Office of the President
October 13, 2004
How Can the UW System Strengthen the Wisconsin Economy?
President Kevin Reilly, University of Wisconsin System
Breakfast of Champions
University of Wisconsin-Rock County
Thank you, Regent Axtell, for that very nice introduction. It is a pleasure to be here this morning and I appreciate the fact that all of you turned out so early for this special event – I think that represents the kind of energy and involvement that characterizes the Janesville area and especially UW-Rock County.
They say that "professors are folks who talk in other people's sleep." Well, given the hour, I will try my best to be brief and to keep you awake! I want to give you plenty of time to ask me questions and, in turn, I very much want to hear your ideas and views on how the university can partner with business and community leaders to energize the region's economy.
The title of this event seems very appropriate – we certainly have many champions of higher education here today and from this region – first and foremost, our distinguished Regent Roger Axtell, who has advised Wisconsin governors, past and present, on the topic at hand: Wisconsin's economic development. We also very much appreciate the contributions of Regent President emeritus George Steil, his fellow former Regent Mick Neshek and, of course, UW Rock County's energetic and accomplished dean, Janet Philipp. Further, I am grateful to all of you in this room who have given of your time, energy and dollars to this campus and to others in the UW System. Never has your support meant so much to us as it does right now.
I am pleased to be here today on the heels of the announcement of UW Rock County's first-ever one million dollar fund drive and last Thursday's announcement that the UW-Rock County Foundation already has raised 500 thousand dollars toward a much-needed building project for the campus. Congratulations! We will work with you to encourage the county to make a strong commitment to this project and to this campus – it represents a critical investment for this community. As the former chancellor of UW-Extension, I have experienced, first-hand, the importance of our university's strong partnership with Wisconsin's counties and it is a relationship that I intend to continue to nourish as president.
After all, we are working together on a common and vital goal: to encourage innovation, to build regional economic vitality and to create an entrepreneurial climate in Wisconsin, which will ensure our state's economic future.
Before I delve into the topic at hand, let me tell you a bit about my first six weeks as president of the UW System and my priorities for the months and years ahead.
It is a great privilege to lead the eighth-largest, most accessible, and most productive university system in the nation. I have received notes and letters of congratulations literally from around the world. This experience has reinforced for me not only the national, but also the international, reputation that this university has earned. The University of Wisconsin is truly a signature brand for the state. That is due, in large measure, to the strong support that we have enjoyed over the course of many years from Wisconsin citizens and to the marvelous leadership we have had on our campuses, on our Board of Regents, and from past university leaders like Katharine Lyall.
In my first remarks to the board in September, I outlined four priorities for my presidency and they very much relate to our discussion here today.
- We will work with the Governor and the state to increase "brain gain" and raise the percentage of Wisconsin residents with a college degree. As many of you may know, we do well in retaining our graduates in the state workforce after they receive their UW degrees, but we rank last in the nation in the number of college graduates we recruit into our state's workforce. States with greater than average personal incomes have a higher percentage of the adult population with a college degree which, in turn, creates more prosperity and improves the quality of life, without raising taxes, I might add! So that must be an important goal for us and for our state leaders.
- We will work more directly with our students. The draconian state cuts to the university over the past three years have resulted in double-digit tuition increases. Our students are now paying close to half of their instructional costs – the highest in our history. Our rising tuition and declining state support have effectively closed our doors to many who desire a UW education, particularly returning adult students and students from low-income families. We will be working closely with the Governor and legislature to make financial aid a priority in this upcoming state budget, and to expand access to our UW campuses, which we can do with some modest state reinvestments.
- We will make UW System operations more transparent and efficient. Many Wisconsin citizens probably think of the UW as a "black box." We are a large and complex enterprise, but we can and will do a better job of communicating what we do, how decisions get made and why decisions are made. We will stand accountable to the citizens of the state. Some of you perhaps read about the recent LAB audit of the university that showed that 15% of our budget goes toward administrative expenses. We are efficient when compared to comparable university systems but at the same time, we are committed to working with our chancellors and deans to make sure that we are operating as efficiently as we can. We need to be as thrifty with your tax dollars as you would be if they were in your own checking account.
- Finally, we will continue our commitment to local, regional and statewide economic development. You may be familiar with the four economic summits that we sponsored over the past four years – a few of you may have even attended those summits. They laid the groundwork for many recent state initiatives in economic development, including the Governor's Grow Wisconsin program.
So, what can the UW System do to help strengthen the state's economy?
First, we must "hold on to what we've got," as the old song goes. If we continue to bleed state support, as we have in the past, at a higher rate than other areas of state expenditures – in fact, experience cuts when the state budget is growing – our capacity to help grow the state's economy will be severely eroded.
