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Regents discuss cost containment, educational attainment, and governance structures (Feb 9, 2012)

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February 9, 2012

University of Wisconsin System Board of Regents
February Meeting
Day One News Summary

February 2012 Day 1

Regents discuss cost containment, educational attainment, and governance structures

MADISON – Amid growing calls nationwide to control the rising cost of a college education, the University of Wisconsin System Board of Regents took a close look at the UW System’s historical track record of cost controls at its meeting Thursday.

Three decades of data suggests that the UW System has been “a good steward of resources,” Interim Vice President for Academic Affairs Mark Nook told the Regents.

When adjusted for inflation, the total cost of providing a UW education is currently about the same as it was in 1980, said Nook, who led a presentation on “Strategies for Cost Containment and Improved Educational Attainment.”

Since the late 1980s, however, tuition has increased at a rate higher than the Consumer Price Index, largely because of diminishing state support. As state appropriations decline, students have assumed an ever increasing proportion of the cost of their education, as reflected in their climbing tuition bills.

Facing that reality, the University has diligently worked to mitigate that heavier burden through a broad array of cost-cutting measures.

Regents expressed an enduring, underlying concern: At what point does continued cost cutting compromise the quality of the education offered?

“Money does matter in any human enterprise. It’s connected to quality,” said UW System President Kevin P. Reilly. “If the resources, the dollars, get so low, quality does slip in this business as in any other business. It’s our role, working with the state, with the federal government, working with faculty, staff, and students, all our partners, to figure out how not to let that happen in the current environment.”

Nook pointed out that over the years, the University has changed where it invests its resources. “We’ve put more and more resources into services for students,” he said, citing increased expenditures for instruction, academic support, financial aid, and student services.

Such investments have paid off in academic attainment.  Nook noted that since 1980, the UW has had 45% growth in the number of degrees awarded and 12% growth in enrollment – in effect, a 22% growth in degree efficiency.

That funding shift has also meant decreased investments in areas such as institutional support and physical plants, he said.

Three Chancellors provided on-the-ground perspectives on institutional efforts to control costs.

UW-Superior Chancellor Renee Wachter pointed to more on-campus job opportunities to help the high percentage of students with financial need, reduced credit requirements to degree, and increased focus on distance learning options to expand access. 

Chancellor Charles Sorenson said UW-Stout’s cost reduction strategies include a laptop leasing program that reduces costs of hardware, software, and technical support for students; reduced number of general education credits required for most majors; and three-year undergraduate degrees programs in several fields.
 
Chancellor Mike Lovell highlighted UW-Milwaukee’s Life Impact Program, which is designed to assist disadvantaged parents with additional renewable scholarships to replace student loans, emergency funds, and “Life Coach” teams.

By exercising a range of efficiencies, Lovell noted that UW-Milwaukee spends significantly less per student, and has lower student to instructional, research and service staff ratios than the national average, all while achieving significant growth in enrollments and degrees granted.

He cautioned, however, that while it’s reasonable to take pride in such productivity measures, “We need to recognize there is a price to pay in doing that.” In the College of Letters & Science, for example, UW-Milwaukee has an 800-to-1 student-to-adviser ratio. The university also has a 35-to-1 student-to-mental health provider ratio.

“On my campus, I’m not sure what else I can do to cut costs without having quality degraded,” Lovell said.

Regent José Vásquez agreed that efficiency can be double-edged, noting that some might say, “If you’re that cheap, you’re probably not that good.”

Regent David Walsh wondered at what point funding shortages would require the UW to cut back on enrollment. Reilly said that subject comes up frequently, and “it may be sooner than any of us would like.”

Regent John Drew said the UW’s faculty and staff “deserve tremendous credit for what they’re doing to maintain quality in the face of difficult times.” He added, however, that the growing numbers of departing faculty and talk about possible cutting enrollments are both serious indicators of how challenging the current environment really is.

