The Board of Trustees has taken a “definitive step” in support of Duke’s campus in Kunshan, China, said Board Chair Dan Blue.
After significant scrutiny from Trustees and administrators, the Board authorized the University to submit an application to the Chinese Ministry of Education to open the campus.
Five Board committees examined issues surrounding Kunshan, including an ad-hoc committee formed by Blue, Democratic N.C. state senator and Law ’73. The committee is composed of nine trustees and headed by David Rubenstein, Trinity ’70 and co-founder and managing director of The Carlyle Group. The committees looked into questions regarding academics, human resources, facilities and finances, which Blue said were “first on everyone’s mind because of the risk [involved].”
“I think that without a doubt most people would agree that that level of review... has made it a much better program, and we feel pretty confident in going forward into the Duke-Kunshan [partnership],” Blue said. “There’s still a lot to be done—we’re not fooling ourselves.”
Blue added that the administration is finalizing agreements with Kunshan and Wuhan University before submitting an application.
In addition to the $5.5 million the Trustees approved in December to fund oversight and furnishing fees in Kunshan, administrators expect to spend $1.5 to $2 million per year of Duke’s central administrative funds on the campus’s operating budget for five to six years. The city of Kunshan will split operating costs with the University.
Brodhead declined to estimate the total costs of the campus or the revenue it could generate, adding that “it would be wrong to give a ballpark figure except to say we’re modeling them.”
Blue said the Trustees have reviewed several financial models and determined that it would take five or six years for the campus to reach a “steady state,” in which revenues cover costs. Based on this information, the Trustees judged the models to be reliable and the risks manageable. Although Duke has identified sources of revenue to sustain the campus’s operational costs, the models will have to be adjusted when tuition and other revenue streams are concretely determined, he said.
Blue said the Kunshan campus will have a seven-member governing body, with three members appointed by Duke and the remaining four appointed by Kunshan and Wuhan University. He said the decisions made by the new campus’s board will require “an extreme majority,” meaning that at least one Duke appointee will have to vote in approval.
With the Board formally supporting the Kunshan campus, Blue said he expects more discussion about its development to take place between administrators and the University community.
Although Brodhead called the Kunshan effort one of the most detailed planning processes in the University’s recent history, he noted that some details are difficult to share.
“It’s as if you have a dream house, and I ask you what color the bedroom is,” he said.
A bigger price tag
The Board of Trustees approved a 4.3 percent increase in undergraduate tuition at its meeting, bringing tuition to $40,665 in 2011-2012, up $1,670. Duke’s total cost of attendance will rise 3.9 percent to $53,905 including room, board and fees, a $2,040 increase from this year.
In the last 10 years, the Common Fund Institute, which compiles the Higher Education Price Index, estimates the average cost of operating a University has increased 3.4 percent annually. Duke’s cost of attendance has increased at an average annual rate of 4.6 percent in the last 10 years.
“The cost of education has different drivers than a family food basket... those include things we have had to invest very vigorously in,” Brodhead said, citing spending on information technology and libraries. “We have tried to mitigate that cost increase... with an increased commitment to financial aid.”
Brodhead noted that, despite the increased costs to students, the University will continue meeting all demonstrated need. Several endowments created by the Financial Aid Initiative have been underwater since the financial downturn, meaning the University cannot spend funds from those endowments because they are worth less than when they were created, Brodhead said. Although Brodhead did not specify which endowments were underwater, he said 80 percent of the endowments are now worth more than when they were created.
Estimates of financial aid costs for the next academic year have not yet been finalized, but the University expects to spend $10.4 million more in institutional funds on financial aid in 2010-2011 than it did in 2009-2010.
The Trustees also approved tuition increases across Duke’s graduate and professional schools, most notably by 9.3 percent in the School of Nursing to $46,620. Brodhead said the University had been undercharging for admission in comparison to peer schools, despite the School of Nursing’s success. The Trustees approved tuition increases between 2.8 and 5.9 percent at Duke’s other graduate and professional schools.
The Nicholas School of the Environment saw the smallest tuition increase for the next academic year, which Blue attributed in large part to the University’s desire to continue developing the school and encouraging the best students to attend.
Fuqua MMS here to stay
The Fuqua School of Business will offer the Master of Management Studies degree on a permanent basis. The 10-month program, which had been operating on a trial basis the last two years, has seen an 80 percent employment rate three months after graduation for those students seeking jobs.
Brodhead said the University evaluated the MMS program on several different criteria, including the quality of students it attracts, the employment results of these students, the quality and appropriateness of the program’s curriculum and the level of demand for the degree.
“We were pretty excited when we devised this program,” Brodhead said. “People were well satisfied that it proved itself in practice.”
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