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February 5, 2004

Remarks to the Board of Regents
Katharine C. Lyall, President
University of Wisconsin System

2003 UW System Accountability Report

Introduction

This is the 11th Systemwide Accountability Report, marking more than a decade of public reporting to the university’s stakeholders. The UW System was the first in the nation to do systemwide reporting; we continue to be a model for many other states in their efforts. The UW System has multiple stakeholders: the taxpayers of Wisconsin, the half-million living alumni of our institutions, the current students who support us with their tuition, many private donors who generously provide the margin of excellence for many of our programs, the Federal government and private foundations that support world-class research at our institutions, and communities all across Wisconsin who look to partnerships with our campuses to boost both the economic and cultural opportunities that make life in Wisconsin satisfying for us and for the next generation.

All of these constituents expect much of us. Often, the interests of these various stakeholders coincide, but sometimes they conflict. In tight financial times, the University has to make choices that balance competing interests fairly, while preserving our long-term capacity to meet our public purpose. The 2003 Accountability Report reflects some of these difficult choices, but I think we can expect to see even stronger reflections of the 2003-05 budget cuts in subsequent reports because many of the impacts of the cuts only show up with a lag.

Before getting to the findings, let me just note what this Accountability Report is, and is not, intended to do. It is designed to:

  • Serve as a “balanced scorecard” to help our stakeholders see at a glance how we’re doing against selected goals and benchmarks and the strategic tradeoffs that we’re making as resources shift.
  • Be a basis for continuous improvement using indicators tied to the different institutions’ missions as well as to our systemwide goals. We can then weigh our performance gaps against student, faculty, and state priorities to inform budget, management, and policy decisions.

This accountability report, however, is not intended to be:

  • Inclusive of all aspects of a university’s mission; there are many elements not captured here on which we report separately and extensively—these are listed in Section III of the report. For example, we make separate reports on diversity, use of gift and grant funds, faculty turnover, university research, and many other topics.
  • A basis for performance funding or an index of overall institutional quality, since these applications would require policy agreement on a more specific set of indicators of interest to our different constituencies.

Nonetheless, a careful reading of this report gives a more comprehensive assessment of Wisconsin’s public university system than of any other state entity of similar span and complexity. Again, this year, we include supplemental campus reports that show how each institution did on three common goals (its enrollments, its retention and graduation goals, and on maintaining/reducing credits-to-degree) as well as on a number of additional measures specific to that particular institution. These campus-specific measures come from the institution’s own strategic planning processes and reflect extensive campus discussion.

Let me turn now to the findings of the report –

The context in which our institutions operated in 2003-04 has been especially challenging. The UW System’s funding has become more diverse and more dependent on what we can to do support ourselves.

  • Our GPR appropriations declined by $140 million this year from about 33 percent to about 27 percent of overall resources, and our institutions are planning for further decline in 2004-05. State funding now supports just over half (52.9 percent) of our core instructional resources, that’s down from 61 percent the year before.
  • Tuition increased to 20 percent of the total UW budget this year and makes up the remaining 47 percent of the instructional budget in 2003-04.
  • The portion of our resources that is earned directly by our institutions through gifts, grants, and program revenue is now also over half (53 percent) of our total budget available to carry out our mission. This places increasing importance on strong leadership of our institutions and giving them the flexibility to be more entrepreneurial and to manage more strategically if we are to sustain the university’s ability to meet its public purpose.
  • Despite large budget cuts during the period covered by this report, our FTE enrollments grew slightly reflecting the strong commitment that our institutions have to serve, and also forcing some compromises in quality that must be restored if we are to continue to serve 160,000 students into the next biennium.

The scorecard at the front of the report shows that the UW System has met 14 of 20 goals; we had mixed success on four, and we failed to achieve two.

The good news is that we continue to provide access for approximately 32 percent of immediate high school graduates. We increased pre-college participation, served a growing number of students on-line, and met our rising targets for retention and graduation rates. Students and alumni gave us high marks on learning outcomes like fostering critical thinking, preparation for a diverse world, and learning outside the classroom. But our performance on advising continues to lag. Our performance on professional development for our staff, availability and use of information technology, the allocation of resources, and credits-to-degree remain the same this year as last year. Finally, we have not attained our goals for access for nontraditional students, study abroad opportunities, or reduction of classroom maintenance backlog.

These reflect some difficult trade-offs. Our institutions have chosen to preserve traditional high school access over serving nontraditional students; to protect on-campus, classroom instruction over study abroad programming; to proportionally protect instruction over building maintenance and other administrative functions as operating cuts are made. And the choices will be even tougher next year.

