Innovator Article

Fulfilling Our Public Mission
School’s Bold Plan for Long-term Financial Sustainability

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School News • by Tim Akin

As the Graduate School of Management celebrates its 30th anniversary, Dean Steven Currall has unveiled an ambitious strategic plan to further elevate the School’s impact and visibility nationally and internationally.

Driving the key initiatives is a proposed new business model that strengthens the School’s long-term financial sustainability by minimizing reliance on state funds over the next 10 years.

“The new framework is innovative and bold,” Currall says. “It leverages our ability to further diversify our revenue streams, develop new programs and invigorate current programs to expand our portfolio of education options for prospective students.”

Currall has submitted the plan to campus leadership. It calls for retaining all student tuition and fees from degree programs, expanding nondegree open enrollment and custom executive education, and a greater dependence on endowment income from philanthropy.

Currall shared the strategic plan and the new funding model in his State-of-the-School address last September.

“To fuel our strategy, we must have sustainable resources to deliver superior performance,” he said, explaining that the School needs more flexibility to realize its vision while reinforcing its commitment to the University of California’s mission.

UC recently restructured how state funds are distributed to each campus, giving chancellors greater discretion in decision making. UC Davis will change its revenue allocation model in July.

The backdrop is a UC system that has been squeezed by successive years of declining state financial support. UC’s state funding has fallen from $3.25 billion in fiscal year 2007–2008 to $2.37 billion in fiscal year 2011–2012. Another $200 million cut looms if voters don’t approve a state sales tax increase in November.

The university has relied on large tuition and professional school fee increases to offset the impact of state cuts. The Graduate School of Management has weathered the storm better than other academic units because of earlier strategic moves toward revenue-generating programs and philanthropic support following deep UC budget cuts in the early 1990s.

Today, the School generates 73 percent of its $19 million budget from self-supporting activities, including the Working Professional MBA programs in Sacramento and San Ramon, and private support. In 2010–2011 the School received roughly $5 million in state general funds, about 27 percent of its budget, down from 44 percent in 2003–2004. Currall’s goal is a $30 million budget by 2020–2021 that assumes no state funding.

It is not an unprecedented move. The University of Virginia’s Darden School of Business has been self-sufficient for almost a decade. And, the UCLA Anderson Graduate School of Management has proposed to forgo state funding in return for greater “self-sufficiency.”

“It’s a time of great change and reflection in the UC system,” Currall told former BusinessWeek Executive Editor John Byrne in an interview for Poets & Quants, Byrne’s website devoted to graduate business school education. “My job is to insulate my students and faculty from this budget challenge.

“I’m not thrilled with the cuts, but I am thrilled with the reflection they are causing,” Currall said. “People are having to rethink the whole business model and accept the fact that we have to have a new business model. It’s a great change-management story. I guarantee we are going to be better off—more efficient, more market oriented. I think this is a blessing in disguise.”


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