I.	Executive Summary

The mission of the McCombs School of Business is to educate the business leaders of tomorrow while creating knowledge that has critical significance for industry and society.

The goal of the school is to become the best public business school in the nation.

This strategic plan is built on the peer program and discipline reviews undertaken during the 2002-03 academic year and the strategic assessment and recommendations of the McCombs Strategic Planning Committee completed in April 2003. It describes the strategy, funding model, and assessment measures essential for the school to meet its goal by the end of this decade.

To accomplish our goal, the school will pursue six key strategic initiatives:

1. Strengthen its programs in finance, management, and marketing, which alongside its already strong offerings in accounting and information systems will win the school national recognition in all five of the core business disciplines.
2. Change the emphasis of the MBA program to better align its focus with the placement market for MBA graduates.
3. Increase the rigor of our BBA program to match the capabilities of our undergraduate student body.
4. Enhance the school's research environment.
5. Build more strategic partnerships with important firms and industries and strengthen our undergraduate and graduate alumni networks.
6. Increase the diversity of our student body.

Implementing this strategy will require the school to recruit 40 new tenure-track faculty during this decade, enabling the school to have 30 additional faculty teaching in our undergraduate program and another 10 faculty teaching at the graduate level. With normal turnover and expected retirements, the school will need to hire more than 70 tenure-track faculty during the next seven years.

To distinguish the McCombs School from other leading business schools, we will develop distinctive academic initiatives that are based on partnerships with industry.

The school will complete a comprehensive review of its BBA curriculum during the 2003-04 academic year. The review committee will consider both academic and professional development enhancements to the program.

With the consent of the McCombs graduate faculty and the UT Graduate School, the school will start an early MBA acceptance (“Jump Start”) program for minority students beginning in the 2004-05 academic year.

To make the McCombs School competitive in hiring talented junior faculty, it will create and fund a one-semester partial leave program for qualifying assistant professors, thereby extending their pre-tenure evaluation period from six to seven years.

To build external relationships, each academic discipline in the McCombs School will be encouraged and expected to become involved with leading firms and industries in their fields. The school will also increase its financial support for alumni networks, both undergraduate and graduate.

To enhance our executive education operations, the school will financially support the development of a hotel/conference facility on campus attractive to major national corporations for in-service executive training.

To strengthen our ties to major national corporations with executive offices in Houston, the school will offer a Houston executive MBA program comparable to its current program in Dallas. In 2003-04 it will begin to explore instructional needs, opportunities for the configuration of instruction, and possible locations.

Under this strategic plan the school's instruction and operations budget will need to increase annually by $2.0-3.2 million during the 2004-05 through 2009-10 academic years. To fund these budget increases, the school will propose to raise the tuition charged on its graduate programs and create a tuition differential for business courses at the undergraduate level with the proceeds of the differential being assigned to the school.

To support this strategic plan, the dean's annual discretionary budget must more than double during the plan period, rising $5.8 million over its present level by 2009-10. To acquire the needed discretionary funds, the school's net revenue from executive education programs must grow substantially and the school needs to raise large endowed excellence funds, the income from which can be used for discretionary purposes.

The school will utilize three types of assessment measures to evaluate its progress in achieving its goal of becoming the best public business school: (1) student placement, (2) research productivity and impact, and (3) student satisfaction.

II.	Mission, Vision, and Values

The mission of the McCombs School of Business is to educate the business leaders of tomorrow while creating knowledge that has a critical significance for industry and society. Through innovative curriculum, excellent teaching, cutting-edge research, and involvement with industry, the school will bring together the highest quality faculty and students to provide the best educational programs and graduates of any public business school. We believe that to prepare students to become leaders in our very diverse, multicultural society, it is essential that they have the opportunity to become involved with students whose backgrounds differ from their own. To facilitate such an involvement the school wants to have a culturally and racially diverse student body.

The McCombs School seeks to be a national player in business education, producing graduates who are sought by companies across the country and around the world. As the only major business school in the region, the school has a central role to play in the economy of our nation. Yet, we also recognize that Texas is a very important state in our national economy and is the home to many leading firms (45 of the companies that make up the Fortune 500 are headquartered in Texas, the third largest number of any state in the nation). The school intends to embrace its Texas roots while expanding its reach worldwide.

The goal of the McCombs School is to become the best public business school in the nation. Such a school attracts and retains the best faculty, recruits the highest quality student body and produces graduates that satisfy the needs of the finest employers and corporate partners. Such a school is an incubator of new ideas while instilling in its students an appreciation of diversity and an ethical framework for future business decisions.

To become the best public business school, the school must excel in the five fundamental business disciplines—accounting, finance, information systems, management, and marketing. These academic disciplines serve as the foundation of business education and no business school can lead unless it has top faculty in each of these core fields. To distinguish the McCombs School from other leading business schools, we will create differentiating academic initiatives in each discipline and across these disciplines, initiatives that will have strong relationships with important firms and industries. To enhance our academic programs and our research agenda, we will also develop strong capabilities in the supporting discipline of quantitative methods while taking advantage of any special opportunities available to the school in the enriching academic fields of entrepreneurship and global business.

The University of Texas at Austin has identified six core values for the university as a whole:

• Learning—a caring community, all of us students, helping one another grow.
• Discovery—expanding knowledge and human understanding.
• Freedom—to seek the truth and express it.
• Leadership—the will to excel with integrity and the spirit that nothing is impossible.
• Individual Opportunity—many options, diverse people and ideas, one University.
• Responsibility—to serve as a catalyst for positive change in Texas and beyond.

