All-Alumni Convocation 2014

May 31, 2014

Good morning, and welcome, in the one hundred and thirty-ninth year of our college, to the All-Alumni Convocation. Over two thousand Oles and their friends and families have returned to the Hill this weekend to renew their connection to the college and with one another. I extend to all of you here in Boe Chapel a heartfelt welcome and add a warm hello to all of those joining us via the live or archived stream of this convocation.

During the coming academic year we will be celebrating the 140th year of St. Olaf. For those of you who are keeping score, that would be the Bissuperquintcentennial year. You can look it up. All of the limestone — and some red brick — that we have piled on top of this hill since our founding in 1874 constitute a visual representation of the solidity, the gravity, and the endurance of our enterprise. Marking our 140th year will provide an opportunity to honor our past, to celebrate the present, and to embrace our future. It’s going to be a fun year, and I hope all of you will find occasions to be part of the celebration.

In a moment we will receive the gifts from our reunion classes. But before we do that, I’d like to convene a “shareholders meeting.” That’s one way to think about the all-alumni convocation. You are our investors, and you deserve a straightforward, candid report on how the college is living out its mission, what results it is achieving, and where it is headed so that you can evaluate the return on your investment. Here it comes.

St. Olaf College exists to prepare students for successful, meaningful, and impactful lives, so let’s begin by talking about them. The Class of 2014 has left campus, equipped by their St. Olaf education with a base of knowledge, skills and competencies, and habits of mind and heart that will enable them to flourish in the vocations they will discern, the communities in which they will live, and in the families they will form. The most popular major in the graduating class was biology, followed by mathematics, economics, psychology, and chemistry. Thirty-two percent of the class graduated with honors, and seventy-seven students were inducted into Phi Beta Kappa. Seventy-three percent the class participated in at least one off-campus domestic or international program. St. Olaf continues to be first among all liberal arts colleges in the nation in the number of students who study off campus.

Of the 785 graduating seniors, 740 or 94 percent of them have told us about their post-graduation plans as of last weekend. Twenty-nine percent have jobs, and 21 percent are enrolled in further education, nearly all of them in graduate or professional school. So, as my Grandma Anderson used to say about her grandchildren who had a plan in life and were pursuing it, we don’t have to worry about 50 percent of the graduates. But we do need to stay focused on the other half, who are “still working on it.”

St. Olaf has made a very public commitment to becoming the best in the country among liberal arts colleges at helping students discern their vocation — what they are called to do — and then translating that calling into an actual job that will lead to financial independence, professional accomplishment, personal fulfillment, and community engagement. We have learned that it takes about a year for a graduating class to settle into that first step down life’s path. We publish on the St. Olaf website the data for the Class of 2013, the students who graduated one year ago. There were 693 graduates in the class. We know where 91 percent of them are, and of that group 97 percent are either employed or in graduate or professional school. If you go to the college’s website and click on the link on the front page called “Outcomes” you will see where those students are employed or where they are studying, and you will see the self-reported income bands within which they fall. You will also find there, by the way, copious other information about the other kinds of outcomes that a St. Olaf education delivers, from measures of student learning that we gather through assessment of student learning, to retention and graduation rates, to fellowships and awards that our graduates win.

You hear a lot in the press about American college students graduating from college with crushing debt. Some do, but they aren’t Oles. Ninety percent of our students receive some form of financial aid — usually a mix of grants (which you don’t have to pay back), student work (which is good for you), and loans. The average indebtedness upon graduation of our graduates who borrow is $27,500. The national federal student loan default rate is 14.7 percent. The loan default rate for Oles is 2.6 percent. That tells me that our students who borrow are graduating with manageable debt and are in careers that make it possible for them to manage that debt.

Having said goodbye to the Class of 2014, we’re turning our attention now to welcoming the Class of 2018 whom we will welcome on Labor Day weekend. If you listen carefully you can hear their distant thunder now. The class comes to us from 46 different states and from 31 different foreign countries. There are 64 degree-seeking international students in the class. China is sending us the greatest number of international students next fall (seven), and there are three Norwegians in the class. Sixty percent of the class is from outside Minnesota. The next four states to send us the most students are Illinois, Wisconsin, California, and Washington.

Fifty-eight percent of the class is female and 42 percent male, which is a fairly consistent gender split for our college. Eighteen percent of our American students are students of color and 8 percent are international students. So, slightly more than a quarter of the entering class reflects our college’s commitment to broadening our racial, ethnic, and global diversity in the student body. The average high school GPA of the Class of 2018 is 3.63. The median high school class rank is the 90th percentile. The median ACT is a 29, and the median SAT is 1310.

