Hood River, OR 97031
Speech written for Jack Wilborn, Managing Partner, Arthur Andersen, to deliver to the American Electronics Association's 4th Annual Oregon Technology Benchmarks Conference Sept. 15, 1998.
Thank you, Jim (Zupancic --- ZU PAN SIC). It's a real pleasure to be here today.
I feel a little bit like the "town crier," walking through the streets, calling out the news.
Today, I have news about the relationship between Oregon's institutions of higher learning and the high-technology industry.
And despite what you may have heard, it's mostly good news.
Arthur Andersen recently surveyed higher education in Oregon. We asked the schools to tell us what they're doing to meet the needs of the high-technology industry.
Response to the 1998 Benchmarks Survey gave us good information.
It wasn't complete, but it was a start. As the name implies, it gave us a "benchmark" to compare research in future years.
We checked other sources, too.
Much of what I'll share with you today comes from research by people inside the Oregon University System. They've done a great job of looking at their schools, their students, and what they experience during their studies and after graduation.
If you care to dig deeper, all that information is readily available on the Web.
Now for the news. Oregon's colleges and universities -- despite cutbacks in state funding and rapidly rising tuition rates -- are changing for the better.
They're doing more with less.
They're living the pioneer spirit that brought hundreds of people over the Oregon Trail more than 150 years ago.
With increasingly close ties to business and industry, these schools are customizing programs and turning out bright and talented minds for the growing demands of Oregon's high-tech sector.
Let's put it this way: Higher education in Oregon is a lot like my golf game.
It's better than it looks.
It deserves more respect than it gets.
But it can always use improvement.
Seriously, great things are happening inside our universities. But it's not enough, and I want to talk a little bit today about what the people in this room can do to improve that situation.
It's been fashionable in Oregon's high-tech industry to criticize the state's higher education system.
I'm not here to bash Higher Ed.
I'm here to say Higher Ed has done a remarkable job, considering what it's had to work with.
Here's why. In the 1990s, as stock prices have soared, as each of us in this room has looked eagerly at the next IPO, the state of Oregon has disinvested well over $100 million in its public colleges and universities.
And yet the state's universities are working with business and industry ...
Let me give you an example.
Out in Beaverton is a little company called Fluent Speech Technologies. One of its founders and the core group of employees all used to work together at the Oregon Graduate Institute.
They developed, then licensed a speech-recognition technology that promises to revolutionize the way people retrieve information.
Before long, travelers will be able to talk to a kiosk and get information in their native language.
Or hear what they want to know from the world wide web.
It's exciting stuff. Positive stuff. And it happens all the time, up and down the state of Oregon.
From the Oregon Institute of Technology in Klamath Falls to Oregon State, our schools are attracting more of Oregon's best and brightest.
From Southern Oregon to PSU, combined SAT scores of incoming freshmen in 1996 were higher than they were in 1986.
And the number of freshmen entering with a 3.75 GPA or higher has exploded.
At OSU, it went from 16.5% in 1987 to 27.2% in 1996.
Same at the U of O ... up from 12.7% to 19.1%.
PSU? Up from a mere 5% in 1987 to over 11% in 1996.
You won't read about this on the Sports pages, but our universities are winning where it counts.
It isn't just bright kids entering Oregon schools. It's bright kids, entering fields of study that promise good jobs with your companies when they graduate.
In 1996, 47 new freshmen at OSU wanted to study computer engineering.
Last year, the number more than doubled -- to 96.
And officials expect even more interest this year.
Employers are eager to snap them up. They should. They're good.
Engineering students at OSU recently passed the "Fundamentals of Engineering" exam with a higher pass rate than 99% of the nation's engineering graduates.
The test is a prelude to certification as a professional engineer. Although it isn't required of computer engineering students, many take it.
And test scores are a measure of quality teaching. Compared to the rest of the nation's engineering schools, OSU students ranked in the Top 5.
