E-mail message to the Campus
February 9, 2005

REMARKS AND ESSAYS:
State budget update 2005-07
Chancellor Bruce Shepard shared the following e-mail message with the UW-Green Bay campus following the Governor's presentation of his proposed budget for 2005-2007

2005-2007 Biennial Budget: Summary of Governor's Recommendations

UW-Green Bay Supplementary Strategic Budgeting Process
2005-2007 (draft)

Open Position Review

Colleagues:
Last evening, Governor Doyle fulfilled his constitutional obligation to provide the Legislature with a balanced budget. In so doing, he faced the formidable challenge of protecting priorities while addressing a budget shortfall of daunting proportions.

In my message today, I will attempt to explain our early understanding of the implications of the proposed budget for public higher education in Wisconsin. And, specifically, for UWGB. While my message is long, the budget is complicated, and I have decided to err on the side of more rather than less explanation.

This I will preface with my usual caveats. We are a long way from knowing what the final budget will be. Indeed, we are only beginning to understand and clarify the Governor's proposal. And, over many years we have learned that, when things look good, they never turn out quite that well, and when thinks look bleak, they never turn out quite that badly.

This morning, it looks to me a bit like the proverbial "glass part full; glass part empty" story. I will begin with the "glass part full" side of the story.

On the positive side, the budget has these important features (all budget numbers are annual, ongoing base budget adjustments for the UW System as a whole):

• Provides $103 million for "costs to continue." This is the budget addition that would be necessary to continue to offer services at current levels and consists, primarily, of funding for projected increases in utilities costs and fringe benefits.
  
• Provides $13 million for "student success" initiatives including $11.5 million for additional faculty positions.
  
• Provides $1.5 million for Alzheimer's research.
  
• Proposes $500,000 to support the extension of employee family benefits to domestic partners.
  
• Allows remission of the non-resident portion of tuition for students without documented U.S. citizenship.
  
• Proposes undergraduate residential tuition increases under 6% per year, keeping Wisconsin a "low tuition" state relative to neighboring states.
  
• Funds the ongoing financial aid commitment ($5.9 million) that, last biennium, was covered through a "one time" draw on auxiliary reserves.
  
• Through additional commitments to financial aid, maintains the link between amounts of financial aid available and increases in tuition.
  
• Provides $2.5 million to help retain "faculty whose services are in high demand by other educational institutions."
  
• Reverse the decade-long trend of declining taxpayer support for Wisconsin's public university system.

These are important commitments to access and quality education.
It is equally important that you understand how, in these difficult fiscal times, the commitments are to be funded (total biennial contributions):

• $101 million from tuition increases.
• $65 million to come from reductions in positions not directly delivering classroom instruction and savings.
• $49 million in GPR (taxpayer support) for the biennium is added to the budget.

Put more simply, the positives I noted earlier (the largest "addition" by far simply being what it costs to continue current services) are being funded from three sources (in order of importance): tuition, internal reallocation, and GPR.

Before trying to bring these numbers back down to UWGB's level, a word on compensation. The Governor has expressed his understanding of the importance of adequate and "catch up" salary adjustments. He has chosen, at this time, to not fund the "catch up" provision that the Regents included in their request and to defer determination of salary increases to the "normal" processes for determining such matters, those processes typically occurring in April/May.

The Governor did include an amount for a "faculty in high demand" retention fund. This was not part of the System request. We do not know if it is targeted for specific campuses nor how it is to be used. Were it evenly distributed (and we are not making that assumption), our "normal share" would be $60,000.

Now, what do all these numbers mean for us? All we have at this stage are System-level numbers. Nevertheless, historically, UWGB's share of whatever - cut, addition, rescission, shortfall - has been a usually consistent 2.4% of the System total.

On the addition to instruction, our share of the 125 new faculty positions being authorized by the Governor would be three faculty. Funding for these additions would not be available until the second year of the biennium. While not a large number of additions in the face of the erosion we have seen, that erosion took place over a long period of time, and the addition is a welcome turnaround in that trend.

