Thank you.

It is a pleasure to welcome you all--especially our new faculty members--as we begin the University of Oregon's 121st academic year and to outline for you what I see as the current status and future direction of our enterprise.

Yesterday, returning from lunch as the sun was breaking out of the fog on this beautiful campus, I had one of those experiences that would put a spring back in anyone's step: I encountered two women students, one of whom leapt off her bicycle, asked whether I was the University President and when I admitted I was, asked to shake my hand and congratulated me. I probed to find out why I had received this unexpected introduction and compliment. In a voice pealing with enthusiasm she said, "because I love the U of O!" This truly is taking credit for someone else's work, so I want now publicly to thank all of you who create this enthusiasm each day.

Let me frame my next thoughts with a quite different quote I read recently in Forbes magazine from the visionary management expert Peter Drucker:

"Thirty years from now," he said, "the big university campuses will be relics. Universities won't survive. It's as large a change as when we first got the printed book."

This prophesy is not exactly an upbeat way to continue a "State of the University" address, so let me elaborate.

Part of the change Drucker is talking about is the growth of on-line distance education providers. Those of you familiar with his work know that Drucker delights in provoking response with outrageous sound bites. But he is also a smart, straightforward guy and a much-quoted expert in what makes organizations work.

You ignore Drucker only at your peril.

Before we start updating our resumes for a move out of academia, let me say that I believe Drucker is wrong in his specifics.

But I believe he is right to offer a wake-up call.

University campuses will not be relics in thirty years, but they will change, and in many ways change dramatically.

The reasons are numerous and, I believe, inescapable.

Diminishing resources, dwindling public support, challenges to access and diversity, the move of information and even friendships (if true friendship ever can be "virtual") to cyberspace, and conflicting public expectations all form a part of it.

Our global economy is undergoing a massive warp speed shift to high-technology and service jobs. This transition creates a pool of millions of older adults who need to find new career paths or advanced learning for their current vocations.

The polity of our nation is becoming ever-more distrustful of government--more questioning of institutions, public and private, more willing to attack perceived bastions of privilege and more parsimonious in giving tax support, even in face of the ancient Biblical advice to insulate for the seven lean years during the prosperity of the seven golden years.

The demography of our nation is changing as the Baby Boom generation ages and its children reach college.

The children of the Boomers arrive at our doors with their a unique set of skills and attributes. Among them is an ability to shop for their education. More than 50 percent of these students will not spend an entire collegiate career at one institution. They may start at a community college, transfer to a four-year institution, transfer to another one, perhaps take some courses on-line, and then pursue graduate study somewhere else, and finish with continuing education wherever it's available. The effects on our recruitment and retention efforts are obvious.

At the same time their parents and other working adults, in the millions, are seeking education to change or further their careers.

Overlying and intertwining with these economic, political and demographic trends are changes in technology.

Anyone who daily sits to process 40 or 50 e-mail messages--a form of communication that few, if any of us, used ten years ago--knows how technological change affects our everyday lives. There probably is more computing power in your automobile than existed in the world in 1950.

But technology's effects on higher education are much greater than many of us realize.

In the past 18 months, more than 70 virtual universities have announced their formation on the Web.

Many of them are no more than glorified correspondence courses. They will charge, overcharge, overpromise and succeed or fail. But don't be complacent in the expectation of universal failure. Pay attention to this: California is designing a virtual university that will offer on-line classes from 9 U.C. campuses, 22 state universities, 106 community colleges, and 164 accredited independent colleges.

Minnesota and Kentucky are arranging similar ventures. And here in the West, 21 governors--including our own--are supporting the Western Governors' Virtual University.

The big money, however, is in the private sector, where corporations are beginning to recognize that the growing hunger for higher education makes it profitable.

One of these private vendors, Phoenix University, according to today's New York Times front page story, has just become the largest private university in the United States, with 40,000 students--10,000 of them studying strictly on-line. The rest visit satellite learning centers around the nation, including a newly announced, 2,000-student site in Portland. The student body is largely comprised of the huge and growing number of working adults seeking higher education--adult students who are place- and time-bound by families and jobs, people who cannot take four years off to attend a regional university.

