Prior to 2003, ASU operated as a state government agency, dependent largely on state appropriations and on a low-cost, low-access tuition model in which the tuition was the least expensive among flagship institutions in all 50 states. However, the low level of investment by students provided few resources for financial aid, so a university education was out of reach for large numbers of qualified Arizona students.

The university also lacked adequate resources for faculty salaries, classroom technology, network infrastructure and other resources needed for high-quality instructional delivery and student support. ASU began reevaluating its funding sources in an effort to create sustainable revenue streams to help the university grow.

Seeking partnerships

Responding to the design aspirations set out by President Crow, ASU began remaking itself into an entrepreneurial entity, seeking investment and partnerships from municipalities, corporations and other bodies to leverage its existing resources. The university offered its partners talent, expertise and knowledge capital, in addition to a population of students, faculty and staff who could reenergize an area.

• To the astonishment of skeptics and the higher education community around the country, the university reached an agreement with the City of Phoenix in 2005 to develop the Downtown Phoenix campus, moving at light speed after a conversation in 2003 between ASU’s president and the Phoenix mayor. The plan received approval from the citizens of Phoenix in a March 2006 bond election, with the city providing land and buildings, and ASU the academic programs, student housing and parking. Classes began for students that fall, and the campus now enrolls more than 17,000 students each year.

• Over the past six years ASU has partnered with American Campus Communities (ACC) to provide more than 2 million square feet of new-student housing on the Tempe campus on long-term leases, including a state-of-the-art campus for Barrett, The Honors College. It also has partnered with Inland American Communities for housing and a new dining facility at the Polytechnic campus, and with ACC on West campus housing. ASU’s on-campus housing has increased from about 6,000 student beds in 2002 to 12,500 in 2012.

• The university worked with the Scottsdale City Council, which voted to approve a 198-year lease to the ASU Foundation for a $41.5-million, 42-acre parcel of land in Scottsdale they purchased for the university to build a research/innovation park. SkySong opened in 2008 with 20 global start-up and midsized companies and now includes 44 companies representing six foreign countries.

• ASU formed a community partnership to bring a campus to western Arizona, partnering with Lake Havasu City, the Lake Havasu Unified School District and the Lake Havasu Foundation for Higher Education. Phase 1 of the campus, to include the renovation of a middle school, opened in fall 2012.

• Looking to the greater goal of sustainability, ASU entered into partnerships with solar power generating facilities, installing what has become the largest solar generating capacity of any university in the country. ASU is able to generate more than 70 megawatts of solar power, locking in the cost of energy for 20 years, while also taking advantage of state and federal incentives. One-third of ASU’s power is generated by the sun.

Increasing research awards

ASU began aligning its research initiatives with critical national goals in order to address some of society’s biggest challenges. This effort has led to increased success in obtaining grants for research into earth and space exploration, sustainability and renewable energy, advanced materials and flexible electronics, health, national security, and education in science, technology, engineering and mathematics.

The university created several interdisciplinary research institutes and initiatives allowing researchers to collaborate freely across diverse disciplines, partner with outside organizations and industries and receive support in pursuing major grants. ASU has strategically invested in research infrastructure and recruitment of faculty who build our base of expertise in key areas. The Biodesign Institute, for example, brings together faculty and staff who are working on solving important challenges in health, sustainability and security.

These efforts have allowed ASU to secure major funding such as a recent $30 million, four-year contract from the U.S. Department of Defense to develop a novel diagnostic technology for rapid detection of exposure to infectious disease agents before symptoms occur.

Research expenditures (annual spending of awards), which were $123 million in 2002, rose to more than $360 million in FY 2012. This reflects the success of the institution in competing for funding from sponsors, including federal, state and private sources. It is also an important indicator of the institution’s overall contribution to the knowledge base and the regional economy.

World-class research can attract external funding and provide an economic return on investment to the community, so ASU has been highly strategic in its investment in science and technology research.

ASU has also expanded its global research profile, with hundreds of ASU professors involved in research around the world. Many have expertise sought after in key areas that apply to the developing world and elsewhere. ASU is building its capacity to pursue global funding opportunities and contracts through the U.S. Agency for International Development.

Substantial awards include $43.6 million from the Department of Defense Army Research Office for flexible panel display research, $18 million from the National Human Genome Research Institute as part of the National Institutes of Health for the Microscale Life Sciences Center, $15.2 million from NASA for a lunar reconnaissance orbiter camera contract and $12.4 million from National Science Foundation for Project Pathways for math and science. ASU is one of only a handful of institutions with neither an agricultural or medical school to surpass the $200 million level in research expenditures and now ranks among the top 20 research universities in the nation without a medical school.

Raising tuition and financial aid

Under the leadership of the Arizona Board of Regents, ASU undertook a systematic approach to reform, moving from a low-cost/low-access tuition model to a moderate-tuition/high-financial-aid model that would expand access to students from low- and middle-income families. As a result, the number of low-income Arizona freshmen enrolling at ASU has grown by 2,000 percent, from 49 in 2002-03 to 1,048 in 2010-11.

