Testimony of Richard L. McCormick, President of Rutgers, The State University of New Jersey

Assembly Higher Education Committee
Monday, February 8, 2010

Chairwoman Lampitt and members of the Assembly Higher Education Committee: Good morning. I am Dick McCormick, President of Rutgers, The State University of New Jersey, and I am pleased to speak today on behalf of the New Jersey Presidents’ Council and as the representative of our state’s public research universities. First I want to congratulate you, Chairwoman Lampitt, on your appointment to chair this committee. I appreciate your passion for and commitment to higher education issues, and I look forward to working with you and this committee in the future.

Chairwoman Lampitt has asked me to speak about the Presidents’ Council’s economic impact study, entitled “Partners for Prosperity: New Jersey and Higher Education.” Each of you should have before you a copy of the report that came out of our collaborative process. All members of the Presidents’ Council participated in a broad-based and detailed survey, conducted by Appleseed to collect data demonstrating the financial impact of the sectors. All of the sectors—research universities, state colleges and universities, independent colleges and universities, county colleges, and proprietary colleges and universities—contributed to the study.

Not surprisingly, we found that our colleges and universities play a vital role in the economy in the Garden State. It starts with our core mission of teaching. Collectively, our institutions provide educational opportunities to more than a half million students, helping them to acquire the skills to succeed in an increasingly knowledge-driven economy. At the same time, colleges and universities are also a major industry in themselves. Our campuses are huge employers of New Jersey residents, buyers of goods and services from New Jersey companies, and sponsors of construction projects that help to shape the state’s future.

Based upon data from the fall of 2007, New Jersey’s colleges and universities collectively enrolled approximately 533,000 students. (Let me add that this figure has surely grown larger, having seen Rutgers set a new high for enrollment this year, and we are not alone.)

Systemwide, enrollment in credit-bearing programs totaled approximately 309,000, with 88 percent of the students being New Jersey residents. Between 2003 and 2007, more than 317,000 students received a degree or certificate from one of our institutions, including 75,000 who earned advanced degrees.

A number of national studies have confirmed that education has a significant impact on an individual’s earning power. Our findings in this study revealed the same. We found that in 2007 the median income of New Jersey residents with some college or an associate degree was $40,354, more than 25 percent higher than the median for residents with only a high school diploma. More impressive, the median income of New Jersey residents with a bachelor’s degree was $55,191, fully 72 percent higher than the median for high school graduates.

As we looked at the economic impact of higher education as a major New Jersey industry, the data revealed another facet of our colleges and universities’ value to our state. In fiscal year 2007–08, the revenues of our institutions totaled nearly $8.6 billion.
Let me highlight a few areas. Tuition and fees accounted for 29 percent of our revenues in contrast to the state and local appropriations of 22 percent. Also, worthy of note is that federal grants accounted for 10 percent of our revenues, and that earnings from investments and other enterprises made up 20 percent of the total.

Higher education is a huge employer. As you will see in the report, our employment numbers compare favorably to other industries in New Jersey. Out of 13 industries, higher education ranked sixth, with construction, hospitals, and food and beverage retailing leading the pack. Collectively we employ more than 80,000 people, not including student workers. About 63 percent of this number represents full-time employees, and 91 percent live in New Jersey.

As I noted earlier, colleges and universities also contribute to the state’s economy as they purchase goods and services from New Jersey companies and undertake construction projects. In 2007–08, our institutions purchased $1.3 billion in goods and services and spent $677 million on capital construction and major maintenance projects. In the same year, our members’ construction projects generated about 4,240 full-time-equivalent jobs in private-sector construction and related industries.

As president of the state’s leading public research university, I am especially pleased to say that the research carried on by our faculty also strengthens the state’s economy in many ways. About 70 percent of these dollars come from the federal government, 10 percent come from the state, and the remainder comes from corporations, foundations, foreign governments, and internal funding. New Jersey colleges and universities spent about $780 million in research projects in fiscal year 2007–08—and, again, I can say from Rutgers’ experience that this figure has increased significantly since this data was compiled.

Much of this research addresses critical challenges for our state—in areas such as alternative energy, autism, nutrition and obesity, transportation, cancer, environmental protection, early childhood education, and health care. The application of our research has profound benefits, both economic and social, far beyond the jobs and revenue the research itself may generate.

