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REMARKS TO THE BOARD OF REGENTS

President Katharine C. Lyall
October 8, 1999

I want to take a few moments this morning to report to you on the outcome of the Board's 1999-01 biennial budget request for the UW System.

As you know, it has been a long and sometimes frustrating wait for those of us charged with operating a quality university system that serves the state effectively. The saga began more than a year ago with the Regents' request for $130 million GPR/fees to sustain our institutions, enable us to recruit and retain top faculty, and provide the libraries, advising, computing resources, and study abroad opportunities that characterize a fine education. Last February, the Governor recommended $66 million in his state budget proposal. At the time, I described that as the "best budget proposal for the UW in a decade." I'm pleased to tell you today that the final 1999-01 budget approved on Wednesday has delivered on that prediction.

The new 1999-01 budget provides a total of $90 million in GPR/fees over the biennium ($75 million of original request plus additional $15 million contribution towards pay plan) and the management flexibility we need to expand earned revenues to serve more students throughout the state.

This budget funds some very important "educational basics": $7.3 million to strengthen our library collections after a decade of stagnation, $3.9 million to train students to use instructional technology, $2.5 million to expand study abroad opportunities to prepare our graduates for work in the global economy, $1.7 million for pre-college and other programs within the scope of Plan 2008 to ensure that all Wisconsin citizens can aspire to higher education.

In addition, institution-specific initiatives for UW Colleges (to improve student services), UW-Stout (graphic arts partnership with industry), UW-La Crosse (allied health), and

UW-Madison's Initiative (to selectively restore and rebuild capacity in targeted research areas) are funded. Full funding of the Madison Initiative means that UW-Madison can claim the $200 million in private funds put forward by the UW Foundation and WARF as a challenge grant. Meeting this challenge was essential to maintaining the state's flagship research university.

Modest increases are provided for AOP and Lawton financial aid programs, and a very important linkage of financial aid to tuition increases is established by creating a sum sufficient appropriation for the state WHEG and Lawton programs. This action will guarantee that WHEG funding will rise at the same rate as tuition in future years, ensuring continuing affordability for UW students.

There are some unique additional features of this budget that meet the needs of students, faculty, and the state.

Access and Affordability

$28 million is provided to buy down planned regular tuition increases for resident undergraduate students in 2000-2001. This effectively cuts the average tuition increase for the biennium in half, from nearly 8.0% to about 4.0% by freezing regular undergraduate resident tuition in the second year of the biennium. (Regent-authorized differential tuitions will continue.) Combined with the "linkage" of WHEG to tuition, this represents a major improvement in affordability for students, and without compromising quality.

Funding is also provided to increase access to the UW System by 1,000 FTE student slots systemwide. As we work on a prudent enrollment management strategy for the next five years, this additional base funding will help us adjust and adapt our planned enrollment targets to ensure that Wisconsin continues to have one of the highest access rates to higher education in the nation.

Management Flexibilities

This budget also provides three key flexibilities that will be essential in our efforts to expand our services to nontraditional and working adults and assist with the state's "brain gain" strategy.

Continuing appropriation authority enables us to put the revenues paid by students directly to work for them in mounting programs they need without a cumbersome re-appropriation process. Our "brain gain" strategy to expand UW services to working adults depends on this capability.

In order to accomplish this, the budget also permits us to exceed our authorized GPR position limit by 1%. This means that we can hire up to 180 new staff to help us mount needed programs without depending on the state for more tax dollars to do this. Together, these two flexibilities position us to extend UW education and programs to new clients throughout the state.

Thirdly, the budget authorizes our institutions to cover the first six months of health insurance for new employees from base resources. This is essential in our ongoing struggle to hire the best faculty and staff we can in an increasingly competitive market, where first-day health insurance coverage is the norm.

As usual, there are also a few not-so-good items in the budget, including, at last count, fourteen new reporting requirements, including an audit of the UW Center for Tobacco Research.