In 2002-03, ASU tuition was the lowest among flagship institutions throughout the country. But it was still not affordable for many capable students who did not qualify for enough federal aid to cover the amount. ASU could provide only very small amounts of institutional aid, about $8.7 million total.

Because of increases in tuition and other revenue enhancements, ASU was able to provide $62.3 million in institutional gift aid to students in 2010-11, and it is estimated that three-quarters of all ASU students do not pay the full amount of tuition. ASU now enrolls 90 percent more undergraduate minority students than in 2002 and 150 percent more Pell Grant recipients.

Because state general fund appropriations were cut from $483 million in FY 2008 to $300 million in FY 2012, ASU had to increase tuition at a rate more rapid than had been anticipated. But tuition and fees are now at the mid-point of flagship institutions across the nation with no increase this year and only moderate increases forecast for the future.

State appropriations

During its 2003 session, the state legislature voted to secure funds for research infrastructure at Arizona’s three universities, with ASU receiving $185 million. These funds were essential in constructing ASU’s key research buildings, including The Biodesign Institute and the four the Interdisciplinary Science and Technology Building IV buildings. State appropriations continued to increase through FY 2008, topping out at $483 million and providing 33 percent of ASU’s gross revenue. After the nationwide economic downturn, the state drastically reduced its support in FY 2009 and again in FY 2010, so the university restructured and cut costs. Faculty and staff were asked to make sacrifices such as furloughs, and 1,600 full-time positions were either cut or not filled. Units were downsized or eliminated.

To become more cost-effective rather than sacrifice educational quality or access, the university acted decisively to implement its planned changes faster than anticipated. The structural changes that were already underway brought about greater efficiencies, since ASU had begun consolidating academic units that could strengthen each other.

ASU leveraged technology to speed the development of online classes, with enrollment in online classes growing almost 300 percent last year to 4,512 fully online students in fall 2011 and 6,569 in fall 2012. ASU offers 1,114 courses and 56 programs online. Last year, ASU Online was ranked number one in online student services and technology by U.S. News & World Report.

Major cuts in the state budget led to a $300 million allocation for ASU in FY 2012, providing only 20 percent of its gross revenue.

Increasing private gifts and investments

President Crow recruited ASU alumnus and one-time PepsiCo Inc. Chairman and President Craig Weatherup to serve as the foundation board chair. Under Weatherup’s direction, the alignment with Crow's bold vision began to take shape and is reflected in the foundation's new name – ASU Foundation for A New American University – as well as the reshaping of its mission to support ASU as a New American University.

Today, under the stewardship of CEO R.F. “Rick” Shangraw Jr., the foundation helps advance ASU by working closely with philanthropists to engage them in the university’s efforts to produce meaningful change. Philanthropy is a tradition of giving and sharing that is primary to the quality of life and to the success of the university. During the last 10-year period, alumni, parents, foundations, corporations and other individuals and organizations have committed $1.4 billion in support of ASU’s students, faculty, research, academics and facilities.

• Donor Type Chart
• Gift Purpose Chart

There are many forms those investments have taken, including endowments which expand ASU’s permanent financial base and create reliable, virtually perpetual income streams for such advancements as endowed faculty positions, student scholarships, broad-based interdisciplinary research projects or even entire academic programs. Deeply committed to advancing the philanthropic spirit of its donors, a primary responsibility of the foundation is the growth-management of the endowment, with an overarching goal of balancing the needs of the university for both current and future generations. The endowment to support ASU has grown from $100 million in 2002 to more than $500 million today and has experienced investment returns that have outperformed our custom benchmark and the S&P 500 during that same time period.

• Endowment Growth Chart
• Investment Returns Chart

Additionally, the foundation has been hard at work creating entrepreneurial partnership opportunities for the benefit of the institution and establishing a portfolio of income-producing, long-term investment and development properties. These, in addition to the endowment, comprise the foundation’s total assets, which have grown from $228 million to $792 million during the golden decade.

• Total Assets Chart

• A $10 million endowment by Craig and Barbara Barrett endowed Barrett, The Honors College, which now resides on all campuses. The endowment ensures that ASU's brightest students experience the advantages of pursuing higher education in a small, intellectually and socially vibrant environment while having access to the vast resources of a major research university.

• William Polk Carey, chairman of New York-based investment firm W. P. Carey & Co., announced a $50 million gift to ASU in 2003. The gift, which endowed the W. P. Carey School of Business, was the second-largest single donation to any U.S. business school at the time.

• In 2004, Julie Ann Wrigley made a $15 million contribution to establish the university's Global Institute of Sustainability. From that institute grew the world's first School of Sustainability, which opened at ASU in January 2007. In June 2007, Wrigley made an additional $10 million investment in ASU to recruit four of the world's leading sustainability scholar-researchers.