What about the University of Oregon? Well, it ranked 15th nationally among all public universities not just in the volume, but also the quality of research in sciences, social sciences and humanities.
And it has won a number of awards for its innovative use of technology on campus.
Good stuff, reflective of good things going on inside our campuses.
It shows how the schools are trying to serve student demand for training that will lead to good jobs. Jobs that are driving student demand, and change inside the universities.
It wasn't always so. Six years ago, Oregon wasn't producting enough jobs. More than half of Oregon State's engineering graduates had to look outside the state for work.
Now there aren't enough graduates to meet demand.
According to the projections of our survey sample, participating companies anticipate hiring approximately 900 new college graduates in 1998.
On a statewide basis, Oregon high-tech companies will hire 1200 new college graduates in 1998. About 75% of the new college hires will be engineers.
That's pretty close to what the state has projected in annual engineering job growth -- about 936 openings per year.
If every one of Oregon's engineering graduates took a job in state, that would still leave about 100 more engineering jobs to fill.
The thing is, about 40% of our college graduates leave the state for jobs elsewhere. So employers find themselves looking elsewhere for new hires.
Engineering programs are a direct pipeline to the job market.
State figures show that of all the people who had earned graduate degrees from Oregon's public universities between 1986 and 1991, over 96% of engineering grads had jobs five years later.
More than 95% of business grads were working, and 94% of math-science grads had jobs.
Good jobs, too. More than 48% were earning at least $40,000 a year, and over 27% were earning more than $50,000 a year.
Starting salaries for OSU engineering grads last summer ranged from $41,100 for mechanical engineers, to $48,800 for electrical engineers.
So, education pays, and Oregon's education is paying off. But it's not paying off enough.
To find out what's going on out there, all you have to do is read the paper. The most instructive part. The Employment Classifieds.
(Holds up classified section.)
I've been doing a little reading. And you know what? You need help!
By the year 2006, Oregon's high-tech industry is expected to need ...
Where is all that talent coming from?
Not entirely from Oregon's schools. If we continue to lose 40% of our college graduates to jobs outside the state, at current graduation rates, it would take Oregon schools 15 years to produce the engineers we are projected to need over the next 10 years.
And even if we kept all of our computer science graduates, at the rate state schools are producing them, we would still fall 211 short.
No, much of that talent stream -- at least recently, and until things change -- has been imported. That explains in part why 40% of new Oregon residents have college degrees, compared to 27% of people already here.
That explains why 19% of people already here work in professional capacities, while 32% of new residents arrive with those skills.
Smart people have always moved to Oregon, and they still do.
So, you ask, what's wrong with that?
Nothing. We need all the talent we can get.
The problem is this: The cost of higher education in Oregon is leaving our sons and daughters little financial incentive to attending college here.
Every year, more of Oregon's high school students leave for schools elsewhere.
California keeps 91% of its college-bound high school grads.
Washington and Arizona keep 86% of theirs.
In Oregon, we keep 79%.
Are Oregon's schools somehow lacking? Hardly. When students choose to attend Oregon schools, they say they do because they like what they find here.
And after they finish school, 97% of Oregon graduate students rate their education "good" or better.
So, why are we losing more of our college-bound population?
Maybe they're sick of Mom and Dad.
Maybe other schools offer more degree options.
And maybe cost has something to do with it. It is hard to ignore the numbers.
Before tax cuts took their toll, the state spent 15% of its general fund budget on higher education. Today, it's half that.
The money has to come from somewhere, and increasingly, it's coming from students.
According to the U.S. Department of Education, annual tuition increases at Oregon's major universities have, and I quote, "substantially exceeded the U.S. inflation rate, earning a rank well above the norm."
Since 1991, the state has trimmed $128 million from its biennial budget for higher education.
During the same period, resident tuition and fees have soared ... from just over $2,500 a year, to more than $3,600 a year.
Oregon now has the second most expensive public higher education system among the 13 western states.
California costs more. But then again, it pays more. Its university faculty are among the best-paid in the nation.
