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Birgeneau: 'A quantitative and qualitative change for us'
In this fall's Berkeleyan interview, the chancellor speaks about the great promise of the Hewlett matching gift, touching on other campus priorities as the academic year gets under way

12 September 2007

A year ago, you told us [Aug. 29, 2006] that you had hopes of addressing the imbalance in the faculty salary structure vis a vis our private peer competitors, in part, by emphasizing fundraising for endowed chairs. This week's announcement of a major gift to the campus indicates progress on that front. How does the Hewlett Foundation's challenge gift meet the expectations you had in mind last year?
Clearly this represents a very important step forward, first of all in our ability to honor our most accomplished faculty, but also in strengthening the financial basis of the university. In the past, when chairs were funded at the $500,000 level, it meant the income provided only enough resources to support the research and scholarship of the chairholder. There are some cases where the chair endowment has grown, and the chairholder generously allows the income to be used for the commons. Such sharing seems to occur often in the humanities. But this is the exception rather than the rule.


Walter Hewlett (left), chair of the foundation that made this week's historic gift to Berkeley, shares Chancellor Birgeneau's conviction that private giving in support of public education is a worthy endeavor. (Peg Skorpinski photo)
 
The Hewlett Foundation Endowed Chair Challenge provides the first large-scale example of a new financial model for our campus. It provides half of the resources to endow 80 chairs at $2 million, plus 20 distinguished-professor chairs at $3 million. This means that instead of a quadrupling of the amount required of a donor to fund a chair, under this matching challenge it's actually [only] a doubling, from $500,000 to $1 million. Given total funding of $2 million, a chairholder can still receive a scholarly allowance of $25,000 a year from the income, but the income from the additional $1.5 million endowment can be used to help meet two of our most significant challenges: graduate-student support, and shortfalls in faculty salaries. We also hope that this model of chair income, contributing both to the individual chairholder and to the commons within a department, will hold for future chairs.

To fully realize the potential of the gift, how will the endowment be managed?
An important aspect of the Hewlett gift is the $3 million portion that is intended to help us strengthen our investment mechanisms. This was, in fact, a condition of our receiving the gift. We've done well with our returns [on investment] in the last several years, and we believe we'll do even better in the future. That's a central element of this endowment idea - that the available funds will grow much more rapidly than inflation.

Which disciplines will benefit from the chairs created by the challenge?
I'm really proud that these chairs will be very broadly distributed. So, for example, since 17 percent of our faculty are in the arts and humanities, provided that they meet their fundraising responsibilities, 17 percent of the chairs will be in arts and humanities.

Additionally, one unique feature of the Hewlett chairs - and it was one of the conditions put in by the experienced university administrators on the Hewlett board - is that after 50 years the chairs may evolve toward another area of scholarship. They foresaw that an area prominent in scholarship in 2007 may not even exist in the year 2057! So we need to have the flexibility to move chairs around as areas of scholarly research and education evolve.

Is that a sensitivity unique to the Hewlett board?
One impressive aspect of all this is that the Hewlett board, with the exception of [LBNL Director] Steve Chu, who had to recuse himself, is composed entirely of individuals with strong affiliations and/or loyalties to elite private universities: It includes the current president of Yale and the former provost of Harvard, and the former dean of Stanford Law School is the president of the Hewlett Foundation. This makes the gift all the more significant, because it was the elite private-university sector that recognized the importance of having Berkeley, as a public institution with its public character, continue to excel.

One dean who's been involved in faculty-retention battles told us that while the faculty salary gap at Berkeley is a real issue, professors, like everyone, would also like to be recognized for their hard work, which having more chairs available will do. Is that your experience?
When I was a faculty member in physics at MIT, I was very aggressively recruited by Stanford. MIT, as a matter of policy, never matches salary offers, but their response was to offer me one of the two most prestigious chairs in the physics department. That was overwhelming, and it had a huge emotional impact on me - in a phrase, I was blown away. It was recognition I wasn't asking for and didn't expect. Frankly, I didn't even view myself at that time as belonging among the elite in the MIT physics department.

I'm sure that applies just as well to the faculty here at Berkeley. For mid-career, emerging scholars about to reach the top levels in their fields, the ability to recognize their standing in the department - and, of course, to provide them with discretionary resources - is really quite important.

Which incentives are usually most persuasive when faculty retention cases arise?
Each retention case is different, with a complicated set of variables. But in the majority of them, salary is actually secondary.

I had a couple of young associate professors in my office who both had astounding outside offers that would nearly double their salaries. However, what they wanted to negotiate about first was the state of the undergraduate laboratories in their department. That was the most important issue to them: that the university wasn't properly supporting the undergraduate educational program in their department. They wanted that addressed first before their personal situations were addressed. I sat here and thought, "We have to keep these people!" That to me was a symbol of what makes Berkeley such a great place.