The McCombs School adopts these six values as fundamental to business education. Only through learning and discovery can the school fulfill its basic mission of educating tomorrow's business leaders and producing the new ideas that will affect business practice. Leadership and responsibility are traits that we want to build in our students, and only through freedom and individual opportunity can our students develop their intellectual capabilities to the fullest.

The school recognizes two additional values as part of its core mission:

• Competitive Spirit—a desire to succeed and make a difference.
• Ethical Behavior—recognizing and acting on an ethical framework that governs business and personal behavior.

We want our students and faculty to share a competitive spirit to excel and perform at a high level. We relish the entrepreneurial drive that is part of the Texas culture. At the same time, we view ethics as an intensely relevant aspect of business practice. We expect students in all disciplines to explore the complex ethical issues that are vital to the long-term health of organizations, and we are committed to helping students develop a sound ethical foundation for their business careers.

III.	Strategic Initiatives

To fulfill our goal of becoming the best public business school, we have identified six strategic initiatives that the McCombs School will pursue during the first decade of the 21st century.

1. Grow from being a niche to a national player in business education.

At this time the McCombs School is widely recognized for its academic strength in the disciplines of accounting and information systems (IS). As shown in Exhibit 1, the school has in the past invested substantial faculty resources in these two fields when compared to the business schools that serve as our competition. Approximately 21% of the McCombs tenure-track faculty are in accounting compared to an average faculty allocation of 9% for our benchmark schools. Similarly, we have 11% of our tenure-track faculty in the IS area while our competition averages only 5% of its faculty in IS. Those faculty investments have earned benefits for the school because we have what is widely recognized by accounting professionals as the best Masters of Public Accounting (MPA) program in the nation and, as noted in the peer review of the IS discipline, our IS faculty is the envy of other schools, considered by many one of the strongest research groups at any university.

Exhibit 1

The problem with such a faculty allocation is that the McCombs School has become known as a niche player among business schools. We have under-invested in other fundamental business disciplines such as finance (13% of McCombs tenure-track faculty compared to a benchmark average of 19%) and failed to develop the more widespread faculty strength needed to be recognized as a leading national business school. Pursuing a niche strategy was optimal in earlier stages of the development of the school, but it is now time for us to broaden our strategy and develop academic leadership in all five of the core disciplines.

Our strategy is to maintain our strong competitive positions in accounting and IS while building our comparative academic talent in the other business disciplines of finance, management, and marketing through the allocation of new faculty resources to these areas. Our objective is to become nationally recognized for all five of the core business disciplines. As discussed in the peer discipline reviews, we will need to recruit senior faculty in some of these disciplines while in others our primary focus will be at the junior level.

2. Better align our MBA program with the MBA placement market.

In recent years the McCombs School has professed a desire to differentiate our MBA program from others through an emphasis on entrepreneurship, globalization and technology. While all three of these areas are potentially valuable components of an MBA education, only technology is an important placement area for MBA students through the consulting opportunities for students in information management. Exhibit 2 (see page 6) shows the fields where our MBA students found employment over the past five years. As noted in this exhibit, McCombs MBA placements were predominately in three areas: finance, consulting, and marketing. For the past five years an average of 77% of our MBA placements were in these three fields.

Having the school well known for entrepreneurship or global business instead of one of the three major placement areas detracts from our ability to attract companies as recruiters of MBA students when they are primarily interested in hiring students with interests in finance, consulting, or marketing. Our present emphasis and branding strategy is not conducive to building greater MBA placement opportunities for our students.

Instead of trying to differentiate the MBA program and the school on the basis of academic fields that do not relate to the placement market for our students, our strategy is to build distinction and create recognition for the school in the academic disciplines that serve as the primary employment opportunities for our students. We already have excellent examples of such a strategy in the Finance Department. Through initiatives such as the MBA Investment Fund, energy finance, private equity, and real estate finance, the school has started to build a reputation among prospective students and recruiting companies for its distinctive capabilities in finance. We need similar types of innovative initiatives in other disciplines, particularly in management and marketing, to distinguish our MBA program from others and establish a useful brand recognition for the program and the school.

Under such a strategy, entrepreneurship and global business will still have important enriching roles in the school. Both areas of study offer valuable elective courses for MBA students that can enhance their education and better prepare them for positions in any field. The school will continue to nurture the development of these areas while better aligning the focus of the MBA program with the academic disciplines that relate to the placement market for our students.

Exhibit 2

3. Improve the rigor of our BBA program.

The quality of the BBA students in the McCombs School has risen substantially over the past decade. The undergraduate class that entered the business school in fall 1992 had an average high school class rank of 84% and an average SAT of 1190 compared to a class rank of 97% and an average SAT of 1275 for the BBA students who were admitted for fall 2002. Our BBA program presently has the highest admission standards of any large undergraduate program at UT. We have arguably the best undergraduate student body on campus and one that would be considered qualified for an honors program at most universities.

Our challenge is to provide these talented students with a rigorous and demanding academic curriculum that expands their intellectual capabilities and their professional development, a challenge we are not meeting today. Our undergraduate classes are generally too large for the quality of education that we seek (our student-faculty ratio is the highest on campus and substantially higher than our business school competition) and the majority of our BBA classes are not taught by tenure-track faculty. Historically, the restricted instructional resources of the university and the business school have limited the number of tenure-track faculty in the school relative to the size of our student body and has forced the school to rely on non-tenure-track faculty (lecturers) for teaching many of our undergraduate classes. For the 2002-03 academic year, full-time or part-time lecturers taught 72% of the undergraduate student credit hours in the McCombs School. While these lecturers generally are talented teachers, they often lack the academic training and experience in research that would enable them to establish the level of academic rigor that matches the capabilities of our students.

