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									DATE:          February 9, 2001

TO:            McCombs School of Business Friends and Advisory
               Council Members

FROM:          Bob May


Greetings and Happy New Year from everyone at the McCombs School! This is hardly a
quarterly report, I know—it always seems to get pushed back. But we’ll make every
effort to make these reports briefer and more frequent in the future.

I’m proud to say we’ve had some very significant accomplishments in the year 2000. Of
course, the main event was the unprecedented gift from the McCombs family for which
the School was named and dedicated in October. In addition, the School:
     launched the McCombs School Matching Gift Program—with notable success
     passed its re-accreditation peer review with flying colors;
     launched a new planning initiative beginning with a study of top schools’ best
        practices conducted by Deloitte Consulting;
     again achieved significant diversity in our in-coming freshman class;
     proposed that the University officially modify the process of admission to the
        McCombs School for fall 2001; and
     rose in the Financial Times survey.

On Thursday, October 26th, the University dedicated the Red McCombs School of
Business. For those of you who could not attend, you really missed a great ceremony! We
had a student and faculty event on Gregory Gym Plaza in the afternoon featuring the
Longhorn Pep Band. Later, during a gala dinner on the 4th floor of the McCombs School,
we surprised Red by lighting the Tower orange in honor of the McCombs family, with an
a cappella rendition of the Eyes of Texas by the Ransom Notes choral ensemble. Vice-
President Johnnie Ray’s staff took charge of the events and they did a superb job.

Most importantly, I believe the McCombs family was moved and touched by the events
of the day—as we wanted them to be, since their generosity means so much to the School
and the University.

The McCombs gift opened a new chapter in our capital campaign. Since the McCombs
gift will be funded over eight years, we will spend $5 million of the total of $50 million
in a declining pattern on priority activities to ensure that substantial progress is made as
soon as possible. Such progress is essential to exploit opportunities now at hand and to
meet the very high expectations inspired by the announcement of the gift. The buildup of
Dean’s Report, February 9, page 2

endowments to support our top priorities will gradually supplant the direct expenditures
of Mr. McCombs’ contributions.

The remaining $45 million is being offered as a challenge grant to prospective donors of
named endowment gifts such as endowed scholarships and chairs (to recruit and retain
star-quality students and faculty), endowed centers for research and program excellence
funds (to finance year-round productivity), and endowed management excellence funds.
Thus, gifts ranging from $50,000 up to $5 million can qualify, and Mr. McCombs’ $45
million has the potential to attract another $45 million in endowments on a one-for-one
matching basis. In general, matching funds will be available only for new endowment
contributions that are unrestricted and the matching funds will be added to the naming
donors’ gifts to double the size of their endowments.

I am very pleased to announce that since we launched the McCombs School Matching
Gift Program last fall we have already agreed to match a number of gifts pending
approval of the University and/or the Board of Regents, including a number of endowed
scholarships and fellowships, several excellence funds, three chairs and one center of
excellence. These pending gifts put us well on the way to ending the capital campaign on
a successful note. (We may not announce donors and identify them with their gifts until
the University and/or the Board of Regents formally accept the gifts, so I will begin
giving you specifics in my next report.)

If any of our Matching-Gift opportunities is of interest to you, just call David Lotz,
Assistant Dean and Director of Resource Development at (512) 471-3957.

In September, a team of three business deans (from the University of Wisconsin, Florida
and Ohio State), two accounting faculty members (Case Western and Indiana) and an
industry representative (Ernst & Young Foundation) conducted the peer review of the
School and its Department of Accounting required for re-accreditation by AACSB—the
International Organization for Management Education. AACSB is the recognized
accreditation agency for business schools and accounting programs in the U.S. We go
through this process every ten years, reporting at intervals in between.

To summarize the outcome, both the McCombs School and the Department of
Accounting passed the review with flying colors. The AACSB’s report included the
following commendations:

        The University of Texas at Austin, Red McCombs School of Business is
        commended on (1) the administration, faculty and staff who all show
        excellent dedication and skill, (2) the substantial success in its programs,
        (3) a strong faculty research focus while maintaining a clear emphasis on
        teaching excellence, (4) its undergraduate students’ enthusiasm and
        perception of a high quality, high valued learning experience, (5) its
        particularly impressive placements from the doctoral program, (6) the
        adequacy and quality of the facilities to meet the program goals and
Dean’s Report, February 9, page 3

        objectives, and (7) its faculty for their commitment to the School’s
        educational programs and for their enthusiasm in fostering an excellent
        learning environment.

And indicated that our interim report due in January, 2006, should demonstrate:

        …sustained and further enhancement of mission-linked outcomes and processes,
        including development and implementation of improved procedures for:

        1. A more formal strategic planning process with annual updates.
        2. A more formal annual planning process that (a) reaffirms the mission,
           (b) identifies and prioritizes gaps, and (c) provides a structure for the
           allocation of resources to attain the mission and the School’s very high
        3. Clarif[ying] how senior faculty are rewarded for service activities.
        4. A more formal policy describing the development and reward process
           and the roles and responsibilities of the non-tenure track faculty.
        5. Review[ing] of current plans and accomplishments in the area of faculty
           demographic diversity.
        6. Develop[ing] policies governing the recruitment, development and
           evaluation and deployment of additional personnel, some of whom may
           not be tenure track.