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Legislative Task Force Update

Regent Mike Falbo, who chairs the legislature’s Special Task Force on UW Restructuring and Operational Flexibilities, provided a report on the Task Force’s February 8 meeting, which featured a joint presentation by UW-Madison Chancellor David Ward and UW-Milwaukee Chancellor Mike Lovell.

In their presentation to the Task Force, the Chancellors observed that the structure of UW System allows for a diversity of institutions that tie to a statewide mission, offering a broad range of access and choice for students, as well as the ability to transfer among UW institutions. In addressing options for a new UW System structure, both Chancellors supported the creation of new advisory boards at each institution, with the Board of Regents retaining its statewide governance role. Under this model, the Regents would receive additional input from institution-level boards comprised of local stakeholders.

Lovell and Ward suggested that new advisory boards should include Regents as appointed members, which would further improve understanding of institutional issues, problems and concerns, while enhancing the communication flow with the full Board of Regents.

The Chancellors also discussed their relationship with UW System Administration, noting that the central office is moving to a “customer service” focus, playing more of a coordinating and strategic role. The primary challenge for individual universities, they argued, is the growing need for relief from state regulations and laws, rather than from any controls imposed uniquely by the Board of Regents or by UW System.

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Working Group on System Structure and Governance reports on findings

Regent Vice President Brent Smith told the Board that the Ad Hoc Working Group on System Structure and Governance, which he chairs, is recommending that the Board of Regents seek full authority to set tuition and to manage the System’s financial and human resources, capital projects, and procurement activities.

Charged with the determining whether there is a need to restructure the UW System, Smith said the group has concluded that such restructuring should only be undertaken if it furthers the mission of the UW System.

The group further found that institution-level advisory boards – or “Chancellors’ Advisory Councils” – with governing authority vested in the Board of Regents and delegated to chancellors, would be a better approach for enhancing UW System institutions’ ability to fulfill their unique missions, without creating an undue administrative burden for chancellors. A significant change from existing advisory boards would be the possible inclusion of Regents. In its report, the group noted that this structure would also increase the number of individuals advocating on behalf of an institution within a community or with members of the Legislature or the Governor.

The group also suggested that a systemwide advisory council, comprised of members of the institution-level councils, should be considered to address matters of statewide concern.

UW-Oshkosh Chancellor Rick Wells, who is a member of the working group, expressed his support for institutional-level advisory boards. “Until we get substantially more authority and the flexibility we need to lead our institutions, we shouldn’t be talking about another governance board. We could end up with another level of bureaucracy,” Wells said.

Regent Judy Crain expressed concern that Regents’ roles be clearly defined regarding any participation in advisory boards, noting that their primary responsibility is to the System.

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Education Committee

The Education Committee heard and discussed the annual program planning and review report, with an eye toward determining what the Board of Regents’ and committee’s oversight role should be in the future. Last year, the President’s Advisory Committee on the Roles of UW System Administration recommended that the process of reviewing and approving new undergraduate and graduate degrees be restructured and expedited.

To work on the new process, Associate Vice President Stephen Kolison and UW-Stout Provost Julie Furst-Bowe were appointed co-chairs of a systemwide working group to review current policies, guidelines, and practices relating to program planning and review. Kolison reported to the Education Committee that the group’s work should be completed by May 2012. Pending approval by the Board, the goal is to have the new policies and process in place by Fall 2012.

Kolison told the committee that the System’s current array consists of 1,186 degree programs. Of that total, STEM (Science-Technology-Engineering-Mathematics) programs account for 26%, business 9%, and health programs 9%. During the 10-year period from 2001 to 2011, the entire array grew from 1,107 to 1,186 (7%).

While there were almost three times as many STEM-related programs as there were health- or business-related programs, the System’s STEM array experienced the lowest growth (4%) in 2001-02 to 2010-11, compared to 24% growth for the health array, and 11% growth in business array. The growth in all other areas was 6%. Kolison observed that the System has many STEM programs, and therefore he was not surprised by the slower growth rate in that area.

