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Muscle & Bone

As the University charts its strategic course toward preeminence, economic conditions are forcing it to retrace steps down a well-worn path.

Purdue business managers have the ironic task of maneuvering the University through the latest round of recession-induced budget constraints, as they work to hoist Purdue to the next level.

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Their assignment, at once unique and painfully familiar, is to juggle limited resources and to find and cut fat where decades of tight resource management has left muscle and bone.

To meet the challenge, administrators are drawing on Purdue's 140-year tradition of conservative fiscal discipline that carried it through times as trying as the Great Depression.

An article from the 1973 inaugural issue of Perspective, titled "Austerity: still the name of game," tells what then was a recurring and familiar story.

In light of sparse state funding, the Board of Trustees had just approved an operating budget allowing for a 1.6 percent increase from the previous year. The meager increase meant that Purdue was losing ground in its faculty salary ranking with comparable universities and Purdue officials were cautioning that "things might get worse before they get better."

Through wise management, often in lieu of funding increases, things did get better.

Purdue leaders and their philosophies

Fred Ford, executive vice president and treasurer emeritus, retired four years ago after spending nearly four decades shepherding Purdue resources. He recalls tight budgets as a way of life dating back to his start at Purdue in 1959.

"Because Indiana has such a small economy compared to Michigan or Illinois and at the same time it supports two flagships -- Purdue and IU -- we were predestined to live on very tight budgets," Ford says. "My involvement began with President Frederick Hovde, who was a very brilliant man. He understood that it was necessary in Indiana to be fiscally conservative."

Ford says Purdue leaders traditionally have taken a businesslike approach toward managing resources.

"We have always had a corporate culture," Ford says. "We have the Board of Trustees that has historically been dominated by business and industry leaders -- Eli Lilly and other major corporations in the state -- and that continues. Purdue never ran a deficit, unlike other universities, and it doesn't today."

Frederick Hovde, who retired as Purdue president in 1971, had opposed the idea of private fund raising for public universities. Arthur Hansen, who followed Hovde in the president's office, brought a different point of view.

"When Hansen came on board, he started a major effort in private fund raising," Ford says. "Then, when [Steven] Beering came, he moved it up by quantum leaps.

"At the same time, however, because gifts are nonrecurring, it was understood that we had to be careful with them."

Ford says Lytle Freehafer, vice president and treasurer under Hovde beginning in 1961, came to Purdue after serving as a state budget director. He set the stage for the University's long-term, careful fiscal management.

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"He had very high standards and very high integrity," says Ford.

Those are some of the same qualities Ford's colleagues ascribe to him.

Though outside of Purdue circles Ford's name may not be quite as familiar as Hovde, Hansen or Beering, many might argue that he did as much to advance Purdue as any one of them.

In 1974, when Ford assumed the title of executive vice president and treasurer, Purdue's endowment stood at $50 million. When he retired in 1998, it was $1.3 billion, 26 times its size of 24 years earlier.

"I'd put him as the best in the country, probably," Beering, president emeritus, says of Ford. "He was brilliant on the investment end of things. He and I worked together at raising the money and he worked at the investing. He is very intelligent, well-informed, totally trustworthy and reliable."

Ford, who invested Purdue's endowment funds in blue chip stocks, is quick to acknowledge that during the years while he was in charge, the Dow Jones Industrial Average went from 700 to 11,000, more than 15 times higher.

Citing an example of Ford's work on the admissions process, Beering also says that Ford could be known as the father of Total Quality Management at Purdue.

"I was concerned that it would take us months to process an application and we'd lose the students in the meantime," says Beering. "We went from months of time to admit somebody and then we got it turned around so that we can do it within 24 hours. You can't put a dollar sign on that directly, but its value is unquestionable."

Since Ford's retirement, his colleague, Ken Burns, has been at the helm as executive vice president and treasurer, bringing the same fiscal principles to the task.

"We've always operated with fewer resources than all of our peers," Burns says. "People at Purdue have always been creative at how to organize things to make them the most effective."

Confirming Burns' point is Purdue's solid last-place ranking in the Big Ten for per-student state funding. The most recent ranking available is from the 1999-2000 academic year.

Apart from funding for Agricultural Research Programs and the Cooperative Extension Service, each full-time Purdue student was supported that year by $6,255 in state appropriations. Indiana University, which ranked second to last, received $6,661. Minnesota's state appropriation was first, at $15,658.

Room for Learning

Purdue's creativity in maximizing its resources is no more evident than in its use of classroom space.

As the number of students on the West Lafayette Campus grew dramatically in the decades before the start of the 21st century, the number of buildings did not increase proportionately.

The result was a last-place finish for Purdue in Big Ten rankings of available square feet per student, by HEFMA, the Higher Education Facilities Management Association. Purdue showed 6.47 square feet per student, a good distance from the nearest-ranking university with 8.18 square feet. The number one ranking was 16.77 square feet per student. HEFMA does not identify university names in its rankings.

