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You are here: Home Spring 2009 Features Economist and Chief
Economist and Chief

By Kevin Hyde

When James Ramsey was named University of Louisville president in November 2002, the university knew it was getting an educator with two decades of experience in state government. That’s a good combination.

But it may be Ramsey’s Ph.D. in economics that has served him best during his time in Grawemeyer Hall.

Since 2001 UofL has been mandated by the state to cut its budget nine times for a cumulative reduction of more than $100 million in both one-time and recurring funds.

Yet UofL has forged ahead and made huge strides toward its goal of becoming a premier metropolitan research university by 2020—the mandate handed down by the Kentucky General Assembly when it passed the Post Secondary Education Improvement Act of 1997.

Under Ramsey’s leadership, UofL has tried to keep higher education affordable by being more efficient, cutting costs, finding new revenue streams and developing unique private partnerships.

"It’s vitally important that the people of Kentucky are confident that the university is spending tax and tuition dollars wisely while we create a vibrant, stimulating learning environment for our students," Ramsey says. "Our goal is to remain a fiscally and socially responsible institution—one that is a good citizen of our city and state, and a smart investment too."

UofL Magazine sat down with the university’s "economist and chief" during the recent holiday break and talked about the challenges the institution faces in a dreary fiscal climate.

Q: You were former-Gov. Paul Patton’s state budget director and chief policy adviser during the creation and passage of the Post Secondary Education Improvement Act of 1997. You played a major part in its development. Do you feel you are personally invested in seeing that its goals and mandates are accomplished?

Absolutely. There’s no question that I feel very personally invested. I have been a classroom teacher. I’ve been in a policy role with the governor. I’ve been part of the higher education reform movement. Yes, I feel very professionally and very personally committed to the mandates of the reform act. And, of course, being a native of this area and knowing the changes in this community and what the University of Louisville means to this community—having that personal sort of commitment and buy in—I think is extremely important. To be candid, it’s what drives me every day.

Q: Since you’ve been president, UofL has experienced almost constant state budget cuts with a cumulative impact of more than $100 million. Is that funding likely to be reinstated in the near future?

No, I don’t see that. The history of Kentucky is that we have often been one of the last to be impacted by a national recession, but then one of the last states to recover. We’re seeing that now. The national economy lost 2 million jobs from January through November 2008. Interestingly, Kentucky’s economy continued to add jobs through August, so we were sort of bucking the national trend. But then all of a sudden in September and October, we began to see very significant job losses.

I don’t get to do my economic forecast for the state anymore, but I think the impact of the downturn in the economy is going to be with Kentucky for a while.

Q: How will this affect state higher education funding?

There’s been a fundamental shift in the funding of higher education, and there’s no question that it’s meant less state support and more of a price tag on students. I don’t see that dramatically changing anytime in the next several years.

Since 2002, when again there was an economic downturn in the state that caused budget cuts, we at the University of Louisville—in order to continue moving forward and meet our goals—have had to operate very differently than we have in the past. We’ll continue to have to operate differently.

Q: How so?

We have adopted a seven-point strategy to move forward in a tough fiscal environment. One is to continue to look at all of our operations and look for efficiencies. Two, try to take underperforming assets and make them more fully performing—things like the Shelby Campus and the Reynolds Metals Building. We’re taking assets of the university that have been cost centers in the past and moving them to where they are generating revenue. Three, we are working hard to increase clinical income from our physician practices. Four, our fundraising has hit all-time records under the leadership of Keith Inman [vice president for University Advancement].

Five, we’ve looked for partnerships to allow us to do things such as expand the residence halls and food services. Our new food services contract will result in $11 million in capital expenditure that we couldn’t do if it were up to just us. Six, we’re trying to continue to build our research and contract research programs to generate more money. And seven, we’ve been as creative and innovative as we can. It won’t be too much longer before we start really seeing some of the direct benefits from the Tax Increment Finance District.

So we’ve had to operate very differently, and we’ve had to change some things about how we’ve operated in the past particularly, say, with regard to our operations, health insurance for our employees, pharmacy management programs, our Get Healthy Now initiative—things that really hold down our costs. Our energy audit program that we’re implementing will result in more than $50 million in savings. Building on our clinical programs has resulted in our new UofL Health Care Outpatient Center downtown that is bringing our doctors together for more referrals and building university income.

