2004 audit of the University of Wisconsin System by the Legislative Audit Bureau

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Friday, September 17, 2004

Statement on LAB Audit of UW System Staffing

Kevin P. Reilly, President

University of Wisconsin System

"My colleagues and I appreciate the significant amount of time and effort that Jan Mueller and her colleagues at the Legislative Audit Bureau invested in conducting and completing this evaluation. The LAB did this review in a very thoughtful, thorough and professional manner. We will use this study, coupled with the Board of Regents’ recently completed study, "Charting a New Course for the UW System," in our ongoing efforts to improve our administrative processes and to operate more efficiently.

"It is a priority of my presidency to make sure that we operate as efficiently and as openly as possible and that we seek continual improvement in these areas. In that spirit, I fully embrace all four of the report’s recommendations.  We intend to implement all of them, and I believe this will improve the quality and usefulness of the financial and staffing information that we provide to the Legislature and the Governor.  We also will work with legislators and the governor to remove bureaucratic barriers to our more efficient operation in such areas as purchasing, position reporting and building programs.

"We also appreciate the report’s confirmation that when applying the nationally accepted accounting models for "institutional support" used by the federal government, the UW System has the lowest administrative expenditures among its 18 peer institutions in the United States – 6.9 percent compared to the national average of 10.2 percent.

"The LAB report also demonstrates that the university is an important engine for Wisconsin’s economy.  Despite cuts in state support, we have been able to grow our workforce on non-state dollars. This has resulted in more high-wage jobs for Wisconsin. It has allowed us to undertake ground-breaking work in research and public service in areas like Alzheimer’s disease to improve the lives of all Wisconsin citizens.  From 2002 to 2003, for example, we grew our research activity by $47.5 million.

"We are proud of that growth and the entrepreneurial activity of our faculty and staff. This, in turn, gives our students more opportunities for research involvement and learning outside the classroom. We believe that the more we can leverage state dollars to increase outside federal and private grant and gift funding, the greater the benefits for the people of the state.  It is important to note, in that regard, that the number of UW employees supported by state tax dollars today is lower than it was in 1986.

"One of the challenges with the review is that the LAB used its own unique method of assessing our administrative staffing. For example, they counted positions that have supervisory responsibilities and all clerical and secretarial positions as administrative costs – positions in student affairs, admissions, career planning, athletics and financial aid that most students and citizens do not generally associate with ‘university administration."

"There are no measures by which to ‘benchmark’ this kind of assessment of our administrative staffing against other universities. Thus, we cannot determine whether our 15% administrative cost is high or low.  We want to explore this further and to work with LAB staff to produce data that can provide comparisons to other universities so we can benchmark our future progress toward becoming more efficient. We are inviting LAB staff to join us at our October Regents meeting, if their schedules permit, to discuss their findings and next steps with our regents, chancellors and university officers.

"LAB has recommended we report to the Audit Committee next February on our efforts to reduce administrative expenditures and increase operating efficiencies and we will do so. The UW System Board of Regents, UW System President and the Chancellors have made efficient operations a priority for the past decade and recent state budget cuts have forced us to ‘walk the walk,’ not simply ‘talk the talk.’  We pledge to vigorously continue this effort and to be as sensible with each state tax dollar as the people of Wisconsin would be. We look forward to reporting back to the Governor and legislators in February on our progress in that regard."

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