Higher Education and the Massachusetts Economy Building on Our Competitive Advantage

JOHN SCHNEIDER, MASSINC INTERIM PRESIDENT AND CEO: For the next week and a half I am serving as MassINC’s interim president and CEO. Our state is blessed to have robust public and private education systems. No other state has the institutions we have to anchor knowledge and workforce development. But have we taken for granted or even neglected our colleges and universities? Are other states doing more to take away our strategic advantage as the competition for talent becomes more global and fierce. It’s my pleasure to introduce MassINC’s new president CEO Greg Torres, chair of the Mentor Network, a Boston firm that provides human services nationwide. (Torres, seated in the audience, waved) He has worked in the government sector, notably as chief of staff at Senate Ways and Means. We look forward to working with you. Greg begins June 26.

MICHAEL JONAS, ACTING EDITOR OF COMMONWEALTH MAGAZINE: It’s often been said that Massachusetts lives by its wits. High skills and high educational attainment are the state’s competitive advantages. There are increasing concerns that our enviable standing is threatened by rival states and overseas economies and from within by complacency. Those concerns and ideas for ways to address them were the subject of an essay by Richard Freeland in the current issue of CommonWealth magazine. We have a panel with a distinguished track record in higher education, business and public policy roles. Richard, your essay says the state is not yet in a crisis when it comes to our economic standing and status, but you sound a warning saying that we lack a strategy to leverage our institutions and that we have taken private institutions for granted and that public institutions are on a decline. What’s the problem?

RICHARD FREELAND, FORMER NORTHEASTERN UNIVERSITY PRESIDENT: It’s a pleasure to see so many people I have known for such a long time. It makes me feel like I’ve been around Massachusetts for a long time. My main argument is that Massachusetts is engaged in fierce competition with other states and countries for talent and jobs. Second, in this regional competition for talent and jobs and investment our colleges and universities are one of our most important assets and our most distinctive. Despite the importance of higher education to the economy, we have a weak record of supporting institutions. And it’s time for the state to leverage assets for economic development and policies should be linked to an overall statewide competitiveness strategy. On the reality of the competition, not much needs to be said in this audience. There are daily press reports on this topic. We have problems obtaining talent given the high costs of living. We have trouble persuading startups to grow in Massachusetts and in attracting new companies due to the attractiveness of other states. People from all over the world came to the bio conference to take our talent away. The second point on the importance of universities and colleges in economic competition, part of our local folklore is the role Rte. 128 played in getting our economy going and it was linked to research universities and MIT. The linkage has been demonstrated over and over again. EMC was founded by three graduates of Northeastern. Biogen was founded by graduates of Harvard and MIT. There is no question in my mind of this tight linkage in Massachusetts. As for the record of supporting higher education, thoughtful people have expressed concerns about the failure to invest in public higher education. The Senate task force on public higher education repeated the exhortations of the Saxon Commission 20 years later. We had led the nation in cuts to colleges and public higher education. Less well understood is that Massachusetts does less to support the strengths of our private universities and colleges than many of our competitor states. New York and New Jersey provide significant financial support to go to private institutions. States have developed talent retention programs, which Massachusetts supports only at public institutions. In research and development, Massachusetts ranked 24th in the nation in providing university support, not even in the game with major players like New York and California. Look at the state budget and we spend the smallest percentage with the exception of Vermont and New Hampshire. How long can we remain competitive while consistently under-investing in higher education? We are living on borrowed time. It’s not clear what the timeline is. We’ve gotten away with underfunding of higher education. There are warning signs we should be paying attention to. Our percentage of R&D has declined. The state has reduced the budget for higher education while the costs have gone up and up and up. How long can that be true before we are under-preparing young people for the workforce? The time is now to reverse these historic patterns of under-support. We should be developing a major league statewide policy. We should increase overall investments in higher education to competitive levels. We should structure investments to leverage all our assets. We should support university-based research. We should link our policies to a comprehensive statewide strategy for regional economic development and use state dollars to foster collaboration. And we should put in place accountability systems and track the performance of our increased investments and our academic industry with comparison to other states. I want to express my hopefulness. I sense a growing awareness in the Legislature, with the economic stimulus package and the 2005 Senate task force report on higher education was another indication of legislative awareness. Gov. Patrick’s life sciences initiative takes the state to a new level of involvement of institutions. And Gov. Patrick’s recently announced Project Readiness is important to the future well being of the state. The new commission could provide the opportunity to flush out the broad and inclusive strategy for which I have been calling. My article was written with a spirit of concern and I am hopeful the time has finally come when we can put ourselves on a path to supporting institutions to make Massachusetts competitive and to support our economy.