To accomplish our strategic initiative of improving the rigor of our BBA program, we need to increase the number of tenure-track faculty teaching in our undergraduate program and lower the size of our classes, especially our required BBA core courses. We must reevaluate our BBA curriculum in light of the additional faculty resources applied to the program. The school also should look for ways to further the professional development of our BBA students, evaluating whether MBA non-academic initiatives such as Plus have some application to our undergraduate students.

4. Enhance the school's research environment.

To have good teaching in a business school, you must have good research. While such a statement may not appear obvious to some, the direct relationship between teaching and research is fundamental to understanding what underlies the great business schools. A strong research environment attracts the best faculty in business disciplines, faculty that are creating new ideas, challenging both undergraduate and graduate students intellectually and developing cutting-edge curriculum. In addition, research-active faculty in the McCombs School generally receive higher student evaluations in their classes than non-research-active faculty. A business school is only as good as its faculty and the quality of its faculty is primarily determined by the quality of its research environment.

For the McCombs School to meet its responsibility to society to expand knowledge and for us to attract and retain the type of faculty needed to meet our goal of becoming the best public business school, one of our strategic initiatives must be to strengthen our research environment. A limitation of our present environment has been insufficient funding of research in the school. We need enough discretionary funds to provide competitive summer support to our research-active faculty and the stimulating research seminars, workshops, and conferences that are incubators for new research ideas.

Independent of funding, another limitation has been faculty expectations. We have not always asked enough of ourselves in the sense of the quality of our research and our involvement in the research of our colleagues. To become the best, we will need to not only support a stronger research environment, but also to raise our expectations of what is an excellent research performance by a McCombs faculty member.

An important part of a school's research environment is its Ph.D. program. Doctoral students as young researchers provide stimulus to the environment and through their collaborative work with faculty generate new research ideas and projects. Our Ph.D. program has been significantly underfunded relative to our competition, limiting our ability to attract the best candidates for our doctoral program. We need to increase the funding of this program and simultaneously raise our expectations regarding the type of academic institution where we place our graduates.

5. Develop further our external relationships with industry and our alumni.

A challenge faced by faculty at a leading business school that is not shared by academics at other non-professional schools on campus is that not only are we expected to be excellent teachers and researchers, but we also are expected to develop and maintain relationships with business professionals who relate to our academic disciplines. It is critical for the development of the McCombs School that our senior faculty are actively involved in building strategic partnerships with important firms and industries. Such partnerships can serve as the foundation for the creation of distinctions in our academic programs, initiatives that will differentiate the McCombs School from other top business schools.

Another important aspect of the school's external relationships is our alumni network. Leading business schools develop and maintain close relationships with students who graduate from their programs. Our alumni can serve as conduits to the firms where they work as well as sources of internships and permanent positions for our students. When compared to our competition, our undergraduate and MBA alumni networks are not as well developed. As part of our strategic initiative to expand our external relationships, the school needs to devote greater attention to these networks and expand our support for their development.

6. Increase the diversity of our student body.

For Corporate America, diversity has become a way of life and a way of carrying out business. The prevailing view among the country's major corporations is that diversity in the workplace increases competitive advantage, spurs productivity, and attracts top talent. In the words of General Electric executive Ben Heineman, “At GE we believe that diversity is not just a moral imperative but a business necessity.”

McCombs must continue to respond as actively as possible to the changing landscape of American business. As noted in the report of the McCombs Strategic Planning Committee, “A well-rounded professional education should include exposure to not only a diversity of ideas, but also a diversity of cultures and backgrounds, which prepare students for changing demographics in the business world.” Having a strong minority representation in our academic programs improves the educational experience for all the students in those programs. It also increases the employment opportunities for both minority and non-minority students because some firms determine whether to recruit at a particular business school based on the amount of minority enrollment at the school.

The Hopwood court decision had an adverse impact on the minority enrollment in the McCombs School. As shown in Exhibit 3 (see page 9), the number of African-American and Hispanic business students declined significantly after the decision in 1996. With the recent Supreme Court decision in the University of Michigan case, the school will have a renewed opportunity to recruit and support highly-qualified minority students for both our undergraduate and graduate programs. The school needs to be creative in devising strategies that will help us compete for the very best minority candidates.

Exhibit 3

IV.	Implementation

Starting in the 2003-04 academic year, the McCombs School will undertake the following steps to implement our strategic initiatives and accomplish our goal of becoming the best public business school by 2010:

School's Overall Strategy

• Recruit 40 Additional Tenure-Track Faculty to the McCombs School

Over the next seven years, we plan to add 40 tenure-track faculty to our professorial ranks. These new faculty represent a 33% increase in the number of professors in the school. As these new faculty join the school, we will increase the number of tenure-track faculty teaching in the BBA program by 30 and add to our teaching capacity in our graduate programs by 10 faculty. Consistent with our strategic direction, the academic disciplines that will be given a priority in this new hiring will be finance, management, and marketing.

In addition to the new hiring, the school must replace faculty who retire or resign over the decade. At the start of the 2003-04 academic year, we have funding for 5 open faculty lines and there are 4 McCombs faculty who have an agreement with the university to retire at the end of this academic year. By the end of the decade, an estimated 20 more McCombs professors will reach the most common retirement age (65). Altogether our combined replacements and new hires will likely total more than 70 faculty during the next seven years. Recruiting such a large number of faculty will be a major undertaking with substantial resource implications for both our instructional and discretionary budgets.

