The UW Chancellors, President Reilly and System staff met Friday, February 20, and again via teleconference Wednesday, February 25, to better understand the Governor’s $174 million System-wide budget reductions. We developed a worst-case budget reduction scenario for each campus as well as ideas for continuing to strongly advocate for a decrease of the Governor’s budget cuts for UW universities.

Worst-to-Best-Case Budget Reduction Targets

At this point in time, the worst-case budget reduction scenario total for UW Oshkosh is $7.8 million over the 2009-11 biennium. Each campus’s fair share of the budget cut was determined by its percentage of the total System-wide budget.  When all is said and done, UW Oshkosh’s fair share of a System-wide biennial budget cut of $174 million is 4.5% or $7.8 million. The UW System is required to meet approximately 65% of the $174 million biennial budget cut in 2009-10. This means our share is a $5 million budget cut in the first year of the biennium which represents 3.4% of our 2008-09 annual budget minus the federal funds.  The remaining $2.8 million will be cut in the second year of the biennium.

While we will continue to try to make a compelling case with the Governor and Legislature to reduce this very large cut, we must understand the context of the State of Wisconsin’s $5-billion-plus deficit and continue preparing our 2009-11 biennial budget assuming a sizeable budget cut.  We will prepare three budget reduction scenarios:

1.  “Best-case” budget plan assuming a $5 million budget reduction based on the Governor’s willingness to significantly decrease the $174 million budget cut;

2.  “Worst-case” budget plan assuming a $7.8 million budget reduction; and

3.  “More-than-likely” budget plan assuming (a) $5.8 million budget reduction and (b) at least a 5.5% tuition increase for each year of the biennium approved by the Board of Regents.

The $2 million difference between the “worst-case” and the “more-than-likely” scenarios depends on whether the Board of Regents approve the level and type of tuition increase the Governor is recommending. As we develop the three scenarios, we will be prepared to restore funding for our University’s highest priorities to the extent we are able to convince the Governor and Legislature to reduce the cuts.

Remaining Budget Reduction Questions and Concerns

At this point in time, it is difficult to determine how much of our $7.8 to $5.0 million cut will be one time (lapsed) or ongoing (base budget reductions). For example, if we assume a tuition increase of 5% to 6%, then several million dollars of the cut will be one time. A tuition freeze for all students would not only mean the cut would increase by $2 million, it would mean most of the cut would be ongoing as well.

Furthermore, we understand the 1% across-the-board General Purpose Revenue (tax funds) budget reduction is a permanent cut of our base budget. However, we do not know how or how much of the 1% across-the-board cut of program revenue the Governor assumed would be an ongoing base cut. We hope the Governor and his staff understand that an ongoing cut from these types of programs would require that the revenue sources (mostly non-tuition student fees) would have to be increased every year hereafter just to cover the 2009-11 cut. Without increased fees, the 2009-11 cut would eventually take all these program revenue accounts to zero.

There are several serious concerns related to the Governor’s requirement that we cut revenue from our auxiliary enterprises, such as residential hall reserve funds, to help offset the cost of financial aid for students whose family income is less than $60,000. This means these students would be held harmless from tuition increases, in part, by reducing student-generated auxiliary funds that are used, among other things, to pay for residence hall improvements and maintenance. Let me be clear, we are very supportive of the much needed financial aid for about one third of our students (those whose family income is less than $60,000), but we believe the Governor and Legislature should not rely on other student fees to fund the program.

Meeting with the Governor and Strategic Budget Priorities

President Reilly, System staff, Board of Regents, Legislators, and the Chancellors will be meeting with the Governor and his staff to (1) raise the above concerns, (2) obtain a better understanding of the budget reduction requirements and, (3) most importantly, strongly encourage the Governor to reduce the budget cut so we can maintain access for our students while minimizing the negative impact on the quality of their educational experience.  We will also explain to the Governor why it is not reasonable for him to expect us to fulfill Growth Agenda goals in the promised time frame under such a large budget reduction. However, we hope we can find a way, with his additional budgetary support, to meet some of the Growth Agenda goals.