 

Pay Plan

While the pay plan for faculty and staff is not included directly in the operating budget, you need to be aware that the final budget provides both the GPR/fee funding and the continuing appropriation authority sufficient to award 5.2% pay plan adjustments in each year of the biennium. This would bring our faculty salaries close to market for the first time in nearly eight years and will be essential to helping us compete for the best candidates as we replace retiring faculty over the coming biennium.

The final steps in this process require the DER Secretary to recommend, and JCOER to approve, the 5.2% pay plan that is funded in this budget. I urge them to do so soon so that we can compensate our current employees fairly for work they have been doing since July 1 and work aggressively to attract the next generation of the professoriate for the UW.

WRS Benefit Improvement Bill

Also separate from the operating budget, but related to it, is a bill providing for certain changes in the Wisconsin Retirement System: the multiplier used in calculating retirement benefits will increase modestly from 1.6% to 1.765% on all years of service through 1999 (but not future years); the 5% interest cap on employee contributions will be lifted (especially helpful for faculty and staff who may not work long careers in Wisconsin); reopening the variable program within WRS on an elective basis; and improvements in death benefit restrictions. These changes will be funded from within WRS existing accounts, although there may be some legal challenges before the changes can go into effect.

As we analyze details of the budget bill, we may find other provisions of interest, and I will update you on these by mail in the next week or so.

As you review this budget outcome, I hope you will agree that it gives us a much-needed boost in resources to help us move into the next century. I want to thank the UW System Budget and University Relations staff who have worked so hard over so many months to help us arrive at this day. And I also want to thank the Regents for the year of careful budget preparation work you did with us and for your unswerving support for the program and pay plan dollars we need to maintain the quality of this university system.

Finally, I am most appreciative of the support of the Governor and legislative leadership in both houses who, despite a difficult process, recognized the importance of a strong UW System in the future of the state and worked to give us the tools we need to deliver on the Wisconsin Idea for the next century.

The ball is now in our court, to use these resources effectively and carefully-I can assure you that you will see the results of this budget in many dimensions as our institutions work to serve students and the state.

Other Good News

UW-Stout has received a maximum six year accreditation from ABET, the national accrediting association for engineering programs. Stout joins Platteville, Madison, and Milwaukee in offering ABET accredited programs in Wisconsin.

In a very productive joint bidding process, the UW System and Wisconsin Technical College System have concluded a three-year contract that makes a package of the most popular MicroSoft software programs available to faculty and students at a substantial savings. We estimate that software worth about $60/student on the market is obtained for about $10/student under this contract. Equally important, students own the software at graduation and can take it with them. Faculty are permitted to install on their home computers the same software they are using at work to increase compatibility and efficiency of faculty course preparation and research. The combined purchasing power of the UW System and WTCS made this good deal possible. We look forward to other collaborative opportunities of this kind.

UW-River Falls has just been named a recipient of four U.S. Department of Education grants that total $3.4 million over the next five years. Upward Bound will bring fifty low-income or disadvantaged kids to campus each year as part of the effort to help them prepare for college, and McNair Scholarships will help disadvantaged or underrepresented graduates go on to graduate school. UW-River Falls will work with the River Falls, Prescott, and Hudson School Districts and with Saint Bridget's School to train teachers for using technology in the classroom. Finally, a Title III grant will enable UW-River Falls to improve graduation rates by strengthening advising. These grants are a very welcome opportunity to expand and extend the UW's collaboration with K-12 schools and to advance our pre-college efforts towards greater educational opportunity.

Finally, I just wanted to mention that October 18-22, 1999 is Wisconsin Women's Philanthropy Week. A Fund for Women of the Madison Community Foundation, the Women's Fund of the Milwaukee Foundation, The Council on Women's Giving of the UW Foundation, and the Women's Philanthropy Institute are all sponsoring this effort to reach and inspire women donors to contribute to causes they value. Some interesting research suggests that women make giving decisions differently from their male counterparts, are more likely to support long-term projects that help individuals directly, rather than bricks and mortar, and are just beginning to develop philanthropic habits.