How did their cases turn out?
They both stayed, even though we didn't meet their outside offer in terms of salary . . . though we're moving in the direction that was important to them. We were also able to make significant progress in helping them equip their own laboratories in the way they and their graduate students need to do cutting-edge research.

You've framed the Hewlett gift as a turning point in the financing of public higher education. Are there existing arrangements such as this at other universities? Don't we have to wait and see whether departments can meet their fundraising goals before we can proclaim this a real turning point?
Very often, to decide whether something really was a turning point, you have to look back 10 years. For Berkeley, it is a fundamental change in the financial model for faculty and graduate students. For the first time we're going to add to the pool of funds available from the state to pay academic-year salaries with income from the endowment - that's both a quantitative and qualitative change for us. I estimate that if we can do the Hewlett gift three times over, that will largely bridge the [faculty salary] gap, at least in the near term.

Do you see the Hewlett gift as a third-party validation of what you have been saying about the need to turn to private funding to sustain the public mission of the institution?
I prefer the term "recognition" to "validation." At one point during our conversation with the Hewlett board about public education -and there were many such conversations, at all levels, during the time period we were engaged with them..I was talking about the challenges we face in public education. I got about halfway through my arguments when the chairman of the board, Walter Hewlett, interrupted me, then continued my monologue for 10 more minutes, as if I were still speaking. Not only did I not have to complete my argument, he was completing it for me!

Do you think the going will be that smooth as Berkeley pursues future gifts?
I've had these conversations with a number of other foundations and have found this same resonance at every one. Whether these resonances translate into major gifts remains to be seen, of course. But many of these foundations have leaders whose backgrounds are exclusively in elite private universities on the East Coast, and without exception those people recognize the importance of Berkeley as a public institution and the importance to the country of maintaining a high-quality, competitive education in the public sector. As I said to many of them: Just because a person cannot afford to go to Harvard or Yale or Princeton, or it isn't in their world view, doesn't mean they don't deserve to be taught by faculty who are every bit as good as the faculty those places can support. That argument was universally accepted by the heads of all the major foundations with whom I have spoken.

Now, is this indicative of some kind of sea change in the donor universe? It's too soon to tell. I think the country, in part because of the phenomenal success of the private universities in fundraising and investments, has only recently come to understand this huge and growing gap between the privates and publics, which mirrors the huge gap that's growing between the privileged and the underprivileged in American society.

On that score, a few weeks ago, in an op-ed piece in the San Francisco Chronicle, you discussed the financial challenges many of our students face. You then described a proposal you've been lobbying for in Sacramento - one that would provide state funds, in the form of a permanent endowment, to match private donations targeted at reducing the "self help" requirement (currently about $8,000 annually) that is so burdensome to many of our students and their families.
We're extremely proud, here in California and at Berkeley in particular, about accessibility and how successful we've been. It's been well-publicized, but not well-understood, just what a large percentage of our students come from financially disadvantaged backgrounds. This is something we can be extraordinarily proud of.

'Just because a person cannot afford to go to Harvard or Yale or Princeton, or it isn't in their world view, doesn't mean they don't deserve to be taught by faculty who are every bit as good as the faculty those places can support.'
-Chancellor Birgeneau

Secondly, the nature of financial aid, and how we do it, is also not well understood. The concept of "self help" is foreign to many people who look at a total annual cost of attending college, say, $25,000, and think, "This is never going to be possible for me." For a person from a poor background, the total cost is irrelevant; the only relevant number is the one they have to come up with themselves, one way or another.

So after I first took up the position of chancellor, and began to understand the many challenges here, I was exposed to our Pell Grant numbers, and the fact that we have more Pell Grant students at Berkeley than all of the Ivy League universities put together. That's very impressive, and that shows we're fulfilling one of our most important commitments as a public university.

I then asked for some projections to tell us what the self-help figure would likely look like five years from now, based on existing financial-aid programs. The early projections suggested that the self-help level could rise to between $12,000 and $13,000 per year. Now, if someone's family income is $20,000 a year - and that applies to some 4,000 of our students -and you tell them that they're going to have to provide $8,000, maybe $4,000 of which they could earn and $4,000 of which they could borrow, that might seem achievable. But if you tell them that over the next four years they're going to have to provide $50,000, they're going to say, "I could never imagine doing that, so I'm going to go to the local community college."

