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Annual Address to the Faculty
January 2000

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President Steven B. Sample More than 500,000 reprints of the Time/Princeton Review article naming USC the "College of the Year 2000" were mailed to alumni and friends of USC all over the world.


President Steven B. Sample gave his annual address to the faculty on the University Park Campus on Tuesday, Jan., 18, and on the Health Sciences Campus on Wednesday, Jan 19. The transcript that follows combines the two speeches.

Recently our colleague Robert Biller, dean of the USC School of Policy, Planning, and Development, recounted an interesting anecdote from the middle of the 1980s. Neal Pings, then USC's provost, had put together a planning committee of which Dean Biller, who was executive vice provost at the time, was a member. There were several faculty members on the committee, including Scott Bice, dean of the USC Law School. According to Dean Biller, sometime during that planning session Dean Bice said, "You know, we ought to undergo an exercise here, a kind of Gedanken experiment. Let's imagine what it would be like if, 10 years from now, USC were on the cover of Time magazine." Most of the people at the planning session found it very difficult to conceive of USC's being featured by Time under any circumstances. But 15 years later, USC was named by Time magazine as the College of the Year 2000.

What was the methodology that Time used to come to this decision? Unlike U.S. News & World Report, which employs complex formulas with even more complex (and constantly changing) weighting factors, Time appoints an anonymous jury charged with looking at the entire spectrum of the 3,500 academic institutions in the United States. After the jury has narrowed its list of candidates to a few institutions, Time sends out one of its best investigative reporters to take a hard look at each of the finalist campuses.

I remember receiving a phone call last August from a senior editor of Time. She said, "You know, Dr. Sample, we've had one of our best investigators on your campus for the last three weeks." I said, "Yes, I'm aware of that, and it's made us a little nervous." And then she said, "I'm calling to tell you that, as a result of our investigation, we've selected USC to be our College of the Year 2000!"

Some of you may have seen a reprint of the article about USC that appeared in the recent edition of the Best College for You, jointly published by Time magazine and the Princeton Review. You can't buy this kind of coverage at any price. When the issue came out, we ordered 300,000 reprints of the article ? the biggest reprint order in the history of Time magazine ? and within two weeks we had to place another order for an additional quarter million copies. Today we are at half a million requests for reprints and still counting.

As you might expect, I was pretty excited about this recognition when it was first announced. In fact a couple of weeks after the announcement was made, Malcolm Currie, the chairman of USC's Board of Trustees, had one of these reprints cut apart, had each page double?laminated in plastic, and then had the pages rebound with a small spiral binder. He presented it to me at a board meeting and said, "Here, Steve. Now you can take the article with you into the shower and read it every morning!"

The attention we have received as the College of the Year has been wonderful. But beyond all the hoopla is the fact that USC was selected for this honor in large part because of the role we play in our surrounding neighborhoods. We were chosen because of what we have been doing in the USC Family of Five Schools and through the Good Neighbors Campaign, and, above all else, because of what our students have been doing as community outreach volunteers. Did you know that some 10,000 of our undergraduates voluntarily participate each year in some form of public service? I myself didn't know the number was that large until I read the Time article. Our undergraduates contribute some 300,000 hours of public service through every kind of project you can imagine in our neighborhoods.

USC has developed something for which other universities and colleges would give their right arm ? a strong culture of public service among our undergraduates. Indeed, this culture of public service has become an integral part of undergraduate education at USC.

Our undergraduate education program has made extraordinary progress in many areas during the past decade, and this progress has been heavily faculty?driven. The average SAT scores of our incoming freshman classes during the past 10 years have gone up by almost 250 points. The average GPAs have gone up from 3.4 to 3.8. Most of our students now come from the top 10 percent of their high school classes ? they used to come mostly from the top 50 percent. We rank in the top 10 nationally in numbers of National Merit scholars matriculating in our freshman class. Last year we had almost 25,000 applicants for 2,800 freshmen positions, a ratio of almost 10?to?one, and with the publicity from the Time article we may very well be at a 10?to?one ratio for the class that we are assembling for next fall.

Best of all, 75 percent of the matriculants in last fall's freshman class named USC as their first choice. This is a much higher?than?average percentage for private universities, and it is dramatically higher than the corresponding percentage for public institutions. Our retention rate has also increased dramatically. This past year we again had a 94 percent freshman?to?sophomore retention rate, following a similar retention rate the year before, which in turn was by far the highest in our history. This year we had an 89 percent sophomore?to?junior retention rate. For the first time in our history we can see the possibility of graduation rates in excess of 80 percent, which is exactly where we need to be in order to be competitive with other highly selective private universities.