Our most important contribution to the economy, after all, are the 160,000 students we educate and the 30,000 students who get degrees each year from the UW System. More than 80 percent of those graduates stay and work in Wisconsin. How many in this room, out of curiosity, have a degree from, or have studied at, one of our 26 UW campuses? How many have children or relatives with UW degrees? So we can see here a visible manifestation of the UW's impact!
Our university system produces more than 60 percent of the state's teachers, more than 50 percent of the state's registered nurses, and UW-Madison, as another example, produces more than 90 percent of the state's pharmacists. We also graduate a large percentage of the state's lawyers, accountants, managers and business leaders.
These are good paying jobs for Wisconsin. There have been recent stories and editorials implying that a college degree is a luxury. That is wishful thinking. Of course, not everyone needs a college degree to succeed. But many professions are closed to someone without a college degree. And the wage gap between those with and those without college degrees is widening. In 2002, BA degree holders earned 83 percent more, on average, than high school graduates. Twenty years ago, college graduates earned 61 percent more.
Sociological research at UW-Madison has shown that those with college degrees require less tax support – they are healthier, more philanthropically inclined, more active volunteers, and more civically engaged. In the 1992 presidential election, for example, 58 percent of those with a high school diploma voted while 81 percent of those who had earned a bachelor's degree or higher went to the polls.
I've already said that one of our goals is to increase the percentage of Wisconsin's population with college degrees. I am happy to report that in recent years, all of our benchmarks in that regard have been moving in the right direction for the state. Our retention rates are up, our graduation rates are up, and our enrollments are up.
UW-Rock County has experienced enrollment growth this fall, welcoming 276 freshmen. This is a good thing for our state but this growth in entering freshmen and retention rates, during a time of diminishing state instructional support, is straining our ability to provide a quality education.
One manifestation of that is overcrowded classrooms. U-Rock, as you may know, is teaching classes with 35 students in classrooms designed to accommodate 30. Throughout the UW System, we have overcrowded classrooms and teaching laboratories. That is one reason I applaud your initiative in seeking a new academic facility for this campus.
Another way in which we help the state economy is by leveraging state dollars to attract nonstate funding which provides much needed jobs in communities throughout the state. About 25 percent of our funding now comes from the state – the rest is from gifts, grants, contracts, student fees and auxiliaries that we operate such as residence halls, bookstores and food services. In all, we employ more than 31,000 people at the UW, most in well-paying jobs. I hasten to add that, despite the growth in our system, we have fewer state-funded employees than we did in 1987.
We also employ people indirectly through our capital building programs and generate jobs in our communities by purchasing goods and services and through the dollars that faculty, staff, students, and visitors to our institutions spend. In all, the University's annual economic impact on Wisconsin's economy is more than ten billion dollars a year. Both UW Rock County and UW-Whitewater have a major impact on the economy of this region, which is especially important because your unemployment rates here are slightly higher than the state average.
Another way that we help the economy is through our robust research enterprise. The Wisconsin Technology Council released a report just last week that illuminated the tremendous impact of academic research and development on Wisconsin's economy, concluding that it generates more than 30,000 jobs and $800 million annually. This places academic R & D on par with the state's plastics and printing industries and ahead of construction. The lion's share of this academic research takes place at UW-Madison, one of the nation's preeminent research universities and a destination for many graduates of this freshman-sophomore campus.
To help Wisconsin's economy, we must preserve and enhance our ability to compete successfully for research funding, and that means we must dedicate resources to recruiting and retaining the best faculty and staff throughout the UW System. That is difficult when all you can offer is a one percent pay raise over a two-year period, while asking those employees to contribute funds back to pay for rising health care costs.
Many of you in this room run successful companies. Could you keep your most talented employees if you offered them a zero percent pay raise one year and a one percent pay raise the next, especially if it looked like those rates could continue for the foreseeable future? Probably not.
Because of state budget cutbacks and low compensation packages, we are seeing successful raids for our most talented faculty and staff from competing colleges and universities, including our neighboring technical colleges in some cases. We must stop the UW's own brain drain or we will not only lose our capacity to help the local economy, we will lose the capacity to teach the volume of students we have. That is why in the budget the Regents recently passed, we are asking the state to reinvest some of the new dollars it is projected to receive over the coming two years in the university, and to help us restore a portion of the 700 faculty positions we have lost during the past decade. At the same time, our enrollments have been climbing. I'm sure some of those losses have been felt here at UW Rock County and at nearby UW-Whitewater. Just think for a minute of the research dollars, intellectual contributions, public service potential and entrepreneurial energy that has been lost with those 700 lost faculty positions.
