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Colleges and Universities Committee

Testimony by
David Walsh, Vice President, UW Board of Regents

October 7, 2003

Good Morning. I want to thank you for inviting me today to discuss the issue of leadership salaries in the UW System and to discuss the bills that are related to this issue. Thank you also for your courtesy in allowing me to arrive late to this hearing.

We recognize that the proposed bills are in response to the September 2 telephone conference at which the Board of Regents, in an open meeting, duly noticed under the Wisconsin Open Records Law, approved 2003-04 salary ranges for the 35 members of our senior executive group. Let me emphasize that since that meeting, no salary increases have been granted because President Lyall was directed to come back to the Board with recommendations prior to taking any actions.

There are two significant issues both of which have been responded to in part by some of the bills before you today.

The first issue is process. There has been well-deserved criticism from lawmakers and the media about the process of approving salary increases no matter how small by telephone with less than a majority of the entire Board of Regents voting in the affirmative (albeit a majority of the quorum present). Moreover, the conference call was conducted two days prior to a scheduled meeting of the Board of Regents. This was a mistake. The matter should have been discussed at a meeting of the Board with a maximum number of Regents participating. To that end, it will be reconsidered at our meeting scheduled for this Friday.

Let me address the two bills that are a response to the process of September 2nd. The first (AB 558) is one that would require a roll call vote on all actions of the Board of Regents. I speak only for myself. The Board of Regents has not addressed the issue but I would urge you not to pass legislation requiring roll call votes on all matters. It would be inefficient and cumbersome to require a roll call vote on all issues such as recess, consent calendars or for that matter unanimous acclamations. I am sure as legislators, you recognize that roll call votes are not necessary on all matters. Likewise, since anyone can request a roll call vote, it is not necessary to statutorily require it. On the other hand, I would support and I will make a motion to require a roll call vote on all matters involving compensation.

The second legislation (AB 543) is that all UW system departments and subunits be required to formally notice all meetings. There are literally hundreds and hundreds of such meeting on the campuses throughout our State. This legislation would require Departments to advertise each of those meetings in the official State newspaper which would cost our campuses thousands of dollars that would be much better spent in the class rooms. With all due respect, I believe the legislatures’ concerns lie with our Board’s policies and procedures, not with those of the UW-Eau Claire’s English Department or the UW-Fox Valley Biology Department.

The third bill (AB 532) would give the executive salary setting approval to the legislature’s joint finance committee. This Bill raises the substantive issue of leadership salaries. My response requires first some background.

The legislature gave the Regents the authority to set ranges for executive salaries, because at that time, they felt the Regents rather than State elected officials should take responsibility for those salaries. I happen to agree that that is where the responsibility should lie. By all means, hold us accountable, as you are today, but I urge you to consider carefully before you take ownership of the problem. The background of this particular salary decision is instructive.

The September 2 decisions to increase salary ranges was not a recent issue. It was the consequence of the Regents early decision not to implement a matter previously approved by the Joint Committee on Employment Relations (JCOER). In October of 2001, JCOER approved a 4.2% increase for faculty, academic staff and executive leadership for the year 2002 - 2003.

In July 2002, the Board of Regents authorized the 4.2% for faculty and academic staff to be paid in two steps, July 2002 and January 2003. On the other hand, the Board of Regents authorized only the first step, a 2.1% increase for executive leadership.

In December, 2002, the Board of Regents again considered the previously approved 2.1% increase for executive leadership but decided to defer the matter in light of State deficit problems and to wait for the Governor’s budget proposal and legislative reaction.

In July, 2003, the State Budget for 2003-2005 was completed. As we all know the University of Wisconsin system took a $250 million cut funded only in part by a tuition increase.

In August, 2003, Chancellors Zimpher and George announced their departure for other universities. Special Search Committees were appointed. And, it became clear that the Board of Regents needed to establish salary ranges for those two searches.

On September 2, 2003, the Board of Regents met telephonically and adjusted the ranges only. The Board directed President Lyall to return with individual compliance recommendations. No salaries were increased.

The Board of Regents is sensitive to the fiscal dilemma facing the State of Wisconsin. Indeed, it accepted 38% of the proposed cuts to state spending while the UW System budget is only 9% of the state GPR budget. Much of the credit goes to the executive leadership that has accepted the challenge by absorbing the cuts and maintaining a high quality of education with maximum access. Our challenge is to balance the need to maintain strong executive leadership while at the same time being sensitive to the competing constituencies in need of State funds. I am referring to Corrections, Medicaid, K12, Transportation and other special needs throughout the State. This is a tough time and all of us need to balance our priorities.

State statutes call for the Regents to adopt salary ranges for academic staff and senior leaders with minimums and maximums and to pay all salaries within those ranges. For a decade, our ranges have been based on data for similar positions at peer institutions as defined by the Department of Administration and the Board to be comparable institutions. I am providing you today with a copy of an example of some of that information which describes the levels of leadership compensation of our peers in Iowa, Illinois and Minnesota. It should be no surprise that Wisconsin is significantly below those peers.

We think this is a practice that has worked and should continue. Accordingly, we urge you not to pass legislation that would require the approval of the Joint Finance Committee to set executive salaries. It is micro-managing that would be inefficient and with all due respect, politicize the process. The status quo, is for the Regents who are closer to the issues and evaluations to make the decisions, take the heat and be forced to defend them.

There is another part to the salary issue. It costs more to recruit and to hire new chancellors than it costs us to keep them here. The President and our Board are very concerned about the departures of Chancellors George and Zimpher, which are early warning signals. We are concerned about retaining and recruiting the best University leaders for Wisconsin, especially at a time when those leaders are being asked to do much more with much less in the way of State resources.

As I earlier said, we have been justly criticized for the process by which we chose to implement a previously approved increase. To that end, the Board of Regents will on Friday, reconsider that decision and we will wholly air the issues at our general meeting. We have requested and we will receive additional information from a consultant. This information will help us in reaching the necessary balance between our goals of a quality system and sensitivity to competing state needs.

Great people have made Wisconsin great. Our Board is committed to recruiting and retaining great people to lead our campuses. We appreciate your help in keeping this great University system strong and preserving the excellence and access that we are so proud of.

We would be happy to answer any questions you might have.

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