In the meantime, our campus must move forward using the three budget reduction scenarios as we prepare to submit our 2009-11 annual budget to President Reilly by April 15, 2009. To that end, please review my memo of February 18, 2009 as well as memos of October 16 and October 30, 2008, and the October 27 presentation for important background information related to budget priorities, budget development principles and fund-based legal restrictions.

I want to emphasize that we will continue, even given large budget cuts, to support past and future high priority strategic budgetary decisions designed to keep our University moving forward. For example, we will strive to:

• maintain current number of seats in courses for our students,
• complete all of this year’s tenure-track faculty searches,
• continue supporting the Liberal Education Reform Team initiatives,
• support our commitment to sustainability initiatives (please see my statement of February 23, 2009 for a detailed rationale for funding what is fast becoming a nationally recognized University-wide distinctiveness),
• enhance our campus’s emergency notification systems,
• maintain expanded student academic support programs supported by differential tuition,
• begin and complete over the next three years $100 million of capital improvements to support enrollment increases for the State’s third largest university while creating more than 4,000 construction-related jobs, and lastly
• avoid layoffs with the help of the Governor and the Legislature.

With respect to layoffs and furloughs, we are encouraged that Governor Doyle is committed to doing his best to avoid them. Regarding layoffs, according to an article in the Post-Crescent, the Governor has stated the following:

I considered them and I still have to consider them. This isn’t anything you can take off the table. We are really scaling back. Ten percent of state positions are going to be vacant and that means a lot of people are doing a lot more with less.

It just seems to me right now that, at a time when we’re trying to have people go to work, laying them off is kind of the opposite of what we’re trying to get done.

So I’m going to do everything I can to do this through attrition. That means we have to get pretty creative, as an opening comes here, we may have to move people’s duties around and be more flexible in how you can move from department to department. . . .

I can’t say there won’t be layoffs and I can’t say there won’t be furloughs. What I can say is I’m going to do what I can to avoid that. (Link to full Post Crescent article:  Q&A: Gov. Jim Doyle discusses a variety of budget issues February 22:B-3)

We also strongly agree with the Governor’s call for maximizing job assignment flexibility and creatively aligning our workforce to fulfill our teaching, research and service missions. We will, of course, encourage and listen to any advice including constructive criticism of the current or future budgetary priorities listed above.

Unit-Level Budget Reduction Targets and the “Rainy-Day” Fund

I am pleased to report that due to excellent campus-wide fiscal planning and management, we will be able to use our “rainy-day” fund to meet $2.5 million of the eventual campus budget reduction.  Since we do not have a “hundred-year flood” fund, we have to identify the remaining cuts by developing three budget planning scenarios based on campus-wide unit budget reductions of 1.9%, 2.5% and 3.8%. We, of course, would rather use the $2.5 million for important campus needs, but tough economic times require that we deplete the “rainy-day” fund. Nonetheless, the availability of the fund will significantly reduce the negative unit-level budget reduction impact. Budget reduction details for the three budget planning scenarios are being provided to the Provost and Vice Chancellors.

In addition, we will do our best to make informed decisions and provide rationales for these decisions. In order to help your administrative and governance leaders make the best decisions possible, we have outlined below opportunities for internal and external stakeholder feedback:

• We have scheduled additional joint budget planning meetings for administrative and governance leaders.
• Another campus-wide budget forum meeting is scheduled for March 31 from 11:30 to 1:00 pm in Reeve Union room 202.
• As promised, we launched a web-based survey to obtain feedback from anyone wishing to provide advice and ideas to help meet our budget challenges. Please access the survey between March 2 and March 13. We will analyze the survey results and share the findings and advice during the campus-wide budget forum on March 31.
• Administrative leaders will attend regularly scheduled faculty, student, classified and academic staff governance meetings to provide budget updates, address concerns and obtain advice. Please feel free to raise concerns, ask questions, and provide advice to your individual administrative and/or governance leaders.