What about the future of undergraduate education at USC? Provost Armstrong recently appointed a task force to think through what the profile of future freshman classes at USC should look like. The task force, chaired by Michael Diamond, executive vice provost, and Morton Schapiro, dean of the College of Letters, Arts and Sciences and vice president for planning, came up with some recommendations concerning the characteristics of the class we will admit in 2005. They suggested that average SAT scores should be about 1350, average GPAs should be 3.9, and three?quarters of the students should come from the top 10 percent of their high school classes. They also recommended that we admit smaller freshman and transfer classes than we do now, while increasing the number of undergraduates on campus through improved retention rates.

The task force recommended that we continue to recruit a freshman class that is extraordinarily diverse ? not just racially and ethnically diverse, but culturally and economically diverse as well. We want students at USC who represent a wide range of interests, opinions, backgrounds, and ambitions.

We also want to continue to recruit a freshman class in which the overwhelming majority name USC as their first choice. We do not want to become anyone's second?choice university, and we must be willing to trade off a bit in SAT scores or other quantitative measures of academic potential in order to make sure that we are the university of first choice for the overwhelming majority of our freshmen.

When I addressed the entering freshman class last fall, I made some predictions. I said, "Most of you are going to live until you're 100, work until you're 80, and have three or four different careers during your lifetimes ? not three or four different jobs, but three or four different careers. And almost all of you will go on to graduate school." Many of the freshmen had not yet thought much about going on to graduate school, but at a very highly selective university such as USC it is almost inevitable that essentially all of our undergraduates will eventually pursue advanced degrees.

Thus, inevitably, undergraduate education at USC and other elite institutions will increasingly become preparatory education for graduate or professional school. USC is already doing an outstanding job of preparing students for this new reality, thanks to our highly successful core curriculum, the creation of a broad array of minors, and our encouragement of all students to pursue a minor in a field that is far removed from their major. These factors, along with the implementation of our new Renaissance Scholars program and our strong emphasis on our student participation in public service, are beginning to create an undergraduate offering at USC which is truly unique and superior to that available at other universities in America. Nonetheless, we as faculty must continually anticipate changes and constantly reassess and revise our undergraduate program so as to truly serve the best interests of our students in the years ahead.

Distance learning is a very hot topic today in American higher education. When you think of distance learning you probably think of the University of Phoenix, which now has the largest enrollment of any university in the United States. But let me point out that Columbia University and New York University have each developed for?profit subsidiaries to pursue distance learning, and Stanford University and Duke University now offer degrees on?line through the internet.

There is a long history of distance learning in the United States. Extension courses have been an integral part of university offerings ? particularly at land grant universities ? for more than a century. Here at USC, Dr. Frank Baxter, an outstanding English professor, became one of the first people to teach a course for college credit on television. His course on Shakespeare was first offered over the air back in 1953.

When I was a young faculty member in the late 1960s at Purdue University, I regularly taught graduate courses in electrical engineering to practicing engineers all over the state through the Indiana Educational Television Network. These courses were taught in real time using one?way video and two?way audio. Since these engineers could not drop their jobs and come to the West Lafayette campus, the courses were exactly what they needed to earn their master's degrees from Purdue. I should point out that the remote students performed just as well as their on?campus counterparts.

The USC School of Engineering has a long tradition in distance learning via closed?circuit television, having awarded thousands of first?class master's degrees to practicing engineers here in the Los Angeles area during the past three decades. Recently this distance learning program in engineering has been expanded nationally through a satellite communications system called the Distance Education Network.

But the intense recent interest in distance learning in America has been triggered not so much by closed?circuit television as by the internet. Indeed, our own School of Gerontology now offers undergraduate and master's courses and graduate certificates on?line over the net, and many other units at USC are considering doing the same.

The provost and I recently appointed a commission ? chaired by Jerry Campbell, chief information officer and dean of the university libraries ? to look into the matter of distance learning. The report of that commission is both thoughtful and thought?provoking, and I recommend it to you. It notes that the development of on?line courses of the highest quality costs between $200,000 and $500,000 per course. Such a large up?front expense raises questions as to the proper role of private capital in distance learning, not just at USC, but at Columbia, NYU, Duke, Stanford, and every other major university in the country. And of course, we at USC must address the question of how we should relate distance learning to our strategic priority of internationalization.

My point is simply that distance learning poses an important challenge to all of us as faculty members. USC has been a leader in distance learning for nearly half a century, but we now must ask what our role should be in the decades ahead. I certainly cannot stand here today and say I know exactly what we should be doing in this area. However, I am certain that the appropriate approach to distance learning at USC is going to vary widely from school to school, from department to department within a given school, and from professor to professor within a given department.