Just as significant, although harder to calculate in dollars and cents, is the service that our colleges and universities contribute to New Jersey. Our students give time and energy in a variety of ways to extra-curricular service programs, and in courses that integrate service with classroom learning. New Jersey institutions reported that more than 32,500 students participated in some form of community service during the 2007–08 academic year.

Wherever New Jerseyans are grappling with challenges—whether protecting our shore line, increasing agricultural productivity, revitalizing our state’s industrial cities, finding better means of delivering health care, or improving our K–12 schools—the colleges and universities are there.

The impacts enumerated above are just some of the benefits our state receives from the higher education sector. As you peruse our study, I know you will find many, many more benefits not outlined in my remarks today.

As the representative of the public research universities, I would like to make some specific comments about those institutions.

In recent years, there has been growing concern—and rightfully so—about America’s competitiveness and preeminence in science and technology. We have led the world for decades, and we continue to do so in many research fields today. But the world is changing rapidly, and our advantages are no longer unique. China and other nations are making major investments in producing scientists and engineers.

Just two years ago, a national committee’s report entitled Gathering Storm warned that the United States was in danger of losing its position as an international leader in science and technology.

The report, commissioned by the National Academy of Sciences, National Academy of Engineering, and the Institute of Medicine, argued for increased public investment in math and science education and for the promotion of research activities in the public and private sectors.

Specifically, the report sought to make our nation “the most attractive setting in which to study and perform research so that we can develop, recruit, and retain the best and brightest students, scientists, and engineers from within the United States and throughout the world.”

As New Jersey’s largest and most comprehensive public university, with more than 10,000 faculty and staff and 54,000 students, Rutgers is uniquely positioned to be the type of research powerhouse and economic engine envisioned in the report. One of only 32 public universities nationally in the prestigious Association of American Universities, Rutgers is already recognized as one of the nation’s leading research institutions. Moreover, each year Rutgers returns to the New Jersey economy more than six times the state government’s annual investment in the university.

Of particular significance is our research. Last year Rutgers generated nearly $400 million in external research support, and we are on track to obtain nearly $500 million this year. This research is creating jobs, educational opportunities, and scientific and technological innovations that stimulate local industry.

It is a credit to the quality of our faculty and programs at our state university, but I know we could do even better. This amount could be increased substantially through strategic state investments in faculty recruitment, equipment, and student support in key areas of science, engineering, and technology.

And not just at Rutgers. Similar research examples, although to a lesser extent, exist at colleges and universities across New Jersey, and I urge the state’s investment for these vital purposes.

Honored members of the Assembly Higher Education Committee, please know that the proud achievements I have shared with you this morning are all at risk. Public funding for higher education, in actual dollars, has stagnated for more than a decade, while our enrollments, our educational and research achievements, and our payrolls have soared.

Unlike virtually every other state, New Jersey contributes practically nothing to the physical facilities of its four-year colleges and universities. There are no annual appropriations for this purpose, and there has been no higher education bond issue since 1988. This neglect of the state’s colleges and universities gravely imperils our ability to achieve what we can and what we must if New Jersey is to thrive and prosper.

Without better state support, our capacity to expand college opportunity for low- and middle-income students, to keep college affordable, and to contribute to the development of an educated, employable, economically stable, and engaged citizenry—is at risk.

Without better state support, our ability to ensure the quality of the state’s colleges and universities, to stem the brain drain of many of our best students who are leaving New Jersey, and to enhance New Jersey’s available workforce—is at risk.

Without better state support, our capacity to create new jobs, to stimulate and sustain economic growth, and to contribute to an attractive environment for business investment—is at risk.

Without better state support, our ability to expand research that creates new knowledge and technological innovation, provides opportunities for productive partnerships with business and industry, and garners greater federal and private support for research—is at risk.

Without better state support for colleges and universities, our capacity to maintain, let alone expand, what is already a major industry in our state, to employ thousands, to buy goods and services from New Jersey companies, and to put New Jerseyans to work through these purchases and through major construction projects—is at risk.

Members of the committee, as you refresh your work in a new legislature and with new leadership, please be our advocates so that the vital work of the colleges and universities is protected rather than imperiled. We recognize the difficulties that you face in helping New Jersey find answers to this recession. As you do, please remember that your colleges and universities have already demonstrated the capacity for enormously positive impacts on our economy. And we can do so much more. All of us look forward to working in partnership with you.

Madam Chairwoman, I would be pleased to answer any questions that you or your committee members may have. Thank you.