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February 6, 2004

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

2005-07 Biennial Budget Planning

Although we are not yet through the first year of the 2003-05 biennium, we need to begin the process of developing the 2005-07 Biennial Budget because the state statute requires us to submit a request to the Department of Administration in September of 2004; that leaves just five more Board meetings to formulate this request.

The fiscal environment for the nation and the state appears to be improving, albeit slowly. The State Department of Revenue is projecting personal income growth of about 5 percent in 2004-05, on top of the 4 percent or better for tax collections in 2003-04. UW students bore a large share of the state deficit reduction this biennium in the form of higher tuition and reduced services; it is not unreasonable to advocate for some restoration of these sacrifices as times get better. Indeed, it is essential if we are to continue to provide educational opportunities for all those who need and deserve the services of the UW System.

Earlier this year, we heard Terry Ludeman from the Department of Workforce Development project that Wisconsin will experience a shortage of 100,000 skilled workers by 2010. This is because there will be more seniors, like me, retiring from the workforce than new workers entering the workforce.

Other states are planning for this future also. I recently shared with you an article from the Chronicle of Higher Education (1/16/04) which showed that despite hard times, 27 states still made increases in funding for higher education last year and a number significantly boosted state financial aid programs. This is the context in which Wisconsin will compete for workforce and jobs and economic growth in the next several years.

The encouraging news is that much of the work coming from the Charting Study is beginning to identify key directions and needs. Many of the emerging recommendations are directed to things that we can do to help ourselves, some new revenue-generating opportunities, some identifying of additional streamlining of costs, and some reallocation of administrative savings to support access and quality in the System.

But there are others, such as restoring financial aid and reinvesting in lost faculty positions that really will require judicious state reinvestment if we are to meet the ongoing needs of Wisconsin and help to address the 100,000 person shortage that I just mentioned.

We will also have the usual “costs-to-continue” for debt service, utilities, fringe benefits, and other built-in costs identified by the Department of Administration. In your folder, you have a schematic diagram that shows the UW System’s budget process: Cost-to-Continue, Operating Budget, Capital Budget, Statutory Language and Compensation for faculty and staff. All of these must be submitted by September 15, except the Compensation request which is submitted to the Office of State Employment Relations in November or December.

Normally, to begin the operating budget process, the Business and Finance Committee would consider some proposed initiatives and develop draft recommendations to be considered by the full Board. That has not been the case this year, because the Charting Study groups spent much of their time considering alternatives that could be recommended to the full Board for inclusion in the Biennial Budget. So I am recommending that we use the following process outlined on the page in your folders so the board can consider a budget request in August:

  • We will hear the United Council presentation of its Biennial Budget priorities this month (February).
  • At the March meeting, next month, there will be a discussion of a possible financial aid initiative.
  • In April, you will hear the other budget related recommendations coming from the Charting groups and discuss and establish criteria for our Capital Budget priorities.
  • In May and June you will see the preliminary Capital Budget request based on the priorities you had approved in April and decide on the final initiatives and amounts you felt comfortable requesting from the Charting recommendations.
  • In June, you will also see a list of costs-to-continue (defined by Department of Administration) and proposed statutory language changes that we would like to request to streamline operating costs and achieve efficiencies.
  • In August, you will meet to review the final budget document to encompass all budget pieces and act on submitting the request to the Department of Administration to make the September deadline.
  • The recommended pay plan request will come to you in November or December to complete the cycle here.

The Physical Planning Committee is responsible for recommending a Capital Budget request and priorities to the full Board in August. That Committee will begin its process next month, using the priorities established by the board to rank projects and comprise the next budget request.

This is a rigorous timetable, but one that meshes well with other work the board is doing. We have a tradition of beginning the budget process by hearing from our primary clients, the students, about what they see as the most pressing needs to maintain the quality education. I would like to pause now to see if you have any questions or advice on the process.

Good News...

UW Superior receives $5 million gift, largest ever

UW-Superior has received its largest ever gift of $5 million from anonymous donors for the support of a much-needed campus classroom building that will replace two older, outmoded buildings. The new building will house classrooms, academic departments, faculty offices, and IT services together. Congratulations to Chancellor Erlenbach for obtaining this very important gift to support UW-Superior's growth as Wisconsin’s Public Liberal Arts College.

