Sizing Up a Smaller Duke

For years, Duke has been on a high-growth trajectory. With declines in endowment returns and philanthropic giving, the university—like most of higher education—is adjusting to a challenging financial reality.
November 30, 2009
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On a late afternoon in September, with summer very much in the air, the Duke Symphony Orchestra has just finished its traditional opening concert on the East Campus lawn. A half-dozen freshmen head to the scene just in time for the finale—the inevitable "Stars and Stripes Forever." One of them asks, "Is there free food here?" His friends weren't sure. But, they should have surmised, this is not the year for free food.

For a decade or so, higher education had been on a seemingly unstoppable roll, in happy harmony with the rest of the U.S. economy. Over the ten years ending June 30, 2008, Duke's $6.1 billion endowment had been growing at an average annual rate of 15.6 percent. That largesse was put to work. Aiming to keep higher education affordable, Duke, like many top-tier institutions, enhanced financial-aid packages. New programs grew from new thinking about research and learning, notably DukeEngage, which funds students in civic-engagement projects around the world. At a September faculty meeting, George McLendon mentioned a key measure of intellectual growth over his five years as dean of the faculty of Arts & Sciences: an increase of almost fifty tenured or tenure-track faculty members.

And the bricks-and-mortar expansion (with architecturally pleasing stone included for good measure) is even more striking: a new library building, a new engineering complex, a new science building, new and revamped athletics facilities, an art museum, and physical growth in schools ranging from divinity to business.

Today, though, campuses are no longer awash in a wave of prosperity. They're reeling from the shock wave of the Great Recession.

This fall, Harvard University reported that its endowment had plunged 27.3 percent in the past fiscal year. Harvard, in addition to halting a huge campus expansion plan, had already frozen nonunion salaries, offered voluntary retirement incentives for staff, and, in June, announced 275 layoffs. Yale University suffered about a 30 percent loss in its endowment. Yale president Richard C. Levin alerted the Yale community to expect "another round of reductions."

Earlier, Yale had anticipated that some 300 employees would be laid off; as it turned out, most of its reductions have been achieved by leaving vacant positions unfilled. At the ten University of California campuses, thousands of students, faculty members, and employees turned out to protest budget cuts, unpaid faculty furloughs, and tuition increases.

Duke was not immune. After all those years of growth, the university's endowment suffered a 24.5 percent loss in fiscal year 2008-09. (Duke's endowment still grew at a 10.1 percent average annual rate over the last ten years, a rate that places Duke second only to Yale.) Duke's giving total for fiscal year 2008-09 dropped 22 percent from the previous year, from $386 million to $302 million; the number of donors was about the same. Contributions to the university from The Duke Endowment, historically the largest donor, fell from $77.7 million the previous year to $40.3 million. Some of the giving from The Duke Endowment, and from other sources, was for particular projects, the university's Financial Aid Initiative among them, and wasn't bound to be repeated. But for The Duke Endowment, a private foundation based in Charlotte, as for every charitable organization, philanthropy was taking a tumble with the financial markets.

Those aren't surprising results in a stressed economic climate. In 2008, the average individual 401(k) account lost 28 percent of its value. According to the Federal Reserve, in the third quarter of last year, the net worth of American households fell by 9 percent—the largest amount in more than a half-century. For the full year, household wealth dropped $11.1 trillion, or about 18 percent. Most of the wealth was lost in the holdings of financial assets like stocks.

Duke is in a three-year effort to recover $125 million—$125 million, that is, less than what the university would be spending not just for what it's now doing but for what it would like to be doing. So part of Duke's response hinges on cutting back current expenses; part of it hinges on scaling back its plans and looking for other revenue sources.

At the same time, the university's spending policy calls for paying out a fixed rate, currently 5.5 percent, of the average value of the endowment over a three-year period. (In flush times, the board of trustees has occasionally limited the amount of endowment payout from one year to the next. More recently, Duke has been using accumulated reserves—the equivalent of a household's "rainy-day fund"—to avoid more severe cuts.) Given the dropping off in endowment returns, the next two budget years will be increasingly tough at Duke.

"Calibrating the size of the problem is quite difficult," says Tallman Trask III, executive vice president, "in part because the markets are moving all the time." The markets are up since the initial $125 million calculation, "but other things are down, including big gifts," adds Trask, the chief administrative and financial officer for the university. "I didn't ascribe a great precision to $125 million in the first place, and I'm not ready to ascribe a great precision to any alternative number yet."