Let me now say a few words about our fund raising campaign. You will recall that we set out to raise $1 billion in private support over a seven?year period, from 1993 to 2000. We exceeded that billion?dollar goal after just four and a half years, at which point the trustees raised the goal to $1.5 billion. I'm pleased to say that, as of December 31, 1999, we met this new goal of $1.5 billion a full year before the anticipated end of the campaign.

Two recent gifts in particular helped us reach our new goal so quickly ? Flora Thornton's cash gift of $25 million to name the School of Music, and a gift of $110 million from the W. M. Keck Foundation to name the School of Medicine. Incidentally, the Keck gift was our third gift of $100 million or more, following Ambassador and Mrs. Annenberg's gift of $120 million in 1993 to endow the Annenberg Center for Communication at USC, and Alfred Mann's gift of $112 million in 1998 to endow the Mann Institute for Biomedical Engineering at USC. So far as we can tell, USC is the only university in history to have received three gifts of $100 million or more.

"USC has developed something for which other universities and colleges would give their right arm ? a strong culture of public service among our undergraduates."
? Steven B. Sample

We can be justifiably proud of having received five school?naming gifts as part of this campaign. All five of those gifts ? for the Leventhal School of Accounting, the Marshall School of Business, the Rossier School of Education, the Thornton School of Music, and the Keck School of Medicine ? were, at the time they were pledged, the largest gifts to schools of their kind in the history of American higher education.

Despite all this good news about the campaign, every now and then a faculty colleague comes up to me and says, "President Sample, USC has been raising a lot of money lately. But where's my share? I haven?t seen it yet." It's a fair question, and deserves a thoughtful answer.

When a university begins a formal fundraising campaign, it identifies a start date, a stop date, and a dollar goal. During the time between the start and stop dates, every dollar of support received or pledged from a private (that is, non?governmental) source is counted toward the goal. Of course, it's extremely important that dollars credited to the campaign not be double?counted, meaning that a dollar counted as a pledge in the earlier part of the campaign not be counted again when the pledge is paid later on.

In USC's case, we have raised $1.5 billion in new gifts and pledges since the campaign began in 1993. Thus far, only about $1 billion of this amount has actually been received. So the first point I would make in response to my faculty colleague's question is that roughly half a billion dollars in pledges received in this campaign still remains to be paid.

The second point I would make to my colleague is that our campaign has been focused primarily on augmenting the university's endowment. As many of you may know, 10 years ago our endowment per student and per faculty member was among the lowest of any private university in the country. I'm pleased to say that our endowment has quadrupled over the past 10 years. Much of this growth has been due to market run?up, but a lot of it is attributable to the success of our fundraising campaign.

We have a great track record for building endowment during the past 40 years in terms of percentage growth, but keep in the mind that we started from almost ground zero. In 1958, when Norman Topping became president of USC, we had $3 million of total endowment while Stanford had $120 million ? a 40?to?one ratio. Today, Stanford has about $4.5 billion in endowment, and we have about $1.5 billion. Thus the ratio of Stanford's endowment to ours has shrunk from 40?to?one down to three?to?one.

The problem with endowment is that the faculty don't feel the effects of it right away. If we receive a million?dollar grant for the current support of a particular program, and if we spend that money over a few months' time, the effect will be dramatic and immediately noticed by everyone involved in the program. But once that million dollars is spent, it's gone for good.

By contrast, a million dollars received as an endowment gift produces only about $50,000 of spendable money a year (that is, about 5 percent of the corpus). However, since we grow the corpus at the rate of inflation, the amount of spendable money each year from that endowment also grows at the rate of inflation. Moreover, that spendable money is available not just for this year, or for the next 10 years, but forever. In short, strengthening our endowment has allowed us to compete in the big leagues, and has been an absolutely essential part of insuring USC's long?term success.

The third point I would make to my faculty colleague is that the gifts, grants, and pledges received as part of our Building on Excellence campaign have been very targeted and specific. In addition, they have been highly faculty?driven. As a general rule, people don't give unrestricted money to USC. Ours is not a sentimental campaign in which someone with a little heartthrob for good old USC writes a check for $100 million to be used as the trustees see fit. Rather, the overwhelming majority of the money raised in this campaign has been earmarked by the donor to support specific programs, specific departments, specific faculty groups, and specific faculty members. What has driven this campaign is academic excellence, and I want to congratulate my faculty colleagues, and especially our deans, for having mounted such an effective campaign based primarily on academic quality.

