Wood's Words: If Not Now.. When?

Jim F. Wood ‘64

He sat at the white Formica kitchen table studiously reading the application for a third time, and sipped slowly from a bottle of Coke while assessing the impact of each word. A three-year graduate of the University of Nebraska-Lincoln, he badly wanted the approval of his father that acceptance to this school would provide. Satisfied, he folded the application and slipped it into an envelope addressed to the business school admissions office at Harvard University, Cambridge, Massachusetts. He stood, finished the Coke, applied the three-cent stamp and walked to the corner mailbox.

The envelope arrived in Cambridge four days later. Applications from the Midwest were read by a junior admissions officer familiar with undergraduate institutions in that part of the country. If the applicant showed promise, the application was passed to a senior officer who would decide whether the application was sufficiently strong to be read by the entire committee. The applicant’s two years at Wharton caught the junior admission officer’s eye. But, there was no reason given for the applicant’s decision to withdraw early, before completing the required coursework, and the applicant was only twenty years old. The junior officer marked the application noting the age and Wharton experience and decided to forward it to the senior officer for concurrence. Two weeks later, a thin envelope arrived at the Omaha home of Warren Buffett advising him he had been rejected for admission to the Harvard Business School.

At his father’s insistence, Mr. Buffett enrolled in the business school at Columbia University in New York where he studied under the famous professors and investors David Dodd and Ben Graham. Mr. Buffett is quoted as saying Professor Dodd “turned my life around.” In August of 1950, long after Columbia’s application deadline, Buffett wrote to Dodd, “Dear Professor Dodd, I thought you were dead, but now that I know you’re alive, I’d like to come and study with you.” Later, he is quoted saying, “I would not be who I am today without David Dodd… Harvard did me a big favor by turning me down. But I haven’t made any contributions to thank them for that.” After completing his graduate work, Mr. Buffett returned to Omaha and formed an investment partnership. Professor Dodd was so impressed with his young student that he invested some money on behalf of himself and his daughter, Barbara, in Mr. Buffett’s partnership.

In September 2007, officials at George School, a private preparatory school in Bucks County, PA announced that an alumna, Mrs. Barbara Anderson, nee Dodd, had donated a staggering $128 million to the school. Harvard may yet rue its hasty 1950 decision, but since its endowment stood at $34.9 billion in September of 2007, the largest endowment of any institution of higher learning, you could be forgiven for thinking Harvard probably doesn’t miss Mr. Buffett’s or Mrs. Anderson’s money.

Just how large is $34,900,000,000? At official exchange rates, it’s larger than the GDP of Costa Rica ($21.4 billion) and 72 percent of the GDP of Vietnam ($48.4 billion). Costa Rica and Vietnam, with populations of 4.1 million and 85.3 million respectively, generate about $5,220 and $567 of GDP per capita, considerably less than the per capita $45,620 tuition/room/board/fees charged by Harvard for the 2007-2008 academic year. However, the Harvard Financial Aid Initiative completely eliminates parental contributions for students if parental income is less than $60,000. And, in 2006, the median debt level for Harvard graduates was $6,850, less than a third of the $20,000 national average student debt at graduation. Harvard advertises its average total aid package is close to $34,000, meaning the average cost to attend Harvard for one year is $12,000, a 74.5 percent tuition/fees discount rate!

Yale University’s endowment is about $22.5 billion, and in September 2007, Yale announced its endowment posted an extraordinary annual return of 28 percent. Both Harvard and Yale have very sophisticated investment strategies, but if you were to place a more measured annual return on the Harvard endowment of, say 12 percent (remember it’s tax exempt), Harvard would earn about $11.5 million per day, or enough earnings in one 90-day fiscal quarter ($1.035 billion) to pay the total annual costs and fees for all its 20,042 students ($914 million).

You will not be surprised to learn this kind of money has been noticed in Washington, DC. On September 26, 2007, the Senate Finance Committee held a hearing that included a discussion on whether colleges and universities should be required to distribute a minimum percentage of their assets each year. Jane Gravelle, a senior specialist for economic policy at the Congressional Research Service told lawmakers that college and university endowments earned an overall return of 15.3 percent in 2006. These same endowments, however, only spent 4.6 percent of these earnings, and for institutions that had endowments larger than $1 billion the total distribution for aid to undergraduate students was 2.85 percent. Lynne Munson, an adjunct fellow for the Center for College Affordability and Productivity testified, “ Many schools have been rolling over so much money for so long that they should easily be able to accommodate a higher rate of payout.” Not content with “fixing” compulsory education in the United States, Congress may now seek ways to interfere with the economic system that created and sustains the best system of private higher education in the world.

Clarkson University’s endowment is about $180 million. It is conservatively invested and for budgeting purposes is expected to earn a modest 8-9 percent annually (or about $15 million). Between $3.0-3.5 million of its earnings (or 33 percent) currently are used each year to help balance the institution’s operating budget. In addition, Clarkson receives unrestricted gifts from its alumni and other donors of just under $2 million. So, some $5.0 million of income required to support its operating budget comes from non-tuition sources. And, the university must deal annually with a tuition discount rate in the neighborhood of its historical amount of 50 percent. It’s a pretty interesting balancing act. No room for a lot of additional debt.