• Develop Distinctive Initiatives in our Management and Marketing Disciplines

Because of our strategy to distinguish our business school from others through distinctive academic initiatives that are based on partnerships with industry, the school will encourage and support the development of innovative programs and centers in our fundamental business disciplines and across our disciplines through providing seed money for such initiatives and facilitating interactions with key industry leaders. Such developments are especially important in the management and marketing disciplines because the strengthening of these areas within the school is a key part of our overall strategy.

A notable example of the type of academic initiative we want to foster is the newly created program in supply chain management. This initiative has brought together faculty in operations management and management science to explore how firms manage suppliers, production, and product sales to minimize costs. The McCombs faculty developing this initiative are working closely with major firms as diverse as Dell and Frito Lay.

• Develop a Branding Strategy to Convey the Strategic Distinctions of the McCombs School

McCombs has made few forays into national marketing and has never pursued an integrated marketing campaign to leverage the school brand for the benefit of its sub-brands, the academic programs. For years, weak central marketing may have been sufficient, but this will not work if McCombs is to become the best public business school in the nation. To achieve national stature, the school must brand itself by clearly and consistently stating its promises to constituents. The school must also pursue an integrated communications plan—a school-wide effort that supports the marketing goals of the degree programs while allowing these sub-brands to flourish through affiliation with a strong parent brand.

The new strategic plan marks the beginning of a new branding strategy by identifying and planning the competitive advantages that the school will promote. As the next step, a task force will be formed and begin the process of creating a brand strategy for the school by the end of the 2003-04 academic year. The new brand strategy will result in an integrated marketing plan that promotes the McCombs brand through advertising, media relations, electronic and print communications, word-of-mouth, and internal marketing.

One of the first items on the branding agenda will be addressing the relationship of McCombs and UT Austin. When, where, and how should the emphasis fall relative to these two brands? Different programs at the school have approached the balance in different ways. And how can the school advance “McCombs” while retaining the leverage of “Texas” and “UT Austin,” two names by which most of the world knows us. These are difficult questions that schools like Darden, “The Anderson School at UCLA,” and Haas, home of “The Berkeley MBA,” have resolved in varying manners, to varying levels of satisfaction. McCombs will seek a resolution that best serves the new strategic goal of embracing our Texas roots while expanding our reach worldwide.

Academic Programs

• Temporarily Reduce the Size of the Full-Time MBA Program While Maintaining Other Full-Time Programs at Current Enrollment Levels

With our present faculty size, it is very difficult for our BBA and MBA programs to offer all of the business classes our students need and want to complete their degrees. These course pressures will be significantly relieved when we obtain the planned additional faculty. Until then, it would be advantageous to reduce temporarily the number of students in both programs to enable the school to improve the quality of the programs now. With the overwhelming applicant demand for our BBA program, it is not feasible politically to decrease its size even for a short period of time. However, it may be possible to reduce the size of the full-time MBA program by 65 students (one cohort) from about 405 in a class to 340 until the new faculty are hired. As shown in Exhibit 4, our MBA program is the 8th largest in the nation among ranked business schools (second to Michigan in size among public schools). Such a reduction would still leave us the 11th largest program and should not have a negative impact on our recruiters, with whom we would consult in the course of making such a decision. Before implementing such a reduction for the MBA class entering in 2004-05, there will also need to be discussions with the Provost to ensure such a reduction would be considered revenue-neutral for the school.

Exhibit 4

Full-Time MBA Program Enrollment of Top-Ranked MBA Programs
Program Size Ranking	School	2002-03 Full-Time MBA Enrollment	US News Ranking
1	Harvard	1805	1
2	Wharton (Penn)	1604	2
3	Kellogg (Northwestern)	1250	4
4	Columbia	1172	6
5	Chicago	992	9
6	Michigan	869	13
7	Stern (NYU)	817	12
8	McCombs (Texas)	805	17
9	Stanford	749	2
10	Sloan (MIT)	744	4
11	Fuqua (Duke)	696	7
12	Anderson (UCLA)	671	14
13	Marshall (USC)	581	20
15	Darden (Virginia)	574	11
14	Johnson (Cornell)	562	16
16	Kenan-Flagler (UNC)	554	21
17	Kelley (Indiana)	546	23
18	McDonough (Georgetown)	530	24
19	Haas (Berkeley)	497	7
20	Yale	480	14
21	Carnegie-Mellon	469	17
22	Tuck (Dartmouth)	464	10
23	Goizueta (Emory)	388	21
24	Jones (Rice)	353	27
25	Mendoza (Notre Dame)	325	29

One of the recommendations of the McCombs Strategic Planning Committee was to consider reducing the number of students in the PPA/MPA program. This program is a valuable component of our BBA degree because it provides an opportunity for undergraduate McCombs accounting students (about 200 students per year) to complete the academic requirements for taking the CPA examination. Also, as noted during the school's discussion of this recommend-ation, accepting directly into the MPA program another 80 students each year with non-McCombs undergraduate degrees provides a valuable diversity to the program. Therefore, the school intends to keep the PPA/MPA program at its current enrollment.

• Continue Improving the Delivery of the MBA Program

During the 2002-03 academic year, the McCombs School made valuable operational changes in our MBA program. They included strengthening the MBA core teaching and requiring interviews of MBA applicants. These changes have already had a positive impact on our MBA program. We need to continue to look for ways to improve the delivery of this program including organizational changes to ensure there is a strong relationship between the program and our Ford Career Center. Additional financial resources will need to be applied to the MBA program to continue to improve its operation, particularly in its delivery of student services.

