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Board of Regents: Proposed biennial budget benefits UW, state (Mar 7, 2013)

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March 7, 2013

University of Wisconsin System Board of Regents
March Meeting
News Summary

March 2013

Board of Regents: Proposed biennial budget benefits UW, state

MADISON – In its first meeting since Governor Scott Walker announced his proposed state budget for 2013-15, the University of Wisconsin System Board of Regents heard an overview Thursday of how that budget would affect UW institutions .
With a proposed budget that includes $181.4 million in new state (General Purpose Revenue) dollars, UW System President Kevin P. Reilly called it a “good budget.”

If the Governor’s budget is approved, a potential result for UW students could be “the lowest tuition increase we’ve had in many years,” said Associate Vice President Freda Harris, who provided Board members with a comprehensive breakdown of the Governor’s proposed funding for UW System.

Noting that UW students currently pay about 70% of the cost of their education through tuition – the reverse of 30 years ago when the state carried 75% of the total cost – Harris said the proposed state investment in the UW System “could begin the trend of helping to close those numbers.”

Harris told Regents that not since the 1980s has the UW had a budget that didn’t include any types of cuts or lapses. The proposed budget’s continued implementation of block grant funding for the university also gives the Board both the flexibility and ability to address top priorities, including its long-term Growth Agenda goals, new economic development initiatives, instructional needs, and employee compensation.

Reilly noted that planning in this new “block grant” era requires that the university look at its budget process a bit differently than in the past, looking at the full picture of expenses and revenues, and how UW System priorities fit within that picture.

He said that budget discussions at this meeting did not include compensation and tuition – key budget considerations for the university – because significant information is still pending.

“Narrowing our 18% compensation gap remains a top priority for the UW System, and the Governor’s proposed budget would provide the Board of Regents with new authority to establish compensation plans for UW System employees,” Reilly said. He noted, however, that such authority has not yet been provided, so the university must continue to work through the existing process with the Office of State Employment Relations (OSER).

“Once we know more about the full compensation picture in the coming biennium, we can add that to the information about utilities and fringe benefit costs and other of our operating expenses. Based on that bottom-line expense number contained in the final budget, we will know what kinds of revenues will be provided, and finally what tuition adjustments may be necessary to achieve a balanced budget,” Reilly said. 

He added that even with these uncertainties, it does seem clear that the Governor’s budget sets the stage for some positive movement on employee compensation, along with the lowest tuition increases in many years.

Regent Chuck Pruitt congratulated the Governor on the proposed budget, calling it a “major step forward.” Regent Mark Bradley applauded the Governor for “thinking out of the box,” and said the budget “appears very positive.”

The budget now moves to the Joint Finance Committee for consideration, before heading to the legislature and finally back to the Governor.

“There’s still a lot that needs to be done,” Harris said. “There are some recommendations for flexibility and authority that have to be approved by the legislature before we can actually move forward with some of the recommendations.”

Regent Jerry Whitburn noted, “We have to see how it plays out – and obviously we have to continue to make the case down the stream as it works through the Assembly and the Senate.”
 
UW-La Crosse Chancellor Joe Gow said he and others are excited. “I have been here six years and it’s a new feeling not to be looking at some big cuts,” Gow said. “It’s great the economy is recovering and there can be some reinvestment.”

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Moving Forward on Growth Agenda Goals of Quality, Access, and Success

Senior Vice President Mark Nook led a comprehensive presentation for the full Board on the opportunities and challenges that UW System and its institutions face as they work to achieve long-term Growth Agenda goals.

He told Regents that UW System is currently ahead of trajectory in order to meet the goals of the More Graduates plan to boost by approximately 80,000 the cumulative number of UW undergraduate degrees conferred by 2025.

As noted at the February meeting, Systemwide retention and graduation rates also are on track among both freshmen and transfer student populations. However, while enrollments for Fall 2012-13 were the highest in more than a decade, the total fell nearly 2% short of goal.

Looking ahead, Nook told Regents that threats to UW’s ability to meet its More Graduates goals and standards of educational quality include lower faculty salaries relative to peers, as well as increased retirements and resignations. Threats to UW’s enrollment numbers include declining high school demographics, a slower state economy, and diminished financial aid.

To meet long-term goals, the UW must succeed in producing more graduates from populations that traditionally have lower success rates, Nook said. “If we don’t get people in the lowest income levels to earn a degree, to be able to be active in the growing knowledge economy, we cannot pull this economy up,” Nook said. “We have to have more of everybody … That’s the moral imperative that More Graduates is built upon. Regardless of race, regardless of financial background, we not only need to provide access, we need to make sure they’re successful.”

Nook addressed three major UW System strategies to address such challenges: (1) providing better access to a  larger number of diverse students; (2) increasing retention through innovative initiatives that are proven strategies for keeping more students in college and improving the quality of the education they receive; and (3) helping more students graduate at a faster rate.

Several chancellors offered perspectives from their campuses.