It’s really changed us as a university, and it’s changed us in a way that is good. It’s changed us in a way that has allowed us to keep moving forward to meet the goals that were given to the university by the state of Kentucky.

Q: Another unfortunate result of the budget cuts has been the need to raise tuition. What steps is the university taking to make sure a college education is still affordable and achievable for Kentucky families?

We’re trying to make sure we’re accountable for every dollar we spend—not just accountable to taxpayers but to our students. That’s first and foremost. Secondly, when we have to raise tuition, we increase student financial aid by that same amount. Thirdly, as tuition went up, if there was a returning student who said, ‘Well, I can no longer afford to pursue my education,’ we created a need-based program for that student.

And then we created our Cardinal Covenant program for new students. Any deserving student whose family income is below 150 percent of the federal poverty level is guaranteed the opportunity to get a college degree at the University of Louisville. Finances and costs and tuition will not be a deterrent or impediment to them coming to the University of Louisville.

So the steps we are taking to make UofL affordable are to: 1) Make sure we’re accountable for every dollar we spend, 2) increase our scholarships and our need-based assistance, and 3) be creative with new programs like Cardinal Covenant.

Q: The University of Louisville’s goals are ambitious, even in the best financial circumstances. In the midst of Kentucky’s current financial crisis, has the university considered reprioritizing or perhaps even narrowing its aspirations?

We realize in this fiscal environment that it is much more difficult, but we want to do the best we can to work our way through this situation and stay on track. If our seven strategies aren’t working, if the state isn’t able to rebound in an adequate period of time, then we might have to step back and say we can’t do all the things that we’ve been mandated to do. But right now, we want to continue to move forward.

We know it’s challenging. Our plan calls for us to hire 20 new research faculty a year. We were not able to do that in 2008, so that’s making it more difficult for us to achieve our research goals. But we want to keep moving forward and see the glass as half full, not half empty.

Right now we’re continuing to be very focused on achieving those goals that we set in our 2020 Plan [the university’s strategic business plan for the years 2008-2020].

Q: As a whole, what kind of year was 2008 for the University of Louisville?

It was a great year in terms of our students. We again attracted the best freshman class in the history of the University of Louisville. For the first time in our history, we actually have more students coming from outside Jefferson County than from Jefferson County. Our graduation rate continues to improve.

We continue to see more and more of our students winning national awards and again this year had seven students win the prestigious Fullbright, the most of any school in the state. So the successes we are most proud of are our students’ successes. That’s why we’re here.

Second, our research programs continued to grow. We had a great stretch of announcements in the fall. One that we’re very proud of is being selected as one of about 25 centers in the United States for the National Children’s Study—the grant provides more than $13 million over five years. That will be a huge national research program, studying children from pre-birth to 21 years old. That project has the potential of being every bit as big as the Human Genome Project that’s changed medicine. To be a part of that, and for our community to be a part of that, is huge.

We went through a series of major grant announcements: one for studying diabetes and obesity, one with our cancer program, one with our birth defects center. We had just some great research announcements in the College of Education and Human Development and the School of Engineering and so forth.

So in a very tough fiscal environment—tough in terms of state funding, tough in terms of university funding, tough in terms of federal funding—our research programs continue to be strong.

Third, we were very proud to receive the Carnegie designation in community engagement. This shows that our curriculum at the University of Louisville is very engaged in what we’re about as a metropolitan research university. The Carnegie designation shows that we are very involved in dealing with health care issues, education issues, economic development issues and social issues within our community. That’s what we’re all about. And to receive that Carnegie designation is important. We’ve also received some nice awards recognizing our contributions to the community from organizations like Volunteers of America and the West Louisville Performing Arts Academy.

And then it’s been a good year for us in terms of our alumni support, in terms of our fundraising. Last year was a record fundraising year for the University of Louisville.

Granted, 2008 was a very, very difficult year, for not only the fiscal challenges, but the fact that we had one of our employees—a trusted employee—indicted by the federal government. But when we put the year in a total perspective, we continued to move forward and meet the mandate that was given to us.

Q: As an economist, what do you think UofL can be optimism about look at the new year?

The governor and the public policymakers are realizing that they have to do something about the revenue situation. I think that’s a start, number one.

