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Regents: Taxpayer Protection Amendment not in public’s best interest - Special Regents meeting news summary (Mar 23, 2006)

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March 23, 2006

University of Wisconsin System Board of Regents
Special Meeting
News Summary

Regents: Taxpayer Protection Amendment not in public’s best interest

Board opposes policy that would likely mean increased tuition, fewer students

MADISON—The University of Wisconsin System Board of Regents took a stand Thursday against a proposed constitutional amendment that would hurt student access and affordability by limiting state and local revenue.

"We believe the so-called Taxpayer Protection Amendment would force the UW to admit fewer students, and tuition would have to significantly increase," Board of Regents President David G. Walsh said in a statement. "Those results are not in the public’s best interest. Today’s action is part of our responsibility to make sure the state’s public university system is accessible to the maximum number of Wisconsin’s sons and daughters, provides them a quality higher education and meets the needs of all Wisconsin citizens."

The Board voted to approve a resolution opposing the proposed Taxpayer Protection Amendment (TPA), which would place limits on revenue that can be collected by state and local governments. The resolution also opposes any proposed constitutional amendment that would require state referenda for legislative matters traditionally considered by elected officials.

The Regent resolution noted that the proposed amendment is likely to reduce critical state funding for higher education, and force increased tuition and student enrollment caps. Further, because the amendment would establish limits on both state and county revenue, the law could have major impacts on statewide UW-Extension services, and limit student access to the freshman-sophomore UW Colleges. Both institutions are funded with state and county funds.

Finally, the resolution noted that the amendment has the potential to inhibit the university’s goal to increase the number of citizens with four-year college degrees, an essential strategy for growing Wisconsin’s knowledge economy.

Read the resolution (pdf)

"This action would be crippling to the university"

Freda Harris, UW System associate vice president for budget and planning, outlined a history of state support provided to the state’s public university system. She noted that the state has provided funding above only what has been required to maintain only existing services in just two of the last six biennia. Substantial cuts to the university’s budget in more recent years have led to dramatic tuition increases, Harris said.

Regents previously learned about the potential impacts of the proposed amendment at its regular March meeting. One of the proposed amendment’s co-sponsors, Sen. Glenn Grothman (R-West Bend), told the Board that the amendment was intended to stimulate Wisconsin’s economic growth by creating a more favorable tax environment.

But an analysis by Andrew Reschovsky, a professor at UW-Madison’s La Follette School of Public Affairs, showed that the UW System would have received approximately $200 million less in state support if the proposed amendment had been in effect over the last ten years.

To continue to operate the university with more-limited levels of state support, Harris said the university has, to date, chosen to increase tuition and decrease non-instructional services, but has been able to increase student enrollment.

Harris conservatively estimated that the UW System will need an increase of $74 million in state support to continue current operations in the 2007-08 fiscal year, factoring in increased health insurance costs and a modest 2 percent employee pay plan. That estimate would not include any funding for new programs, such as the proposed Wisconsin Covenant financial-aid plan, she said.

If the Taxpayer Protection Amendment were in effect, Harris estimated that state support for the university would fall $42 million short for 2007-08, leaving Regents to decide whether to increase tuition by more than 11 percent to recover the funding, to reduce enrollment to cut costs, or both.

For example, the UW could make up for the projected shortfall by reducing student enrollment by the equivalent of 10,000 full-time students, but a 4 percent tuition increase for admitted students would be required, she said. Chancellor Rick Wells of UW-Oshkosh noted that such decisions would likely mean enrollment would be denied to more than 15,000 individual students.

"When we cut 12,000 students each biennium, it’s like cutting of a piece of us bit by bit," said Regent Roget Axtell of Janesville. "This action would be crippling to the university system."

UW-Platteville Chancellor David Markee said increases in utility costs have a tremendous impact, especially for campuses where students live in residence halls. On some campuses, utilities comprise 28 percent of the total budget, he said. Markee added that campuses would also lose other revenue, such as student fees and dollars generated by self-supporting programs.

"There would be fewer classes, fewer people working in the business offices – there’d be less of everything because you’d have to generate the savings," Harris said. "In fact, baccalaureate production in Wisconsin under TPA would likely decline."

UW System President Kevin P. Reilly asked how the proposed constitutional limits might affect tuition or enrollment levels in future biennia.

"Over time, there aren’t other sources of revenue to pay for this. You would be looking at higher and higher tuition, or lower and lower enrollments," Harris said. "Those choices would have to be made each biennium."

"It gets worse and worse, in other words," Axtell confirmed.

Regent Thomas Loftus of Sun Prairie said that in the past, the UW received disproportionately more funds than other state agencies, which could exempt UW from having to make such choices. But Regent Peggy Rosenzweig of Wauwatosa noted that larger investments in the university preceded the state’s commitment to two-thirds funding for K-12 education, and before the state increased its investment in Corrections.

Regent Vice President Mark Bradley of Wausau said he was concerned that the Consumer Price Index would be used to determine a formula for state revenues.

"Our expenses increase at rates that are typically greater than the normal living expenses for a regular citizen," Bradley said.

"You’re looking at a different basket of goods that you’re buying for your house than what we’re buying in higher education," Harris agreed. "Part of what we’re purchasing is knowledge. It’s not related necessarily to a consumer price index."

The amendment’s sponsors have not released further information in terms of changes to the bill since the Regents last met earlier in March, such as removing provisions that would include bonding for university facilities in the revenue limits, said Margaret Lewis, UW System associate vice president for government relations. She added that additional public hearings on the proposed amendment are expected,

UW-Stevens Point Chancellor Linda Bunnell, who said she is a veteran of two states that have tried to govern themselves by referendum, Colorado and California, cautioned the Board that what is written in the proposed amendment may not be how the referendum question is posed to voters, nor how the amendment may be finalized or interpreted.

Regent Peggy Rosenzweig of Wauwatosa said she was very concerned that the amendment would begin to erode Wisconsin’s democratic system.

"I believe strongly in representative democracy," Rosenzweig said. "That’s really why we go to the polls."

View a projected UW System budget analysis (pdf)

View a TPA analysis by Professor Reschovsky (pdf)

Read release