All these things are important.

But an equally important change occurred this past year not here, but in Salem, where the Oregon Legislature did something brave, something smart, something right: it reversed Oregon's long policy of disinvestment in its public universities, and gave the Oregon University System the first significant increase in public funding in a decade.

We all owe a debt of thanks to the legislature and the governor.

Although the final funding fell several million dollars short of what the Oregon University System requested, the increase still marks an important change. Higher education was again a priority in Salem.

Where will the money go? Much of the increase--far too much, until you appreciate the risks we took to achieve systemic reform--is tagged for recapitalization--for long-term support of programs we have been funding through short-term means during the disinvestment years.

Much will go toward implementing a new, student-centered funding model, one simpler and more realistic than we have had for years. This new model will allow Oregon public universities to retain tuition moneys generated on their campus, and will reward those institutions most innovative and successful in attracting and retaining students. As you know, this is a change I and others have advocated for some time.

This is a tremendous and heartening sea-change in the way higher education is viewed in this state.

While I am strongly optimistic about the coming year, I believe it is appropriate to temper false expectations when it comes to the immediate benefits of the new university funding model.

I wish I could say that it is going to translate into a flood of money for all of us. But with so much spoken for, with so many deserving programs to bring back to vibrant health after a decade of disinvestment, we will not see money for costly programmatic increases.

Let me speak directly also to faculty salaries. Remember that just five months ago, we implemented an average and permanent 2 1/2 percent increase for faculty salaries. I wish I could announce precise, predictable numbers for the coming two years, but that is not possible today for three reasons:

1) First, the Chancellor's Office this last Monday told all seven Oregon University System institutions to be extremely conservative, especially in the first year of this biennium, in announcing or awarding salary increases;

2) Second, normally reliable enrollment indicators through many years unaccountably have overestimated our actual enrollment this autumn by several hundred students. Enrollment is good, and for freshmen has increased. But overall it has not risen as much as we had hoped. Several million dollars of tuition revenue, which for the first time we might have retained and wisely expended, simply has not materialized; and

3) Third, the faculty--you--have not yet been consulted as fully as our community decision processes should respect.

I propose the following course for this process:

1) First, we must await the traditional "Fourth Week of October" student head count and credit hour census to determine our revenue numbers;

2) Second, we need an honest and searching analysis of salary issues. These involve not only absolute levels respecting comparators, but important questions of "compression," disadvantages in areas of particular national and international strength, promotion award shortfalls and competitive disadvantages generally and specifically across disciplines. I already have shared our fiscal challenges with the deans, department heads, the Faculty Advisory Council and University Senate leadership.

3) Third, we need to develop a concerted long term plan--over a six- to eight-year period--with appropriate variables, to achieve a far higher percentage of parity with our competitors than we now enjoy. In this regard, please understand three important sub-points:

1. Salaries constitute fully 80 percent of our budget. There are no magic "cuts" elsewhere that remotely give us significant new salary dollars.

2. There are serious trade-offs between the numbers of faculty per student, and what the institution can afford to pay. By almost any objective measure, we have added faculty in the face of static or declining student numbers. Said another way, this enriches faculty quality and thins the soup, inescapably, of salary increase dollars.

3. Our plan for salary growth must parallel the ratio of faculty and student growth.

We need to complete this information gathering in a timely way, hopefully by the beginning of Winter Quarter, so that everyone appreciates a common ground of facts, assumptions and, hopefully, conclusions.

I thank leaders of your elected Faculty Advisory Council and the University Senate for assuring cooperation to conclude this process in a timely and informative way.

All is not grim--remember three positive things:

This is what the athletic coaches call a rebuilding year. Funding for contracted wage increases for classified staff and GTFs. For much-needed and long-deferred maintenance of our buildings. For implementation of some of the best ideas from our Process for Change.

We are, in short, looking at a more promising prospect than any year in the past decade. And future years should be even better.

We are indeed on an upward trajectory.