Kolison noted that 60% of UW System’s programs are not duplicated, an accomplishment that has been admired by other systems of higher education throughout the country.

Provosts in attendance commented that professional doctorates and certificates have gained popularity. UW-Milwaukee Interim Provost Johannes Britz said, “If we can graduate more students, even with less program array, that’s what I’d like to see. We can’t grow much more.”

“Their success is our success,” he added, describing students’ ability to succeed in the job market after graduating.

In other business, the Education Committee:

  • Heard a report from Senior Vice President Mark Nook, including updates on Academic Affairs Advisory Committees, the Growth Agenda for Wisconsin Grant Program, and the UW System’s LEAP Wisconsin work;
  • Approved the B.S. in Nutritional Sciences at UW-Milwaukee;
  • Approved the Bachelor of Fine Arts in Entertainment Design at UW-Stout;
  • Approved the Bachelor of Fine Arts in Graphic Design and Interactive Media at UW-Stout;
  • Approved the B.S. in Sustainable and Renewable Energy Systems at UW-Platteville;
  • Approved the M.S. and Ph.D. degrees in Epidemiology at UW-Madison;
  • Approved contract renewals for two charter schools in Milwaukee: the Capitol West Academy and the School for Early Development and Achievement; and
  • Approved a new charter school in Milwaukee: the Breakwater Lighthouse Charter School

The committee-approved items will be brought to the full Board for a vote on Friday.

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State Auditor Joe Chrisman gives UW System 'clean' opinion of financial statements

Associate Vice President for Financial Administration Julie Gordon presented the Business, Finance, and Audit Committee with the UW System’s annual financial report for Fiscal Year 2010-11.

According to the report, total revenues increased by $214.3 million, or 4.6%, over the previous year. For the second year in a row, the largest share of total revenue was generated from net student tuition and fees, representing 22.1% of total revenue. Net tuition revenue grew by $67 million in 2011 to $1.07 billion.

Although state support fell by $37.7 million in fiscal year 2010, it did grow by $53.9 million in 2011. State appropriations now represent 21.1% of the University’s total revenue, 10.0% less than fiscal year 2001-02.

Grants and contracts from the federal government increased by $58.0 million, accounting for 17.9% of total revenues, while grants and contracts from state, local, and private providers increased by $33.1 million, or 8.2% of total revenues. If combined, total grants and contracts would become the largest share of the UW System’s total revenue (26.1%).

Total revenues from grants and contracts grew to $1.27 billion in fiscal year 2011, an increase of $91 million over the prior year.

Gifts decreased by $20.8 million.

Total expenses from all funding sources increased in Fiscal Year 2010-11 by $131.4 million (3.0%), comparable to the 2.8% increase in the previous fiscal year.

The financial report included a clean, or “unqualified,” opinion from State Auditor Joe Chrisman and the Legislative Audit Bureau, who briefed the Regents on the agency’s review. Financial Audit Director Carolyn Stittleburg from the Bureau identified several areas of concern to be addressed.
 
Mandatory Refundable Fee (MRF) policies and procedures revised

The Committee approved changes to the Regent Policy 30-4, which requires UW institutions to collect fees for any UW System inter-institutional governance support groups for which the Board of Regents has approved a Mandatory Refundable Fee (MRF). The only organization for which an MRF is currently approved is the United Council of UW Students.

Interim Associate Vice President for Student Affairs and Chief Student Affairs Officer at UW-Oshkosh Petra Roter told Regents that the modifications to the policy provide individual campus student governments with the flexibility to determine when and how a MRF is reviewed and/or when a referendum to initiate or terminate membership in an inter-institutional governance support organization will be conducted.