• Ira A. Fulton, a local homebuilder and self-made millionaire, and his wife Mary Lou became the university’s largest single donors, donating $160 million in 2005. The generous gifts endowed the Ira A. Fulton Schools of Engineering and the Mary Lou Fulton Teachers College, and helped to launch ASU’s Decision Theater.

• In 2008 and again in 2010, entrepreneur and philanthropist T. Denny Sanford made transformative investments that resulted in the creation of a pair of signature, nationally recognized programs within ASU schools. Working with the ASU Foundation, Sanford was able to align his focus on the well-being of children, families and the world through his support of what is now ASU’s Sanford Harmony Program. Housed in the T. Denny Sanford School of Social and Family Dynamics, the program bridges the gender divide by providing girls and boys with opportunities and support for positive peer classroom interactions and friendships, and also lays the foundation for healthy and successful relationships throughout the early childhood years and beyond.

• Sanford’s 2010 investment of more than $18 million in ASU’s Mary Lou Fulton Teachers College has changed the way teachers are prepared by the university. The resulting Sanford Inspire Program has earned national recognition, redefining teacher preparation by integrating best practices of ASU’s Teachers College and Teach For America.

• Rob and Melani Walton supported ASU’s Global Institute of Sustainability with $27.5 million in 2012 to develop and deploy promising solutions to sustainability challenges including energy, water, environment, climate, urbanization, social transformation and decision-making.

These are just a few of the transformative ways the ASU Foundation has helped further the success of ASU as a New American University.

Expanding auxiliary enterprises

A university the size of ASU operates in many ways like a small city, providing services and products to students, faculty, staff and the general public. Not all of the units listed below were able, in 2002, to generate sufficient revenue to cover costs and needed improvements. Since then, most have devised ways to become more efficient and more entrepreneurial, providing better services at lower cost.

• ASU Bookstores, which had always been self-supporting, realized the need to meet the changing demands of courseware technology, including online textbooks and the used and rental textbook market. In 2011, it outsourced to Follett Higher Education Group, a privately-owned bookstore provider that manages more than 930 bookstores nationwide. Since then ASU Bookstores has been able to provide reliable service to students, more competitive pricing and used book availability, and a source of revenue that can support other operations.

• Parking and Transit changed from an enforcement to an access mentality, providing additional services such as shuttles, Zip cars, Wi-Fi, subsidized transit passes and valet parking for events. While rates for parking decals have been raised to make them consistent with the marketplace, fewer parking tickets are being written and sustainability is increased. Parking and Transit revenue also supports other university initiatives such as the ASU Police Department.

• ASU entered into a partnership with ARAMARK food services for residential and retail dining, allowing the university to increase services at the Tempe campus and to build a comprehensive dining program at the West, Downtown and Polytechnic campuses. ARAMARK provided the capital investment and equipment to enhance numerous dining locations, increase the level of quality and the number of options, and place a focus on local food choices and sustainability. They have improved food choices for students with no investment from ASU.

• ASU’s subsidy for KAET-Channel 8, now called Eight, was eliminated over a four-year period. The PBS-affiliate station trimmed costs and increased its fund-raising and marketing efforts for program underwriting and memberships. It also moved to the downtown Phoenix campus, created a number of new station-produced shows such as “Horizonte” and “Check Please,” and now operates three channels. KAET has operated in the black for several years.

• Trademark Management, which licenses companies to manufacture goods using ASU’s trademarks, has increased its revenue threefold. The ASU brand has increased in popularity as the academic reputation of the university has grown. ASU contracted with IMG, one of the nation's leading sports marketing agencies which helped the university increase sponsorships. The rebranding of Sun Devil Athletics last year led to a major jump in revenue, and the new Pac-12 broadcast rights will provide increased revenue streams.

• ASU Gammage, the university’s premier performing arts home, became self-supporting by broadening its presentations and increasing programming of all types. It moved from offering four musicals a year to seven shows and three special performances, some of them contemporary works, and hosting one of the top Broadway series in the country. Gammage expanded its audience, bringing in 35,000 schoolchildren for performances, inviting art and drama teachers for workshops, hosting military dependents whose family members are deployed, offering master classes and a summer Camp Broadway for 10- to 17-year-olds. Each year, half a million people attend an event at Gammage, and the venue adds $50 million a year into the local economy.

ASU has compressed into a single decade a process of institutional evolution that could have taken 50 years or more. The fact that it has done so during a period of nationwide belt-tightening has sharpened the university’s focus and led to greater innovation. It also illustrates the adaptiveness and resilience of the New American University model of academic excellence, broad access and maximum societal impact.

In a tradition-bound industry that often evolves slowly, ASU has upended ideas of what can and cannot be done, providing inspiration for institutions of higher learning throughout the nation.