• Continuously Improve Teaching Performance in All Programs

Faculty in the McCombs School are among the best teachers at The University of Texas. Over the past three academic years, students in the school rated their instructors either good or excellent in 75% of their classes and 92% of the faculty were rated as satisfactory or better. Approximately 10% of the UT faculty selected for the Academy of Distinguished Teachers are McCombs professors even though the school only has 6% of all eligible UT faculty. An area of greatest weakness in teaching performance has been with some of our part-time lecturers who have not been well received in the classroom. This strategic plan will help to address that problem by increasing the number of tenure-track faculty in the school and thereby enabling us to reduce our reliance on part-time lecturers, especially in our BBA program.

• Undertake a Comprehensive Review of our BBA Curriculum

To achieve the enhanced rigor we seek for the McCombs undergraduate program, there is a need for a thorough review of our BBA curriculum. A committee will be appointed at the start of the 2003-04 academic year to review both the required and elective portions of our undergraduate curriculum. The committee also will consider what innovations in our MBA program in recent years such as core course coordination, faculty oversight committees, and professional development activities like Plus might be applicable to our undergraduate students.

• Build a Stronger Sense of Community Among Students and Faculty in both the MBA and BBA Programs

As noted by the external program reviewers and the report of the McCombs Strategic Planning Committee, a challenge for the school is developing a feeling of direct responsibility for and involvement in our BBA and MBA programs by McCombs faculty and students. With our large size and numerous academic programs, our faculty do not have as much of a sense of ownership for individual programs as would generally be found at a smaller private business school offering only an MBA program. To help encourage greater responsibility for and ownership of our programs, the school will organize BBA-oriented retreats and other activities for faculty with primary teaching responsibilities in our BBA program and similarly MBA-related retreats and activities for faculty who teach in our MBA program. Faculty will also be expected to become involved with the students in their program in activities outside of the classroom such as attending commencements, judging case competitions, helping student organizations, and attending school-sponsored social events.

• Start an Early Acceptance (“Jump Start”) Program to Increase the Number of Minority Students in our MBA Program

One of the challenges in recruiting minority students for an MBA program is that qualified minority professionals typically are not concentrated in a particular geographical area or industry for targeted recruiting. However, while receiving their undergraduate education prior to entering the work force and applying for an MBA program, future minority MBA students in Texas tend to be strongly represented in certain universities—Hispanic students in South Texas universities and African-American students in historically-black universities. While we cannot directly admit them into our MBA program upon completion of their undergraduate degree because of their lack of work experience, we can offer highly-qualified minority students an early acceptance into our MBA program while they are still in college. We would evaluate them for admission applying our normal academic standards, but the work experience requirement would not be considered in the admission decision. If a student is accepted, admission would be deferred for a minimum of three years while the candidate secures appropriate work experience.

Beginning in the 2004-05 academic year with the agreement of the McCombs graduate faculty and the UT Graduate School, the school will initiate the Jump Start program, an early MBA acceptance program for highly-qualified minority students. Each year 10-15 students will be competitively targeted for this program. The accepted students will be provided access to the placement resources of the Ford Career Center and the MBA program office will offer outreach activities to these students during their working years. By building a relationship with these talented students, we hope there will be a high matriculation yield when they eventually decide to attend an MBA program.

Research Environment

• Substantially Increase the Financial Resources Devoted to Research and the Ph.D. Program

To attract and retain the faculty the McCombs School needs to compete with other top business schools, we must provide two months of summer research support to each of our research-active faculty. The school is not yet at that level of summer support for our existing faculty, while the planned addition of 40 new faculty will further substantially increase the amount of discretionary resources needed to be competitive. We also need to have centers or excellence funds in each department to support research seminars, provide small research grants to faculty, and bring to campus outstanding researchers from other schools as visiting faculty. The school must increase its funding of Ph.D. fellowships to enable us to recruit the very best candidates for our doctoral program.

• Strengthen our Quantitative Methods Discipline to Better Support our Academic Programs and Our Research

A valuable resource for the school is the faculty in quantitative methods in our Management Science and Information Systems (MSIS) Department. These colleagues in management science and statistics teach important service courses in our undergraduate and graduate programs and provide assistance to other faculty in the school on their research projects. We presently have an insufficient number of statistics faculty to meet the teaching and research support needs of the school. Our weakness in statistical support is actually a university-wide problem that is shared by other schools because there is an absence of a significant faculty group in statistics in the UT Mathematics Department. The school will work with the Provost to explore a university-wide solution to this problem and then, if necessary, hire additional tenure-track faculty in statistics to ensure that we have the support necessary for our academic programs and our research.

• Create a Semester Partial Leave Program to Enable Junior Faculty to Extend the Pre-Tenure Period

Similar to most public universities, UT has a probationary period of six years for assistant professors prior to the tenure decision. With the long review times of the top academic journals in business disciplines and rising expectations of the research record required for tenure, six years is too short of a pre-tenure period for most junior faculty in top-tier business schools. Many private universities have responded by extending their probationary periods to as long as ten years. Our shorter probationary period puts us at a competitive disadvantage when recruiting assistant professors. While formally extending UT's probationary period does not appear to be feasible, we could provide our junior faculty in the McCombs School with the opportunity to extend their pre-tenure time by offering a semester partial leave program that would effectively extend their tenure clock by one year. Under such a program, assistant professors who have satisfactorily completed their three-year reviews could apply to the school for a 25% leave of absence for one semester of an academic year. The school would use its discretionary funds to pay the cost of the leave and, because of the partial leave, that academic year would not count as part of the faculty member's pre-tenure period.