I realized that we had to start working then and there to try to keep these numbers down. The first thing was, of course, to try to control costs internally, and our Student Affairs staff has done a marvelous job in that arena. The second thing would be to increase financial aid through existing programs like Pell Grants. For the last two years we and others have been lobbying in Washington to have Pell Grants go up, and that's been passed this year, wonderfully. However, even when you take those enhancements into account, we still are threatened by significantly increased self-help levels over the next five years.

Do you think that a public-private program such as you describe here would resonate with donors?
I've lived through [creation of a program of this sort in Canada], and when I looked at the situation here in California, it was clear to me that we ought to be able to do the same thing here. It turns out that people love the idea of the government matching their donations . . . it's pure human psychology. Matches matter, and government matches seem to matter even more. So I did a rough calculation, and estimated that the University of California system could raise $150 million in donations each year for seven years, which would total about a billion dollars. If it were matched by the government at that level, we'd then have $2 billion for the system - which would initially spin off $100 million at 5 percent, and grow progressively with good investment strategies. That amount would go a long distance toward meeting the needs of our financially challenged undergraduates.

When you float those the numbers in Sacramento, how do legislators react?
Every single politician I've discussed this with has said it's a terrific idea. The challenge is to go from an individual assemblyperson or senator saying that to a budget line item. As a first step last year, State Assembly Speaker Nez, who's very supportive of this idea, put $25 million in the budget specifically for financial aid for transfer students . but it did not make it all the way through the political process.

So how goes this lobbying effort?
I've been championing it both within the UC system and in Sacramento, and I would say that enthusiasm for it is only now just building. In addition, we still have some work to do in convincing every single UC chancellor that this should be among their highest priorities. Some other campuses are coming late to understanding the financial challenge we face in terms of guaranteeing accessibility. I like to remind them every once in awhile..


The last details of the campus contract with BP, LBNL, and the University of Illinois are being worked out, says Birgeneau, who presided over that announcement event in February (above). "This will be an agreement that upholds our most valued principles," the chancellor affirms. (Steve McConnell photo)
 

In April, we reported that a signed Energy Biosciences Institute agreement was anticipated by mid-summer. It's now fall, and there's no signed agreement. Can you characterize the progress of the negotiations?
We're doing very well. It turns out, as we knew in advance would be the case, that there are complications when you're trying to forge an agreement between a state university in California, a state university in Illinois, a national laboratory, and a global corporation. Even the state laws are different between California and Illinois, much less all the protocols and laws within the federal government. We need to reconcile all these things, and that is proving to be somewhat complicated on a technical level, which as I say is where the remaining issues lie. But we're almost there.

Are you confident that people will like what they see in the final document? The process has not been without its tensions.
I expected the campus debate that emerged over the proposal, and welcomed it: These issues are complicated, and they needed to be aired publicly. I'm very confident that this will be an agreement that upholds our most valued principles.

The state's 2007-08 budget allocates a 5 percent salary-increase pool to UC. Where are we in terms of determining the overall merit pool for Berkeley campus employee increases this year?
That's not yet fixed. We're converging on numbers for both the COLA component and the merit pool, and counting on the fact that our improved performance-review system means we'll get an appropriate, meaningful assessment of the performance of our individual employees, and be able to reward them commensurately.

You've made it clear that his will be the last year in which employee performance reviews are not firmly linked to specific goals - and in fact, several units are already piloting the new goal-based system during this cycle of performance reviews. What do you think the benefits will be from the new system?
I'm a strong believer in a fulsome performance-review system as the only way to guarantee that everyone will be treated fairly. Otherwise you have inequities on both ends: You have cases where people who aren't carrying their load are nevertheless being rewarded; and you have people who are performing very well, or extraordinarily well, but perhaps don't get along with their supervisors as well as some others, and therefore aren't being rewarded appropriately. Having an objective performance-review system is the only way I know to ensure that we have a fair system.

Salary increases over the past several years have been specified by the compact struck between Gov. Schwarzenegger and UC President Dynes some years ago. Now that Dynes is stepping down, will the compact continue under a new UC administration?
That was one of Bob Dynes' really significant accomplishments, to negotiate this with the governor. It has served us extraordinarily well, and I believe that it will continue to do so. The governor seems to be totally committed to the health of the University of California. If he were ever going to step back, this was a year when it was going to happen, and it didn't. While all of us breathed a sigh of relief when the final budget came out, it really gave us faith in the governor.

One of the things I've emphasized since I arrived here as chancellor is the need to do long-range budgeting for the campus as a whole, as opposed to year-by-year incremental budgeting. You can't do long-range budgeting if you don't have some confidence in what the state budget is going to be. So from the point of view of how we're trying to improve the budget process here at Berkeley, the state of California adhering to the compact is very important.