EAU CLAIRE, Wis. (WEAU) -- Under a new proposal, universities within the UW-System could face the largest budget cut they’ve ever seen. Gov. Scott Walker announced a plan to cut 13 percent from the system over the next biennium. That’s a $300 million cut from 2015-17. Both UW-Eau Claire and UW-Stout leaders say the budget will be a challenge.
Gov. Walker’s plan also calls for a two-year tuition freeze. Right now, UW schools are in the second year of another tuition freeze, but the plan also gives the system flexibility to set its own tuition for 2017.
Phil Lyons is the Vice Chancellor for Administration and Student Life Services at UW-Stout. He said cuts have happened over almost every governor’s budget, but this is the largest they’ve seen.
“This is 13 percent of our state support, where last year's cut which we thought was significant was about 5 percent,” said Lyons.
The $300 million cut would mean tough decisions for UW schools.
“That's going to really, from our stand point, require very sharp pencils, some creative minds and a willingness to really examine everything and every aspect that we do,” said Lyons.
He said reductions would need to be made throughout the next two years, but there’s no definitive plan just yet. Lyons said the plan would likely be similar to plans implemented during years past when there were cuts.
“Some of the reductions that we made year over year have reduced some of our choices. So, this cut is going to be much closer to the bone than others. In the last biennium, we took advantage of positions that came open through attrition or retirement and we filled those positions differently or reallocated the work to different folks. We also reduced a couple programs and resized ourselves for efficiency to deal with those cuts,” said Lyons.
UW-Eau Claire Chancellor James Schmidt said the cut also comes with a two-year tuition freeze which prevents schools from making up for the budget cut.
“When you combine the size of the cut with no opportunity to increase the revenue, it is significant,” said Schmidt. “That is one of the biggest in history if not the largest.”
With the governor’s proposal, the system would be given more flexibility, like the ability to set its own tuition after the two-year tuition freeze. Schmidt said UW has been asking for this flexibility for years, designating the UW System as a public authority.
“The Board of Regents is what sets tuition now,” said Schmidt. However, right now, the legislature has frozen the tuition. “In the future they will still have that responsibility. We're hoping this means the legislature will respect our board which are appointed by the governor to make the right decision.”
So would tuition go up in two years? Lyons said it could, depending on what competitors are doing.
“We would be able to take a look at our expenses and what our revenue could be or should be, because it’s a capitol market, so it’s going to give us natural pressure to be competitive with all other schools, tech schools, institutions in Minnesota, institutions in Illinois and online education. This is a global market place now and the way we set tuition (right now) is a bit odd,” said Lyons.
Chancellor Schmidt said universities would also be able to streamline its student-funded buildings. For instance, a UW-Eau Claire residence hall was approved in the state budget in 2013. Schmidt says the plan hasn’t moved past 10 percent competition in design.
“It’s held up in the Department of Administration and the DFD (Division of Facilities Development),” said Schmidt. “In the future, buildings that are 100 percent paid by students such as resident halls or student unions would be in the review of the Board of Regents to evaluate and make those decisions and they would issue revenue bond rather than going through the legislative process.”
This would save time, money and allow plans to move forward more quickly than before.
Employees at the universities would no longer be considered state employees under the proposal, but rather public employees.
According to UW, UW System will remain participants in WRS and ETF (retirement) and will continue to receive health insurance benefits through the State of Wisconsin. The current Board of Regents structure and appointment process and schedule will stay in place as the governing body of the new authority, which will become fully enacted on July 1, 2016.
The University of Wisconsin System will be given more autonomy, while having its state funding slashed by 13 percent over the next two years, under the budget Gov. Scott Walker will submit to the Legislature next week.
Walker released details of his budget plan as it affects the UW System to The Associated Press on Monday ahead of a public announcement on Tuesday.
“It will make the University of Wisconsin more efficient, more effective and ultimately more accountable,” Walker said.
The State Journal first reported this month that Walker was considering giving the System more autonomy, possibly accompanied by budget cuts. Walker and System president Ray Cross confirmed the discussions last week.
The state is facing a $2 billion budget shortfall for the two-year budget that begins July 1.
UW had asked for an increase in funding of $95 million over the next two years — money that it argued was needed given that Walker was calling for another two-year tuition freeze. Walker is going forward with the tuition freeze, but is calling for the $300 million cut in exchange for something university leaders have wanted for years: more independence.
Cross said he supported the structural changes, but he would work to reduce the budget cut.
“It’s going to be a very significant challenge,” he said of the cuts. “It’s not something we look forward to.”
Walker is proposing turning the 13 four-year campuses and 13 two-year colleges that comprise the UW System into a public authority, a structure that would give the university more flexibility over a wide array of matters that are currently mandated by state law.
Future funding from the state would come in the form of a block grant funded by sales taxrevenue, with annual increases tied to the rate of inflation. Doing that will give the university more certainty in funding, while also providing it with “full flexibility in use of state resources,” Walker’s office said.
Cross said he supported that change.
A similar idea floated by Walker in 2011, which would have broken UW-Madison off from the System, died under bipartisan opposition and pushback from other UW campuses.
Madison would remain a part of the UW System under the latest proposal, which would grant the entire system more autonomy rather than just the flagship campus.
Former UW-Madison chancellor Biddy Martin had worked with Walker on the previous proposal, and she left the job soon after it failed.
Walker said “instead of nibbling around the edges,” he determined the best approach was to give the entire System more authority.
“I just think it’s really, really important we give them this opportunity,” Walker said.
University officials, along with both Democrats and Republicans, have been wary, voicing concerns before Walker released details of his plan.
Under Walker’s proposal this year, the Legislature would have no ability to stop the university from raising tuition as much as it wants starting in 2017.
Prior to the most recent two-year tuition freeze, tuition had gone up 5.5 percent each of the previous six years. That was the most allowed by a law that would no longer be in effect under Walker’s plan.
Walker said he thought competition from other universities would keep future tuition increases at UW in check.
The university would also have complete control over employee salaries and other employee matters including tenure, shared governance, sick leave, procurement contracts and construction projects.
In the most recent budget, UW accounted for more than 7 percent of total general fund support. That was third-highest behind only K-12 aids and money for Medicaid and other medical assistance programs.
The proposed $300 million cut comes after Walker and the Legislature cut UW funding by $250 million in 2011.
Walker said he was open to negotiating the level of cut with the Legislature.
Walker’s budget proposal will be submitted to the Legislature, which is controlled by Republicans, on Feb. 3.
The proposal comes as Walker ramps up his consideration of a 2016 presidential run. He’s said repeatedly that he can’t run a successful presidential campaign if things aren’t going well in Wisconsin.
Democratic critics have repeatedly pointed to the $2 billion projected budget shortfall as evidence that Walker’s failed the state.
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