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Joint Finance budget decreases UW funding, rejects compensation flexibility for Regents (May 23, 2013)

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May 23, 2013

Joint Finance budget decreases UW funding, rejects compensation flexibility for Regents

MADISON, Wis. – The legislature’s Joint Committee on Finance today advanced a budget that cuts state funding for the University of Wisconsin System by $66 million over two years and requires that UW reallocate $78 million for new initiatives and other expenses.

In addition, the Committee voted to transfer $58 million of UW funds to the Higher Education Aids Board (HEAB) in fiscal year 2014.  Because an equivalent amount of state funding would be withdrawn from that agency’s budget, the transfer will not result in any additional financial aid for UW students.
To the extent possible, UW System will use balances to cover fixed costs such as faculty and staff salaries, fringe benefits, debt service, and utilities. However, the permanent funding reductions and the absence of any new tuition revenues are expected to leave a structural shortfall of at least $61 million in UW’s annual budget starting in fiscal year 2016.

“We understand the concerns about UW’s cash balances, but we need to consider the long-term implications, and the hole we will face two years from now when revenues will not be there to support our core operations,” said Brent Smith, President of the UW System Board of Regents.

Lawmakers required that the Board of Regents adopt new policies and procedures regarding the number of tuition dollars that UW institutions may carry forward from one year to the next. Information prepared by the Legislative Fiscal Bureau shows that UW’s current cash balances are relatively modest compared to other higher-education systems and universities.

“We will continue our efforts to implement rigorous new policies, reformat our financial reports, and integrate that information in decisions about budgets and tuition rates. We need reasonable guidelines that protect the long-term financial viability of our UW institutions and the quality of a UW degree. We can achieve those goals while improving the ways we monitor and report information about net assets,” said Mike Falbo, Vice President of the UW System Board of Regents.

“Understanding how students and families are increasingly concerned about debt, I’m proud that we can deliver a zero-percent tuition increase to our students, even as we acknowledge that this will create its own challenges,” said Falbo.

Legislators rejected Gov. Walker’s recommendation to give the Board of Regents new authority over compensation plans for all UW employees and moved back the timeframe for approving new personnel structures that have been in development for two years.

“On its own, reduced funding will create one set of challenges, but compensation issues remain the biggest single threat to the quality of education our students receive and the ability of our institutions to strengthen Wisconsin’s workforce. We will do everything possible to address those compensation issues now, using available resources and existing management authority. But today’s budget decisions will weaken our vital effort to narrow the 18-percent gap between salaries for UW faculty and staff and those of their peers. Wisconsin needs its public university to be a stronger, not weaker, economic engine in the 21st century. In our competitive global knowledge economy, we need to rebuild trust and work together to find new ways to attract and retain top-notch talent at the University of Wisconsin,” said Kevin P. Reilly, President of the UW System.

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Contact:  

David Giroux
608-262-4464