Will the development of virtual universities fulfill Drucker's dire prediction?

Under present technologies, probably not. Present technology, though, is anything but static. While we fall short, now, of the capacity to be "beamed up" or "beamed in," the cybergurus are hard at work.

But among the many reasons research universities are not headed for extinction, I believe the most important is one of the least tangible.

All of us in this room, faculty, students and staff alike, understand the tremendous and transforming experience that comes only from person-to-person, face-to-face teaching and counseling, mentorship and intellectual engagement in the context of real, human social interaction.

We understand that a university campus is not a "virtual" place, but a real one, where students learn life lessons as well as class lessons.

We understand that real education feeds the souls of our students as well as their minds. Real education has extra-curricular sports, internship programs, clubs and associations of almost bewildering but exciting variety.

No virtual university can do that.

However, technology, used creatively, can and will help us do our jobs better. This University already is a national leader in the use of computers, e-mail, and the internet to enhance our students' education. By one rough estimate from our Computing Center, perhaps 40 percent of the classes we teach have an on-line component, ranging from student questions asked via e-mail to full-scale on-line courses.

But we must also recognize that taken together, the changes in our economy, demography, polity, technology and pedagogy pose important--in some people's views, epochal and even cataclysmic--challenges for us--challenges which we cannot ignore. If you think we can ignore this environment, search out the opportunity to discuss change with a fellow citizen who has been "re-engineered" in a corporation, or re-described and repriced in the "managed care" revolution in health care professions.

* * * *

How do we respond?

The first step is to recognize our strengths, and to work from them.

I listed in my recent welcome letter to you numerous academic awards and rankings that we have received in the past year. As much as I enjoy repeating the list of honors and accolades, I won't lengthen this address by doing so now.

Well, perhaps I will just very quickly remind you that according to independent observers we are among the best researchers in the nation, we work with the best campus computer networks in the nation, and we offer one of the very "Best Buys" in higher education in the nation.

Perhaps the most important external affirmation of our quality came earlier this year from our in-depth decennial accreditation review. I now specifically thank the team of our colleagues, unsung heroes and heroines, for their leadership in guiding us through this process.

After an exhaustive examination and award of full accreditation, the review committee commended us for, among other things, being "at the leading edge of implementing new technologies," for our "creative and entrepreneurial response to state budget reductions," our "exemplary achievement in optimizing resources and facilitating collaboration" through our interdisciplinary institutes and centers; and for our commitment not only to undergraduate education, but to graduate education as well.

Before we become too self-congratulatory, however, I remind you that the accrediting committee also recommended needed areas of improvement. They asked for increased consistency in faculty performance review across campus, especially among tenured faculty; better coordination of our ability to assess the outcomes of our educational programs; and, to my personal surprise, in view of the devotion of resources and human commitment to the "Oregon Model" of undergraduate education, increased attention to the effectiveness of our general education program.

The Provost's Office is addressing each of these internal issues aggressively.

The accreditation committee's report concluded with the following:

"There is a sense of the distinctive and special about the UO. Among the attributes frequently cited are the quality of the program, sense of community, people who care about their institution; the special character of Eugene, the climate and geography, the human scale of the university, and powerful traditions of collaboration, cooperation, openness, and friendliness. There is an ever-present pride and search for excellence."

This paragraph, a summary of what our peers see as our unique character, encapsulates much of what makes us strong.

A sense of community. A sense of pride. A spirit that says, "We can work together to solve common problems, regardless of disciplinary boundaries."

And I see something more.

You're all aware that our current $200 million fundraising campaign is two years ahead of schedule. Our alumni and friends have spoken with their pocketbooks, pledging their belief in the value of our teaching and research by supporting us with tens of millions of dollars for teaching, scholarships and facilities.

But there is another group of donors I want to honor today: our own emeritus faculty.