External Relationships

• Expect Each Academic Discipline to Build Strong Industry Relationships

The school will encourage, support, and expect each academic discipline to build strong relationships with leading firms and industries. Those relationships can take a variety of forms ranging from advisory councils to consortiums to support for research centers. The senior faculty in each discipline will be expected to take a leadership role in furthering our involvement with individual companies. The school's resource development office will assist the disciplines in creating the desired relationships.

• Enhance our Undergraduate and Graduate Alumni Networks

The school will increase its financial support of both our undergraduate business alumni activities and the McCombs MBA alumni network. The development of both of these alumni networks is important to the future of the school. Activities the school will support include the travel costs of having McCombs faculty speak at major alumni gatherings, the development of better communication to our alumni, the involvement of MBA alumni in the interviewing of MBA applicants, and the strengthening of professional networks for the benefit of past and future graduates.

Executive Education

• Participate Financially in the Development of a Hotel/Conference Facility on Campus

Critical to the expansion of our executive education program is the construction of a hotel/conference facility on campus. The absence of such a resource has caused us to lose a number of major custom program proposals for individual companies because other competing business schools provided residential complexes on campus suitable for executives. In recent years the university has considered constructing such a facility, but the project has thus far not moved forward partially because of a need for additional funding. The McCombs School has discussed this issue with university leaders and we will commit to provide up to $5 million in interim funding for such a project from the McCombs gift provided the school has a leading role in the determination of the site, building improvements, and operations of the facility.

• Offer an Executive MBA Program in Houston

Dallas/Ft. Worth and Houston are two of the most important business centers not just for Texas, but for the nation. They are the 5th and 7th largest metro economies in the country, respectively. It is imperative that the McCombs School develop strong relationships with the firms in these cities and have a dominant executive education presence in both markets. The 2002-03 academic year was the first time that our Dallas Executive MBA Program had open enrollment and we want to continue to build that program to an enrollment level of about 60 students in each class. Our next priority in the executive MBA market is to have a program in Houston. During 2003-04, the school will explore the best possible formats for offering an executive MBA in Houston.

School's Organizational Structure

• Retain the Present Five Department Academic Organization of the McCombs School

With our intention to add 40 new faculty to the school, a relevant question is whether we should expand the number of departments in the school beyond our present five. While a new department with a reorganization of our disciplines across departments would enable us to keep the average departmental size around 25 tenure-track faculty, it is difficult to justify the cost of creating another department on that basis, especially because we are not planning to establish a new academic discipline in the school. With five departments, the additional faculty will raise our average size to around 30 professors (plus lecturers) per department. While such a size is still manageable, the faculty growth will require more operational resources allocated to the departments by the school.

• Reorganize the School's Management Committees

At this time the Resources Committee is the school's primary administrative committee considering both strategic and operational issues affecting the school. A problem with this structure is that the membership of the committee is too diverse to address both types of issues. Also, the school has lacked a mechanism for faculty who do not hold administrative positions to be involved in discussing the important issues facing the school. Starting in the 2003-04 academic year, the Resources Committee will be disbanded and three new school committees will be formed:

Executive Committee: This committee will discuss the major strategic and resource allocation issues affecting the school. The committee will be chaired by the Dean with membership consisting of the Senior Associate Dean, the Associate Dean for Research, the Associate Dean for Undergraduate Programs, the Associate Dean for Graduate Programs, and the five Department Chairs.

Operations Committee: This committee will be responsible for addressing the school's operational issues and ensuring our academic programs and support operations work effectively. The committee will be chaired by the Senior Associate Dean with membership consisting of the Executive Committee members, the Associate Dean for Business Affairs, the Associate Dean for Executive Education, the Director of the Ford Career Center, and the Director of Computer Services.

Faculty Advisory Committee: This faculty committee will advise the Dean on major strategic and resource allocation issues affecting the school. The committee will be selected by the Dean and its membership will consist of the Senior Associate Dean and two faculty members from each department, one being the holder of an endowed chair and the other a non-chair full or associate professor.

• Move Oversight of the Entrepreneurship Program to the Kelleher Entrepreneurship Center

As discussed in the report of the McCombs Strategic Planning Committee, the Entrepreneurship Program needs an organizational structure that provides faculty from across the school and, potentially from other UT colleges, the opportunity to participate in this program. Because entrepreneurship is a cross-functional area of study, it is appropriate to move the administration of this program from the Department of Management to the Kelleher Center for Entrepreneurship. The director of the center will serve as the Director of the Entrepreneurship Program and be responsible for the management of the program working closely with the MBA Program Office. All faculty teaching in the program would continue to be required to have an academic appointment in one of the five McCombs departments.

V.	Funding Model

Implementing our strategy will require substantially more financial resources for the McCombs School through the remainder of this decade. Both the school's budget for instruction and operations as well as the dean's discretionary budget which supports research and academic programs will need to grow to accommodate the greater number of tenure-track faculty, the desired enhancements of our research environment, and the new academic initiatives that are part of our strategy. The principal source of new funds for our instruction and operations will be higher tuition for our undergraduate and graduate programs while increases in our discretionary budget will need to be funded by greater private financial support and by more executive education revenue. The remaining $35 million in the McCombs matching program is an important tool in expanding our discretionary budget and soliciting resources to build our research environment.

Instruction and Operations Budget

Faculty salaries during the nine-month academic year (other than stipends to endowment holders), salaries for graduate students who serve as assistant instructors (AIs) or teaching assistants (TAs), and much of the cost of operating our departments and programs are paid through the school's instruction and operations budget. This budget also is used for making improvements to the classrooms and offices in the business school buildings. The funds for this budget are allocated to the school by the university primarily from state appropriations and tuition revenue.

