Feb 9, 2021
Thank you Tim for that kind introduction. I also want to thank:
- Mark Mone for his remarks and his commitment to the strong partnership between our two universities.
- And MMAC for inviting us to join you today.
I want to share with you several state budget initiatives for which I hope you’ll help advocate. But first let me give you a quick update on what’s happening on our campus.
Good news
Even in an historically challenging year there is good news to share:
- UW-Madison continues to be a ‘hot’ school nationally. We set a new record for freshman applications last week – they’re up 16% over last year with increases both in-state and out-of-state.
- We’re now among the top 10 public universities in the country in 6-year graduation rates. And we’ve reduced time to graduation. That’s good news for many reasons. In particular, it reduces debt. 57% of our undergraduates graduated last year with no student-loan debt.
- We’ve also increased scholarship aid to expand access for low-income Wisconsin students. I’m particularly proud of a three-year old program called Bucky’s Tuition Promise: If you can qualify for admission to UW-Madison and your family’s income is at or below the median in Wisconsin (about $60K), you will receive scholarship aid to cover all tuition and fees for four years. One in 5 WI freshmen is now covered by this program – and Milwaukee is well-represented.
I am proud of the quality of education and research at UW-Madison – but COVID has made this past year a particularly difficult one.
COVID-19 update
Education
When the pandemic hit nearly a year ago, we sent students and most employees home and changed our entire instructional model in 10 days. We redesigned 8,000 classes so we could teach remotely.
We re-opened in the fall with multiple new policies and new health protocols. For example, we:
- Reconfigured the ventilation systems in our buildings
- Changed class times to limit the number of students moving through the hallways at one time
- Purchased nearly 2 million masks and 7,300 gallons of hand sanitizer
- And stood up systems for testing, quarantine, and isolation
Lots of people told us it would never work. I’m happy to say we proved them wrong. After a spike at the start of fall semester which we quickly got under control, positivity rates were consistently below the state and county through December.
For spring, we’ve greatly expanded our testing. We now have twice-a-week mandatory testing for all undergraduates and once-a-week testing for faculty and staff who are working on campus. And we’ve added a new app called Safer Badgers that controls access to our buildings based on whether the person’s met their testing requirements and tested negative.
None of this has been easy or cheap. Altogether, our expenses on COVID-related efforts have cost us $50m. But it’s important to us to keep our campus safe, and to make sure we catch infections when they occur so that we keep the community safe as well.
Research
In addition to educating thousands of students, we are also running a $1.3 billion research institution – one of the 10 largest in the U.S.
A growing segment of our research work relates to COVID – we’ve received over $50 million in the past year for COVID-related projects. Some of these are Madison-Milwaukee collaborations. For example:
- A project to test wastewater to give us an early warning about emerging clusters so we can respond quickly to stop the spread of the virus.
- And a partnership with Milwaukee Public Health, funded by the CDC, to sequence COVID viruses on college campuses in Wisconsin and Michigan to better understand which variants are being spread, and how they’re moving from place to place.
But as Mark said, our largest collaborative projects are unrelated to COVID. For example:
- Our College of Engineering and the Wisconsin Energy Institute have a proposal led by M-WERC (em-work) to the U.S. Department of Energy to develop and deploy connected-energy systems, which could be the way we power Milwaukee in the future. Our partners include Milwaukee-based businesses A.O. Smith, Eaton Corp., WE Energies, and others.
- And we have a long-term partnership with GE Healthcare to develop state-of-the art medical imaging to improve how we diagnose and treat diseases like cancer.
These are among 372 current research collaborations with Milwaukee-based entities.
We have a new report coming out on Thursday that looks at UW-Madison’s economic impact on the state. I haven’t seen the final version, but I’ve been told that it will show that it’s about $30 billion, through – among other things — partnerships like these.
Finances
The pandemic has spotlighted the importance of have major research institutions in the state. But it’s also created a financial crisis bigger than anything we’ve seen.
At UW-Madison, 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 dorm and cafeteria 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.
If next fall is a more normal semester, much of our revenue will comesback quickly, so this is primarily 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:
- We started the past year in a strong financial position, so we could divert dollars from new programs into pandemic-related funding.
- We received some federal funds earmarked for pandemic-related expenses.
- And we took immediate action to reduce expenses:
- Froze salaries and most hiring
- Pulled back any new budget distributions for next year
- Implemented mandatory furloughs for all employees, cutting annual salaries by 2.5 to 4.6%, as well as a 15% voluntary pay cut over this year for senior leaders.
- Implemented budget cuts on all units of around 5%.
But this is a state budget year. If the state cuts us further, we will be facing more long-term problems. We are asking the state for help on 4 items:
- First – additional budget money
- Given the financial impact of the pandemic, it would very hard to cope with a state budget cut on top of our other losses. The Board of Regents has asked for a budget increase, which I strongly support.
- Second – borrowing authority
- This is a financial tool available to every one of our peer schools and is critical to be able to continue operations in a crisis.
- Example of how this could help: Our Athletics Department has lost about $50m in revenues due to the pandemic. A short-term loan would help the department keep the staff it will need as soon as the pandemic is over.
- Third – working capital flexibility
- 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.
- Fourth, 2 major capital projects
- We are trying to replace 2 obsolete buildings with modern and much-needed facilities. These two buildings will be partly donor-funded – one in Engineering and one in L&S.
- Thank you to those of you who are already working with us to advocate for state funding for these buildings.
Conclusion
This year has highlighted the value of a highly educated workforce and the value of scientific research. We are fortunate in Wisconsin to have two top research universities that deliver both.
I hope that many of you will consider advocating on behalf of UW-Madison, UW-Milwaukee and the entire UW System.
Thank you and I’ll be happy to take your questions.