Trask co-chairs the Duke Administrative Reform Team (which goes by the assertive acronym DART), a group of administrators, faculty members, and staff members that reviews ways to re- duce costs and improve efficiency. There's new scrutiny around energy, for example: In the winter buildings will be colder and in the summer, warmer—about two degrees in either direction. There are now strict guidelines for charging business meals to the university. One faculty member, in a recent conversation, couldn't help observing that Durham's finer restaurants are looking a lot less crowded, in part because the Duke corporate credit card is no longer so easy to reach for. Duke also will no longer fund home Internet services for faculty or staff members or pay for subscriptions or memberships in professional organizations.

At the same time, Duke is innovating in the interest of budget relief. It's converting to Voice over Internet Protocol (VoIP), a phone system that takes analog audio signals of your voice and turns them into digital data. In essence, VoIP uses a standard Internet connection and eliminates the need for dedicated phone lines and switching equipment—an estimated $2.7 million annual savings.

Before heading out for a run one hot September afternoon, Kevin White, who became Duke's vice president and director of athletics in the summer of 2008, contemplates his department's own economic innovations. Talking in his Schwartz-Butters Athletic Center office, which offers a sweeping view of Duke's athletics infrastructure, he employs the vocabulary of a business thinker, motivator, and citizen of the campus: "reshuffling the deck," "reprioritizing,""working smart," "being proactive," and "being true to our mission." White says, "We're preparing for the worst and hoping for the best. But the idea is to get through this period in an even stronger position."

Last spring, White worked with colleagues to craft a "Financial Exigency Plan." The plan envisions six levels of financial crisis—from the seemingly manageable pressures produced by the current downturn to shortfalls significantly greater than $5 million—along with accompanying actions. The plan would protect student-athletes and "the student-athlete experience," avoid layoffs until other money-saving methods are explored, and consider reducing the number of sports only as "a last resort."

Right now Duke Athletics is in the first of the six levels. The department has imposed economies in, among other areas, information technology (only computers that break down will be replaced and only then if other computers aren't available), print production and postage (primarily cutbacks in media guides and other publications), entertainment (including game-related hospitality and banquets), ticket distribution (tighter restrictions on complimentary tickets), training tables (reducing the total number of training-table meals served and the cost per meal), and team travel (negotiating group rates more aggressively).

Athletics is trying to increase revenue, "but in an environment like this, it's pretty difficult," says White. Shortly after he arrived, Duke and Nike Inc. reached a ten-year sponsorship agreement that will supply all twenty-six teams with uniforms, footwear, apparel, and equipment. Nike will also provide cash compensation annually to the department.

More recently, Duke completed a long-term marketing and media-rights deal with ISP, a Winston-Salem-based company with a college-sports focus. ISP will oversee the Duke Athletics radio network, the weekly football and basketball coaches' TV shows, scoreboard and stadium advertising, and GoDuke The Magazine. Capitalizing on one of its prime assets, men's basketball, the department is offering more premium seating in Cameron Indoor Stadium, without cutting back on seating (or standing) students.

On the other end of West Campus, geographically and perhaps metaphorically, the Nasher Museum of Art is also adjusting to challenging times—exacerbated by a drop in corporate support. But is this the right moment for buying art? According to Nasher director Kim Rorschach, "The most dramatic drop in prices has been in the over $5 million arena. And we don't play in that game because we don't have acquisition funds at that level. We tend to buy leading edge contemporary art, works in the below $100,000 range. Prices have dropped there as well, but not quite as much as we would like."

The museum is now conceiving all-purpose gallery configurations; in the past it would knock down and rebuild temporary gallery walls for each new exhibition. And it's cost-conscious around loans for those exhibitions. The current "Beyond Beauty" features photographic material from Duke's own Rare Book, Manuscript, and Special Collections Library. "Picasso and the Allure of Language" was organized with the Yale University Art Gallery; most of the works come from Yale collections. For a future exhibition, the Nasher and its counterparts at the University of North Carolina at Chapel Hill and UNC-Greensboro are collaborating for "The World Through Andy Warhol's Lens." Polaroids donated to each museum by The Andy Warhol Photographic Legacy Program will travel, in a grand combination, among the three museums, with the sharing of framing and other expenses.