Exhibit 5 (see page 19) shows the projected new funding requirements for the McCombs instruction and operations (IO) budget for the academic years of 2004-05 through 2009-10 that are necessary to support the strategic initiatives in this plan. Under new faculty cost, the model assumes that the Provost will fund separately his previous commitment to the school of 30 new McCombs faculty over the next five years with university funding at the average salary of assistant professors in the school. The school therefore will be responsible for self-funding 10 tenure-track hires, the additional salary increments necessary to hire senior faculty instead of assistant professors (the model assumes that 6 of the 40 new faculty will be hired at an associate or full professor level), along with the salary increments required to bring the budget lines of the forecasted 30 retiring or resigning faculty to market levels.

The structural adjustment component of this budget includes funds to increase our merit raise pool and to provide structural salary adjustments for our highly-sought faculty. In recent years the university has provided funds for annual salary increases, but it has also offered schools the opportunity to add to the raise pool with school funds. Faculty and staff raises are assigned solely on a merit basis and the school wants to have funds available each year to supplement the university raise pool. Also, during the 1990's and early 2000's business schools witnessed a substantial increase in faculty salaries both at the junior and senior levels with leading faculty receiving offers that would include increases in their salaries beyond what could be met through the merit raise pool. In case there is another round of salary pressure, we need to have available annually a pool of funds to meet salary offers given by other business schools to our best faculty and ensure that the salaries of our most productive faculty are kept at market levels.

Exhibit 5

IO Budget Projected Additional Funding
	2004-05	2005-06	2006-07	2007-08	2008-09	2009-2010
Instruction
Cost of New Faculty	$530,000	$565,000	$600,000	$635,000	$670,000	$355,000
Additional TA/AI Funds	$100,000	$117,700	$18,900	$20,250	$21,525	$22,800
Structural Salary Adjustments	$630,000	$671,300	$752,580	$790,000	$813,050	$866,250
Instructional Budget Needs	$1,260,000	$1,354,000	$1,371,480	$1,445,250	$1,504,575	$1,244,050
Operations
Department Supplements	$300,000	$400,000	$48,640	$48,900	$49,155	$49,410
Program Supplements	$1,290,000	$670,000	$335,000	$375,000	$350,000	$350,000
Infrastructure Improvements	$350,000	$350,000	$800,000	$500,000	$350,000	$300,000
Operational Budget Needs	$1,940,000	$1,420,000	$1,183,640	$923,900	$749,155	$699,410
Total New Funding Requirements	$3,200,000	$2,774,000	$2,555,120	$2,369,150	$2,253,730	$1,943,460

In the operations portion of the budget, the department operating supplements are largest in the first two years of the model period to rectify a funding shortage that presently exists in the departments—the departments' operating budgets have not increased in at least 15 years except for staff raises. The new funds under infrastructure improvements will cover the costs of constructing new office space within the McCombs buildings for some of the 40 new faculty. It will also pay for a remodeling of the MBA program office space to make the program operations more efficient.

With added faculty, the school will have the capability to offer more classes for our students and we thus will need to have access to additional classroom space. As part of this strategic plan the school will explore the possibility of adding two floors to the GSB building. It is estimated that the cost of such an addition would be in the range of $8-10 million and the school will seek to find a naming donor for the building who would provide funding for the addition.

As noted in Exhibit 5 (see page 20), the McCombs School requires annual increases of $2.0-$3.2 million in its instruction and operations budget under this strategic plan. To fund these budget increases, the school will propose to raise the tuition charged on its graduate programs, especially for Texas residents, and it will propose the creation of a tuition differential for business courses at the undergraduate level with the proceeds of the differential assigned to the school. Exhibit 6 gives the McCombs tuition levels per student credit hour (SCH) for undergraduate and graduate business courses for the upcoming 2003-04 academic year and the levels necessary over the subsequent six academic years to meet the new funding requirements. This tuition model does not include any projected increases in university-wide tuition and assumes that the present resident/non-resident splits in our BBA program (90% Texas residents) and MBA/MPA programs (40% Texas residents) will continue over the model period. It also assumes that the school reduces the size of its MBA program by 65 students per class during the period.

Exhibit 6 shows that the projected undergraduate business tuition differential would start at $27 per SCH in 2004-05 and grow to $170 by 2009-10. The impact of this differential on needy undergraduate students would be offset by the annual $380,000-$550,000 in scholarship funds that would be raised through the differential. For graduate students the greatest impact of the tuition increases would be on Texas residents because at the present time their tuition is much further below our competitors than our graduate non-residents. For resident graduate students, their annual tuition and fees would rise from $11,940 in 2003-04 to $19,064 in 2009-10 under this model. However, as demonstrated in Exhibit 7 (see page 21), even with these tuition increases, the McCombs undergraduate and graduate programs will remain very competitive on a cost basis with other leading business schools, especially when recognizing the substantial increases in competitors' tuitions that are likely to take place over the model period.