What do we "pay"?

First a word on "savings." We are still trying to understand this. We currently think it boils down to this, though: UWGB will have to find and return, in the first year, one-time savings of $480,000 and make an additional permanent base budget reduction of $120,000.

In addition to this cut, our share of the "reallocation" of non-instructional positions is, we currently estimate, a permanent $360,000 reduction in year one and an additional permanent cut of $120,000 in year two for an ongoing permanent base budget reduction of $480,000.
Add those numbers together and our year one budget is being reduced by $960,000 and our year two budget is being reduced by an additional $120,000. Over the biennium, the impact will be $1.08 million. As a basis for comparison, this reduction is about two-thirds the size of the reduction we faced for the current biennium, the deepest cut ever experienced by the UW System.

There is a difference between the two biennia. The cuts this time are more specifically focused.

Cuts must come from state funds: tax support plus tuition. We must, as required by the budget proposal, maintain access and protect instruction. When we subtract salaries (or portions of salaries) actually committed to delivering classroom instruction, that leaves about $15 million in UWGB's budget. It is that $15 million rather than our whole budget that must be reduced. It is essentially everything we do besides actual classroom teaching and self-supporting activities.

Using that base and for those who prefer to think in percentage terms, here are what we currently understand to be our challenges:

• Year One: Reduce non-instructional budgets by 6.3% of which about half is "one-time" and half is an ongoing or permanent base budget cut
• Year Two: Make an additional 0.8% permanent base budget reduction.

Overall, we project that we will leave the next biennium with our instructional budget permanently increased by 2% and the non-instructional portion of our budget permanently reduced by 4%. Given that, for the biennium we now in, we concentrated all ongoing budget reductions in these same areas, that means that the non-instructional areas will have had, over two biennia, a 10% reduction in ongoing base budgets.

Is the glass part full or part empty? Depends upon what glass we are talking about.

The "full part" does not come until the second year while the "empty" part is largely "front loaded" in the first year. Therefore, it is that latter matter to which we must now immediately turn, leaving the additions (the three faculty) to normal budget and planning processes for the second year of the biennium.

The Governor's expectations for non-instructional staff reductions and for efficiency savings are extraordinarily sobering. While we will argue the case, realistically, we should not expect a legislative hue and cry to restore funding for non-instructional budgets (what they will call "administration") or to cover "savings" mandated even if unrealizable. So:

• Effective today, we will apply additional considerations and require further scrutiny before approving searches for GPR/Tuition-funded positions that do not directly deliver instruction. Details will be shared later today.
  
• We will, collaborating with the appropriate governance bodies and the Strategic Budgeting Committee, develop the supplemental budgetary process, timelines, and guidelines for deciding upon reallocations. Initial proposals for the processes and guidelines we might follow have been drafted and will be shared for critical comment and improvement.
  

As I noted, there is some good news in the Governor's budget proposal. We would be kidding ourselves, though, if we thought that other parts of the proposal will not hurt the quality of the academic, student, and other support services that contribute to our students' entire educational experience and that critically support those who provide classroom instruction.

One promise, as always: we will share whatever we know with you, doing so in part by using a new set of web pages focused upon the upcoming budget. For those wishing more detail, an excellent summary of what System currently understands to be in (and to not be in) the Governor's budget proposal can be found on that page along with a link to the Governor's full proposal for the UW.

Please know that your continuing dedication to our critical mission is deeply appreciated. It is a mission I hear validated every day as I travel throughout the community, and it is in that validation that we will find brighter futures for Green Bay's University of Wisconsin.

Bruce

Office of the Chancellor
David A. Cofrin Library, Suite 810
University of Wisconsin-Green Bay
2420 Nicolet Drive
Green Bay, WI 54311-7001
Phone: 920-465-2207
Comments to:
Chancellor's Web Manager
Revised 2/25/10
E-mail: shepardb@uwgb.edu

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