JONAS : Under Governor Weld, he put out a document called “Choosing to Compete” that highlighted the role of higher education. Nearly 20 years later, we are talking about the same issue. Is it time for a new blueprint and what was missing from the first one? Have conditions changed on the ground or have we failed to execute?

GLORIA LARSON, INCOMING PRESIDENT OF BENTLEY COLLEGE: Thanks for including me. I have not yet been the president of Bentley College and have not been secretary of economic affairs for 12 years. Let me take a historical perspective. You have to be really curmudgeonly and downright wrong to disagree with the overarching premise of Richard’s article. It’s incredibly therapeutic to read that article and have that call to arms and see the Patrick administration embracing this as a call to arms. A lot of us are worried that there has not been a coalescing consensus with enough urgency attached to translate into direct action plans. College presidents have been saying for a long time that Massachusetts has been reliant on our idea capital status. We look to higher education and businesses and individuals to spawn and to continue with great innovation. For 60 years the innovation economy has really been our chief calling card. If we only become research-oriented and don’t have development that translates into full-scale production, it’s absolutely true that going forward we are going to start to be in decline and we won’t be one of those robust innovation economies that competes with New York and California and Pennsylvania and North Carolina and Texas more recently. In 1993, Michael Porter did get together with Governor Weld. I looked in my files and found one of the last remaining copies of Choosing to Compete. (She held it up) Why did we not feel that overwhelming sense of urgency? Partly we were coming out of a tough recession. We had double-digit unemployment. We were an incredibly high-cost state. We had almost Louisiana-level junk bond status. We all rolled up our sleeves and tried to address those concerns. The document said the innovation economy was a centerpiece and we called for much bigger investments in higher education, seed money and we focused on what were then arcane laws that encouraged silo, theoretical research that did not move capably with partnership and applications. Part of that was the legal system at the time. In 1993, we knew North Carolina was a threat with the incredible research triangle and aggressive efforts to recruit companies. A couple of years later MassINC sponsored another look at where all this was headed with “Lessons Learned” and we spent months taking a hard look at the innovation economy. What were we doing wrong? It led to a forum with Michael Dukakis and Bill Weld talking about kinds of things we needed to do to move forward. Everyone talked about more investment in UMass and doing tech transfer more efficiently and bringing industry and government and higher ed together. In 1999, there was still no sort of sense of looking over your shoulder and seeing a threat. More recently I give credit to Mass Insight for ringing the alarm bells. MassINC has been developing a blueprint for a pathway for technology developments going forward in Massachusetts and has drawn this incredible group of higher ed leaders, university and college presidents and lots of major industry folks. Some CEO’s like Ray Stata at Analog Devices say we have a clear choice between this level of complacency and doing incremental things like the economic stimulus bills and clearly the life sciences initiative or choose a much more coordinated, strategic broader based sector by sector with different parts of the state all pulled together in a strategic way. There has not been a follow-up to “Choosing to Compete” in 1993. Gov. Patrick and Dan O’Connell have been talking about doing just that. The Weld administration used what I would say now in retrospect was a far too siloed approach. We have talked about what state actions we need. It was a great idea at the time and it worked pretty well for a period of time but now we know looking at a better model is what we need is an interdisciplinary, integrated approach. We have to pull industry, higher ed, state government and other stakeholders together and agree on the components of a statewide industry-by-industry approach, not just life sciences but other emerging industries and promising technologies. We have to look at how we plant seeds evenly and appropriately in different parts of our state and where do we get the funding to go forward. What we don’t yet have even now is this broader understanding of how truly urgent this is. It may not be urgent today in that we are going to become Cambridge, England. But like some other things that have drawn so much consensus – $3.3 billion in K through 12 education reform, last year’s Connector health insurance program – they grab higher consensus than the higher education imperative has. It’s incumbent on all of us to develop that groundswell or support and consensus.