We’re in good shape, though, as we had already begun to work on most of these
recommendations even before the peer review visit:

Recommendations 1 & 2: Deloitte Consulting is working on a Best Practices Study of
both private and public schools in the top 15. The study will be completed for the March
Advisory Council and faculty meetings and will fuel our strategic planning discussions
this summer. We plan to finalize our strategic plan by December. In my next Quarterly
Report I’ll give you an update on our progress.

Recommendations 4 & 6: We have completed drafts of faculty reward processes and
recruiting policies that will become effective this spring.

Recommendation 5: This may be interpreted as a criticism of our present degree of
diversity, and we will ask for clarification from AACSB, since the McCombs School has
the highest percentage of tenured minority faculty of the top 25 business schools
(Business Week, June 21,1999) and is in the top half (we believe) in percentage of
tenured female faculty (something we will verify). We will, of course keep up our
diversity efforts and perhaps will simply have to make our methods for achieving
diversity better known to AACSB, along with our methods of rewarding senior faculty
for service (Recommendation 3).
Dean’s Report, February 9, page 4

Our efforts at the undergraduate level have been quite successful. The diversity of our
freshman class exceeds our achievements in the pre-Hopwood era of affirmative action.
In fall 2000, 56% of our freshmen were female, 14% Hispanic and 4% African-
American. While the combined Hispanic and African American percentage is nowhere
near the total population percentage, it is just above the percentage of minority students
who meet reasonable criteria for admission to universities with competitive admissions.
This represents a remarkable achievement since standards for entry into the McCombs
School are higher than the University standards and the University has the highest
standards of public schools in the State.

We continue to struggle with diversity in the MBA Program, and enrolled about 5%
minorities in the program as of last fall. This is down from pre-Hopwood percentages in
the low teens. We have been engaging our business partners, students and alumni in a
number of new strategies to increase the number of competitive applicants. I chair the
Board of the Consortium for Graduate Studies in Management, an organization that has
been successful in increasing the pool of minority applicants at its twelve member
schools (including UT). We are working to further increase the minority applicant pool
nationally and gain further insights into methods we can employ to improve our situation
at the McCombs School.

Our competition—schools like Virginia and Michigan—can award graduate fellowships
specifically to minority masters students, and thus they can compete effectively for the
best students. Under Hopwood, the McCombs School may not use race or ethnicity in
allocating competitive scholarship/fellowship funds; however, the Ex-Students’
Association can, and initiated its Texas Leaders Scholarship Program to provide such
fellowships. Anyone wishing to know more about that program should contact Jim Boon,
ESA Executive Director, or Eleanor Moore, Director, Scholarships & Recruitment.

As you know, our record of enrollment of minority students since fall 1998 has
been enhanced by the top-10% legislation that guarantees admission to the Texas
public university of choice to students in the top 10% of their high school classes.
However, applying the law at the McCombs School level last year caused the
School to exceed its admissions target with top-10% applicants alone. Thus, we
proposed, and the University has agreed, to modify its process of admitting
freshmen to the McCombs School for fall, 2001.

Under our new policy, applicants ranked in the top 10% of their high school
graduating class are admitted to the School based on their relative class rank (top
1%, then top 2%, top 3%, etc.) until all spaces allotted for automatic admission
are filled. No more than 75% of the available spaces in the School of Business
will be filled through this automatic admit process. The remaining applicants
ranked in the top 10% of their high school class will be pooled with all other
business applicants to compete for the remaining 25% of spaces. Admission to
Dean’s Report, February 9, page 5

these remaining spaces is by individual review. Top 10% students who are not
admitted to business are considered for their second-choice major.

The criteria and procedures for individual review are explained on the University’s
Admissions web site at:

The McCombs School went up from #32 in the Financial Times 2000 survey of
worldwide top MBA programs to a tie for #25/26 in the 2001 survey. The survey was
published in the January 22th issue of that international newspaper. The School also
ranked in the top 10 for Entrepreneurship and Information Technology, both based on
recommendations of surveyed alumni.

Explore UT, a campus-wide open-house for all of Texas, will be held on Saturday,
March 3 from 12-6 p.m. McCombs School events include a stock trading game in the
EDS Center, a Business Trivia game, business etiquette seminar, mock interviewing, a
cultural game of charades, career panels, building tours, and a business cartoon exhibit.

Come join the fun and bring your family and friends! Earn prizes and chances to win one
of the items in our business ensemble raffle, including two round-trip tickets from
Southwest Airlines, gift certificates from Dillard’s and Texas restaurants, a desk top
system from Dell, and two Palm IIIxes. For more information, visit the website at

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