Rorschach is an alumna of the financially stressed Brandeis University, which made news last winter by announcing that it would shut its Rose Art Museum and sell its entire 6,000-piece collection. The collection includes works by Warhol, Marsden Hartley, Robert Rauschenberg, Roy Lichtenstein, Jasper Johns, Helen Frankenthaler, Willem de Kooning, and other leading art figures of the last century. Brandeis officials have since backtracked on the idea of closing the building, but the future of the collection remains uncertain.

"I spent many formative hours in the Rose," Rorschach says. "The thought that Brandeis would dissolve it was personally devastating. Happily, many universities very quickly made very reassuring statements about the central importance of art, about the importance of managing collections to the highest professional standards and retaining the confidence of donors and supporters."University Endowment at the End of Each Fiscal Year (in billions)

 

 

 

 

 

So far, budget-cutting at Duke has focused mostly on the art of controlling personnel expenditures. For higher education generally, 60 to 70 percent of the budget is tied up with direct compensation and benefits, says Kyle Cavanaugh, Duke's vice president for human resources. "When you go through a significant budget realignment, it has to impact your work force." Cavanaugh joined Duke last February from the University of Florida at Gainesville. Like other public universities, Florida had been feeling increasing pressure from shrinking state budgets, even before the collapse of the financial markets last fall—a leading indicator of the trouble to come for higher education overall.

Last spring Duke stipulated that there would be no salary increases for employees making more than $50,000 a year; employees below that threshold received a one-time $1,000 payment. The university also put in place what's called, somewhat cumbersomely, a vacancy management initiative. Cavanaugh says, "We can't behave like a private company, where you might do a full hiring freeze," for lots of reasons—including the fact that grant money supports some positions and that others are critical to the workings of the institution. Still, as positions become vacant, "they have to go through a very significant level of scrutiny, all the way up to the senior leadership, as to whether they will be approved or not."

Cavanaugh notes that, in the past, Duke's employee turnover rate was about 15 percent—a percentage that would yield considerable savings even with a quasi-hiring freeze. But a bad hiring environment overall has slowed that turnover rate to 8 or 9 percent. Duke's most dramatic gesture so far has been a voluntary retirement initiative. In the first wave, last spring, 825 staff members (considered hourly rather than salaried employees) qualified, and 294 accepted it, an unexpectedly high figure. Eligible employees were at least fifty-years old and had worked at Duke for at least ten years. If they took the offer, they received five years added to their Duke service and five years added to their age—add-ons aimed at bolstering their pension payout and their eligibility to receive retiree health insurance. The retirements will save the university about $15 million annually.

In late September, the university announced a second round of retirement incentives, this time directed to 198 salaried employees. According to a university statement, deans and vice presidents will gauge whether a position "could potentially be eliminated or restructured for significant cost savings if the retirement incentive is accepted."

Even as its workforce is shrinking, Duke is, more than ever, a magnet for job seekers. With North Carolina's unemployment rate at nearly 11 percent, the number of people looking for work at the university has hit an all-time high. This past January, 10,367 people applied—a 52 percent increase over the same month last year. The university along with the health system is on track to draw 125,000 job applications this year, even with a shrinking number of job openings.

Trask, the executive vice president, says Duke's retirement incentives and other strategies are carefully considered. "You're trying to manage a very complicated, multifaceted enterprise here. Each of the schools is different, each of their financial realities is different, and they all got where they are in different ways. If you just hit them with a meat cleaver, that wouldn't be thoughtful or productive. So we've gone through all the schools' budgets with some care. We say to deans, 'It looks to us that you spend a lot of money in this category. Did you know that? Did you consciously decide to do that? Do you think you're actually getting what you expected in return for that?' It turns out that sometimes the answer is yes and sometimes it's no.

"We're not telling them whether they should do something or not. But I can't imagine a dean would consciously choose hiring fewer faculty members over perpetuating an inefficient bureaucracy." Duke's central administration, says Trask, is relatively lean. He's watched the work of an outside consulting group that recently arrived at a different conclusion for the neighboring University of North Carolina at Chapel Hill. There, administrative expenses per student have grown faster than academic expenses, and multiple layers of management have led to administrative inefficiencies. "One of the things I decided to do almost a decade ago was to not grow the administrative part of the university," says Trask, who came to Duke in 1995. "If you look at Duke's budget over the last decade, the percentage that goes to administrative costs is flat. You don't want to direct your money in that direction if you can help it."