JONAS: So Dan O’Connell, Gloria did her time in state government. You are now the guy selling the Massachusetts economy to business. Is there something broken that needs fixing when it comes to higher education and its connection to the economy? What’s the thinking from the administration?

O’CONNELL: I am in Gloria’s office and I want to report I have the same furniture. I have no intention of replacing it. She has marvelous taste. Bill Weld was in my office last evening. We talked a little about “Choosing to Compete” and the decision to seek out that guidance and put together that report and how well it has held up in many ways and the need to move forward with something new. The administration is a faithful reader of CommonWealth magazine. I eagerly read Richard’s article and re-read it this morning. He is very much on target. One of the governor’s first instructions to me was to get around the state. It had been an interesting experience for him as he campaigned. He did reach each corner as he campaigned. I set about on visits one day a week. I have made 15 of them. I find not one economy but a number of regional economies. It is a varied state. In some parts housing is a very onerous cost. In other parts, Springfield, we have wonderful housing stock that is very affordable. Unfortunately, there are public safety issues we need to address. It’s not a one size fits all. The regions doing the best job creating economic development opportunities are those where government, industry and higher education are working together. UMass-Dartmouth works hand in hand with the business community to prepare graduates for jobs and in fostering research partnerships. They work on development of new specialties like marine sciences. I am on the board of the John Adams Institute. We are working on the ORION ocean research partnership with UMass-Dartmouth and Woods Hole Oceanographic for a federally funded offshore research buoy system to gather information along the coast that will be helpful to understanding climate change and wind and tides. The governor has made several initiatives where we try to pick up on some of the issues identified in studies. One is the life science initiative announced at the convention. There were 24,000 visitors from all over the world. It does show you that the world is flat. On Tuesday of that convention, Gov. Patrick came to the center of the hall. We had a good location. It was a glorious spring period. The San Diego delegation said you even stole our weather. The initiative captured the energy of the convention and it lingered and the buzz was certainly around our space. How we put that together and how it was well received was a real lesson to us. It was not administration people sitting around a conference table. It was an open and collegial gathering involving UMass and MIT and Harvard and representatives of Whitehead and research institutes all meeting together and sharing ideas and talking about collaboration. It was meetings that lasted over a month. As the local press and we know how they are, the Herald and the Globe, tried to find some chink in the armor and called person after person, they had a lot of trouble finding anybody. The articles were very complimentary of the scope of the project and how public and private institutions would benefit, how fellowships were talked about to keep our best and brightest, and how collaborations provide appropriate tax provisions to deal with the long gestation period and matching grant programs where industry and government work together. It’s an example of how we need to proceed in other areas as we move to forge solutions. In my six months of service this time, I find government is a blunt-edged tool. We don’t have the answers. We have some resources, more limited than we’d like. We need good advice to turn that blunt-edged tool into a sharp instrument. I chair the life sciences center and we had a meeting last Thursday. The first money we spent was on a study by the UMass Donahue Institute that will look at workforce needs over the next ten-year period and look at curricula at our institutions and see how we might adapt curricula to prepare students better. It was a very auspicious start. I was pleased that the Mass Biotech Council partnered with us to fund 20 percent of that study. It shows the coalition is holding together well. I mentioned the Orion offshore initiative. There is also alternative and clean energy. You may have read in the Globe today about initiatives in that area. We are competing to be the headquarters for the national wind blade testing facility. It is currently in Boulder, Colorado, which is too isolated a site for research collaborations. We are one of two finalists for the location. We are a finalist because of a partnership with UMass Amherst, MIT, industry leaders and government, state and local, in putting together a proposal to locate the facility on the waterfront in Charlestown at the Moran Terminal where cars are offloaded. Wind blades are quite long, 55 to 70 meters, and there is a need to be able to move them around and that location on the harbor, a very strong harbor in terms of its depth and operating capabilities, allows blades to come in from domestic producers by sea to the terminal and it has rail and automobile access. We are competing against Corpus Christi, Texas. That’s an oil state, not a wind state. I think we are very well situated. We expect an answer within the next ten days. It’s an example of cooperation and effort. What is missing is the strategic step that Richard calls for. We are working on that. I am meeting with Dana Mohler Faria later today. The discussion is going to be about how we move forward on the higher education-industry partnership side of this and on the strategic development. It is time for another look at it. Choosing to Compete was an excellent document but the years have passed. I will be looking at a broad partnership with public and private institutions probably not centered at Harvard Business School, as it was before. Bill Weld was somewhat Harvard-centric in those days. He’s much more expansive now. We also will be looking at a plan to reflect regional economies.

