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Strategic Budget Advisory Committee (SBAC)
Strategic Budget Advisory Committee

University of Wisconsin Community Prepares for Funding Cuts

January 07, 2009

By Todd Finkelmeyer - The Capital Times

With almost certain state funding cuts coming down the pike, University of Wisconsin-Madison Chancellor Carolyn "Biddy" Martin recently took the unusual step of holding campus forums to give faculty, students and staff a chance to float ideas on how best to absorb revenue reductions.

Perhaps even more unusual, people showed up -- approximately 400 in all attended three mid-December forums, despite blistering cold and snow that, on one occasion, threatened to close down the university.

The suggestions for cost savings ran the gamut, from improving technology to boosting marketing.

Hannah Karns, who is vice chair of Associated Students of Madison, the official student government at the university, said the UW could save money if it used less paper and fewer copy machines, and transitioned to more of a Web-based operation. Brian Bubenzer, an administration program manager in the College of Letters and Science, said UW-Madison needs to better convey its importance and value to the people of Wisconsin so the state would understand the repercussions of any major funding cuts.

And Sofia Snow, an undergrad from Boston, implored university leaders to carefully consider how hiking tuition to make up for state funding cuts would impact students of all economic backgrounds.

The forums, while designed to solicit input, also put the university community on notice that the state's projected $5.4 billion deficit over the 2009-11 biennium could significantly affect the UW in coming years.

"It gave a signal to campus that things are going to happen -- that the you-know-what is going to hit the fan," said Noel Radomski, director of the Wisconsin Center for the Advancement of Postsecondary Education, an education think tank on campus. "It's almost like putting your toes in the water before jumping into a freezing lake."

UW-Madison officials interviewed for this story refused to get into specifics regarding what some of their contingency plans might be should the "you-know-what" hit the fan. Yet they say they are determined to research all options and make the best of a potentially ugly situation.

"What I try to keep focused on is kids who are in sixth and eighth grade," said Michael Knetter, dean of UW's School of Business and the recently appointed special assistant to the chancellor for long-term strategy and development. "We need to make sure there is a great university here when they are ready to go. And we will make sure that that's the case.

"The current economy just makes it a little more challenging. Universities all over the country, public and private, are in very similar circumstances, and industries outside of higher education in many cases are facing even more monumental challenges and upheavals. There is something about not going through it alone that leads me to think that if we do this the right way, the university will come out of this stronger than it has ever been."

The university is concerned about potential funding hits on several fronts entering the new year.

For starters, the federal government provided $657.1 million, or 28.8 percent, of UW-Madison's $2.28 billion budget for the 2007-08 school year. Darrell Bazzell, UW-Madison's vice chancellor for administration and the chief budget officer, is a bit worried about that pot of money given the federal government's own budget woes and the general state of the national economy.

"Obviously, we're a major research institution that is very dependent on federal resources to support our large research enterprise," he said. And while the state provided $461.1 million, or 20.2 percent, of UW-Madison's budget for last school year, university officials are preparing for the amount of taxpayer support to drop as Wisconsin faces its largest deficit ever. Gov. Jim Doyle's 2009-11 budget remains a work in progress, and he likely will present it to lawmakers in mid-February.

Gifts and grants are also hurting. Last year they accounted for $436.9 million, or 19.1 percent, of the university's budget. Of that pie slice, the UW Foundation -- a nonprofit, tax-exempt corporation that is the official fundraising arm for UW-Madison -- sent $228.7 million to support the university in 2007. Yet through mid-December, the foundation's endowment, thanks to the stock market slump of the past year, had taken a 22 percent hit after ending 2007 at $1.77 billion. Donations also were down.

In other words, the UW Foundation isn't going to be able to come to the funding rescue with bags of extra money.

"There's no such thing as 'extra money,'" said Sandy Wilcox, president of the UW Foundation. "So, no, it's not a pretty situation."

The one source of revenue university officials do have control over is student tuition. Last year it accounted for $338.9 million, or 14.8 percent of UW-Madison's budget. It's a near certainty that, in an effort to offset the shortfalls in the other major funding areas, tuition will jump in the coming years.

"Tuition increases will be necessary to preserve not only our preeminence, but also our service to the public," Martin wrote in an e-mail to faculty, staff and students on Dec. 18. "We will find balance by ensuring that these increases do not affect students from low-income and median-income groups."

Martin, who took over as chancellor just four months ago, realizes the budget crisis will be a major test of her leadership skills on campus. But she says she is encouraged by what she is hearing from different corners of the university.

