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Remarks to the Board of Regents
UW System President Katharine C. Lyall
February 7, 2003

2003-05 Budget Message

As we know, the Governor expects to deliver his proposed budget in a speech on February 18. He has warned us all not to expect a Valentine. We know that the UW System must be part of the solution to the state deficit and our campuses have been working since last November to identify priorities and potential cuts to programs and positions. This process requires consultation with faculty, staff, and students, and systemwide coordination among our institutions to ensure that we do not inadvertently cut the same major at every campus in the System.

The magnitude of the cut, its timing, how much (if any) can be offset with tuition increases, and what provision may be made for increases in financial aid will all affect the final decisions. As we approach this task, we need also to bear in mind that our institutions are still absorbing $51 million in cuts since the last biennium, $34.1 million since school started this year.

Since last fall, our campuses have been making cutbacks wherever they could without affecting the students already enrolled for 2002-03. All campuses have made administrative cutbacks, including:

  • reducing GPR travel by about 50 percent—this has restricted faculty travel to professional meetings and student opportunities for field study.
  • printed matter and publications have been restricted to information that parents and students need to select a school, a major, and courses and information directed to alumni and donors as part of our fundraising efforts. From now on, publications will carry a disclaimer when they are not published with GPR funds.
  • advertising has been eliminated except job notices that are legally required and public events information which serves the local community. I should note that campuses take seriously their partnerships with local businesses and community organizations and will continue to meet their obligations to these partnerships.
  • selective replacement of vacancies to maintain instructional capacity to serve the fall 2003 entering class, a year when our enrollments exceeded targets by 2,400 FTE. These personnel cuts have:

    • reduced library hours (UW-Milwaukee) (UW-La Crosse) (UW Colleges)
    • eliminated risk management and security staff (UW-Milwaukee)
    • eliminated positions in accounting and psychological testing (UW-La Crosse)
    • deferred replacements of staff in alumni relations, custodians, a Director of Information Systems (UW-Stevens Point)
    • reduced student work-study position (UW-Whitewater)
    • cancelled math and writing tutors for Distance Education (UW Colleges) etc. . .

    The extent of future reductions in faculty and staff will depend on the size of our 2003-05 cuts and any offsetting tuition revenues.

While we do not yet know the magnitude of the 2003-05 cuts that will be proposed, I would like to suggest some principles that we should follow in managing whatever is required:

First, whatever cuts are necessary in the short run, we should work to preserve our long run capacity to serve students and the state. We must not plunge the System into a death spiral.

Second, in keeping with our efforts to minimize administrative costs, we have looked first to cut administrative expenses that are least related to serving students, meeting our legal accountability responsibilities, and generating external (non-GPR) revenues. This will undoubtedly mean that students, parents, legislators, and other constituents will encounter slower service and longer wait times than we would prefer. We will need everyone's patience with such delays.

Third, we should look to eliminate or merge academic programs and majors that have small enrollments or similar programs elsewhere, taking care to coordinate such eliminations across the System so that we do not simultaneously remove the same major(s) everywhere. For students, this may mean that the majors and programs they want can only be obtained at one or two campuses in the System; in some cases, they may need to apply out-of-state for specialized and especially expensive programs.

I should note that both administrative cuts and program eliminations require the elimination of positions and personnel. Because our budget is 85 percent "people," we cannot generate large dollar savings without affecting jobs and people. We will make these decisions as conscientiously as possible, carefully observe our UWS Administrative Rules and campus procedures for notice periods, appeals, etc., and make every effort to assist employees in finding new opportunities within the UW System and state government.

Fourth, in order to mitigate the effects of large base cuts on student access, we should support a move-to-the-midpoint policy for tuition, coupled with matching need-based financial aid. To put it bluntly, state subsidy dollars should be removed first from those that can afford to pay and last from those least able to pay. We should not move to the midpoint all in one year and we should ensure that financial aid at least parallels the rate of tuition. As you know, current UW tuition levels are at or very close to the bottom of our peers. Moving to the midpoint would implement the Regents' long-standing policy of "moderate and predictable" tuition.

Fifth, after all these steps have been taken—cutting administrative costs, eliminating programs, and moving tuition to the midpoint—if further position/personnel reductions are necessary, we may need to review and adjust enrollment targets to reflect the elimination of additional faculty and staff from the budget.