JONAS: Jean MacCormack, I imagine thing look different on the South Coast than here in Boston. We talk about the high cost of living here and on the coast you worry about people leaving because of the lack of an employment base there. What is it that concerns you and what are parts that are missing?

JEAN MacCORMACK, UMASS-DARTMOUTH CHANCELLOR: We have a strategy that says really what Richard calls for, for public and private partnerships to focus on those clusters of development with the most potential for our region and the state. I found that people are open to that strategy. Calling it the South Coast is the result of one of the efforts to re-market the area as a different place in terms of image. There is a tremendous sense of urgency at UMass as a whole around this issue. In my case, we have built the advanced technology and manufacturing center in Fall River at the site of an old mill, in some ways very symbolic. It’s an industry partnership built in 18 months with MDFA. It is occupied by ourselves and industry partners. It has labs and a venture center for new technology companies. Our students play active roles as interns there with companies. I graduate 1,700 students a year and I was worried because they cannot stay here for the high tech jobs we have prepared them for. The dropout rate is 40 percent in Fall River. When a company comes to the region, if it’s a biotech or software company, they want to know if they will have the workforce they need. It’s a chicken and egg thing. The center has a prototype lab. This is critical to that kind of synergy we are talking about. We built our arts center in New Bedford with a private developer. We will own the building in 20 years. Every building around the campus was boarded up and now has been privately redeveloped. All of these things are possible despite the truth of what Richard says, that we have less money than ten years ago. It has required a lot of creativity. There is an impending crisis on the part of infrastructure and the ability to sustain an affordable, high quality public education. We need to see our higher ed institutions, public and private, as a joint resource. We need to change our attitude about that. We have not made together that urgent sense of investment in public higher education. Forty percent of high school graduates do go to private institutions. Of those who do go to public institutions, they have to get high quality education at the community college, state colleges and at UMass. We have to figure out what will make that happen. How do we create that sense of urgency to change an attitude that has been somewhat competitive? We do need an attitude adjustment, as I would say, about how we need both sets of institutions in partnership with private sector groups. We have to stop worrying about whether one part is better than the other or whether one part gets more than the other. As we make more public money available, we need to think about accountability.

JONAS: What does the state need to get right so companies do grow here?

CHARLES FADEL, GLOBAL LEAD FOR EDUCATION, CISCO SYSTEMS: Massachusetts has a better brand overseas than in the United States. It does not help when a former governor pokes fun. A lot of folks around the world think the US system is the system to emulate. In a global context, we are not in a bad position but it’s clear that popular press has made the pressure much higher. We can debate the shortcuts and oversimplification but all of a sudden everyone has the fear, not just blue-collar workers, and everyone is paying attention. In the past, one could rationalize. You look at creativity as the differentiator. It’s something that is hard to emulate because it’s inherent to the social fabric of the system. Lets cherish a strong democracy. When the Chinese government asked how it can be more creative, we have to say it starts with something you might not like – freeing up your people. Each country has its own specificity. When it comes to companies locating in Massachusetts or not, let’s not only keep in mind the larger companies but the bigger strength of Massachusetts and the United States is the ability to spawn new businesses. Cisco was created in the Silicon Valley. Cisco acquired a number of companies here. We set up shop next to IBM because we were raiding their business at the time. It was the right type of people for the task. Large companies locate for the right type of people for the task. We need more EMC’s obviously. Why did Cisco do the acquisitions and not vice versa? This is where anthropology comes into play. Sometimes it’s attitudinal. We are just a tad less aggressive than others, more civil than others, but it comes with a punchiness that is missing at times when it comes to Silicon Valley companies. A couple of interesting bets were made in the 1990s. I remind you of artificial intelligence. Had these bets paid off, computing would have been very health in Massachusetts. You can’t always be right. The next generation may be life sciences and energy. I may show European bias in saying the state can be a huge facilitator. The impetus for change can come from reaching a crisis point or having a lack of leadership. Hopefully with this leadership at the state level we will be able to anticipate and make the right bets instead of responding when things are in a crisis situation.