In all the enthusiasm about a better budget this year, it's easy to overlook those who made it happen.

There were a number, too many to list. But I believe we owe a debt of thanks to one person in particular.

This part of my remarks has not been circulated in advance for comment or caution. These words are mine, they are true, and they are important to say now that the struggles of the past seem capable of bearing fruit.

Years ago, before I became president, and before he became Provost, John Moseley was already crunching the budget numbers, preparing reports, showing how the higher education system generally, and the University of Oregon particularly, was disadvantaged by the old budgeting system.

He brought these concerns to the attention of those who made the budget. He refused to have his concerns discounted. And he would not stop. Year after year, he made his case for equity, for rationality, for a fair deal for the UO, knowing, or at least hoping, that others would join him in asking for a fair deal on the budget.

The new funding model I believe represents a watershed in our institutional history. And for that we owe John Moseley our gratitude.

* * * *

I said I would return to the Process for Change.

All of you other than the very new faculty know about this two-year grassroots planning process to gather in every idea we could for educational improvement--and to implement the best of those ideas.

Our work is bearing fruit. This year--to the extent that stewardship of still-scarce resources permits--will also see the implementation of the first Process for Change initiatives, including the introduction of Pathways, an innovative curriculum of integrated courses and activities for undergraduates.

The Process for Change on this campus generated hundreds of ideas during the past year. Dozens of the most effective are in the process of being implemented. When I shared just a sampling of your innovations with the Chancellor and the State Board, their reaction was one of respect and admiration for your work.

Besides Pathways, more are coming, or have already been put in place:

Look around, listen, and you will see and hear evidence everywhere of health, growth and vitality:

Let me speak for a moment about campus diversity.

You heard a good deal about it last spring, and will hear more this year.

Because the energy of last spring is being turned into action.

Some of the students I spoke to last year served this summer as interns, working with a variety of campus offices.

These hardworking students, with their superabundance of energy, accomplished much in a few short months with the help and guidance of a steering committee of faculty, staff and students.

But perhaps the most important thing they accomplished was helping to remind us all on campus that we have students, faculty and staff members who, because of their skin color, or sexual identity, or beliefs, are somehow made to feel apart rather than embraced.

Ours is certainly not a campus marked by overt racism. But there is a level of interaction in which casual remarks and assumptions, more thoughtless than overt, can and do cause searing pain.

I also learned yet another lesson about new technology. Last spring's sit-in was triggered by a "flame war," an exchange of e-mail in which participants were, to say the least, intemperate in their remarks.

It is certainly true that the technology of e-mail--with its immediacy, its sometimes conversational tone, its instant amplification through copying to scores, hundreds of recipients with the stroke of a key--can make reasoned dialogue more difficult.

It is wise to remember that e-mail is not a private conversation. It is a written document that can be made immediately public.

We will continue our work to make our campus a model of diversity.

I do not want us to lose sight of the fact that we've accomplished a good deal already.

We have attracted a high-quality student body with a higher percentage of students of color than the state around us.

We will do more. This year, close to $1 million will be devoted to scholarships targeted toward building diversity. The fund for Diversity Building Scholarships alone is scheduled to double from $280,000 in 1998-99 to more than $500,000 in 1999-2000.

During the four academic years between 1995-96 and 1998-99, more than one in five of the new tenured and tenure-track faculty hires made at the UO were faculty of color--26 new faculty of color out of 121 total hires.

The most important point is this: The students, the faculty and staff, all of us are headed in the same direction, toward the same goal: A campus that is welcoming and safe for every student, every staff member, every professor, every person.

This is not an objective easy to reach and nurture. It might not ever be totally achievable in a place this vibrant, this spirited, this devoted to the principles of free and unfettered speech. Not to speak of the fact that during the school year, many of the 17,000 members of our community are young, with everything that youth implies: Deeply felt emotions, admirably idealistic goals, a wonderful feeling of freedom, a sense of the immediacy of issues.

I fully expect that, like every large public campus in our nation, we will see continued activism in this area.