I want to stress that adjusting our enrollments is the fourth, not the first, step in this process; it is driven only by necessary reductions in faculty and staff that eliminate the ability to provide the sections, labs, and other educational services that students need to graduate in timely fashion. Our obligation is to serve our students well at whatever scale is possible with available resources.

Finally, there are a number of restructuring options that could be examined to reposition our institutions over the long run to operate with much reduced state support. These might include: exploring the "Cornell model" which privatizes certain professional schools and programs within the university; and considering whether "charter status" for the UW System could reduce GPR costs and stabilize our System by following the kind of restructuring adopted for UW Hospitals and Clinics five years ago. Each of these options has pros and cons that should be carefully weighed. Depending on the depth and permanency of the ongoing budget reduction, restructuring may be the only long-term way to meet principle #1: preserving our core mission and capacity to serve Wisconsin.

Good News...
After all that rather grim information, I want you to know that many things are still going right throughout the UW System:

UW Small Business Centers—Last week (Wednesday) was Small Business Day in Wisconsin. Small businesses (those employing fewer than 100 people) generate 80 percent of all new jobs. Ninety-five percent of Wisconsin businesses fall in this category. We are not a state of big corporate headquarters and are rapidly losing our status as home to large manufacturing firms. Our economic future and growth depends heavily on helping to reposition Wisconsin as a place where an individual with a good idea and hard work can find encouragement, venture capital, and intellectual expertise to launch and grow a new business.

UW-Extension's Small Business Development Center, under the direction of Erica Kauten, helps entrepreneurs put it all together. There is a small business assistance office at each of the 13 UW campuses across the state where advice from management to marketing to finance is available. Quick assistance is also available from the new Business AnswerLine (800-940-7232). The SBDCs Entrepreneurial Training Center can help you develop a business plan, qualify for a Department of Commerce grant, refer you to potential investors, and provide other help. Last year, the SBDC served 10,000 individuals and business owners—working to build Wisconsin's growth opportunities.

In fact, today, Erica Kauten, director of the SBDC, and Chancellor Sorensen are launching a specialty Center for Innovation and Development at UW-Stout. The Center for Innovation and Development will provide business counseling and education to entrepreneurs, building upon the market research and expertise of UW-Whitewater's Wisconsin Innovation Service Center. The Whitewater center specializes in new product assessment; the Stout center will focus on helping entrepreneurs convert their ideas to cash by developing business plans, obtaining financing, and building their management skills. All 13 of our SBDCs are units of UW-Extension that operate jointly with their host campus.

UW-River Falls Grant—National Science Foundation has awarded a $374,000 grant to UW-River Falls to support Professor Mark Bergland's continuing project on "Developing Computer Simulations of Protein Laboratory Procedures for Case-based Learning in International Biology Curricula and Pre-service Science Teacher Education." This project will further teacher education and teaching materials in lab-based science—and helps to boost Wisconsin's Federal funds flowing into the state.

Systemwide IT Summit—Our UW Systemwide IT Summit was held in December at the Eau Claire campus. The IT Summit brings together CBOs, CAOs, and CIOs from all UW campuses to work together to manage campus technology in an increasingly tough fiscal environment. You will recall from yesterday's Accountability Report that we are ranked highly by our faculty and students for access to and quality of computing services. This is an expected tool of the academic trade and universities are stretching to get every dollar of value from our IT expenditures. The Systemwide IT Summit sets the priorities for the core of our Systemwide IT Plan, which is presented to this Board each fall.

You'll also be interested to know that the System Administration Procurement Office recently negotiated a $1.2 million (20 percent) reduction in software maintenance costs that will benefit the whole System. The credit goes to Ruth Anderson for knowing the market and optimizing the educational discounts we can obtain as a System.

Finally, I should mention the passing of two special friends of Wisconsin higher education:

Robert Taylor, former UW-Madison journalism graduate and news editor at WIBA radio for many years, died in December. He served as an assistant to three UW presidents and in 1968 became a university vice president for public relations. He returned to teaching at UW-Madison in the 1970s until he retired in 1986. His wife, Judy, remains in Madison. We remember his service with gratitude.

I also want to note the passing of former Regent Roy Kopp at 97, in Naples, Florida. From Platteville, he served the Boards of the Wisconsin State Universities and UW System, 1965-1974.