WMC Board Meeting
Thurs May 13, 2021
Thank you Kurt/Mike for that kind introduction and for all that you and the WMC directors are doing to help Wisconsin businesses to survive this very challenging year.
I also want to congratulate WMC on being named “State Chamber of the Year” by the Council of State Chambers. To win a major national award for innovation and service would be a great honor in any year – but in this year, it is truly a remarkable achievement – congratulations!
You invited me to talk about finances and the state budget, and I want to share with you several budget initiatives that I am hoping you’ll help us advocate for. But first let me give you a quick update on what’s happening on campus.
Points of Pride
This was a strange year for all of us. At UW, we really missed the personal interactions that are part of university life, and many of the things that make the university so special – from Badger games to an afternoon on the Terrace.
But at the same time, we had a lot to celebrate this year:
- We are now one of the top 10 public universities in the country in graduation rates.
- We’ve also decreased the time it takes to get a degree – the average undergraduate now earns their degree in less than 4 years. Which also reduces student debt — 57% of our undergraduates graduated last year with no student-loan debt.
- Thanks to the generous support of our alumni, we are able to guarantee – for the first time in our history – that every WI student who can qualify for admission and whose family makes less than the state’s median income will receive funding to cover tuition and fees for 4 years. One in 5 WI freshmen is now covered by the program we call Bucky’s Tuition Promise.
- And we continue to be a hot school for new students. We’ve received 54,000 applications for about 7,500 spots in the freshman class – a new record.
We also continue to be a research powerhouse – one of the nation’s top 10.
- Our researchers are working in many different fields – but of course a main focus has been COVID. We’ve brought in $50m in federal grants this year to fund 74 different COVID-related projects.
- We invest about $1.3b a year in cutting-edge science that’s saving lives and improving the world. Those aren’t state tax dollars; they’re federal dollars and private grants we bring into Wisconsin every year.
- Most of those dollars stay here in Wisconsin. We released a new study earlier this spring that shows our economic impact in this state is $30b a year. $30 billion – that’s about 10% of the state’s GDP ($306B)
We are planning to be back to normal – or at least as close to normal as possible – when fall semester opens.
- We have now vaccinated more than 35,000 people – members of the community as well as our faculty, staff, and students. Getting almost all of our community vaccinated is the best way to assure next fall goes smoothly.
- The Union Terrace reopened to the public this week.
- The marching band has resumed practice
- And last Saturday, we graduated 7,600 students at in-person commencement ceremonies at Camp Randall Stadium. After the year they’ve had, it was great to be able to send them off with a big celebration.
I would also note that we have some changes in athletics coming. We have a national search underway to replace Barry Alvarez (and of course no one will ever really replace Coach Alvarez)
As you know, one of our most important roles in the state is to deliver a set of talented workers with strong skills.
UW-Madison is uniquely positioned to expand the pool of talent for state businesses:
- We’re working to keep top Wisconsin students here in Wisconsin and bringing in students from other states.
- 20,000 of our current undergraduate and graduate students are from outside Wisconsin. Applications from out-of-state students are up by double digits this year. This is a huge influx of talent into the state…we work closely with the business community to help keep as many of them here as possible after they graduate.
- We confer more than 10,000 degrees every year and, since 2018, a majority of them have been in STEM or healthcare fields.
A little less than two years ago, we opened our new School of Computer, Data and Information Sciences.
- CDIS is already a magnet for students from all over the state, the nation, and the world.
- It now has more than 2,400 undergrad majors across 4 programs and nearly 900 graduate students. Computer Science is our largest major.
- Students from all over campus are taking advantage of the opportunity to add some new tech skills to their resume through a certificate for non-majors. One introductory class last fall enrolled students from 72 different majors.
- We opened a new Data Science major this year and have a suite of data science and information degrees and certificates in the works.
Entrepreneurship education has been another major growth area.
- We enrolled more than 3,000 students from 11 different schools and colleges in our entrepreneurship classes this year.