"I really think the biggest message from all the conversations I've had, whether it was in the forums or with other groups on campus, is that people are willing and ready to make some hard choices and to be strategic to ensure the long-term health of the university," she said.

When it comes to state budget woes and other economic factors wreaking havoc on higher education's finances, UW-Madison certainly isn't alone.

According to the Center on Budget and Policy Priorities, at least 24 states have already made cuts to public colleges and universities or were implementing large increases in tuition to make up for insufficient state funding -- or both. And that number is likely to jump as more states prepare to release their budgets in January and February. In fact, Wisconsin wasn't even included in the list of 24 states.

In June, the Tampa Tribune reported the University of Florida would deal with a $47 million budget cut by eliminating 430 jobs, decreasing funding for disability and financial aid services, and trimming undergraduate enrollment by 1,000 students per year over the next four years. Some doctoral programs, including those in philosophy and romance languages, are admitting no new students for the next three years.

Also in June, the Louisville Courier-Journal reported the University of Kentucky's board of trustees eliminated 188 positions, froze the pay of remaining faculty and staff, and increased student tuition by 9 percent.

In late October, the Arizona Republic reported Arizona State University was preparing to lay off 200 or more faculty associates and dramatically boost some class sizes beginning in the spring of 2009 as it braces for more state cuts.

And in late December, the Los Angeles Times noted that with the California state budget in disarray, both the California State University and University of California systems are looking at undergraduate student fee hikes of up to 10 percent for next year, and Cal State will reduce its 450,000 enrollment by 10,000 students for the same period. The newspaper also reported Stanford University, citing steep losses in its $17.2 billion endowment, has reduced research funding and financial aid, and ordered across-the-board budget cuts of up to 15 percent over two years, including some layoffs and a hiring freeze. Top officials at Stanford, a private university, recently took a voluntary 10 percent salary cut.

It remains to be seen whether significant faculty and staff reductions or pay cuts are in UW System's future. "Right now, I guess you could say everything is on the table or nothing is on the table," said UW System spokesman David Giroux. "We don't have any specific target for budget savings or reductions at this point, and we won't until the state budget is rolled out."

Giroux said he didn't want to give the impression that university officials were "sitting on the sidelines waiting for somebody to blow the whistle. "We know something is coming and a lot of people around here and at our institutions are thinking carefully about what kinds of savings we might be able to achieve with different kinds of actions. But right now, we don't know what's in the budget for us in terms of funding and challenges."

The university has compiled some of the proposals that were presented at the campus forums on a Web site at chancellor.wisc.edu/forum. Among them:

Conduct an internal audit to identify resources that might be shared across campus for greater efficiency.

Review purchasing patterns to reduce overall expenditures in areas such as printing and copying, and make the transition from a paper-based to a Web-based community.

Look for more collaborative and centralized approaches to Web technology, software and distance learning that can save departments money.

Encourage more split appointments for faculty and staff to spur cross-disciplinary cooperation and save money.

WISCAPE's Radomski predicts much more drastic and controversial measures will likely be in the offing.

"From a faculty perspective, you never talk about cutting academic degrees, but that might have to be a reality," he said. "Not for the sake of just cutting, it has to be more strategic than that. But we've got 153 undergraduate degree programs. Do we need 153 degree programs? Probably not."

Bill Barker, an associate dean in the College of Letters and Science, also believes it's imperative that the university and city work together during these economically challenging times. Barker is more wired in than most on this topic, as he not only works at UW-Madison but also is president of the Madison Board of Park Commission, president of the Dudgeon-Monroe Neighborhood Association and active in plotting the future of the east side's Central Park site and the former Garver Feed Mill at Olbrich Park.

"Quality of life in Madison is such a critical recruiting and retention issue for the campus, that we really need to be looking for opportunities to partner with the city and the private sector to leverage all of our dwindling resources to try and keep Madison as fabulous as it is," said Barker, a Georgia native who came to Madison in 1991.

Barker is convinced the university -- and country -- can dig itself out of the economic crisis through innovation.

"That's the way you get out of this -- you just don't keep on doing what you're doing," he said. "You figure out new ways to do things. And where does innovation come from? It comes from universities. It comes from well-educated people.

"I think the state of Wisconsin would be a very, very different place if it weren't fortunate enough to have a truly world-class research institution that is dedicated to the Wisconsin Idea. This public service ethic here is real. People really believe it. The ethic here is to serve the state, to serve society, and I think we're going to need each other."