todd- veredus asset community luncheon series

Todd-Veredus Asset Community Luncheon Series

August 19, 2009

Dr. James R. RamseyPresident

Thank you for this opportunity

Economists like pictures and graphsSome dots and a triangle…

“It was the best of times,It was the worst of times.”

- Charles Dickens

(Let’s not even think about wind, ice, flood, neurosurgery, coaches, etc.)

We know that nationally times have been unprecedented…

GDP Declines During Postwar Recessions(peak-to-trough percent change; date is year of peak quarter)

1948 1953 1957 1960 1970 1973 1980 1981 1990 2001 2008 1st Qtr 2009

2nd Qtr 2009

-6

-5

-4

-3

-2

-1

0

and Kentucky has not been immune to those impacts

Nonfarm employment in thousands

p: preliminary

Jun. 20091,774.2 (p)

Dec. 20071,871.9

Oct. 20001,833.6

Jun. 20031,777.6

Employment 2009 = employment 1999

Kentucky Economy: Mining 1% of our jobs

Jun 200925.7 (p)

p: preliminary

Mining and Logging employment (in thousands)

Kentucky Economy:Manufacturing – Our Bread and Butter

Manufacturing employment (in thousands)

Jun 2009207.0 (p)

p: preliminary

Kentucky Economy: Construction Jobs – Generally Cyclical

Jun 200968.8 (p)

p: preliminary

Construction employment (in thousands)

Kentucky Economy:Education/Health Services vs. Manufacturing –

Then/Now

Jun 2009248.1 (p)

p: preliminary

Education and Health Services employment (in thousands)

Kentucky Economy:Growth, but…

Leisure and Hospitality employment (in thousands)

Jun 2009173.4 (p)

p: preliminary

We (Kentucky) face challenges

• Structural challenges

• Big challenges

• We will struggle for a while (How is that for a forecast?)

What does this have to do with UofL?

· Postsecondary Education Improvement Act (1997)o Public agenda

· Premier nationally recognized metropolitan universityo More educated workforceo More research

o Economic activityo Commercialization

· Boyle Report (1996) and follow up community mandateso New clusters

U of L to be Premier Nationally Recognized Metropolitan Research University

Our Mandates

1997 Post Secondary Education

Improvement Act

1996 Boyle Report

1998 – 2008“Challenge for Excellence”

“We met Challenge”

2020 Plan

The weak economy has an impact on us too…

Kentucky Employment Losses

Cuts/Cuts/Cuts

9 for 9

State Individual Income Tax/Sales Tax

Despite cuts and other distractions, we are making progress… Our Students

• Freshman class average ACT• 2008 – 24.4• 1998 – 21.8• State avg. – 20.8• National avg. – 21.2• More students from outside Jefferson County than inside

Despite cuts and other distractions, we are making progress… Our Graduates

• 1998 – 1,734 degrees awarded• 2009 – 2,428 degrees awarded– Up 40% (694 students) since beginning of

reform

• Graduation rate increased over 50%

• 7 Fulbright Scholars in 2009

Despite cuts and other distractions,we are making progress…

Focus on Translational ResearchResearch Funding and NIH Funding

Total grants for 1997 – 2009 - $140 M 1998 - $39 M

Despite cuts and other distractions, we are making progress…

“from mind to marketplace”

Despite cuts and other distractions, we are making progress…

Helping our community and state

• The Conn Center for Renewable Energy Research and Environmental Stewardship • Argonne National Laboratory

Despite cuts and other distractions, we are making progress…

Helping our community and stateNew arena and other construction projects

ShelbyHurst

Louisville Arena

Haymarket

Despite cuts and other distractions, we are making progress… but…

We have far, far more to do despite the challenges!

1. Reengineer operations2. Convert underperforming assets to fully

performing assets3. Increase fundraising4. Enhance clinical income (460 physicians)

• PPP• University of Louisville Hospital

5. Develop partnerships6. Improve contract research/commercializing7. Being creative (e.g. TIF)

Our 7 Strategies to Achieve Mandates Given Fiscal Environment

And so…

• $105 million in cuts, savings and efforts to find money to move forward

• Big things• Refinanced debt• Self-funded health insurance

• Little things• Washing windows• Power-down vending machines

Dataseam – avoiding new costs

Note: Five cancer drugs are on the way to clinical trails.

Underperforming Assets

Examples –

• Reynolds Metals

• Stoddard Johnson

• Shelby Campus

Ramping up Giving

$42,

434

,018

$36,

382,

594

$42,

382,

805 $6

4,47

6,59

6

$61,

511,

069

$51,

367,

489

$86,

571,

870

$95,

000,

000

Building Clinical Income

Outpatient Center

“For every action, there is a reaction”

• Our theory – pie bigger• Others disagree – zero sum

Enhanced food service

Our Partnerships

Student Housing – The Province Siemens Energy Audit

Being Creative – Our Tax Increment Financing District (TIF)

Health Science Campus and Life Sciences Center

Over the next 30 years this economic development will yield: • 8,700+ jobs

• $668M in payroll taxes

We have been and will be challenged, but we (all of us) must stay intensely

focused!4 keys to Kentucky’s future

• Education

• Education

• Education

• Education

Why?

So let’s wrap up…

Education Pays Per Capita Income in All 50 States v. Adults with

Bachelors Degrees or Higher - Data for 2007

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

15% 20% 25% 30% 35% 40%

2007

Changing Priorities

Students or Inmates?

Questions?

Comments

Education Pays