Oregon's best-paid faculty work at Oregon State University. Compared to other schools around the country, they ranked ... 90th.
We have good people in our schools, smart people, people who have choices and choose Oregon because they love it here. Some are world-class.
But on average, it's hard to attract the best when you won't pay the best.
That may explain why the National Research Council rated the average scholarly reputation of OSU faculty and University of Oregon faculty in the bottom 44% nationally.
I should note here that Oregon is not alone. The nation is facing a crisis in higher education. Just like Oregon, the rest of the country is spending less on universities as it spends more on social services and prisons.
That, according to the Commission on National Investment in Higher Education, has created a "time bomb ticking under the nation's social and economic foundations."
Let me read you what the Commission said in its report:
"At a time when the level of education needed for productive employment is increasing, the opportunity to go to college will be denied to millions of Americans unless sweeping changes are made to control costs, halt sharp increases in tuition, and increase other sources of revenue."
OK, what can we do? For starters, more of what we're already doing.
Not the cutbacks, but the good things.
In the Benchmark Survey, officials told us how they're working closely with industry to fine-tune their programs.
Let me give you some examples. Portland State has developed several new master's degree programs to serve the high-tech sector, in Civil Engineering, Mechanical Engineering, Engineering Management.
Working with an industrial advisory board, the Portland school joined OSU in jointly developing a Master's in Manufacturing Engineering. It is delivered over television to remote locations.
That's evidence of education and industry talking. And then education using technology to deliver technology training to a broader market of potential customers.
That's also evidence of market research.
And reaching customers where they live.
If it sounds a lot like a business, it's because it is.
We all recognize that in a time of limited public funding, educators will need to think more like business. They'll need to become more efficient, and they are, working through recommendations of the Governor's Task Force on Higher Education and the Economy.
To become more efficient, Higher Ed is learning to eliminate duplication. One recent initiative showed the increasing ability of the state's schools to move past turf battles and toward a common good.
Portland State, Oregon State, the U of O, and the Oregon Graduate Institute joined hands, and the result was the new Oregon Master of Software Engineering program.
And once again, the schools involved industry in helping design the program.
Examples of cooperation abound.
Here's another. Formation of the innovative Engineering and Technology Council under SB 504 -- chaired by ESI's Don VanLuvanee -- brings academic and industry leaders together to suggest resource allocations and ensure accountability.
If you've ever held harsh thoughts for Higher Ed, you might change your mind if you thought of Higher Ed as being more like the mid-level managers at your company.
Caught in the middle.
On one hand, education has to answer to the Legislature and the business community.
On the other, it has to answer to the pool of potential clients.
Students are customers, and the universities know they are competing for those hearts and minds.
Programs such as Oregon Math, Engineering, Science Achievement do that. Reaching out to middle and high schools in the Portland metro area, the program melds state and private funds to promote greater awareness of technical and scientific careers among young women and ethnic minorities.
Or how about what they do down at the University of Oregon? Each year, the U of O prepares 18 different science kits. Then it passes them out to school kids in 200 different classrooms.
It's a way to give kids hands-on experience with science.
And it's a way to put a public face on the university.
We've all heard about the value of building relationships with our customers.
Well, to get young women more interested in science, the U of O's Department of Physics this summer held a pretty kid-savvy workshop with the alluring name "The Geek Chic Program."
Instruction is one thing. Research is another.
I talked a little bit earlier about the Oregon Graduate Institute. It may not get the attention of Cal Tech or MIT, but from available evidence, let's say for now that it is close to becoming one of the nation's great research campuses.
OGI offers advanced training in everything from human-computer interfaces to semiconductor processing and device physics.
Research at OGI is pioneering new frontiers in a host of fields that, frankly, dazzle the mortal mind.
Speech recognition, we talked about.
Atmospheric optics and neural networks, we didn't.
But that's just part of the excitement going on out there. When was the last time you paid a visit?