The class also brings with it characteristics that reflect our heritage. Thirty percent are legacy students, which means that another member of their family — a parent or grandparent, an aunt or uncle, or a sibling, preceded them at St. Olaf. Among those who report a church affiliation 32 percent proudly proclaim their identity as Lutheran.

The Class of 2018 is comprised of 777 students. Our enrollment has recently crept up to just over 3,100 students, which puts an undesirable strain on our residence halls, dining hall, class size, and other resources. We are on a path to bring enrollment back down to just under 3,000 so that we can ensure the best possible experience for every student.

The comprehensive fee that students and their families pay us provides about 70 percent of our operating budget. For the college to survive and thrive, we need to be on a path to reduce the percentage of our budget that is provided by the comprehensive fee — because that will keep St. Olaf affordable to all families — and correspondingly we need to increase the amount of the budget supplied by other sources than tuition dollars. Now here’s some good news about that: I am happy to announce that as of this morning new gifts to the college in this fiscal year, which ends today in case any of you are still on the fence, total $30,024,218 million. That’s the greatest amount that has ever been raised in one year in our college’s history. Now it’s not all what I call “green money.” This number represents cash gifts to the St. Olaf Fund, our annual fund; cash gifts to the endowment; new pledges for gifts to the endowment; and planned gifts. So some of it will be coming to the college over time rather than immediately. But that’s fine. One of the hallmarks of a mature fundraising program is a strong pipeline of planned gifts. Every one of these $30 million plus dollars represents a vote for St. Olaf’s future and a tangible expression of support for it. I am deeply grateful to everyone in the St. Olaf family who shared in achieving this excellent result. Our ability to generate substantial philanthropic support is critical the ensuring St. Olaf’s well-being into the future.

More good news: the endowment is growing in a healthy way both because of new additions to it and because of positive returns on our investments. We estimate an end of May market value for the endowment of about $429 million. This represents an increase of over $53 million or 14.2 percent, compared to May of 2013, one year ago. Net investment returns of 12.2 percent contributed $47 million to the increase. Gifts and re-investments were $6 million higher than net endowment spending. Our reference group for benchmarking our investment returns consists of endowments and foundations of $250 million to $1 billion. Compared to that group, our investment returns for the 1-, 3- and 5-year periods ending March 31, 2014 all rank in the top half of this comparison group. Our 10-year return is in the top 6 percent of this group. As we seek philanthropic support to increase the size of the endowment and thus reduce our dependence on comprehensive fee revenue, it is very helpful to be able to show donors how well the college husbands their gifts.

When I gave this talk at last year’s all-alumni convocation, the value of our endowment began with a 3. I said then that I wanted it to begin with a 4 sooner rather than later. Now it does. Now, I want it to begin with a 5 — again, sooner rather than later.

Obviously, as we think about how to keep St. Olaf affordable for students and their families, we have to address not only increased revenue but also our costs. You know and I know that there is a national discourse about the cost of higher education in America. Families are looking at the cost of college and wondering how, as much as they believe in the value of a college degree, they can pay for it. Because we are a private, intensely residential college with very high quality programming that is expensive to provide, St. Olaf is priced at the upper end of the college cost continuum. St. Olaf meets the demonstrated financial need of every student we enroll, so that mitigates the cost of St. Olaf for families, but there is no doubt that whatever your level of need, and hence whatever your financial aid package, the amount you are paying for St. Olaf as a family strains your resources.

As a sign of our determination to control costs, our strategic plan, which is on the President’s page on the St. Olaf website, and which I encourage you to read, ties future price increases at St. Olaf to the Consumer Price Index, the CPI. Our commitment is to not exceed the CPI by more than 1 percent in the event of future price increases. The CPI is a measure of the cost of living, and it’s much easier for families to think about, and for us to explain, our price in that context. One of the things that is most frustrating to people about college costs in America is that the cost of many colleges has exceeded the general cost of goods reflected in the CPI. Essentially, we are saying that will not happen at St. Olaf.

I’ll be very frank and tell you that very few — indeed, I don’t know of any — other colleges in America have made this public commitment, because it imposes a pretty rigorous discipline on an institution. In a time of low inflation, such as the present, this commitment leaves very little room to raise new revenue from the comprehensive fee. We believe this is the right thing to do at this time, but we will have to continuously evaluate whether this commitment is making a meaningful difference to families and whether it continues to be right for the college.

As I think about challenges facing our college in the near future, I think about two types of challenges: those posed by what I’ll call our “business environment” and those posed by our “cultural context.”

