agency Budget Justification for FY 2007 Messina & Graham Chart 30 84

85 Research is costly - In general, as evaluated by several sources including the Huron Consulting Group, university research-related costs are consistently somewhat greater than the associated revenues, even including indirect-cost reimbursement by the federal government - The trend is toward higher costs, driven by increased compliance requirements and an increasingly cross-disciplinary research process - Additionally, state and other funders typically reimburse at lower indirect-cost rates than the federal government - Despite the costly nature of performing research, it creates many benefits beyond the university. For example, research dollars spent generate economic activity that multiplies the effect, and technology transfer can create value-added intellectual property and new companies that produce jobs and wealth Messina & Graham 85

86 Research is becoming more cross-disciplinary - Many research frontiers today occur at the intersection of two or more fields - Collaborative research partnerships (government / universities / business) are increasing, even though industrial funding has declined somewhat in recent years - Technology transfer is getting more attention. Alabama’s rank for patents issued (35 th ) is lower than its population or gross-state-product ranks - There is a rise of R&D-based economic hubs, such as the Research Triangle, with a few advantaged locations accounting for a disproportionately large share of R&D- related jobs and funding. In this regard, Auburn is not currently in a strong position, though it is close enough for faculty collaboration with research universities in Atlanta and, for life sciences, Birmingham Messina & Graham 86

87 While the amount of research spending at AU has grown considerably in absolute dollars over the last five years or so, the University's relative position (rank) – 90 th among public universities in federal research dollars and 72 nd in total research dollars – has declined, moving down from 66 th in both measures between 1998 and Chart 31 Messina & Graham 87

88 Auburn Federal Research Dollars and Rank Source: TheCenter; AU OIRA Messina & Graham Chart 31 Rank (Public Universities) #66#88#83#82#84#90 88 $ Millions

89 AU’s federal research is at 64 percent of the SREB non-medical school median on a dollar basis, and even slightly lower when viewed on a per-faculty basis. Chart 32. In comparisons on all other measurements, AU is also below the SREB median Total research comparisons are somewhat more favorable, but even in the best light, AU’s research funding and other performance measures are well below the SREB median. Chart 32 Messina & Graham 89

90 AU versus Median of SREB Non-Medical Peer Group On TheCenter’s Measures – 2005 Source: TheCenter; AU OIRA Messina & Graham Chart Research University Quality Indicators AU In Relation to Median Values for Non-Medical School Members of SREB Peer Group *Tenure and Tenure-Track Total Research Total, Per Faculty* Federal Research Federal, Per Faculty* EndowmentAnnual Giving National Academy SREB Median = 100

91 AU versus Median of SREB Non-Medical Peer Group On TheCenter’s Measures – 2005 (Continued) Source: TheCenter; AU OIRA Messina & Graham Chart Research University Quality Indicators AU In Relation to Median Values for Non-Medical School Members of SREB Peer Group Faculty Awards Doctorates Awarded Doctorates Per Faculty* PostdocsMerit Scholars Merit Scholars Per 1000 *Tenured SREB Median = 100

92 Comparisons with selected public research universities highlight the challenges for Auburn in advancing its position. As TheCenter has observed, research growth involves a competition for top talent, and over time the resulting dynamics produce a widening gap between the strongest participants and the others. Large regional research institutions such as Georgia Tech, Texas A&M, and UGA perform two to four times as much federally funded research as AU, have between ten and 30 National Academy members on their faculty, and award two to three times as many Ph.D.s. Their endowment assets range from two to 16 times the size of Auburn’s. Charts 33, 34, 35, and 36 Messina & Graham 92

93 Federal Research Expenditures AU versus Selected Institutions – 2003 Source: TheCenter, 2005 $ Millions Messina & Graham Texas A&M ClemsonAUGA Tech U of AUGA Chart 33 93

94 National Academy Members AU versus Selected Institutions – 2004 Source: TheCenter, 2005 Messina & Graham Texas A&M Clemson AU GA TechU of AUGA Note: Includes National Academy of Sciences, National Academy of Engineering, and the Institute of Medicine Chart 34 94

95 Ph.D.s Awarded AU versus Selected Institutions – 2004 Source: TheCenter, 2005 Messina & Graham Texas A&M ClemsonAUGA TechU of AUGA Chart 35 95

96 Endowment Assets AU versus Selected Institutions – 2003 Source: TheCenter, 2005 $ Millions Messina & Graham Texas A&M ClemsonAUGA TechU of AUGA 1,118 4, Chart 36 96

97 Even while performing at multiples of Auburn’s scale in their research enterprises, impressive regional institutions like Georgia Tech and Texas A&M are not among the national research leaders as measured by TheCenter. Texas A&M is ranked among the top 25 American Research Universities on only three of TheCenter’s nine measures, and among the next 25 universities on another three measures. Georgia Tech is ranked among the top American Research Universities on seven of TheCenter’s nine measures; UGA on only two AU is somewhat more dependent on state research funds than many other institutions In a few research areas – including several engineering fields and agricultural sciences – AU has much higher shares of federal R&D funding than its overall share across all fields combined. Chart 37 - AU’s funding share in these selected areas is several times its overall share - Such funding levels can form the basis for building a nationally competitive position in carefully selected areas of concentration Messina & Graham 97

98 Auburn’s Federal Research Funding as a Percentage Share of Total Federal R&D Dollars – Four-Year Average – 2000 to 2003 Source: NSF; AU OIRA Messina & Graham Chart 37 $ Millions Overall R&D All Engineering Civil Eng.Chem. Eng. Mech. Eng. Agricultural Science % 0.50% 0.89% 0.79% 0.49% 1.38% AU’s Overall R&D Share (%)

99 OVERVIEW Auburn and Alabama A&M, together with Tuskegee University, cooperate under the ACES to provide a wide variety of extension services to Alabamians through county offices across the state The Extension System’s mission is “to deliver research-based educational programs that enable people to improve their quality of life and economic well-being” PROGRAM AREAS AND STAFF Extension has six overarching program areas: 4-H and Youth Development Agriculture Forestry and Natural Resources Messina & Graham 99 Source: Annual Report and Highlights on ACES website; AU OIRA 3. Extension Alabama Cooperative Extension System (ACES)

100 Source: Annual Report and Highlights on ACES website; AU OIRA; AU Comprehensive Annual Financial Report, 2005 Urban Affairs and New Non-traditional Programs Family and Individual Well-Being Community and Economic Development Recent initiatives include Hurricane Katrina recovery efforts, insect-pest management, outreach to the Hispanic / Latino population, nutrition education to food-stamp recipients, training for food safety at school, and a waste-oil pilot for poultry farming. Many ACES initiatives cut across several of the program areas AU has 429 full-time and 146 part-time employees dedicated to ACES. The full-time staff represents about ten percent of Auburn’s total number of employees. Almost all ACES employees at Auburn are non-faculty, categorized as “other professional,” secretarial / clerical, or technical FINANCES Total 2005 revenue for ACES was $49.1 million. This represented a decrease of some $2.6 million from 2004 Messina & Graham 100

101 Source: Annual Report and Highlights on ACES website; AU OIRA; AU Comprehensive Annual Financial Report, 2005 The leading sources of ACES operating revenues are federal appropriations, grants, and contracts that totaled about $14.8 million in 2005, down 21 percent from 2004 State appropriations (not accounted for as operating revenues) were $28.8 million, an increase of six percent over 2004 Total expenses were $46 million, resulting in a margin of $3 million “increase in net assets” for 2005 ACES unrestricted net assets were $9.9 million at September 30, 2005 Messina & Graham 101


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