UW-Eau Claire receives $6 million gift

Colonel George L. Simpson, Jr., a member of UW-Eau Claire's first graduating class of 1917, has made a $6 million bequest to Eau Claire as part of its ongoing capital campaign, Endowment for Excellence. Earnings from the endowment will support scholarships, faculty/student research, the Honors Program, and many other needs on campus. Colonel Simpson was one of the original 20 faculty members at Eau Claire, serving as professor of geography and its first basketball and football coach. This gift brings the Eau Claire capital campaign to more than $33 million. Congratulations Chancellor Mash for this outstanding effort and the student and faculty needs it will address.

UW-Green Bay Paper Center

Congratulations go to UW-Green Bay on the announcement of a $500,000 federal grant to establish a Paper Sciences Technology Transfer Center on that campus. The Center will be a source of expertise and applied research opportunities for UW-Green Bay faculty and students, and a focal point for helping one of Wisconsin’s most important industry clusters, the paper industry. Wisconsin Congressman Mark Green joined Green Bay Mayor Jim Schmitt and Pat Schillinger, who is president of the Wisconsin Paper Council, and Chancellor Shepard in making the announcement this week. The Center will also provide collaborative research opportunities for UW-Green Bay and UW-Stevens Point to work together to strengthen this important source of Wisconsin jobs. So Bruce, good job.

UW-Platteville/Rock County Engineering Program

Wisconsin had another piece of good news last week when GM announced its plans to stay and make a significant retooling investment in its Janesville facility. Governor Doyle simultaneously announced that the state would provide $5 million in incentives for education and training. Representative Towns subsequently announced that she is introducing a bill to help bring UW-Platteville’s undergraduate engineering program to the UW-Rock County campus to serve some of those new employees. The project would be supported by a partnership with area businesses similar to Platteville’s engineering program extended at UW-Fox Valley. This is an example of the convergence of many decisions from many different quarters to reinvigorate valuable manufacturing jobs in southeast Wisconsin. I want to thank Regent Roger Axtell for his consistent support in this effort as well.

UW-Madison "does" tech transfer

UW-Madison continues its splendid performance in technology transfer of university research to commercial applications. WARF, UW-Madison's patenting and licensing organization, ranked third in the nation last year, executing 156 licenses worth $32 million in income and also obtaining 87 patents on university-based research. In addition, WiSys, WARF's subsidiary which assists the other UW campuses, reports more than 65 patent disclosures last year. UW-Stevens Point Professor Browne received the first patent through WiSys for his low-cost and effective means of testing the groundwater quality. The income from university patents and licenses is reinvested in university faculty research and last year generated more than $660 million in research grants and contracts. As I like to point out in my rubber chicken speeches, UW research and technology is a major industry in Wisconsin, a clean industry, and it generates thousands of good-paying jobs and high-tech spin-offs for Wisconsin. It is a major key to Wisconsin’s economic future.

UW-Milwaukee helps low-income taxpayers

It's that season again—tax season! UW-Milwaukee business students in the Tax Research course are volunteering to help low-income taxpayers prepare their state and federal tax returns. Last year, students helped 500 clients with incomes below $40,000. I mention this because it is a wonderful hands-on learning experience and is especially valuable to students.

Finally, I would note the passing of two important UW System figures:

  • Henry Ahlgren, former chancellor of UW-Extension and former U. S. Undersecretary of Agriculture in the Nixon administration, died last week in Madison. Ahlgren grew up in Frederic, Wisconsin and got a scholarship to attend UW-Madison where he graduated with a bachelor’s, master’s and doctorate in agronomy. He taught agronomy and farming courses at Madison and then moved to Extension Administration, where he restructured Extension for more effective outreach. UW-Extension became known as a national model for outreach and the sharing of university knowledge statewide under his watch.

  • Our other UW loss this month was Elroy “Crazylegs” Hirsch who died last week at the age of 80 after a long career in athletics, as UW-Madison Athletics Director, and even starred in a movie on which the spoof "Airplane" was later based. But perhaps his most lasting contribution was as unofficial UW ambassador all across the nation. His name is synonymous with Wisconsin sports even to those born much later. We'll miss his joy in life and we will cherish his memory as the quintessential Badger.
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