This report documents some of these compromises we’ve made:

tenure and tenure track faculty now teach only 60 percent of our total student credit hours. Instructional academic staff teach 34 percent and teaching assistants teach the remaining 6 percent. The big growth has been in use of ad hoc instruction. This reflects the efforts to maintain enrollments and course offerings with ad hoc instructional staff as institutions are forced to cut faculty positions. The number of tenure or tenure track faculty systemwide will decline by 250 this biennium and has fallen by more than 500 over the past decade, while FTE enrollments have grown by 10,000. In my opinion, we cannot continue this trend without significant negative impacts on instructional quality, student advising, and ultimately on enrollments themselves. We need to begin to restore our faculty base in 2005-007.

the number of adult (nontraditional) students we serve has declined as institutions have placed higher priority on serving traditional high school graduates with their declining instructional dollars. This means we are not meeting the need to retrain adult workers for new careers and to meet pressing state requirements in areas such as nursing and health care as well as we might. We need to seek some new state investment in an integrated effort of the UW and Technical College systems together to meet such key needs. Our two systems advanced a joint plan for graduating more nurses which could not be funded in 2003-05. I believe we should revisit this, and perhaps other areas of need, in assembling our 2005-07 budget proposal. It is not realistic to think that either of our systems will be able to meet growing state needs for such skilled professionals at the expense of reducing access for traditional high school graduates—and the state should not want that zero-sum choice.

instructional technology offers a way to serve more traditional and nontraditional students than we can serve through on-campus instruction alone. Universities have learned that quality on-line instruction is not cheaper but it can reach more clients and produce more graduates if it is done well. UW instructional technology efforts are supported solely by base reallocation of our campus budgets; and although the Board of Regents has requested state funding for instructional technology in the last two biennia, these requests have not been funded. Reallocations alone cannot continue to meet the needs for replacement and upgrading of equipment and the up-front investment in on-line programming necessary to take full advantage of technology in the future.

facilities maintenance continues to lag state standards as documented by the Computerized Maintenance Management Systems in place on each of our campuses. We continue to chip away at our significant maintenance backlog, but state bonding caps coupled with operating budget cuts make this a real struggle. Proposed initiatives that could further cap state bonding or restrict its use will exacerbate our maintenance problems. The Charting Study working group on efficiencies is currently looking at ways to streamline the capital budget process and thereby squeeze more progress from our limited capital funds. These initiatives will be essential if the System is to continue to chip away at maintenance backlogs in the future.

There are two other challenges that are not directly measured in our Accountability Report but nonetheless will be critical to our ability to continue to meet our public purpose:

  • Student financial aid will be increasingly important to our neediest students as tuitions rise and GPR falls. We have al ready seen a decline in the proportion of our new freshmen coming from families with incomes in the lowest quintile, and we know that $18 million in one-time financial aid that came from our auxiliary reserves will be gone next year. We need a significant public policy discussion on what to do next—reinvest GPR to reduce tuition increases? reinvest GPR in state financial aid? reduce enrollments to levels supportable with existing GPR? I am hopeful that the renewed dialogue with legislative leadership proposed by Senator Darling to the Charting Study can be the vehicle for this policy discussion well in advance of the next frenetic budget cycle.
  • The second issue is competitive pay plans for our faculty and staff. It will be a pressing issue if we are to recruit and retain even the reduced numbers of faculty now on our campuses. The Board of Regents requested up to a 4 percent pay plan for 2003-05; the final approval was for 0 percent and 1 percent. This will drop Wisconsin’s salaries farther below our Midwest peers. As economic conditions begin to improve, we need to pay close attention to restoring faculty and staff compensation to competitive levels, or we will not be replacing excellent faculty we are now losing with people of equal promise.

These are some of the challenges our institutions are facing and they are significant. But there are also many goals that our institutions continue to meet through exceptional efforts, tight management, and the extraordinary willingness of UW employees to go “above and beyond” to serve their students and communities.

Finally, I want to note that these results would not have been possible without the exceptional efforts of our chancellors, faculty, and staff who work hard to create and sustain our ability to meet our public purpose. Their energy, creativity, and much overtime and overloads have made this possible in the short run. But we cannot expect to sustain this exceptional effort without relief in the long run. I think much hangs on critical public policy decisions that will be made for 2005-07. This is why the work of the Charting Study is so important. It will point the way in which the UW System can sustain its public purpose in a dramatically changing environment, and this blueprint will determine in large part the role that we can continue to play in Wisconsin’s future.

I want also to thank Frank Goldberg and his team for all the work entailed in assembling this 11th annual Accountability Report. Frank and I will be happy to try to answer any questions or comments you may have about the details of the report.