Colleagues like Yoko McClain, who helped to build our Japanese language and literature program here into one of the best in the nation over her 30-year career. Two years after retiring, she gave this university two houses.

Colleagues like Ted Stern, an Anthropology professor for 34 years, an authority on Native American and Southeast Asian tribal peoples. His work has been cited by the United States Supreme Court. After retirement, the he and his wife Mary donated their home, much of Ted's library, and more than $60,000 to the Library, the School of Music, and the Museum of Natural History.

Colleagues like the late and legendary architectural history professor Marion Dean Ross, a man who never owned a house or car, who walked to school every day, and who then stunned us by leaving $1.2 million to the university in his will.

Now I want it to be clear that I am not listing these gifts as a deceptive inducement for further faculty giving. I will make that proposal to advance our value and commitment openly and separately, and not now.

The donations our colleagues have chosen to give are wonderful, but their transformational acts of philanthropy mean more than money. They say something about who we are.

We are more than "workers" at a university.

We are a community of learning, with an extraordinary sense of pride and satisfaction in the work we do.

Professors Stern, Ross and McClain have devoted their lives to the ideals of the academy, to a productive intertwining of teaching, research and service, to giving their students a truer and deeper understanding of the world yet to be discovered.

For these emeritus professors and many others of us, the emotions they have developed over the years about our university now extend beyond pride. For these faculty members, pride has matured into an abiding and supporting love of what we do, and what we mean to our students and the world.

I am pleased to say that some of these faculty members are with us today. Join me in a salute to their engagement, caring and commitment.

* * * *

Our strength is in our people: faculty, staff and students.

Through you, we will address and meet the technological, economic, political, and demographic challenges that we face.

I am pleased that the State System of Higher Education argued successfully in the legislature this year for added faculty salary funds and found enough money to offer at least the beginnings of acceptable salary increases for our outstanding classified staff. But we are still not where we need to be.

And I pledge to you today that it is my high and public priority to continue to battle for adequate support for all our employees.

However, as you know, our concerns for fair treatment go beyond the issue of salaries alone.

In my recent letter of welcome to you, I described our long-standing frustrations with the baffling and unintelligible formulas by which the state system historically has collected and redistributed revenues. I am pleased that the State Board is undertaking a review of this process.

And it is important to know that these concerns are not mine alone.

A draft report of the Governor's Task Force on Higher Education and the Economy recommends significant decentralization of the state system and a radical reform of the budget allocation process.

The preliminary task force report recommends a student-centered, or more properly, a "learner-centered" model. Schools should be allowed to retain their own student's tuition money--hardly a radical proposition--and remaining state tax funds should then be distributed more equitably on a per student, rather than per-institution basis, much as we do for community colleges.

This simpler funding formula would give every institution an improved ability to project and balance its budget. By keeping their own tuition dollars, universities will be encouraged to focus on attracting and serving students.

And in the long term, a more straightforward funding model will enable us to see where real shortfalls lie system wide, and thus to argue more persuasively for dramatic and much needed increases in state support for all of higher education.

That will be good for all of higher education.

For now, I urge us all to await the final report of the Governor's Task Force, to study it closely when it is released, and then do our part to work toward swift implementation.

* * * *

We cannot delay the process of dealing with the future. The Governor's Task Force Report, with its call for change, simply adds immediacy to the other forces of the economic, demographic, political and technological trends I've outlined.

In the face of these forces, business as usual is not an option. Complacency is not an option. Cynical resignation is not an option. All the old rules have changed with a speed that is simply startling.

While I and others pursue the external work of ensuring equity, other, even more important work will be undertaken internally to position us successfully for the future.

This is work in which your efforts will be integral.

It would be essential whether we possessed an operating surplus of millions rather than the fiscal realities which drove recent and painful budget cutbacks.

I am announcing today that we are beginning immediately, under the direction of the Provost's Office, a three-stage process to define and respond to the challenges we face.