First the business environment. I’ve just told you about our successful recruitment of the Class of 2018. The admission cycle this year for private colleges in the Midwest and northeast generally was recently described to me by one experienced and highly regarded enrollment consultant as a “bloodbath.” Many colleges did not enroll the number of first-year students they were seeking; many saw their yield on offers of admission — that is, the percentage of students to whom they offered admission who actually enrolled — tumble over previous years. The discount rate — the amount of tuition revenue that was not collected because the price had to be discounted in the form of financial aid in order to enroll the first-year class — rose at many colleges. These are all wrong-direction moves, and those colleges that experienced all three of them need to be doing some serious soul-searching right now.

We are not one of those colleges. At this moment we are shy of our revenue goal by less than 2 percent on a $24 million target, the slimmest of margins. Nevertheless, the general conditions reflected in the overall experience of many of the private colleges like St. Olaf define our business environment: there is demand for what we offer but our customers are also extremely price-sensitive. Moreover, the college has very limited ability to secure revenue from other sources than those price-sensitive customers in order to fund our operations. So we are going to have to present prospective students and their parents with a value proposition that is sufficiently compelling to merit their investment in a St. Olaf education and one that they are actually able to afford.

Doing that will be complicated by increased costs due to government regulation, challenges to our educational model posed by new technologies and new ways of delivering education, and competition from other colleges with greater resources than ours.

At the same time that we are navigating the financial and other challenges of our business environment, we will be navigating challenges posed by what I’ll call our “cultural context.” In America colleges and universities are embedded in the nation’s culture, and as a result they experience and reflect all of the tensions present in that culture. You wouldn’t want it any other way, because of course when students leave the college that’s where they go.

St. Olaf has made remarkable progress in the last decade in becoming more diverse by race, ethnicity, national origin, and geography. Ten years ago 7 percent of our American students were students of color; today than number is 17 percent. Ten years ago 1 percent of the students in the entering class were degree-seeking students from another country; today that number is 8 percent. A decade ago we were a regional college, as measured by the home states of our student body. Today we are a national college with 60 percent of our students from out of state. Our students also reflect the diversity present in American society with regard to gender and sexuality. We continue to be diverse by socio-economic status. Fifteen percent of the students at the college are first-generation to college in their families.

These changes bring consequences. One — and counter intuitively this is a good thing — is increased friction on campus around race, gender, and sexuality. An insensitive remark, a thoughtless assumption, or — more problematically — a slur or some more aggressive action — that might previously have gone unnoticed no longer does. It gets called out, and there’s an urgent desire for campus conversation about what just happened. America’s problems with race are St. Olaf’s problems with race, as our campus more closely resembles the rest of the country. Same for gender. Same for socio-economic status. These frictions all present learning opportunities, and there will be lots of them, but they will be noisy and uncomfortable and public.

As part of that dialog, we are going to be in continuing conversation about identity and particularity. I was among the panelists on a panel on diversity sponsored by student government recently, and one of the questions that generated lots of comment was whether our identity as a Lutheran college and a college that celebrated its ties to Norway was unwelcoming to students from other traditions. My answer was that they didn’t have to be. That you can’t have identity without particularity — you have to be something in particular if you’re going to have an identity at all — and you don’t have to sacrifice your particularity to be welcoming to that of others, and I’m sure that’s right. But we are clearly going to need to talk more and more thoughtfully about this as we go forward.

If we didn’t have these tensions, I’d be concerned about the college’s relevance and its vitality. How we approach and navigate them will give us a measure of our character as an institution, and I invite your thoughts and participation in that conversation.

At the end of the day, what matters most is our students and the experience we offer them. St. Olaf is distinctive in its tradition of combining the highest levels of academic excellence with a fully thought-out and thorough going commitment to its identity as a college of the church in the Lutheran tradition. We continue to offer daily chapel and Sunday worship. Two Lutheran campus pastors minister to the needs of our community and encourage and support students in their faith development at the same time that we welcome faithful students from all traditions to campus and seek to support their faith development as well. We continue to require each student to take courses in religion, theology, and ethics. And we continue to encourage and support among our students inquiry into what their ultimate commitments will be and how they will live those commitments out in their lives.

Oles leave the campus prepared to be leaders in their workplaces and in their communities. We expect them to both do well and do good, and we prepare them for that result. You are the living proof that we deliver on that aspiration. When this year’s graduating class returns for their 50th reunion — in 2064 — they will look back as all of you are doing today, whatever your reunion year, on lives well-lived and the experience at St. Olaf that helped prepare you for that life. We are delighted to have you back on campus, and I wish you the very best this reunion weekend. Thank you.