The purpose of drawing such a dramatic comparison to the richest institution of higher education is to point out Clarkson’s dependency on donations and to point out how extraordinarily successful Clarkson has been employing comparatively meager resources in its mission to educate and carryout important research while transforming itself. Gifts from Mrs. Helen Cheel and the Coulter Foundation have changed the Clarkson of just the 1980’s into a more modern and flexible institution. Its full time enrollment is still less than 2500 students, but over the last decade, Clarkson has relocated the balance of its education facilities to the Hill campus (except its graduate program in Physical Therapy). Significant endowments and curricula improvements have occurred as a result of the Coulter money. A new business and liberal arts school and a state of the art hockey arena have been built with money from Mrs. Cheel. Alumni have contributed too. There are seats in the hockey arena named for donors, there are offices in the business and liberal arts building named for donors. But neither building could have been built without the significant and dominant donations noted above.

Much remains to be done. Clarkson is recognized for its excellence in many academic areas, also as one of the most “wired” campuses in the USA, and as a perennial Division I hockey contender (number 7 as of this writing). Yet it is competing with institutions with much stronger financial resources (think March 12, 2001 when RPI received a $360 million anonymous and completely unrestricted donation; the largest ever to a public or private university in the United States), and there are changes in the profile of high school students that do not favor Clarkson.

About 35 percent of high school students who are interested in Clarkson and academically qualified, and who visit the campus actually enroll as freshman. Clarkson would like to see a freshman class of 650 students each and every year. This is an elusive number, however, because Clarkson has three colleges, and needs to try and balance its enrollment in order to utilize its facilities effectively. Still, this means some 1860 interested and qualified students need to put Potsdam on their junior-year college tour in order for Clarkson to have any chance of sustaining this enrollment figure just from visitors. Instead, the population of high school students from areas where Clarkson has drawn its largest enrollment has been declining for several years meaning many more students need to drive past Cornell, Colgate, Hamilton, Union, RPI, Vermont just to mention a few schools, before arriving in Potsdam. And if the center of the US population is moving south, what will draw high school students to look in the St. Lawrence valley?

Not surprising, the expectations of college-bound high school students have evolved. Fully equipped recreation facilities now are required. While laying out this piece, I heard a report on NPR that discussed gourmet kitchens, including renowned chefs and sushi now available on some campuses, and I imagined a FedEx Boeing 747 arriving each day at an enlarged Ogdensburg airport with fresh Tilapia and Sole from the Mediterranean for St Lawrence and Clarkson students!

Most studying is no longer done alone in dormitories. It is usually done in areas where teams work together on group solutions to problems. Academic teaching today focuses on integration of material as opposed to distinct subject matter. Teams made up of students with various study majors are needed to interact and share expertise in problem solving. If you walk around during semester, you will see laptops open to special academic applications operating simultaneously with 20 or 30 IM’s from all over the world.

In fact, dormitory design has changed radically over the recent past. Many high school students desire, and some require, single room residencies. Often multiple single rooms are designed in tandem with a study or recreation area with a flat screen TV, surround sound, a kitchenette, and full WiFi capability. Parents are concerned about safety and dormitory access, and whereas Clarkson’s location has immunized it from much of the problems of urban campuses, parents still pay a lot of attention to this subject during campus tours.

Notwithstanding the advances and changes Clarkson has made in its evolution to excellence, what would a “complete” Clarkson look like? Answering that question means marrying the visual with the cerebral. What appeals to a high school junior and parents when they make a campus tour? What will add to Clarkson’s reputation in a substantial way? Incremental changes don’t work. There has to be a master plan.

Help wanted.

If not you…who?

If not now…when?

A lot of the acreage along the west bank of the Raquette River belongs to Clarkson. To be more exact, all river frontage along Clarkson Avenue (NY 59) from Walker Arena south to a point about 600 feet south of the Bagdad Road turn is Clarkson property. Look it up on Google maps. It could be opened and developed into a large green-space with walking trails, recreation access, athletic fields. Its beauty and scenic views would be enhanced in respect for the historical aspect of the river and as an integrated feature of the campus. Modern dormitories, replacing Woodstock and Riverside, could be constructed on the bluff overlooking the river in front of the existing Townhouses. The green space below and the Adirondack Mountains to the south are views and offer seasonal colors unavailable on many other campuses. Clarkson lacks a Student Union in the manner of all its peer schools. One needs to be designed in harmony with the Hill campus and build in a location that dominates the central campus. Also, Clarkson’s history demands a signature building representing and honoring its founders. Could you envision Old Main reconstructed on the Hill Campus, perhaps as the Student Union, perhaps as a building that houses the University’s administration? Could you imagine the academic buildings all interconnected, so on that very rare day when temperatures fall below freezing, or the occasional flake of snow falls, students could walk from a business class to a CAMP class without needing four or five layers of protective gear, and a GPS in case they got lost?

Do you think that absent these, or similar changes, Clarkson will have its fair shot at students intent on matriculating for a business or liberal arts education? Do you think Clarkson’s reputation for quality and excellence in engineering and science is sufficient to attract a full-class of students, let alone faculty?

If you can imagine these transformations, if you can imagine these needs, can you also imagine being part of them?