Our trustees have recently decided to raise the goal of the current campaign to $2 billion and to extend the time of the campaign to the year 2002. We already rank fifth among all universities in history in terms of our success in fundraising during a single campaign. If we reach this $2 billion goal by 2002, we will rank third. Only Columbia and Harvard have successfully completed $2 billion fundraising campaigns.

The trustees did not make the decision to extend the campaign lightly; rather, it was a tough decision which they debated at great length. In the end they decided to raise the goal and extend the time for several sound reasons.

First, they believe, as do I, that we are now in a position to emphasize endowment a bit less and place more emphasis on physical plant. The trustees have identified seven construction projects which they believe are among our highest priorities. These include, on the University Park Campus: A new student union; a new campus events center; a fine arts center; an internationally?themed residential college; and a new science and technology center; and on the Health Sciences Campus: A new neurogenetics institute and a new health?care consultation center. Even though some of these projects will be funded in part by debt capital, nearly $200 million in gift capital will be needed to see all seven through to completion.

Second, after consultation with the deans, the trustees have identified a number of programmatic needs that can best be addressed in the context of an extended campaign. Included in this category is the need to raise funds to match certain gifts which were received earlier in the campaign.

Third, it would appear that we have a good chance of receiving two more school?naming gifts as a part of an extended campaign.

And finally, the provost, with a lot of faculty encouragement, has identified a need to raise at least $100 million of permanent endowment for graduate student support, especially at the doctoral level. I'm pleased to say that we already have more than $12 million cash in hand toward this goal.

Another major source of income for this university, and for all research universities, is external support for research and sponsored programs. Here again USC has recently made tremendous progress. Over the past 10 years, we have increased our external support for research and sponsored programs nearly 60 percent to almost $300 million dollars per year. In fact, our annual federal research support now ranks us 17th among all universities in the United States, public and private, and ninth among all private universities in the country. That means that we're now ahead of such fine competitors as Duke, Princeton, the University of Chicago, Caltech, the University of California at Berkeley, and two?thirds of the other AAU universities.

The provost has recently instituted, with strong faculty support, a seven?year cycle for intensive program review that will primarily focus on each program's achievements in graduate education and research. For each program to be reviewed, a team will be formed comprising three outstanding scholars in that field from other universities and three outstanding USC scholars who come from programs other than the one being reviewed. This intensive process of program review should lead to the strengthening of our offerings at the graduate and postdoctoral levels, and will put us in a better position to compete for much?needed outside resources. In some cases these reviews may lead to the discontinuance of programs which have little or no chance of achieving real academic excellence in the foreseeable future.

The next two decades may well be viewed 50 years from now as the golden age of research in the life and biological sciences. The budget of the National Institutes of Health has grown by more than 120 percent over the past 10 years to $18 billion, and will probably grow even more in the next few years irrespective of who is elected president. More over, this incredible level of federal support for research in the biological sciences may be dwarfed by the amount of private capital invested over the next 20 years in biological research and biotechnology.

Such a massive increase in funding for research in the life sciences presents a tremendous opportunity for a number of units at USC, including the College of Letters, Arts and Sciences, the School of Dentistry, the School of Pharmacy, the School of Engineering, and the School of Gerontology. But most of all, this golden age of biological research presents an extraordinary opportunity for the Keck School of Medicine at USC.

Our medical school has before it an opportunity that it has never had before, and that few schools of medicine have ever had or ever will have. Let me list some of the factors that I believe are especially auspicious for the Keck School of Medicine.

First, there is the Keck gift itself. The $110 million is of course very important, but of almost equal importance is the Keck name. I have never seen our medical school faculty more upbeat or energized than they have become since the Keck gift was announced.

Second is the tremendous upward momentum that our medical school has developed during the past few years. Keep in mind that three decades ago our medical school was essentially a department of the county health department and was, in reality, only affiliated with USC. All of the clinical faculty were county employees, and almost all of the facilities were owned by the county. But in a very short period of time the Keck School of Medicine has become a true private university medical school. It has gone from essentially zero to over $100 million a year in private practice income, from essentially zero to over $100 million a year in sponsored research, and from zero to nine members of the Institute of Medicine of the National Academy of Sciences.

Third, the Keck School of Medicine at USC has a competitive advantage over other university medical schools because it does not own its own teaching hospitals, save for the relatively small Norris Cancer Hospital. Universities that do own teaching hospitals ? even those that right now are doing well financially ? are facing enormous risks, and they know it. A number of them ? such as Stanford, the University of California at San Francisco, and the University of Pennsylvania ? are virtually hemorrhaging money from their teaching hospitals; as a consequence, the other parts of those universities are also jeopardized.

