Minutes from McCombs School of Business Dean’s Advisory Council Meeting Friday, March 5, 2010 The spring meeting of the McCombs School of Business Dean’s Advisory Council was called to order on March 5, 2010 at 8:45 a.m. in the Tom and Cinda Hicks Room of the AT&T Executive Education and Conference Center by Chair Gary Kusin. Introductions Chair Gary Kusin opened the meeting by thanking the members for their attendance. Christie Skinner also welcomed all of the spouses in attendance. Kusin introduced Scott Caven, a former Advisory Council member who took a leave of absence to serve on The University of Texas System Board of Regents. Caven’s term on the board has ended, and he has rejoined the council. Kusin introduced Will O’Hara, who was attending his first meeting as an Advisory Council member. Advisory Council members, their spouses and school leadership introduced themselves. Recognitions Dean Tom Gilligan acknowledged two Advisory Council members and their spouses with endowment recognition plaques: Beverly and Will O’Hara for the establishment of and contributions to the Beverly H. and William P. O’Hara Endowed Chair in Business, and Ashley and Rad Weaver for the establishment of and contributions to the Ashley and Rad Weaver Endowed Scholarship. Gilligan acknowledged three faculty members who will soon complete four-year appointments in key administrative rolls: Eli Cox, as chair of the Department of Marketing and director of the Business Honors Program; Janet Dukerich, as senior associate dean; and Pam Haunschild, as chair of the Department of Management. Gilligan announced that Kusin will end his term as chair of the Advisory Council following the present meeting. Gary Kelly will take over as chair at the fall meeting. Gilligan asked attendees to join him in thanking Kusin and the school’s faculty members for their outstanding service and recognizing the school’s generous endowment donors. President’s Update President Bill Powers opened with a thank you to Advisory Council members. He said their vision and service is integral to identifying the university and school’s direction and goals. This year marks the tenth anniversary of Red McCombs’ naming gift to the school. Powers thanked Red McCombs for his continued service and engagement. 1 Powers thanked Gilligan for his leadership as dean of the McCombs School since fall 2008. He credited Gilligan for transforming the school’s engagement with energy and entrepreneurship and for partnering with schools across campus. Powers acknowledged the challenges presented by the current economic climate. The McCombs School is in a better position than schools in other states, but the school must adjust to the present circumstances. The university’s budget remains flat. Endowment and Available University Fund (AUF) revenues are down. The Board of Regents will inject extra AUF funds over the next three years. The 1.9% increase in the McCombs School’s general revenue does not compensate for inflation. The university and school administrations are actively engaging with these issues. In an effort to reduce recurring expenditures, staff salaries are frozen for the current fiscal year. Powers indicated that the university and McCombs School must remain focused on its vision for the future and make budget reductions that are in alignment with its goals. As an institution of higher education, the university is a talent-based organization. The university must remain competitive to attract and retain top faculty members and students. To meet this challenge, the university must reallocate funds and move forward. Seventy-five percent of the university’s budget goes to salaries. Reducing these expenditures is a tough process, but university leadership will execute required measures in a thoughtful and deliberate manner. The governor, lieutenant governor and speaker of the House recently mandated that the university, along with all state agencies, reduce its budget by 5% or approximately $29 million. It is still unknown whether the 5% reduction will be for this year alone or reoccurring. In light of this, Powers is preparing for a reoccurring reduction. Powers acknowledged that the state faces a challenging financial future, and the governor is prudent in asking the university to prepare. A fair portion of the budget stimulus funds from last year will not reoccur and sales tax revenues are down for the state. [Read an update from Powers at: http://blogs.utexas.edu/towertalk/ 2010/06/04/budget-update-2/ ] Athletics is contributing $5 million toward the $29 million budget cut. Powers acknowledged that the university is fortunate to be one of the few schools not bailing out an athletics department. Regarding the Campaign for Texas, the university is slightly behind its goals, although the university is raising funds at a faster rate, statistically, than in previous campaigns. The McCombs School set ambitious goals for the campaign. The Board of Regents approved the university’s proposal to increase tuition. Over the next two years, undergraduate residential tuition will increase 3.95%. 