Our hope is to support entrepreneurship as an important contributor to the state’s economy.
We know there is significant room for growth spurred by UW-Madison innovation, and we’ve put together an innovation ecosystem to nourish entrepreneurship and support tech transfer. There are many different components – let me tell you about three that might interest you:
- The Office of Business Engagement which is making it easier for industry partners to collaborate with us on research projects and recruit top talent.
- The Discovery-to-Product program which works in partnership with WARF to help faculty, staff and students bridge the gap between innovative ideas and commercial reality.
- And our newest initiative – also in partnership with WARF – is called Promoting Industry Collaboration. It will fund Ph.D. students to work as interns with a industry partner for 1-2 years on an invention or innovation related to their research. We are now in the process of reviewing 32 proposals.
Thoughout this pandemic, we have continued to operate all of these programs and many more, to fulfill our mission as a public university. Which brings me to a few comments about our budget.
The pandemic has created a financial crisis bigger than anything we’ve seen before.
We project a total loss of nearly $320m. That’s a combination of losses in revenue plus COVID-related expenses. The biggest losses are in a few areas – for example:
- Athletic revenues are down $50m;
- Our housing and dining revenues are down about $50m;
- And the state took $50m back this past spring and fall, requiring us to return budget money we thought had been allocated to our campus.
We are planning for a normal semester in the fall, and much of our revenue will come back quickly, so this is a short-term cash flow problem. But it’s a big problem!
We are managing these losses with both short-term fixes and long-term adjustments, including using reserves, asking all employees to take furloughs, and passing budget cuts of around 5% on to all units. But given our financial issues, I care even more than usual about the state budget.
Governor Evers’ budget is very positive for UW. We’re working with the legislature to retain as many of the Governor’s recommendations as possible, and I hope you will stand with us to ask the legislature to:
- Support some increase in base budget for UW System and its schools
- Support modern financial tools for the university. Governor Evers has proposed two that are absolutely necessary:
- Short-term borrowing to support operations; and
- The ability to invest our working capital.
- Short-term borrowing:
- A financial tool available to every one of our peer schools and is critical to be able to continue operations in a crisis.
- Example: The $50m loss in Athletics. A short-term (3-5 year) loan at up to $40-50m would help ensure that the department does not need to lay off outstanding staff who will be needed as soon as the pandemic is over.
- Ability to invest working capital:
- We want to remove the byzantine rules that govern how our working funds are held. Changes to these rules would allow us to manage our working capital like most other organizations of our size.
- This will allow us to take some of our cash balances out of accounts where they’re earning essentially zero and into safe, medium-term investment funds that earn a little more.
- This is worth $10-$20m/year to UW-Madison. It’s a small fix that really matters to allow us to manage our finances responsibly.
We’re also trying to get two new academic buildings built.
- One on the Engineering campus that would allow us to increase undergraduate enrollment by 1,000 students – something companies in Wisconsin have been asking for as they seek to hire more engineers. It would also give us new space for hands-on teaching and research.
- And a new L&S academic building that is part of a series of projects to allow us to move out of our crumbling Humanities building.
- Humanities was built in 1969 and it’s got all the warmth and functionality of a big, uninsulated concrete box.
- Over the course of a typical year, we have 60 different departments teaching about 70,000 credit hours there – everything from Introductory Biology to Modern Literature.
- We just conducted an engineering review at Humanities that found enough potential safety issues that we’ve shut down portions of that building.
Both of these buildings were included in the Governor’s budget. We’re committed to raising 1/3 of the cost of these buildings, and we’re asking the state to support the remainder.
This year has highlighted the value of a highly educated workforce and the value of scientific research – and after the losses of this past year, we need state support to recover and to plan forward. This is how we continue to compete nationally and globally for the best and brightest students – your future employees.
There are two ways you and your members can help:
- Ask key members of the legislature to support UW in the upcoming state budget
- Keep talking about UW and sending great students to us.
Thank you for your partnership over the years. I’ll be happy to take your questions.