And Duke didn't want to direct its cost-cutting efforts to "a massive involuntary layoff program that was likely to have longstanding negative consequences for the institution," Trask says. "We would do that as a last move, not the first. The institution is its people. We didn't want to just start hacking at the core of the institution."

That strategy seems right to Connel Fullenkamp, associate professor of the practice and director of undergraduate studies for the economics department. What Duke is doing, he says, is akin to a corporate restructuring, a subject that he teaches. "You figure out what your priorities are and what your ultimate core competencies are. If you find yourself sacrificing the quality of your product, then you know you're in trouble."

Fullenkamp says a radical downsizing would have saved more money, but at an intolerable price. The problem with cutting personnel aggressively, he says, is "not just the number of people you lose, it's the possibility that you're sending your best talent out to the parking lot, never to return." Still, he says, the university could be sending out a stronger message that "we're not just sitting here and licking our wounds, but rather we're using this as an opportunity to become a better institution."

Whether or not Duke is poised to become a better institution, Duke students don't seem all that mindful of pressures on the budget. An informal survey in an undergraduate seminar brought observations about reduced services in the residential-life area (particularly housekeeping staff no longer cleaning up residence halls over weekends). Most of the comments were in the vein of "I haven't felt or seen a dramatic change in the activities I participate in." Students were more preoccupied with the economy and their own lives. Some noted that social activities felt more constrained because of the reluctance of their peers to spend large sums. Another, looking ahead, said, "I feel pressured to perform more competitively in order to find a job when I graduate." One student drew a parallel between the White House's unwillingness to summon the American people to sacrifice in the wake of 9/11 and the university's unwillingness to see budget challenges impinge on students.

In the view of another of those surveyed students, Duke is "doing well, especially considering the difficulties my friends who attend other universities have told me about." Other universities are, in fact, experiencing endowment losses larger than Duke's. Analysts point out that markets were so warped in the last year—arguably the greatest such warping since the Great Depression—that "investment indigestion," as The New York Times called it, plagued institutions lured into private equity, real estate, and other illiquid investments. Endowments that did well in the recent past (like Duke's) fared relatively poorly; endowments with only modest returns in the recent past were spared the dramatic losses. Still, the investment approach that Duke has taken over the years has resulted in billions of dollars of added value.

Largely because it's relatively young, with an endowment that doesn't reach back through the ages, Duke is less endowment-dependent than other universities. Endowment revenue funds about 15 percent of Duke's operating budget—tuition and fees, about 17 percent. Harvard's endowment provides 34.5 percent of its budget; Yale's, 44 percent; Princeton's, 48 percent.

Duke's relatively favorable circumstances also come from good timing, Trask says. "When this hit, we had just finished a very big cycle of construction. We had gone through an analysis a decade ago that said we hadn't done any significant building for the sciences for twenty years, for example. So we went ahead and did that building, we paid for it, and it didn't put a huge burden on the budget." By the time the Great Recession struck, "We had no holes in the ground. We had no buildings under construction that we didn't know how to pay for.

"Now, we'd love to get some capital projects going. And our ability to do that is going to be sorely tested over the next couple of years. Part of the reason is that people who might want to give you the money to do this don't have it either: It's not that universities have been selectively hammered in his economy. It's also clear to me that even if we get through this—and I think we will—what we have to understand is that the years of double-digit growth, double-digit earnings, aren't coming back anytime soon."

At a meeting of the faculty's Academic Council in late September, Trask said the university's decision to adjust its budget incrementally and over time might inadvertently signal something other than a sense of urgency. "People may begin to think the problem has solved itself. It has not."

That sober reality has meant that some things—but not all things—are changing in the way senior administrators see their roles. "The challenge in this job is always to try to make Duke a better place by innovating," says Provost Peter Lange, the university's chief academic officer for more than a decade and a political science professor. "That challenge changes when you have fewer resources overall. You have to start thinking about how you maintain that momentum. I happen to be a person who operates with a mindset that everything is a tradeoff. But now those tradeoffs become sharper."

The job always has required him to be learning constantly, "and in these times the amount of learning expands," he adds. "Each of us in the senior leadership has to have a fuller understanding of the whole university, not just of the part that we are directly responsible for. In this climate, interactions and interrelationships across the institution become more relevant."

For Lange, one of the most relevant concerns now is faculty renewal. "One thing I have been focusing on with the deans is trying to sustain a good turnover rate for faculty. How can you sustain a rate of renewal of your faculty when fewer of them are going to be offered jobs from other universities because the money isn't there, fewer of them are going to be attracted to retirement, and you're going to have fewer dollars to hire new faculty? If you take those things together, you can see a potential for stagnation of your faculty."