Exhibit 6

Projected Tuition with Reduced MBA Enrollment
	2003-04	2004-05	2005-06	2006-07	2007-08	2008-09	2009-2010
Undergraduate Program
Business SCH Tuition   Differential		$27	$60	$90	$120	$145	$170
Resident Tuition Per SCH	$92	$119	$152	$182	$212	$237	$262
Tuition for 30 SCHs	$2,760	$3,570	$4,560	$5,460	$6,360	$7,110	$7,860
Non-Resident Tuition Per SCH	$328	$355	$390	$420	$450	$475	$500
Tuition for 30 SCHs	$9,840	$10,650	$11,700	$12,600	$13,500	$14,250	$15,000
UT and McCombs Fees	$2,600	$2,678	$2,758	$2,841	$2,926	$3,014	$3,105
Total Resident Cost	$5,360	$6,248	$7,318	$8,301	$9,286	$10,124	$10,965
Total Non-Resident Cost	$12,440	$13,328	$14,458	$15,441	$16,426	$17,264	$18,105
Additional Funds Generated		$2,767,500	$2,542,050	$2,297,700	$2,297,700	$1,914,750	$1,914,750
Less 20% Scholarship Allocation		$553,500	$508,410	$459,540	$459,540	$382,950	$382,950
New Funds Available		$2,214,000	$2,033,640	$1,838,160	$1,838,160	$1,531,800	$1,531,800
Graduate Programs
Resident Tuition Per SCH	$138	$176	$209	$238	$268	$300	$325
Tuition for 30 SCHs	$4,140	$5,280	$6,270	$7,140	$8,040	$9,000	$9,750
Non-Resident Tuition Per SCH	$610	$639	$652	$670	$668	$680	$685
Tuition for 30 SCHs	$18,300	$19,170	$19,560	$20,100	$20,040	$20,400	$20,550
UT and McCombs Fees	$7,800	$8,034	$8,275	$8,523	$8,779	$9,042	$9,314
Total Resident Cost	$11,940	$13,314	$14,545	$15,663	$16,819	$18,042	$19,064
Total Non-Resident Cost	$26,100	$27,204	$27,835	$28,623	$28,819	$29,442	$29,864
Funds Generated		$1,169,700	$870,800	$843,500	$627,200	$837,200	$602,000
Less 15% Scholarship Allocation		$175,455	$130,620	$126,525	$94,080	$125,580	$90,300
New Funds Available		$994,245	$740,180	$716,975	$533,120	$711,620	$511,700
Total New Funds Available		$3,208,245	$2,773,820	$2,555,135	$2,371,280	$2,243,420	$2,043,500

Exhibit 7

Comparative Tuition & Fees at Benchmark and Top 10 Schools 2003-2004 Academic Year
BW Rank	School	Undergrad Resident	Undergrad Non-Res	MBA Resident	MBA Non-Res
1	Kellogg (Northwestern)	n/a	n/a	34,314	34,314
2	Chicago	n/a	n/a	35,354	35,354
3	Harvard	n/a	n/a	36,050	36,050
4	Stanford	n/a	n/a	36,252	36,252
5	Wharton (Penn)	27,988	27,988	37,323	37,323
6	Sloan (MIT)	29,600	29,600	34,780	34,780
7	Columbia	n/a	n/a	34,788	34,788
8	Michigan	9,273	26,905	29,687	34,687
9	Fuqua (Duke)	n/a	n/a	34,354	34,354
10	Tuck (Dartmouth)	n/a	n/a	32,490	32,490
12	Darden (UVA)	6,344	22,364	28,220	33,220
13	Haas (Berkeley)	5,668	19,864	10,710	22,956
16	Anderson (UCLA)	n/a	n/a	13,400	24,532
18	Kenan-Flagler (UNC)	4,107	16,124	15,034	30,837
21	McCombs (TExas)	5,360	12,440	11,940	26,100

Dean's Discretionary Budget

The dean's discretionary budget funds school operations that cannot be paid from the instructional and operations budget such as the summer salary support the school provides research-active faculty and the activities of our resource development office. This budget also provides other types of research support and enrichment activities in our academic programs. The primary sources of funding for this budget are presently the McCombs discretionary gift, income from unfilled endowments and endowed discretionary excellence funds, annual discretionary gifts to the school, and net revenue from executive education programs. During the 2002-03 academic year, the dean's discretionary budget was approximately $5.2 million.

Exhibit 8 (see page 22) shows the projected additional funding needs for the dean's discretionary budget for the 2004-2010 period. To support our strategic plan, that budget will need to grow by about $2.5 million by 2004-05 which is almost 50% higher than its 2002-03 level. By 2009-10, it will need to more than double, rising by $5.8 million over its present level. The causes of these tremendous demands on this budget are primarily: (1) the 2/9ths summer support required for the projected 70 faculty that will be hired under the plan; (2) completing the summer funding of our existing research-active full professors (presently they receive less than a 2/9ths stipend); (3) funding our new junior faculty leave program; and, (4) financially supporting new academic initiatives and stronger alumni networks. New funding also must be sought to compensate for the eventual loss of the portion of the McCombs gift that was allocated to the dean's discretionary budget through 2006-07.

Exhibit 8

Dean's Discretionary Projected Funding
	2004-05	2005-06	2006-07	2007-08	2008-09	2009-2010
Summer Support for New Faculty	$416,250	$749,250	$1,287,600	$1,720,500	$2,197,800	$2,719,500
Additional Summer Support for Existing Research Active Faculty	$800,000	$832,000	$865,280	$899,891	$935,887	$973,322
Additional School Research Support	$84,000	$92,400	$101,640	$111,804	$122,984	$135,283
New Ph.D. Program Support	$120,000	$124,800	$129,792	$134,984	$140,383	$145,998
Junior Faculty Leave Program	$151,250	$122,513	$131,588	$351,656	$374,344	$397,031
Support for New Academic Initiatives	$150,000	$150,000	$150,000	$150,000	$150,000	$150,000
Additional Alumni Network Support	$75,000	$78,000	$81,120	$84,365	$87,739	$91,249
Replacing Discretionary Portion of McCombs Gift	$700,000	$700,000	$700,000	$1,200,000	$1,200,000	$1,200,000
Replacing Lost Endowment Income	$0	$100,000	$100,000	$150,000	$100,000	$0