I think there are still some areas where the university can help the state move forward. The state recognizes that the University of Louisville has a great deal to offer in terms of the new energy plan that the governor and [Kentucky Energy and Environment Cabinet Secretary] Len Peters have promoted, particularly when it comes to renewable energy and sustainability issues. I think we’re going to make a huge difference in this state. Our niche and what we offer will be very different than UK, which has been more focused on the fossil fuels area, and we can do some things with renewable energy and storage of energy with batteries and so forth.

I think that our outreach across the state is something that is going to make a huge difference, and it’s something that we can really grab on to and take a lot of optimism and confidence from. We’ve been selected to develop our nursing education program in Owensboro. Our robots, or robodocs, continue to provide first-class health care in smaller communities across the state. We’ve had great outreach with our dental school and other programs.

So I think that there are still a lot of mountains we can climb where we take the outstanding work of our faculty and staff and apply it to make a better Louisville, a better Jefferson County and a better state.

As we look back and put in the proper perspective what we’ve been able to accomplish during the Challenge for Excellence [UofL’s previous business plan], and now that we have moved into The 2020 Plan, I think there is so much we can be proud of and so much momentum and energy and enthusiasm to build upon that will drive us and give things to hold onto when times are tough.

Q: What do you want people to know about UofL in 2009?

What I want people to know and remember about the University of Louisville is that it’s a great institution with a vibrant history and tradition going back more than 200 years. But it’s a different university today and times have changed. The economy has changed, the world has changed, and higher education has had to change.

UofL is now what I’d call—or what really Michael Crow at Arizona State calls—a new, modern university. What we’re about is providing the highest quality education, creating new knowledge and solving community and state problems. That’s what we do.

And we’re doing it well. We’re doing it in health care programs, from cancer to neurosciences to heart disease. We’re doing it in nanotechnology. We’re doing it in business and education all across the campus. We’re an exciting institution that’s really making a difference in our community.

And if you’re making a difference in Louisville and Jefferson County, you’re making a big difference in Kentucky because Louisville and Jefferson County are so important to our state.

Carnegie Community Engagement School

UofL entered 2009 with a new rating as one of the nation’s top "community engagement" schools from the Carnegie Foundation for the Advancement of Teaching. The university was one of only 119 schools in the United States and three in Kentucky to earn top marks in two areas: curricular engagement and outreach and partnerships. The foundation developed the rating to recognize colleges and universities that are deeply involved with their communities.

The Seven Strategies:

How UofL forges ahead in a tough fiscal environment

  1. Be More Efficient: UofL continues to examine operations for efficiencies. For example, last year UofL and Siemens Building Technologies announced a massive energy audit that could save the university $50 million over the next 12 years.
  2. Turn Cost Centers Into Revenue Generators: UofL is taking underperforming assets and making them fully performing. Ramsey sites Shelby Campus and the Reynolds Metals Building as just two examples. Shelby Campus, located on the eastside of Louisville, soon will be the site of Shelbyhurst Research and Office Park and will house UofL’s Center for Predictive Medicine as well as office and research buildings. The Reynolds Building, located at the corner of Third Street and Eastern Parkway was sold in 2005 to a developer in an agreement to develop 77 upscale apartments known as The Reynolds Lofts. Units began selling last year.
  3. Practice Medicine: UofL is increaseing clinical income from its physician practices. Efforts have resulted in the new UofL Health Care Outpatient Center in downtown Louisville.
  4. Increase Fundraising: UofL fundraising hit an all-time record in 2007-08 at $86.5 million. The goal for 2008-09 is $95 million.
  5. Collaborate: UofL develops partnerships to help the university do things it can’t do on its own. One example is the university’s new food services contract. UofL has signed a 10-year agreement with leading food service provider Sodexo to revamp dining services, heeding a call from students for better food and longer hours and to help improve campus life. As part of the makeover, Sodexo is investing $11 million to improve food services and facilities.
  6. Build Research: UofL tries to further research and contract research programs to generate more money.
  7. Be Creative: UofL strives to be as innovative as possible. Ramsey sites the $1.3 billion Tax Increment Financing (TIF) project, which may return as much as $350 million in incremental tax revenue to pay for public and campus infrastructure improvements in downtown Louisville adjacent to the Health Sciences Center, including the creation of a research park that will work to commercialize health and life sciences research. The overall economic impact for the city over the next 20 years could reach $2.5 billion.

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