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May 31, 1996

UNIVERSITY OF WISCONSIN REGENTS WILL CONSIDER 1996-97 ANNUAL BUDGET FOR 26-CAMPUS SYSTEM

MADISON -- The University of Wisconsin System Board of Regents, meeting at the University of Wisconsin-Milwaukee June 6-7, will be asked to approve the allocation of the UW System annual operating budget to the campuses for the 1996-97 academic term beginning July 1. The funds for the budget were appropriated by the Legislature and approved by the Governor last year in the state's 1995-97 biennial budget.

Revenue for the $2.48 billion UW annual budget is derived from three primary areas:

  • State general purpose revenue (GPR): $844.4 million, or 34.1%
  • Tuition: $400 million, or 16.1%
  • Other sources: $1.236 billion, or 49.8%

As a result of the state's assumption of a greater share of K-12 educational costs in order to reduce local property taxes, spending throughout the biennium was reduced for many state agencies.

According to President Katharine C. Lyall, under the proposed annual budget the UW System will operate with a GPR reduction of $19.8 million (2.3%) less than in 1995-96. As a provision of the state's biennial budget, the Governor and Legislature permitted a $5.4 million offset through a tuition adjustment, for a net reduction of $14.4 million. This is on top of last year's net reduction of $18.7 million, for an ongoing net reduction of $33.1 million this biennium.

However, the overall GPR budget level in 1996-97, after the application of compensation increases and cost-to-continue decreases, is $5.8 million less than last year in total GPR.

"This is a challenging budget in a time of diminishing resources and increasing demands across the UW System," Lyall said. "The unified goal of the UW institutions and System Administration is to meet student and state needs while making optimum use of limited state tax dollars. I believe we can reach that goal."

Other significant aspects of the 1996-97 operating budget include:

  • An additional reduction of 156 full-time equivalent positions bringing the total biennial personnel cut to 527 FTE. Two-thirds of the position cuts come from administrative, support-service and other non-instructional functions.
  • The student share of instructional costs rises from 33.4% to 34.5% as tuition partially offsets GPR cuts.
  • Proposed tuition increases are the lowest for all institutions since 1991-92 when tuition increased 3.4% for all 26 campuses. The board will consider the following resident undergraduate increases for the 1996-97 academic year:
    • UW-Madison: 4%
    • UW-Milwaukee: 5%
    • Comprehensive universities: 5%
    • UW Centers: 6.5%
  • Revenue from federal sources is projected to decline slightly (-0.5%) while gift and trust fund income is projected to rise by 21% over last year, chiefly as the result of $40 million provided for UW-Madison's Kohl Center. Excluding the Kohl Center, the increase in gifts and trusts would total $6.5 million, or a 2.9% rise.
  • For the first time, UW Hospital and Clinics, operating under a separate public authority, is not a part of the UW System budget, which removes $270.9 million from the System operating budget.

Tuition Adjustments

Tuition adjustments in the second year of a biennial budget are driven by the overall two-year budget plan adopted last year. Overall, the 1996-97 increase is due to four factors: (1) continuation of the technology fee at UW-Milwaukee, the comprehensive universities and at UW Centers campuses; (2) the legislatively authorized $5.4 million tuition offset to required GPR budget reductions; (3) an anticipated 2% state pay plan increase and prospective fringe benefit cost increases; and (4) changes in student mix including an increase in undergraduate students and a decrease in nonresident and graduate students.

Wisconsin Higher Education Grants are expected to increase in the new budget year because of a decrease in the number of applicants and the use of one-time carry-over funds from 1995-96. (The actual WHEG appropriation did not increase between 1995-96 and 1996-97.) The maximum award level for an eligible dependent student will increase 4%, from $1,452 to $1,510.

As part of a multiyear plan to enhance educational quality at the 13 UW Centers, an additional 1.5% will be added to the Centers' tuition schedule. Specifically, 1.5% of the 6.5% increase will be "earmarked" to strengthen student programs and services, including:

  • Strengthening academic advising to better prepare students for transfer to many different programs at all UW System institutions;
  • Enriching the curricular and co-curricular freshman year experience, important for all, but especially so for non-traditional students, first-generation college students and older students who make up a large percentage of the student body;
  • Supporting specific "integrated" courses that strengthen the Centers associate degree program.

The "earmarked" 1.5% increase amounts to $12.50 per semester for resident students.

For the 1996-97 academic year UW-Centers tuition of $1,779 will be 17% less than at comprehensive universities and 8.5% below comparable Wisconsin Technical College System two-year college-parallel programs. This is the first implementation of the differential tuition increase option recommended by the Board of Regents' Study of the UW System in the 21st Century.

1996-97 activities funded by GPR and student fees

The largest single use of GPR/student fee monies is instruction, utilizing 47.9% of all such revenues, or $596 million of a total $1.244 billion in GPR/fee revenues. Other activities funded by GPR/student fees include: academic support ($166.8 million), physical plant ($129.9 million), research and public services ($102 million), institutional support ($101.2 million), and student services ($71.2 million).

Budget reductions

As noted earlier, the UW System Biennial Operating Budget for 1995-97 was reduced a net $33.1 million from the previous biennial operating budget. Accordingly, numerous cost-reduction steps were taken within UW System Administration and each of the UW System's 15 institutions.

A total of 527 positions will be cut systemwide, including 20 percent of all System Administration staff..

Each of the 15 institutions (13 four-year campuses, UW-Extension, and UW Centers) also sustained reductions in each of the two years in the biennial budget period. While all areas of expense were affected, Instruction has been relatively protected while disproportional reductions have been taken from Institutional Support, Academic Support, Student Services, Research and Public Service, and Farm Operations. As shown in the table below, in 1995-96, Instruction was 48% of the UW System GPR/fee base budget while Institutional Support was 8.3%, Academic Support was 13.0% and Student Services were 5.7%.

Activity Percent of 1996-97 Administrative
and General Reduction
Percent of 1995-96
GPR/Fees Budget
Instruction 36.6% 48.0%
Institutional Support (Admin) 20.2% 8.3%*
Academic Support 19.7% 13.0%
Student Services 7.6% 5.7%
Physical Plant 4.3% 10.3%
Research & Public Service 11.0% 8.3%
Farm Operations 0.6% 0.4%
Other 0.0% 6.0%**
(*Institutional Support is 6.3%
on an all-funds basis)
   
(**Auxiliary Enterprises, Hospitals,
Financial Aids, Debt Service)
   

Of these GPR budget reductions made in the 1996-97 annual budget, 93% of the reductions were made in the area of salaries and fringe benefits, 5% came in supplies and expenses, and 2% from capital expenditures. Specific examples of administrative expense reductions and academic restructuring by institution are listed in Section V of the 1996-97 annual budget document.

After approval by the Board of Regents, the UW System budget reductions will be transmitted to the Legislature's Joint Committee on Finance for review on June 18.