Testimony before House Appropriations Committee Regarding National Research Universities

1. Testimony before House Appropriations Committee Regarding National Research Universities David E. Daniel University of Texas at Dallas • Why Do National Research Universities Matter? • Economic Impact on Texas • Brain Drain to Other States • What Will It Cost? • How to Move Forward?

2. Impact of Tier One Universities • Example: MIT • Alumni have founded more than 4,000 companies employing 1.1 million people and generating $232 billion in sales – roughly equal to the economic output of Houston or DFW! • One great, world-class university can have an economic impact on the order of one great city • Imagine --- • Boston (and Massachusetts) without MIT and Harvard • The San Francisco Bay area (and California) without Stanford and UC Berkeley • Austin (and Texas) without U.T. Austin 2 Source of data for MIT: BankBoston study available from web.mit.edu/newsoffice/founders/

3. Texas Is Not Attracting Its Share of Investment Capital • Texas has 8% of the U.S. population but only: • 5% of federal research and development (-$2.8 B per year) • 5% of venture capital investment in 2007 (-$0.9 B per year) • Summary: If Texas had its proportional share of federal R&D and venture capital investment, it would gain $3.7 B per year • Venture capital accounts for 0.2% of GDP but 10% of U.S. jobs and 18% of U.S. business revenue • In 2006 and 2007, Austin had more venture capital investment than DFW, Houston, and San Antonio, combined Sources: Population Data: Population Reference Bureau, 2007 U.S. Population Data Sheet Federal R&D: 2004 expend., National Sci. Fdn.,, http://www.nsf.gov/statistics/nsf07323/tables/tab82.xls Venture Capital: pwcmoneytree.com/MTPublic/ns/nav.jsp?page=notice&iden=B Texas Distribution of VC Data: Mr. Ron Nash’s analysis of Dow Jones Venture Source data by area code, 2007 3

4. Texas Is Losing Talent to Other States • In Fall, 2006: • Texas exported 10,163 high school students to doctoral granting universities in other states • Texas attracted 4,358 high school graduates from other states to doctoral-granting Texas universities • Texas had a net brain drain of 5,815 high school students to universities in other states in 2006 • The problem is getting worse – the loss increased by 54% from 2000 to 2006. • Example of positive impacts from talent importation: 15% of Rice University’s undergraduates hail from Harris County, but 33% of its alumni live there 4 Source: IPEDS Institutional Characteristics and Enrollment Reports, 2006 and 2000 Info. on Rice U. reported in speech by Richard Fisher, Sept. 24, 2007, as reported to him by Malcolm Gillis, former Rice U. President

5. Association of American Universities 5 Source: http://aau.edu

6. The10 Most Populous States Texas Has about Half the Average Number of Top Universities per Capita 6 Sources: wikipedia.org for population data; aau.org for AAU university information.

7. How Many Top Research Universities Should Texas’ Two Largest Cities Have? 7 1Based on economic productivity of metro. Statistical areas in 2005. Source: www.bea.gov/newsrealeases/regional/gdp_metro/2007/.

8. Comparison of States Less Populous than the DFW Metroplex with Public AAU Universities 8 Sources: wikipedia.com for population data on states and metro. statistical areas; aau.org for AAU university information.

9. Cost to Elevate Emerging Research Universities to Major National Research Universities • Cost: Ultimately $3,000 per FTE student per year Annual Cost: About $70 M per University per Year 9

10. Cost in Perspective • Annual Cost to Elevate 3 Average Emerging Research Universities to National Research University (@ $3,000 per student per year): $70 M per year per university = $210 M per year • = 3 More National Research Universities • (Remember: If Texas had its proportional share of federal R&D and venture capital investment, it would gain $3.7 B per year) • Annual GR Appropriations to all Texas 4-Year Universities in 2008-2009 (Including TRB Debt Service): $2.19 B per year • Annual GR Appropriations to the 7 Emerging Research Universities in 2008-2009 (Including TRB Debt Service): $733 M per year Source for GR Data: Office of the Controller, base bill information. 10

11. How to Accomplish the Goal? • Option # 1: Select One or More Universities to Advance • Advantage: Efficient – Focus the Resources • Disadvantages: • Politically Impossible? • The State Alone Can’t Accomplish This Alone – Need Community Support (Private Dollars) and Smart Choices by University Leaders • Option #2: Let the Universities Compete for Resources • Advantages: • Broad Support – All 7 Emerging Universities Have a Chance • Rewards Performance and a Job Well Done • Provides Incentives for Leveraged Investments • Disadvantage: • Without Tough Performance Criteria, Money Spread Too Thin 11

12. Final Comments • Very Significant Results Are Possible within a Few Years and Certainly within a Decade • Future growth will drive the demand for more national research universities even higher in the future • The Total Cost to Elevate 3 Universities Is $210 M per year requiring a 10% Increase in State Funding for 4-Year Universities and a 28% increase in Funding for Emerging Research Universities • The Investment Should Be Phased in Over Time, Perhaps in 3 to 5 Biennial Increments • The Return on Investment for Texas and Its Future Is Expected To Be Transformative 12