2 Powers offered Advisory Council members a few points to consider and share, regarding the university’s tuition rates: 1. Of the university’s 12 peer institutions, if you add tuition and general revenue per student per year funding, The University of Texas at Austin is at the bottom in terms of funding, even if you factor in AUF funding. Of those 12 institutions, 10 have proposed tuition increases from 7-30%. The University of Texas at Austin’s increase is by far the lowest. 2. In Kiplinger’s 2010 Top 100 Best Values for Public Colleges, The University of Texas at Austin is No. 25. 3. This tuition increase is very modest and necessary. Powers introduced Sam Acho, a Business Honors Program student and star student athlete. Acho’s parents, Christie and Sonny Acho, were present for their son’s presentation, and Powers thanked them for their work with Acho and his teammates in their home community in Nigeria. Student Presentation Acho thanked the council for inviting him to speak and shared his background. His mother and father were born and raised in Nigeria. As a nurse practitioner and doctor of psychology, respectively, they return each summer to help in their home community, along with other doctors, nurses and volunteers. Acho has joined his family on these mission trips for the past three years. Last year, Acho’s teammates Tray Allen and John Gold joined him, including Gold’s father, an ophthalmologist. This coming summer, Tyrell Higgins and D.J. Monroe will join the Acho family in Nigeria. Acho views these trips as transformative experiences for his teammates and himself, making them better people and more grateful for what they have. Acho discussed the challenges of balancing his double major in Business Honors and marketing along with being an athlete. He credited many of his professors at McCombs for challenging him and preparing him for the business world. Acho described the excitement of the Bowl Championship Series game against the University of Alabama and the team’s collective sense of calm and confidence the night before. He credited the university for imparting in the team a passion and will to succeed. When they boarded the plane home from California, wearing their Texas gear, the other passengers gave them a standing ovation and thanked the team for their drive and effort. Acho believes that, as a team, losing spoke more about them as people than winning; they lost and stood tall. As Longhorns, they represent more than a National Championship. They represent the university and what it means to be a Texan and a Longhorn. Questions/Feedback Acho opened the floor to questions. In response to a question about his career goals, Acho noted that fall 2010 will be his senior season on the football team, after which he will graduate in 3 December. He plans to work in marketing and advertising for a large retailer before starting his own firm. He will also train for the National Football League, in hopes of maintaining his interests as an athlete and a student of advertising. The meeting adjourned for a break and the spouses joined Christie Skinner for the remainder of the morning. Discussion on Innovation Management and Texas Venture Labs Kusin introduced Gregory Fenves, the eighth dean of the Cockrell School of Engineering. Fenves has an international reputation as an expert in structural engineering and more than two decades of research, teaching, industry engagement and academic leadership. Fenves noted that he and Gilligan both assumed their positions as deans in fall of 2008. In both schools, sharing education, research and knowledge is important. In October 2009, Gilligan appeared before the Advisory Council for the Cockrell School. The Cockrell School is thinking strategically about where to direct its research efforts, to create technologies based on fundamental science to solve major problems. Energy is a major focus and an issue Fenves and Gilligan have discussed at length. Texas is the energy state and should assume leadership in developing secure, sustainable energy, which is so crucial to the state and the nation. Together, the McCombs School and Cockrell School are investigating technology, policy and business models that impact the energy future. Another major focus is health care and health care delivery, issues that span areas of both engineering and business. In service to the greater good of society, the university’s schools are distributing the knowledge created on campus through entrepreneurship and innovation. Researchers address these needs and then must drive them to the marketplace. Kusin introduced Rob Adams and Ted Rappaport. Adams is an active investor, author, consultant and faculty member in the Department of Management at the McCombs School, where he teaches in the graduate program and is director of the Venture Labs Investment Competition (formerly Moot Corp).