UW-Parkside Chancellor Debbie Ford told Regents that her institution’s mixed results in meeting goals in recent years must be seen within the context of UW-Parkside’s unique demographics. She noted that 70% of UW-Parkside students receive financial assistance, 62% of its degree-earners are first-generation college students; and the institution draws from one of the more diverse geographic areas in the state.

While each of those factors create challenges, she said, proactive strategies such as learning communities, intrusive advising, supplemental instruction, and providing opportunities for career exploration are producing measureable improvements in students’ progress toward degrees.

“Even in times of challenges, we continue to keep students at the center of what we do,” Ford said.

Chancellor Dean Van Galen said UW-River Falls has also used targeted initiatives such as promoting High-impact Practices including first-year seminars, collaborative projects, global learning, and internships, to produce positive change in student success.

He also noted that UW-River Falls’ Hudson Center – which caters to non-traditional students – has experienced booming interest in its adult degree completion programs since its opening in 2010.

UW Colleges and UW-Extension Chancellor Ray Cross reminded Regents that UW Colleges are a very different institution within the UW System overall. Although UW Colleges have the lowest tuition in the System, he noted that when its tuition increased, immediate drops in enrollment resulted. “We are an access point, and one of those things critical to access is affordability,” he said.

Cross also pointed out that students at UW Colleges are much more likely to attend part-time relative to elsewhere in the System, with direct implications for student success rates. He noted that while the percent of part-time students at UW-Madison is 0.2% and at UW-Milwaukee is 2.3%, that population at UW Colleges is 13.5%. “Students who are full-time are 300% more likely to graduate than those who attend part-time,” Cross said.

Cross said the new UW Flexible Option targeted to non-traditional adult students is “a huge opportunity for us, and we are being very aggressive” in promoting it.

Nook closed by pointing out that overall progress to meeting the System’s More Graduates goals is “looking pretty good,” but continued progress will require increased investments.

“Many of the plans and programs we’ve heard about today were based on new programs, some of which were implemented by repooling resources, making priority choices,” Nook said. “It’s people that create these programs and people that make it work.”

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Board updated on HRS project

Michael Morgan, Senior Vice President for Administration and Fiscal Affairs, provided Regents with a brief update on progress in resolving Human Resource System issues since the last meeting. He reported that no new problems related to overpayment have been identified, and that work is continuing to ensure that appropriate procedures and policies are in place and effective.

Morgan told Regents that efforts to recover the outstanding $12 million in overpaid health insurance premiums are ongoing. “It’s going to be very, very difficult to recover many of those dollars but we intend to be very aggressive in recovering as many of those as we can,” Morgan said.

He reported that contract negotiations are currently under way with Price Waterhouse Cooper to perform an external risk assessment of HRS.

UW-Madison’s Darrell Bazzell updated the Board on a “road map” to take a comprehensive look at the policies, procedures, people, and technology involved. “There’s a lot we can and should do to make this system more efficient and one that we can be proud of,” Bazzell said.

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Regent President’s Report

Regent President Brent Smith updated the Board on the progress of chancellor searches now under way at UW-Madison and UW-Eau Claire. With finalists in both searches currently visiting their prospective campuses, Smith noted that the finalists will be meeting with President Reilly and their respective Regent special committees next week for final interviews. The Board expects to confirm the new chancellors at its April meeting.

Smith reported that Student Regent Tracy Hribar’s appointment to the Board was officially confirmed by the State Legislature on a recent 33-0 vote.

Smith also shared the news that Regent Mark Tyler, president of OEM Fabricators, Inc., in Woodville, Wis., was recently named the Grand Award Winner in the Workforce Development Category at the 2013 Wisconsin Manufacturer of the Year Awards.

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UW System President’s Report

President Reilly provided an update on recent federal sequestration, the series of automatic cuts to the federal budget that are applied evenly across most departments and agencies.

He reminded Regents that he had written a letter to the Wisconsin congressional delegation, pointing out that UW-Madison alone could lose about $35 million in research funding over the coming year, or 3.5 percent off its base of roughly $1 billion per year. “While this may sound like a small amount, that figure represents a lot of grants that will go unfunded and research projects that won’t be undertaken,” Reilly said.

Reilly added that this effect will be compounded across the state, as every UW institution has projects that are supported by NSF (National Science Foundation) funding, which is scheduled for deep cuts. “Of equal concern is the fear that research agencies will respond to these funding cuts by slowing down renewals and reducing the aggregate number of new awards that are approved,” Reilly said.

Reilly noted that while the Pell Grant program was specifically exempted from funding cuts, the campus-based financial aid programs – including the Federal Work Study and the Federal Supplemental Education Opportunity Grant – will not be spared, and will be reduced for the 2013-14 award year. Similarly, TRIO and GEAR UP funding will face cuts, which will result in less precollege programming, advising and support services for underrepresented and first-generation students.

Reilly said UW officials will continue to monitor how these cuts will impact those programs that the UW System and its students rely on.

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The UW System Board of Regents will hold its next meeting April 4-5, 2013, at UW-La Crosse