JONAS: Let’s talk about the state’s role of facilitator or director? There was a bit of questioning of the particulars of the state investing in emerging companies and the question of should state government be in the practice of picking winners and losers. Is there s line between the two roles?

O’CONNELL: I think very much so. I took geology because it was the easiest of life sciences. Richard calls for peer review and we are fully on board with that idea. As we look at expending funds under life sciences, we look to piggyback on the NIH review. NIH has been flat funded. Really good research is not getting funded because of a lack of funds. We will look to put together peer review panels on moving technology to another level. We are not averse to looking for some royalties for the Commonwealth. A drug that prevents blood clotting comes from the state of Wisconsin’s research and is generating royalties. We don’t want to interfere with private venture capital. But if the government makes a bet based on good scientific and business advice we receive, then we’d love to see some payback so we can roll it back into more research. But we know our limitations. We know the facilitator role is the more appropriate role for us to play.

FREELAND: A study drew interesting comparisons between Cambridge, England and San Diego. Cambridge had research that did not extend into development. In San Diego, the similar research base did produce economic development. The difference was the connectivity between institutions producing the research and tech transfer and the institutions that scale up and create the product. Government can play a facilitator role. Dan talked about funding workforce development. It’s tremendously important. If we don’t have the workforce to staff the companies, we are not going to keep the jobs that result from development. Unless the state thinks now about curriculum, then we are going to lose the jobs of the life sciences initiative.

JONAS: The connectivity question relates to UMass Jean. There are a lot of important issues packed into the controversy going on at UMass. A lot of the stir is about process but lack of organization centers on the idea of greater connectivity is critical to attracting students and research dollars and partnerships.

MacCORMACK: We have to let businesses into the conversation about curriculum. There are some ways we do business that if we create the right kinds of conversations, you get that kind of evolution. That’s what the conversation at UMass as a whole is about. Each campus has a distinctive mission. I am the smallest campus. But I think about it as connected resources. You have to have great informatics on the water. We are the conduit for opening that conversation. It’s about getting the resources aligned in a way that can work effectively. When the Saxon report called on the university to be one university, we had to go through the process of learning differently. Jack is calling for new urgency around the mission of being engaged in a productive way. At the flagship campus, there is theoretical research that goes on but not as much engagement as UMass-Dartmouth has. As Dan points out there are regional economies. We are calling upon ourselves to do better and more around being the University of Massachusetts, which has a greater reputation outside Massachusetts than inside Massachusetts. I have some faculty members who are brilliant in the laboratory but I would never take them into a school. I have to find a way to maximize what they can produce, to maximize the strengths and not have redundancy.

LARSON: Bill Weld, always famous for his quips, has been broadly misunderstood with steering versus rowing. A lot of it was doing a lot of rowing with private sector support. We had economic target areas scattered throughout the state to create economic opportunity. When biotech was getting started, we established the emerging technology fund, which was intended to be gap funding. What’s happened is how you redefine steering versus rowing. The rules of engagement have changed. Private industry and higher ed are no longer locked in their own labs. You need everyone working together. That’s in fact the new facilitation role that the state has to play.

MacCORMACK: Maybe it’s about seizing opportunity and not being as complacent and resting on our laurels.

JONAS: Secretary O’Connell mentioned the approval of this study of workforce needs. We have heard about the lack of coordination of higher ed and the workforce. Once we are armed with this information, what’s the strategy?

O’CONNELL: One of the reasons we put that study to the top of the list is my first month I met with Josh Boger, the CEO of Vertex Pharmaceuticals. They started in Cambridge. I was aggressive arguing for development to happen in Massachusetts and I think I will be successful. He talked about skills needed in lab technicians. I asked how often he talked with Mary Fifield at Bunker Hill Community College. Josh said he’s never met her. That suggested to me that we had a little bit of a disconnect. The study, as approved by the board, calls for heavy involvement by industry and business in anticipating and talking about their needs across the board as they grow. I am told – I am not from the academic world – that there is some resistance to curricula change. It makes it difficult to prepare for that class next semester. I am watching that very closely. As we look at the broad legislative mandate for our activities, I am thinking we may need to target additional funds to assist faculty members to put the time in to develop new curricula and have it ready to spread. I don’t see the study as a beginning and an end to the topic but a beginning that requires an ongoing engagement on the academic and business side. Richard has been in public and private education. He is a very effective advocate. I don’t think the private side has been as quick to adapt to the changing need of our workforce. It’s that traditional four-year education, Northeastern being a bit of a leader with its five-year coop program. We were sometimes not ready to be effectively educated at 17 or 18. I would like to see leadership at private universities to be exposed to new opportunities and taking the workforce on the bachelor’s and master’s and PHD’s a little later in life without the sororities and the drinking parties – a different course that will allow us to keep talent and keep educating talent. There is some work to be done in our educational institutions to address that.<