 Duke's faculty hiring will be down this year compared with the last couple of years. Since recent years were unusually active, the current pace may not be all that different from historical norms. "The big opportunities are more likely to be at the junior level," Lange says. "There's much less hiring of junior faculty out there, so you can get access to those you may not have had access to before. And, of course, to the extent that you're still doing new things, that you're still innovating, that this still looks like an exciting place where morale is high and everybody is not hunkered down—well, you're just going to be more attractive to those faculty members."

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One of the deans working with Lange is Arts & Sciences' George McLendon, who is looking to remove about $12 million from a $300 million budget. At least half of that budget is fixed, or not "fungible"; the remaining budget is overwhelmingly dedicated to personnel. As a result, he says, Arts & Sciences will have to re-examine "our historical approaches to staffing," for example, by having smaller units combine their business operations.

Arts & Sciences is hardly in retreat. At least four faculty members moved from Harvard to Duke this academic year, in political science, African and African-American studies, cultural anthropology, and biology. Says McLendon, "I don't think they were worried about their livelihood. Harvard is not putting up signs saying, 'Lost our lease, everything must go.' Harvard is far from broke. I think it's just that Duke looks like a much more interesting place."

McLendon adds that Duke's "habits of efficiency" serve it well at a tough time. "Duke is used to solving problems creatively, in ways that don't always demand lots of extra money. And so we're better positioned than some places, where the easiest way to solve a problem is just to throw money at it until it goes away. That has never been a viable Duke solution."

Efficiency and ambition are twin themes for Tom Katsouleas, in his second year as dean of the Pratt School of Engineering. "We're one of the places that is still going up while a lot of our peer institutions, both public and private, are contracting," he says. "So this is an opportunity for us to more quickly realize our goal of being equal to those very best engineering schools."

Katsouleas says the school has come together in the spirit of "a consultative and open approach to addressing the budget shortfall, identifying priorities, and then getting back to the business of running a top-tier engineering school." Pratt wants to resist "being preoccupied with what we don't have."

In some ways, according to Katsouleas, the economic climate may put Pratt's efforts to take on "the grand challenges for the twenty-first century" in high relief. Meeting those grand challenges, he says, means engaging students with hands-on projects, entrepreneurial experience, international perspectives, and work in areas such as public policy, business, ethics, and human behavior, along with technology.

 "This generation of students is motivated more than ever at all levels, from high school to Ph.D., to have an impact and to change the world. We're basically taking it as our mission to help them do just that."

Down Science Drive from the Pratt School, Blair Sheppard, dean of the Fuqua School of Business, is feeling the financial pressure from a mission that's notably global. (Fuqua calls itself "the world's first legitimately global business school." Its M.B.A. Cross-Continent Program, announced last year, has students studying in London, Dubai, New Delhi, St. Petersburg, and Shanghai as well as Durham.) Sheppard left his former Fuqua position as senior associate dean to create Duke Corporate Education in 2000. When he returned as dean two years ago, Fuqua's faculty ranks had increased by about thirty. "We grew like crazy in that period. And now it's a great market, but I don't have any money to throw in it."

In a move to help the school financially, each of Fuqua's two-dozen chaired professors— many of them with responsibilities outside the classroom as chairs of committees, editors of journals, and leading researchers—decided to "donate" one extra course this academic year. That allowed the school to cover the teaching needs of its new master's in management science program without having to hire extra faculty members.

Sheppard knows something about crisis management. The year after he created Duke Corporate Education, which provides customized management education to global organizations, terrorists struck New York and Washington. Because Duke CE is based on people traveling to conference centers—not an easy thing in the immediate wake of 9/11—the impact was appreciable.

In Sheppard's view, Fuqua can't afford to be anything less than global-minded. "Where is the next generation of faculty going to come from? Where is the really brilliant kid going to come from? If you had to make a bet, you'd bet it wasn't just going to be the U.S., right? And if you want to sustain quality, focusing on what will be an increasingly shrinking pie is really a bad idea.

"In tough times, quality matters more than ever. Quality is partly distinguished by the degree to which you're actually preparing people for the world they live in. And Duke is in the privileged position of trying to educate the people who are going to run the world. Can you say, China doesn't matter, India doesn't matter, Russia doesn't matter, the Middle East doesn't matter? I mean, it's hubris to assert that we could understand the world by staying in Durham."