And I give this assembly my own pledge that we will continue to make progress in this vital area.

* * * *

I speak here of the spirit of our university. Let me take a moment to tell you a story that says something about the way others see us.

I traveled to Taiwan and then Auckland late this past summer. Among the many benefits of this trip was a growing understanding of the importance of our being a founding member of an incipient "Pacific Rim" AAU--called APRU. I met the presidents of many of the other 34 founding universities around the Pacific Rim during this trip, and am enthusiastic about the multitude of possibilities here for collaborative research, for technological sharing, for faculty and student exchanges. As the single most "international" public university in the nation, measured by the proportion of international students in our student body, the University of Oregon stands to take an important position in this fast-growing area.

While in Taiwan, I also met with many UO graduates. One of our alumni, a doctoral student at our university who also did work at Berkeley, graduated here and went on to help found a new university in Taiwan. He told me a story.

He said that as he was thinking of how to set the tone of his institution. Would it be what he saw as the Berkeley model, or the model of the UO?

The difference, he said, was illustrated by a mentor he had here, a chemistry professor who he saw often in the morning, getting coffee before going to his office.

This professor one month was in a foot cast, the result of a cross-country ski mishap. Despite the injury, this professor, every morning, still got his cup of hot coffee and limped over to his office door. And the Taiwanese graduate student, every morning, offered to help.

To his surprise, the professor always refused. He sometimes ended up with a half-cup of coffee in his office, but he did it himself.

This was quite different than Berkeley, our alum said, where apparently students fetching and carrying for professors is more the norm.

To this student, that was the UO way: Collegial rather than hierarchical. Human rather than bureaucratic. Self-reliant. A little tough.

Let us also be a little kind.

Each of us here at the University of Oregon is intensely involved in our work, our teaching, our research, our daily duties. But let us from time to time--in our dealings with each other, with students, with other members of the community--remember the need we each have for a smile, an understanding ear, a word of kindness from the heart.

It does not mean we do not insist on the highest of standards.

It does not mean we accept excuses for less than our best.

It does not mean we substitute sentiment for wisdom.

But it does mean that we remain thoughtfully humane in the midst of our incredibly human efforts to teach and learn.

The new funding model asks us all to become more "student centered."

In practical terms, that means that each of us must become, in effect, an officer of admissions. Each of us becomes a student advisor. Each of us--faculty, staff and administration alike--takes on a share of responsibility for making sure that students are getting the best education possible.

There might be someone here thinking, "But that's not what I signed on to do."

In the unfortunate possibility that there is a hardened cynic in the audience, I wonder if going through his or her mind is the question: Is this where the President begins to tell everyone to work even harder?

Absolutely not. Everyone I know on this campus works very hard already.

I do encourage you instead to stay focused on the reasons you came here and stayed.

I encourage you to remember why you came to work in this university.

I encourage you to recall the emotion, the sense of duty that your decision entailed.

Let me put the issue autobiographically without, I hope, self-indulgence. Many years ago, I used to ask the questions, "What do I want to do?" or "What do I want to be?" Those are vocational and existential questions. Then some years ago, I realized (though not in a blinding flash on some Road to Damascus) that the questions were incomplete, because the focus was the ego. I now believe the proper question is "What is worth doing?" That framing overtly leaves out the "I" and reintroduces the questions of value and ethical choice.

I believe we all are here because we have chosen what is "worth doing:" the transformation of lives through knowledge.

This means ongoing self-criticism and self-improvement, on every level from the quality of our scholarship to the excellence of our teaching and advising. It means creating an atmosphere on our campus in which ideas are promoted with enthusiasm, critiqued with collegiality, and transmitted with passion.

The great German poet Goethe put it this way:

"Whatever you can do, or dream you can do, begin it,

Boldness has genius, power, and magic in it."

Let us continue to dream; and let us continue to be bold, and we will witness the magic.

Let me welcome you again to an auspicious time in a wonderful place.