"Out of absolute necessity, Purdue classroom utilization is the most efficient certainly within the Big Ten," Burns says. "In fact, as the enrollment has grown, classroom space has actually declined a tick.

"We haven't been able to remove classrooms from use for major renovations or technology upgrades. Classroom upgrading came to a halt in the late 1990s simply because we couldn't take them out of service."

Burns credits Jim Blakesley, Emeritus Director of Space Management and Academic Scheduling, with spearheading the lengthy 7:30 a.m.-5:30 p.m. class schedule that continues to maximize classroom use today.

Labs that never sleep

When the day ends and classroom lights are out, the work isn't over at Purdue -- at least, not lately.

Information technologists at Purdue are orchestrating the latest innovative exercise in resource management by making computer labs work around the clock.

Using software invented at the University of Wisconsin, staff in the Office of the Vice President for Information Technology are helping faculty do years of research computing in a small fraction of the time they would normally expect to spend.

During Christmas break, about 100 instructional lab computers hummed non-stop conducting highly intricate mathematical computations for Samuel Wagstaff, professor of computer sciences. By the end of the experiment, the computers had accomplished in just two weeks what would have taken a typical personal computer three years.

And this experiment was just the beginning.

"Collectively, the instructional lab systems have roughly three times the raw computational power of Purdue's large IBM supercomputer," says Bill Whitson of the research computing services group within the Office Vice President for Information Technology. "This project allows us to provide a wider range of computing resources for research at essentially no cost."

Empowering efficiency

Powering those computers and everything else electrical at the West Lafayette Campus is the Wade Power Plant.

A consulting firm recently took a fine-tooth comb to the plant's workings and completed a 200-plus page utility business plan that handed Purdue's utility managers kudos, and its budget cutters a disappointment.

Their assessment: "The utility operation of Purdue University is sophisticated, well maintained and effectively managed."

The report, by engineering consulting firm Sebesta Blomberg and Associates, showed that in 1999, Purdue was paying 0.042 cents per kilowatt hour for its electricity.

That rate amounted to 32 percent less than the 0.062 average cost that commercial entities operating in Indiana were paying that year, according to the Indiana Utility Regulatory Commission.

For the average Indiana residential consumer, the cost of a kilowatt hour was 35 percent higher than Purdue's rate, at 0.065 cents.

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Purdue generates slightly more than half of the electricity it uses at the West Lafayette Campus at the Wade Power Plant -- a boon for the University.

In addition to producing power at a bargain basement rate, it puts Purdue in an attractive negotiating position when shopping for electricity with commercial providers.

"The availability and operation of the on-campus generation capacity is also used to negotiate more favorable purchases of generation services from the local electric utility," the report said.

As to whether Purdue should consider switching from coal-generated steam power to natural gas or opt to privatize its electricity generation, the consultants said a simple "no" to both.

Today's challenge

Resource management was never more critical at Purdue than it is today.

With Indiana's leaders poised to reduce Purdue funding by up to $90 million dollars during the next two years, creative and inspired management could mean the difference between keeping or losing faculty and staff jobs and developing all of Purdue's campuses or not. The five-year strategic plan to elevate Purdue among its peers in areas of learning, discovery and engagement also is in jeopardy.

"Because of eroding state support, for the first time, we're really going to have to take seriously not doing some things at all," Burns says about the tough decisions he may be facing soon. "We don't yet know what those things are."

Burns adds, however, that this kind of perennial condition has bred a climate of fiscal discipline at Purdue where directors and department heads know they must eke out the value of every penny they get.

"Because of that, we're better positioned today to deal with the kinds of problems we now face than we ever have been before."

PHOTO CAPTION:   Ken Burns, executive vice president and treasurer, stands inside the control center of the Wade Power Plant. A recent independent assessment of the plant showed that it produces Purdue's power at a bargain-basement cost.

PHOTO CAPTION:   Fred Ford (seated), Ken Burns and Jim Almond have worked together over the years to manage University finances and help keep Purdue spending in line with its budget. Ford retired as executive vice president and treasurer in 1998. Burns, the current executive vice president and treasurer, served as vice president for business services and assistant treasurer under Ford. Almond, on the business services staff since 1988, now is vice president for business services and assistant treasurer.

PHOTO CAPTION:   Kyle Banter, a roofer in Facilities Services, does some rubber roof patching at Hawkins Graduate House. Workers in facilities services are kept busy throughout the year performing routine and necessary maintenance on West Lafayette Campus buildings. Keeping a regular schedule of repairs and rehabilitation has helped the University avoid major building and maintenance problems and has extended the life of University resources.

Story by Amy Raley
Photographs by David Umberger