The fourth auspicious factor is that our hospital partners are planning to invest $1.3 billion of their own money over the next 10 years in new buildings and equipment. These investments will directly and materially benefit our medical faculty, our medical school students, and our medical residents. Fifth, as I mentioned earlier, the Keck School will benefit tremendously from the golden age of biological research we are now entering. And sixth, the Keck School of Medicine is advantaged by the fact that it is located in Southern California, which is now the world capital of the biotechnology industry.

Almost everyone would agree that California in its entirety is the world center of the biotechnology industry. But most people would say intuitively that Northern California dominates over Southern California in this field. However, as counterintuitive as it may be, exactly the opposite is true. Now remember, when I say Southern California, I do not mean simply Los Angeles, or even the combination of Orange County and Los Angeles County. Rather, I mean all of Southern California, from San Diego to Santa Barbara. When this region is considered as a whole, it turns out that there are more biotech companies, more employees in those biotech companies, and more academic biotech researchers in Southern California than there are in Northern California. In addition, more biotech research grants are awarded to universities in the south than in the north. Southern California is thus the dominant area in the world for biotechnology today, and it will probably remain so during the years ahead.

Southern California is also the dominant leader in the field of communications, which includes not only communications technology, but motion pictures and television as well. The communications industry in Southern California surpasses that of other regions primarily because of our ability to combine advanced technology with creative content to an extent, and with a degree of expertise, unmatched in Northern California or New York or anywhere else in the world.

Fortunately USC is already the world's leading university in the broad field of communications. Look at the strengths we have: the Annenberg School, one of the leading schools of communication and journalism in the country; the Annenberg Center for Communication, which sponsors interdisciplinary programs in communication spanning the Annenberg School, our top?ranked School of Cinema?Television, and our highly ranked School of Engineering; the Annenberg Incubator, which nurtures start?up companies in the field of communication; the Annenberg Residential College, which brings together students and faculty from a wide range of communication?related disciplines; the Information Sciences Institute, one of the leading players in the ongoing development of the internet and other communication technologies; the Integrated Media Systems Center, which is the NSF?funded national center for research in multimedia; the Entertainment Technology Center, which serves clients throughout the motion picture and television industries; and the new Institute for Creative Technologies, which was established last summer by a $45 million grant from the Department of the Army, and which we hope will soon be the national center for research in virtual reality and computer simulation. No other academic institution in the world can boast of such a broad and deep array of strengths in the field of communications.

Another area in which Southern California is a leader is the arts. Before I came to USC, my friends throughout New York State tended to be dismissive of the arts in Los Angeles. But let's take a realistic look at Southern California's strengths in this area. Consider the Getty, Disney Hall, the Huntington, the Norton Simon, MOCA, and the Los Angeles County Museum of Art. Consider the fact that there are now more active jazz platforms in the Los Angeles area than there are in New York City. Consider the fact that film and television, two of the most ubiquitous and powerful art forms of our age, are headquartered here in Southern California, as is the recorded music industry.

USC is a major player in the arts in Southern California, and I would expect us to play an even stronger role in the future. Taken together, our five excellent professional schools in the arts ? Cinema?Television, Music, Architecture, Fine Arts, and Theatre ? probably constitute the strongest offering in the arts of any university in the nation. Other universities could match or best us in particular areas (save for Cinema?Television), but none have the combined overall strength in the arts that we do.

In addition, USC's Fisher Gallery has established for itself a great reputation in Southern California for its own shows and for shows it puts on in conjunction with LACMA and the Getty. And KUSC Radio has recently re?emerged not only as the best classical music station in the region, but also as a major voice for all of the arts in Southern California.

Finally, Southern California serves as the urban paradigm for the rest of the world, and as the capital of the Pacific Rim. To the extent that the Pacific Rim has a capital at all, it is not Tokyo or Singapore or Sydney or San Francisco or Seattle. Rather, the political, economic, and cultural nexus of the Pacific Rim is right here in Los Angeles and Southern California.

Let me conclude by reminding you that last year I cited Frank Rhodes' challenge to USC. He said, in essence, that USC should not merely copy the dominant academic models of the last century, but should strive to define the university of the 21st century.

I for one am ready to accept Rhodes' challenge. I can see it happening already ? both at USC and in the urban region which is our namesake. Think of the strengths I have emphasized this morning ? communications, biotechnology, the arts, the Pacific Rim, the urban paradigm, unprecedented diversity, Renaissance Scholars, and a culture of public service.

Ladies and gentlemen, I firmly believe that the 21st century belongs to Southern California and to USC, if only we have the courage to seize it and the wisdom to use it for the benefit of all mankind.