Especially in a stressful period, a business school should want to be seen as an innovator—which, says Sheppard, is in keeping with Fuqua's history as something of an upstart. "The top five business schools have got bigger campuses than ours, more endowment, more famous faculty members, more alumni who give more money, and marginally better students who may find marginally better employment. One way you can join that set is to wait forever; you can wait to be a 400-year-old university. Or you can actually rewrite the rules.

"The time to rewrite the rules is when there's discontinuity in the world. We're clearly in a time of discontinuity. And the stakes are higher. You get global warming wrong, and you're really in trouble. You get pandemics wrong, and you're really in trouble. If you say our job as a university is to create knowledge as a value to society, how could we possibly not be doing what we're doing, even with a $125 million budget gap?"

In his Allen Building office, President Richard H. Brodhead can contemplate that $125 million matter while looking over a large swatch of the campus it affects. On this late September morning, classes are changing, and he can see a steady stream of students crossing the quad and buses pulling up to the West Campus stop. He doesn't see a particularly diminished Duke, he says. He mentions two milestones this academic year—the elevation of the Sanford Institute to a full-fledged school and the dedication of a major medical building at the Duke-National University of Singapore Graduate Medical School—as signs of an enduring institutional restlessness and resourcefulness. "We're not done with forward motion. There is still going to be plenty of it."

In public comments, Brodhead has also talked about a "smaller Duke." Higher education has enjoyed a long stretch of accelerated, and almost uninterrupted, growth, he says. The boom years might have seemed boundless. But that's not what historical perspective teaches.

"The first year I was hired to a faculty position, the year I got out of graduate school, was during a hiring freeze. There was a hiring freeze for something like six of the following ten years. People speak of the current circumstances as the greatest downturn since the Great Depression. But people forget that there have been many good years and bad years for universities.

"Two things have governed our philosophy in this situation. One is, let's deal with it as a real-world problem to be solved rather than as some hideous crisis. And two, let's protect our highest priorities. We don't have a faculty hiring freeze here. Why not? Because renewing the intellectual life of the place is among the highest priorities. And so is attracting the very brightest and the most eager and enthusiastic students. The Financial Aid Initiative was started in flush times. But part of my argument then was that you want to have permanent revenue to support a permanent commitment."

Brodhead says Duke won't be shrinking in physical size or number of students or visibility or ambition. The university is well-positioned as an intellectual leader on issues that have moved up the public agenda, including environmental policy and health care, he says. "Our core assets are more valuable than ever at this time."

Still, the momentum will slow in some conspicuous areas—among them, the New Campus, a massive building project conceived as encompassing academic programs, the arts, and student residences and meant to bridge the distance between West and East campuses. "I think the case for the New Campus is as compelling as ever, and I'm sure we will attract the means for it," he says. "Will we build it all in one fell swoop? Probably not. But that almost never happens in history anyway. Let's be realistic. It would be quite immature to believe one should be able to have everything one wants every day or every year."

It's easy to get used to prosperity, Brodhead says, to the point that it becomes an expectation, and add-ons or amenities become priorities. Now, he adds, "We don't have the means to invest in every wish. We have to test our ambitions a little more strenuously. But

the best things in universities aren't necessarily proportional to the amount of money you spend on them. Great universities don't only advance in times of prosperity. Some universities fail to advance even in times of prosperity. The fact that we have access to wealth guarantees nothing about the use the university will make of it."

Brodhead revels in a picturesque moment associated with the freshman class. Back in August, more than 1,700 of Duke's newest students had gathered on the East Campus quad for an annual tradition—the taking of a class photograph. Brodhead was on a platform 50 feet high above the T-shirted multitude, along with Duke Photography director Chris Hildreth. For the first time in memory, the event was threatened by storm clouds. But the result was an unusually dramatic image, and later, Brodhead noticed that a rainbow had formed—a good omen, even with no pot of gold in sight. And maybe a good omen not just for the class, but for the whole enterprise.

"The university has passed through a period where it had 9 percent growth in its budget year after year. That kind of growth is marvelous for certain things. Now we're passing through a period where we have to re-imagine ourselves with a smaller budget base. But you know, self-discipline is good for other things. It's good for making you have to think harder. It's good for making you match your resources with your highest priorities. That's what I think will be the story of these years at Duke."