Ideas flow out, and ideas flow in. Industry input led OGI to develop a weekend-based Master's in Management tailored for the high-tech industry.
OGI is host to the widely popular Saturday Academy for primary and secondary school students. It helps students and teachers meet scientists, engineers and other professionals.
They learn about new technologies, and explore their own interests. It's a real-world introduction to the potential of high-tech careers.
And in 1996, it earned the Presidential Award for Excellence in Science, Mathematics and Engineering Mentoring.
Good stuff. Worth celebrating.
Every day, Robert Ayers celebrates MECOP -- one of the state's stellar partnerships between higher education and business.
MECOP is a business-funded internship program run through OSU. It stands for Multiple Engineering Cooperative Program.
For two separate six-month periods, Ayers took a break from his studies at OSU in manufacturing engineering. The first time, he went to work at OreMet in Albany. He wanted to see heavy industry and learn about life in a union shop.
The next time, he spent six months at Sentrol Inc., a Tualatin maker of electronic sensing devices. He liked that better. And they liked him.
Since July, Ayers has been a full-time employee.
"I'm one of five MECOPers here," he told us.
To a one, the state's universities in the Benchmarks survey said they wanted closer ties with business, and asked for greater support of such programs as capstone projects and internships.
Ayers said the great thing about the program was that it gave him a chance to apply what he had learned at OSU. To "get paid to learn, instead of paying to learn."
Ayers told us he thought he got a great education at OSU. But of his intership, he said, "I learned more than from all my classes combined."
Because it was real world.
Because it reinforced what he studied.
Because it prepared him to get more from his classes.
The only problem with MECOP is that there isn't enough to go around. Employers love it, and have shown a willingness to invest funds.
It's growing this year to involve students from Portland State. It's so popular, in fact, that the Oregon University System wants to apply the concept to the rest of the state's schools.
All it needs is state support. The last Legislature turned down $300,000 to fund program administrators at other campuses.
The value of interships is perhaps best summed up in a saying, attributed to Lakota Sioux Indians. It goes like this:
Tell me, and I will forget.
Show me, and I will remember.
Involve me, and I will understand.
If public sector support is uncertain, private sector support shouldn't be. Looking for a place to invest in the future success of your business?
Involve our students. Invest in our schools.
And encourage the state to fund research. Millions in National Science Foundation grants are unavailable to Oregon university researchers, because the state doesn't put up matching funds for research.
If Reading Is Fundamental for kids, Research Is Fundamental for a dynamic relationship between the universities and industry.
We can do more.
OSU got $69 million in outside research funding in 1996-97, much of it from private industry.
Electrical and computer engineering got $2.1 million.
Computer science? $898,000.
Environmental science/engineering, mechanical engineering, chemical engineering, and materials science/engineering combined got $4.2 million.
The lion's share of OSU's research money -- $46 million -- went to agricultural sciences.
Not that I have anything against "ag", but is the message clear?
If you've got a bundle of cash burning a hole in your pocket, your next great venture play might be waiting behind ivy-covered walls.
In summary, it's time to put up or shut up.
For too long, we in this room have been a little bit like Wayne Huizinga. We want a world championship team and World Series rings. We just don't want to pay for it.
Business isn't a lottery. You don't put a dollar in and get a million back. It takes more.
One of the more telling comments in response to our survey came from Chris Bell, associate dean in the College of Engineering at OSU.
He urged continued collaboration, more interships, and greater research funding.
Then he concluded with a plea. "We cannot improve quality or quantity without resources, that is, money and facilities."
"Above all," he said, "continue to work on our behalf to bring funding in line with expectations."
We in this room can't whine about the quality of the research or the graduates or the course work inside Oregon's system of higher education if we won't do anything to help it.
The state's colleges and universities are in the midst of radical and profound systemic change. It can't be easy.
But they have shown themselves willing to reach out and respond.
The more we in business and high-tech can do to reach back, and respond with advice, money and professional help, the better we all will be.