By the way, one very important initiative that is also in the budget the Regents have sent forward to Governor Doyle is the establishment of a collaborative program between this campus and UW-Platteville to create opportunities for Janesville area students to attain an engineering degree. This has been on the drawing board for some time, and we very much appreciate the local business and legislative support for this initiative. We have strongly urged the governor to include this in his next budget and I hope you will convey your desire to see that happen as well.
This example highlights another critical way in which we benefit the economy – through our outreach and public service work. I am very familiar with the important work that UW-Extension does in that regard, and as chancellor of Extension for four years, I have long been a strong advocate of using our talent and resources to help grow the state economy.
I am very proud of the work of Extension's 13 Small Business Development Centers throughout Wisconsin, which are located on UW campuses, including UW-Whitewater.
And I am proud of the work of our county extension educators who help local communities and businesses, from farmers to franchisers, to nurture and grow their enterprises.
With my UW-Extension ties, you will forgive a little farm humor, as I remind you of the chicken and pig who were walking down the street early one morning, when they spied a sign on a local café window: "Ham and Eggs Special: $1.95." The chicken said, "Hey, look there's a sign about us; we make that possible."
The pig said: "Easy for you to say. For you, it's a contribution, but for me, it represents a total commitment."
Well, the University of Wisconsin System does represent a total commitment to state economic development, in almost every aspect of what we do. Every day, hundreds of businesses throughout Wisconsin, large and small, get the benefit of UW faculty and staff expertise or employ UW graduates. Thanks to Regent Axtell, we have a new program to call more attention to this public service. We initiated a new "Wisconsin Idea Fellows" program wherein each year, we will single out 100 faculty and staff across the system in recognition of their public service contributions. We are working with the Department of Commerce to publish a listing of those fellows and their areas of expertise so that individuals and companies across the state are aware of them and can call on them for assistance. Roger, thanks for championing that program.
This public service, and the intellectual energy and entrepreneurial spirit that it represents, is invaluable to the state. We all know that our state needs skilled workers, and we strongly support the role that the technical colleges, in particular, play in that regard.
This state also must have the more highly educated, creative, professionally trained workforce to address the demands of the new "knowledge economy;" those who will create the companies that will generate the jobs of the future.
In a world in which knowledge is doubling every five years, we cannot afford to fall behind other communities, states or nations in producing a highly educated workforce.
I was delighted to learn that, according to the U.S. Department of Labor, Wisconsin has added 48,800 jobs this past year – the most new jobs of any state in the Upper Midwest. Among those were 19,500 "high-wage" jobs – positions in finance and other professional business services that I'm sure our campuses across the state have helped to generate, and their graduates have helped to fill.
But it is important not to rest on our laurels. Wisconsin still ranks below the national average in the percent of its adult population with a college degree and, not unrelated, below average in per capita income. Wisconsin ranks dead last in the number of federal dollars brought back to the state, despite the research success I've cited. In fact, as a state, we are a net exporter of federal dollars.
We need to work together to improve that formula. We are grateful to members of our Congressional delegation, particularly Paul Ryan and Tammy Baldwin, who have supported important initiatives that have benefited us and this region.
So, in closing, this morning, I recommit our energy and resources to the task of growing Wisconsin's economy and more specifically, to helping the Janesville area economy. But, in return, I ask for your support of the budget priorities our Board of Regents have proposed to the Governor that will enable us to keep that commitment through student access, faculty replenishment and economic development projects. Help us secure governor and legislative support for:
- Financial aid that will, in effect, freeze tuition for students from families with annual incomes in the low $40,000 range and below.
- Access for working adults to educational opportunities that will encourage them to complete their degrees in a timely way.
- Access to quality faculty and staff, not only for all our students, but for our businesses and communities as well, and
- Success for the Wisconsin economy, citizens and businesses through university support for economic development.
Indeed, the themes we've identified in the budget – rebuilding quality, remaining competitive, keeping college affordable, maintaining and, we hope, enhancing access – resonate here and around the state.
Let's make this not only the dairy state, but also the "education and research" state, and use our intellectual edge to grow this economy even more.
I look forward to doing all that I can as President of the University of Wisconsin System to work even more vigorously to secure Wisconsin's economic future.
I believe in what we stand for: opportunity for Wisconsin's citizens and Wisconsin communities. We are in the "human potential" business. It is our job to help our citizens realize their dreams, for themselves and their families. It's our job to develop a citizenry that will make the American dream thrive here in Wisconsin in the 21st century, and that is what we pledge to do.