The most notable change, she noted, is the removal of the two-year mandatory referendum on such membership and the MRF. The revised policy states that a referendum to initiate or terminate the MRF may be called for by a majority of the student campus government body or by a petition with signatures representing 10 percent of the enrolled student body

In other business, the Business, Finance and Audit Committee:

  • Heard a report from Senior Vice President of Administration and Fiscal Affairs Michael Morgan on progress in implementing the ITMAC (Interpret, Train, Monitor, Advocate, Consult) philosophy of management. He also reported that the Human Resource System (HRS) implementation continues to be on budget and on time;
  • Approved an adjustment to the salary range for the Vice Chancellor/Provost position at UW-Milwaukee, where a search is currently under way to fill the position. The salary of the previous UW-Milwaukee Vice-Chancellor/Provost was 25% below the median salary at peer institutions;
  • Heard an overview from Associate Vice President for Learning and Information Technology Ed Meachen of the UW System IT Strategic Plan, entitled The Common Systems Roadmap
  • Heard a status report from Ed Meachen on two IT projects: Phase 2 of the HRS implementation, which includes the self-service eBenefits functionality, and the Pioneer Administration Software System (PASS) Reimplementation; 
  • Heard a report from Director Doug Hoerr on highlights of the 2011 Annual Trust Funds Report, indicating that the funds held net assets totaling $464.2M, up from $409.3M at the end of the prior fiscal year;
  • Approved the proposed 2012 Operations Review and Audit Plan, which includes, among others, policies related to reporting of crimes against minors; international education; and completion and placement rates data.
  • Heard a report about ongoing projects the Office of Operations Review and Audit is working on, including NCAA Division III Athletics – UW-Eau Claire; Undergraduate Academic and Career Advising; Privacy Controls Related to Personally Identifiable Information; and Policies Related to Reporting of Crimes Against Minors;
  • Heard a update from University Personnel Systems Task Force chair UW-Platteville Chancellor Dennis Shields on recent activities of the task force, which include development of plans to make sure that all stakeholders are able to be engaged with and aware of the development of the new personnel systems;
  • Heard a 2nd quarter report on gifts, grants, and contracts, indicating that total awards for the period were $878.2M, an increase of $22.7M compared to the prior year; and
  • Heard a report from Associate Vice President Freda Harris outlining the overall 2013-15 biennial budget process and an expected timeline.

The committee-approved items will be brought to the full Board for a vote on Friday.

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Capital Planning and Budget Committee

Associate Vice President David Miller reported that the Building Commission approved about $84M for projects at its December meeting. The funding for those projects is comprised of approximately $11.5M General Fund Supported Borrowing, $57M Program Revenue and $15.5M Gift/Grant funds.

In other business, the Capital Planning and Budget Committee:

  • Approved UW-La Crosse’s request for authority to increase the budget of the Parking Ramp and Police Building project, and construct the $13.8M project;
  • Approved UW-Oshkosh’s request for authority to demolish the River Commons Building on Pearl Avenue, and develop the site into intramural athletic fields;
  • Approved UW-Platteville’s request for authority to increase the budget of the $5M Porter Hall Renovation project by $150,000 Program Revenue Supported Borrowing;
  • Approved UW-Platteville’s request for authority to transfer a small piece of land to an adjacent private property owner;
  • Approved UW-Superior’s request for authority to construct the $15.3M Ross and Hawkes Halls Renovation project;
  • Approved UW-Whitewater’s request for authority to increase the budget and construct the $5.3M Drumlin Dining Hall Remodeling Project;
  • Approved UW System’s request for approval of six All Agency Maintenance and Repair projects on six campuses totaling about $16M;
  • In a joint session with the Business, Finance and Audit Committee, heard a report that UW Colleges received $15.1 million in city and county financial support in 2011; and
  • In a joint session with the Business, Finance and Audit Committee, approved a resolution updating and consolidating several Regent Policy Documents related to signature authority as well as documents related to real property and construction contracts. 

The committee-approved items will be brought to the full Board for a vote on Friday.

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The UW System Board of Regents will resume its February 2012 meeting at 9 a.m. on Friday, February 10,
in Van Hise Hall, Madison



Related: February 10 (day 2) news summary