As a first step we will appoint "Issue Definition Groups" to gather and collate information about trends and projections in enrollment; budgeting; educational quality; new technology; public perception and support; the roles of faculty, students and staff in institutional change; and our relationship with the system and the state.

With the help of staff in gathering and collating that information, these definition groups will in a few weeks conclude their work with a series of short "white papers" summarizing the challenges we face in each area.

As a second step, we will form a number of brainstorming "solution" groups, each composed of about a dozen faculty, students and staff, each charged with generating the most creative, efficient and original responses to these issues.

We're not looking for panaceas here. There may be no global solutions that will make our problems go away. We're looking for a palette of ideas: small-scale or partial solutions, actions that can be taken immediately, larger scale solutions which respond to multiple issues, even visionary solutions which might show us fundamentally new directions for the future. The only limit placed upon the groups is pragmatic: We want ideas that can work in the real world, and that respond to issues as best we understand them.

The third step will be the implementation of those ideas with the greatest promise.

Let me stress that this is not another "strategic plan," a term that inspires weary cynicism and guarantees another report destined to gather dust in the Archives.

This instead is a process of strategic repositioning, strategic thinking and strategic action. It is part of what must become a continuous process for dealing responsibly with the realities of rapid and continuous change.

I believe this process for change is congruent with the spirit of this place and our people.

New faculty members particularly will be interested to know that we have a certain way of doing important things here that differs from most universities, a way of doing things that is written into the very stones and bricks of our buildings.

In the 1970s, when it was applied to campus planning, it was called "The Oregon Plan." The basic idea is simple, but profound: When planning a building, start not with abstract design ideas, but with the expressed needs and desires of the users. Make buildings that reflect the people in them, that are adapted to their needs and mirror their sensibilities. The Education School, with its lovely courtyard, was one of the first results of that approach. The new science buildings are another--a physical reflection of our interdisciplinary approach to research.

The Oregon Plan approach extends beyond buildings. Of even greater salience is the manner in which we built our award-winning computer network system for a fraction of the money spent by other campuses. It was done not by handing down edicts from a few administrators, but by coordinating the efforts of scores of individuals who were already seeking their own solutions, taking imaginative advantage of already available resources and talents in new ways, creating a system built bottom-up from the efforts of a wide variety of players.

That is the Oregon way. And that is how we will create our own response to the challenges of the future.

It starts with each one of you.

Much of the most important work done this year will not happen in committees, or in the halls of the legislature, or in the quarters of the state system of higher education.

It will happen in the classrooms where you teach and the offices where you prepare next week's lectures and seminars, in the hallways where you stop to chat with a students and in the quiet of your home where you work through ideas for next year's courses.

It will happen every time a student comes to you and asks for advice on a study topic, or wants to talk over a grade.

It is here, at the level of every students' everyday experience, that successful institutions are made.

You create that experience.

If you're good, you are the mentor who takes an extra five minutes to counsel a young person.

You are the researcher who takes the time to share the excitement of discovery, to involve students in the enterprise of discovery.

You are the citizen of a learning community who recognizes that service is also a priority.

It is the sum of these little things, these human things, that make our university more than a place you log onto and off of.

It is the sum of these moments that will ensure the failure of Drucker's prediction.

I have a vision of our university as we move forward into the next century.

A vision in which we are granted the flexibility and autonomy to respond efficiently to the needs of our students and our state.

A vision in which "productivity," a word borrowed unhappily from industrial vocabularies, is insured and improved by collective invention and commitment--a model of behavior that neither is nor is perceived to be a process of creating internal warring camps, but instead allows us all to unleash our creative energies in concert.

A vision in which we are gifted with a funding model that helps us achieve financial stability.

A vision in which we can offer our teaching and research as widely as possible, not simply to traditional students, but to meet the growing needs of nontraditional students in our state, region and even the world.

A vision in which our faculty, administrators and staff are rewarded for their good work, and freed to pursue the most innovative, most effective means possible of teaching, research and service.

With your help and guidance, we will achieve that vision the Oregon way: together.

Thank you.