FREELAND: There is going to be a next stage need to the Donahue Institute study. It’s going to be useful to do some seeding of curriculum development. I encourage you to think about how we can seed and I think in relatively small amounts of money. I also urge you to think about targeted scholarship support to encourage students to sign up. As the federal government has supported foreign language study or critical industries through targeted scholarship, the state could do the same with life sciences.

JONAS: A year or two from now, how will we know whether we have gotten off the path to decline you have warned of?

FREELAND: The issues have been around along time. We are not in an immediate crisis. That in some way helps us. What I would like to see in a year or two or is a ten-year vision of where we ought to be trying to get to. I would like to see a ten-year commitment to a more competitive level of higher education in terms of the percentage of the budget. It would make a huge difference. I would like to see within the vision a picture of how the connectivity will work, the role of the state and public and private higher education. I would like to see coming out of the commission the governor talks about appointing the picture of what it will be ten years out in terms of funding and roles.

AUDIENCE QUESTION: I have two comments and a question. It was said there is not an interest in changing the curriculum. There is a conference at MIT right now where people are talking about what worked for them. I worked with the director of the MIT Museum on the science festival. The objective is to provide an opportunity for families and kids to develop an interest in life sciences. It’s amazing to open up that interest. Kids say they love Boston and can’t afford to live here. They find it’s so expensive when they are beginning their careers. How do you address retention?

O’CONNELL : It’s a top priority for the governor. In the restructuring of the Cabinet, the governor added housing to my responsibility. The issue is what can we do to foster the growth of housing stock. Smart growth is part of it, as is partnerships with employers. We are talking with MGH about an effort to provide workforce housing. We are talking with unions about those issues as well. I think you will see a real focus and resources put into these. We are losing some great talent. If we could convince then to go to Springfield, it would be real helpful. It is a key factor and one that we are focused on. It won’t be one solution; it will be a range of solutions.

FADEL: One solution is high-speed broadband access.

FREELAND: The role of the state is to look at the whole picture, all of the pieces. The state needs to identify the bottlenecks and put state resources into those places.

AUDIENCE QUESTION: I am on the faculty at Suffolk university, I am not proud of my university’s part in preventing the UMass law school. Both sectors evaluate every proposal and think about competitive advantages. How do you see the political strategy of building support?

FREELAND: The competitive nature is a strength. I don’t want to subtract competition from the equation. That is what makes us good. But you can get bogged down in that competition and not understand there are larger issues that affect the whole state and quality of life. We are never going to get rid of the kind of competition you talk about. It is possible to get to another level.

LARSON: A pet peeve is that higher ed is one of the leading industries and does not behave like other industry clusters in thinking about collective contributions. There is this sort of turf warfare that goes on and the divide and conquer your own piece of the pie. Why are not more of these 126 colleges and universities playing a larger role in terms of their own backyard issues? They have not regularly risen to the occasion. Northeastern, by the way, as is UMass, are two of the biggest exceptions to that rule.

MacCORMACK: We change as a result of fear or enlightened forward-thinking leadership and I think Richard is calling for that. I don’t think we will eliminate competition but we have to balance that with a broad vision of where we want to be.

AUDIENCE QUESTION: I am at UMass Boston and have spent my career in public and private universities. I appreciate the difference in cultures. What would it take to get business to be more accepting of the fact that it’s an investment to have employees take time off to go to college?

FADEL: I am torn on that. Corporations have this dilemma in that they are not confronting where they put enormous pressure on employees to perform and we know we have to change the wheels and change the car as we drive it. I am not sure if taking a week or month out and driving to a night class is the answer. We see snippets of education in 20-minute chunks before meeting with customers. It’s just-in-time learning and just-what-I-need learning. It’s a bit of a change. There is a lot more we can do there.