BascHill_Wban_capit06_7792It’s a biennial budget year here in Wisconsin and as soon as the November elections are over, the 2015-17 state budget will be the focus of much of the work of our elected state leaders. As I said this week during my State of the University speech to the Faculty Senate, this upcoming budget will be particularly important for us at UW-Madison, given that we received substantial cuts in the budget two years ago. I want to describe the challenges facing us and what we’re doing to prepare for them.

The higher education system in this state is central to its long-term economic competitiveness and growth. Having a world-class educational and research institution in UW-Madison gives this state a big advantage in attracting high-tech and growing industries to this state. Maintaining the excellence of our university and our overall Wisconsin system should be a high priority for anybody who cares about future job growth.

It’s no secret that the UW System and, in turn, UW–Madison received some major cuts in the current budget enacted in the spring of 2013. Over the past year we were able to absorb the impact of these cuts by spending down our fund balances to fund programs and services across campus, as the state legislature directed.

However, we can’t continue to fill the budget gaps with fund balances. At the end of this fiscal year, our tuition fund balances will have declined almost by half, from 14 percent to 8 percent. I cannot in good conscience draw them any lower, given the need to keep some funds on hand to deal with the uncertainties we face as a large and complex institution.

In fact, most of our fund balances are already fully committed to approved programs or facilities, but just haven’t been spent yet. We have little that can be labeled as true reserves. That means that the university has very few discretionary dollars available to meet unanticipated needs that might arise on campus this year.

If we do not receive an increase in our educational funding, we will have to implement substantial cuts. With no change in the budget, we will need to cut a little more than 4 percent from all of our state and tuition-funded programs.

The 2015-17 biennial budget request made by UW System President Ray Cross and the Board of Regents proposes to avoid many of these cuts and would help put the higher education system on a firmer economic footing.

As part of his Talent Development Initiative, $42.3 million in UW System funds would be used to leverage a proposed $95.2 million in new state funds. These resources would enable us to expand the training of students in areas where labor needs exist in Wisconsin and where we currently have more demand by students than we can accommodate such as in business, engineering, nursing and a variety of STEM-related majors.

This proposal would also assist us in attracting and retaining top faculty and staff, cutting time to degree, and providing funds to other economic development-focused programs in the areas of entrepreneurship and job creation.

It is a solid, well-thought-out plan that promises great benefit to the state. I support it wholeheartedly and have been meeting with legislators, alumni, donors and business leaders to enlist their support. If this plan were fully enacted, it would fill most (but not quite all) of our budget gap.

But it’s going to be a tough year in which to argue for new funds. Surprisingly low state revenue numbers so far – which have resulted in a projected structural deficit of more than $1 billion – as well as growing state needs in areas such as Medicaid and transportation, are going to make a large increase for higher education difficult to achieve.

Because action on the next state budget won’t be complete until at least eight months from now, our fiscal situation remains uncertain. As good managers, we have to be prepared for potential cuts, even as we advocate for the best budget we can. We won’t have a clear picture until next spring or early summer of what our budget will look like for the fiscal year starting July 1, 2015, so we have to be prepared to move quickly if we need to implement cuts to assure a responsible budget.

As a result, I have asked the deans and directors of administrative units to model how they would implement cuts of 2, 4 or 6 percent. I recognize that this is a difficult task, as there is no longer “fat to trim” and this planning will surely touch core programs and even people. At this moment, this is simply an exercise and one that I truly hope we do not need to implement.

If we do have to impose cuts, let me say something about how we would think about that. The wrong approach is to implement across-the-board cuts for all programs. Instead, we need to set priorities and protect our areas of strength while focusing cuts on lower priority areas. (And I am acutely aware that a ‘lower-priority area’ is still likely to be a good program that provides real benefits.)  Hence, I have asked the deans and directors to think strategically as they model cuts.

While direct cuts would occur in programs funded through GPR – that’s state tax dollars – we are also looking at ways to involve areas supported by other types of funding, such as administrative services and other program revenue operations. The more widely we can distribute the impact, the less burden any one unit will have to bear.

I know people are nervous about this cut-planning exercise. As prudent managers, we have to do it. But even as we plan for a difficult situation, I want you to know that I believe there is hope for a more successful outcome.

As you probably know, Gov. Walker says if re-elected, he will propose another two-year tuition freeze for in-state undergraduate students. That would mean four years of frozen tuition, which does create problems for us — particularly if we were faced with budget cuts. I am a strong supporter of keeping costs to our in-state undergraduates as low as possible, however, and understand the proposal for a tuition freeze for another two years – for our in-state undergraduates.

But the uncertainty around the next state budget and the prospect of having to cut university programs is one reason why I plan to discuss with the regents tuition increases for our out-of-state undergraduate students and for our professional schools over the coming months.

We’re also working hard to make our case for increased state funding with the state legislature. Over this past year, I’ve met with 110 of the state’s 132 legislators as well as other state and local leaders about the needs of this campus and where we are financially, particularly in light of the base budget cut and the tuition freeze in the last budget. I talk about what we’re doing to be good stewards of our funds and to be both transparent and accountable.

We’re also hoping to mobilize our alumni and some of our private sector friends to speak to the state’s elected leadership about the need to provide adequate funding for higher education. And we’ll coordinate our efforts with PROFS, ASPRO and other groups that are working on this issue.

I look forward to making a strong case to the governor and the legislature to support our budget request. Most of the elected officials I’ve met with recognize how important higher education is to the state and what a gem a major public research institution like UW–Madison is for Wisconsin. But we will have to make a persuasive case for funding in a year when competition for funds will be tight.

After reading this, you may be asking, “What can I do to help?” At this moment, the process is only beginning. I’d urge you to stay informed and help inform your key stakeholders of our situation. I will be providing regular updates here, and at budget.wisc.edu.

Nothing is expected to happen until after the election. The governor’s biennial budget proposal is usually introduced in mid-February, and the legislature traditionally finishes its deliberations by about the end of June. Final decisions on these issues are still a long way off. But we have to plan for a range of outcomes, even as we work for the strong budget we all want.

In closing, I want to extend my sincere gratitude to the faculty and staff of UW–Madison for all they do every day to make this an outstanding university. Working together, we can continue to strengthen an institution that is one of Wisconsin’s most important long-term investments.