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WINTER 2004

From the Dean

Writing A New Business Plan for the Haas School

Because of the extraordinary international media coverage of the California gubernatorial recall election last fall, members of the Haas School’s far-flung alumni network around the globe were no doubt made aware of the severe budget crisis facing the state. However, you may not have heard all the details of how the University of California system is being impacted. UC is facing a total budget reduction of $530 million this year and next. This will mean further increases in tuition and fees for our students and cutbacks in programs and personnel.

This situation creates both short-run challenges and longer-term opportunities for the Haas School. Most immediately, we will work hard on maintaining the school’s excellence despite diminishing funding from state sources. To deal with the future, we have launched an effort to rethink how the Haas School can best flourish in a changing funding environment. This will involve developing a new business plan for the school that will look at what we do now, where we plan on going in the future, and how we will finance the school over the long haul.

The planning is in the early stages. Our initial thinking applies almost entirely to the graduate school portion of Haas, where we expect to achieve the most leverage for change. However, here are several principles that will guide us as we develop a new business plan that will fuel the school’s continuing upward trajectory:

1. Reaffirmation of the mission of the University of California, which is to excel in research, teaching, and public service. Over the decades, this mission has developed a culture at UC Berkeley that stimulates greatness. The proof is in the university’s distinguished record of Nobel level scholarship, constant innovation, a concern for the betterment of our world, and consistently high rankings of its schools and departments — the Haas School among them.

2. The faculty is the core of our success. The world-class research and teaching of Haas professors have built the reputation of our school and will continue to do so. However, two recent outside reviews of the school by prominent business school deans concluded that Haas has too few tenure-track faculty members to serve its burgeoning programs and, in some areas, threatens to fall below a critical mass for scholarship. In response, we have already begun to expand the size of our faculty. We need to expand by at least 15 full-time positions over the next five years. These positions will improve the faculty-student ratio, enable us to offer a greater variety of elective courses, and expand our capacity to produce leading-edge research in critical areas.

3. Financial self-sufficiency for our graduate programs. State funding of the Haas School has been declining for years. It now amounts to about 31% of our total income, and it will fall again. Unfortunately, a large proportion of the recent tuition hikes for our state subsidized full-time MBA program has not been passed back to the school, but rather directed elsewhere. If this situation isn’t changed, Haas will be forced into an uncompetitive situation in which it charges market rate MBA tuition but takes in insufficient revenue to support an academic program that can match its rivals. The school’s new business plan must include transforming the current state subsidized Full-Time MBA Program into a self-supporting one (the Evening/Weekend and Executive MBA programs, and the Master’s of Financial Engineering program are already self-supporting). There are models to emulate, such as the public business schools at Michigan and Virginia, which have successfully weaned themselves off state support for their graduate programs. These professional schools, and a growing number of others, rely now on market-rate tuition and various executive education activities to finance themselves. In addition, support of the Haas School from alumni and other donors must increase significantly if we are to take our place among the very top tier of business schools worldwide. (We are also exploring the possibility of a residential facility for executive education programs to emulate our rivals in this competitive space.)

4. Maximum flexibility in conducting the school’s affairs. Achieving financial self-sufficiency should be accompanied by a continued lessening of some of the rules and regulations that constrain our operations and make us less competitive in the business school marketplace. For example, thanks to former Dean Laura Tyson, the school reached an agreement several years ago with the central Berkeley campus that permits Haas to pay market-rate salaries to its top-flight faculty. Without this ability, the school would be at a severe disadvantage to other schools. We will need flexibility in many areas as we fully enter the swift current of the marketplace.

Finally, our new business plan must also incorporate the goals of strengthening the school’s alumni networks, expanding its connections with the business sector, and enhancing its global outlook and outreach.

Turbulent times compel ambitious use of our existing resources to meet new goals, and the development of new resources, as well. Fortunately, we have outstanding human assets in our faculty, staff, students, and alumni. And we have a great worldwide brand with huge upside potential, if we organize ourselves effectively to meet new financial realities.

I would be delighted to hear from you if you would like to share your ideas and comments with me on how Haas can prosper in these difficult times. Also please consider supporting the school financially, as the need is greater than ever. Thank you.

With kind regards,

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Dean Campbell

Tom Campbell, Dean,
Haas School of Business

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