The Reeducation Of Oxford

Can John Hood, the university's new head, put its finances on a sound footing?

Mention Oxford, and images of daydreaming dons and youths punting on the Cherwell come to mind. But in the sparsely furnished office of the university's new boss, Vice-Chancellor John Hood, the talk is all cold facts and figures. Hood doesn't even blush when he compares managing Oxford University's 2,000 or so research projects to running a construction company -- something he once did. "Exactly the same discipline is required to manage that scale of activity," he says.

The university committee that hired Hood, 53, last October, broke with hallowed tradition in several respects. Hood, who attended Oxford on a Rhodes Scholarship, is a New Zealander and the first Vice-Chancellor in the university's 900-year history to come from outside its academic ranks. (The Chancellor, currently Chris Patten, is traditionally a figurehead.) Hood also brings an unusual amalgam of experience in both business and university administration. He ran the construction and paper divisions of Fletcher Challenge Ltd., a New Zealand conglomerate, before becoming Vice-Chancellor of the University of Auckland in 1999. His message: Oxford needs to get its financial and administrative houses in order if it is to remain in the top tier of the world's universities. And forget about government coming to the rescue. "We cannot think of our future as lying in the hands of public funding," Hood says.

Hood wants Oxford to have the resources to challenge such preeminent universities as Harvard and Princeton -- even going after top American undergrads, something Oxford doesn't do now. If he succeeds, he could be a forceful advocate for revolutionizing the way Europeans runs their universities. On the Continent as well as in Britain, higher education suffers from an acute funding crunch.


But Hood won't have an easy time. He has to remain on good terms with the government, which still provides about 30% of Oxford's $860 million revenues, while moving toward greater independence. Education is an explosive subject in Britain, as shown by last year's bruising fight to raise annual tuition fees from $2,100 to $5,600 starting in 2006 -- a figure that still won't come close to eliminating Oxford's $17,000-plus budget shortfall per undergraduate each year. (The shortfall at American Ivy League schools is even greater, but they spend roughly three times what Oxford does on educating an undergrad, according to OxCheps, an Oxford think tank.) Tuition and government funding cover only about half of the $35,000 cost of educating an Oxford undergrad each year. The university tries to make up the rest with income from the Oxford University Press, high-tech spin-offs, and its relatively small endowment. But it still runs a $36 million annual deficit.

Building up the university's endowment, 80% of which is held by the 39 independent colleges, is central to Hood's plans. At about $3.7 billion, Oxford's funds are dwarfed by Harvard University's $22 billion and Stanford University's $13 billion. He has hired a development officer, Jon Dellandrea, from the University of Toronto, in the hope that Oxford can acquire a little North American fund-raising magic. One of Dellandrea's key tasks will be to juice up the level of alumni giving: Harvard brings in more than $500 million a year, while Oxford raises just $150 million.

Hood may also transfer management of the endowment from outside firms to an in-house team. Up till now, it has been earning returns of around 6.5%, compared with 15.9% annually over the last decade for Harvard. Supporting those dons and students isn't going to get any cheaper.

Corrections and Clarifications "The reeducation of Oxford" (European Business, Feb. 14), should have listed Stanford University's endowment at $10 billion, not $13 billion. Yale University's endowment is $13 billion.

By Stanley Reed in London

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