State of the University address: It’s time to reinvest in UW

State of the University to the UW-Madison  Faculty Senate,  as prepared for delivery on Monday, Sept. 26, 2016 at  3:30 p.m.

Listen to an audio transcript of the speech.

Good afternoon. It’s always good to see all of you at the beginning of a new academic year.  I hope you had a good and productive summer and that the fall semester is well-launched in your departments. I want to welcome the new senators, and extend my thanks to a number of people here.

First, thank you to Amy Wendt for stepping into the role of UC chair, and to Barb Bowers and Rick Amasino, who are new members on the UC, succeeding Dorothy Farrar-Edwards and Beth Meyerand, the outgoing chair. Beth led the UC during an extraordinary year that included what we believe to be a record nine Faculty Senate meetings. Next, thank you to Secretary of the Faculty Steve Smith, who has done a terrific job working on some big issues. And finally, thanks to all of you for your willingness to be leaders on this campus and to serve on the Faculty Senate.

I also want to note two terrific additions to the leadership team:

VCFA —  Laurent Heller joined us from UC Berkeley over the summer. He succeeds interim Michael Lehman, who stepped in upon Darrell Bazzell’s departure last March.

NursingLinda Scott joined us from the College of Nursing at U of I – Chicago in July.  She succeeds Katharyn May, who stepped down after 15 years as dean to return to the faculty.

And I want to recognize Francois Ortalo-Magne, dean of the Wisconsin School of Business for five years. He is leaving at the end of this academic year to become dean of London Business School, and the search for a successor begins this fall.

The New Semester

Let me start with a reminder of some of the things we’ve accomplished here at UW in recent months:

  • We kicked off the largest fundraising campaign in the history of this university – and we hit the halfway point to the $3.2 billion goal during the summer.
  • We launched two rounds of UW2020, one of the biggest, most exciting research competitions this campus has ever seen.
  • In a year with a larger-than-usual number of outside offers, we retained the great majority of faculty (70%) with outside offers.
  • We have 63 outstanding new members of the faculty, many of whom the people in this room worked very hard to recruit.
  • We just welcomed a freshman class that is the largest and one of the most diverse in our history.
  • Our retention and graduation rates are at long-time highs – and we’re among the top public universities in these statistics.
  • And finally, over the summer we were again named one of the world’s top 25 universities … and earlier this month U.S. News and World Report named us the 10th best public university in the nation (up from #11 last year).

None of this would have happened without all of you.

A Challenging Time 

While there is good news to share, there is no question that this is a challenging time for UW. Our budget has been cut in five of the last six legislative sessions, under both political parties. That’s kept us from hiring new faculty as aggressively as other schools, and it’s led to the loss of some really valuable top teachers and researchers.

Nothing saps morale more than losing valued colleagues. But I believe we can find ways to create a stronger and more resilient university that can grow and thrive into the next 168 years.

I want to talk this afternoon about two key strategies for doing that:

  • First, building a more stable financial base
  • Second, making sure this campus is a place where outstanding people want to be 

Building a more stable financial base

Let’s start with the budget.

This is a year to settle the next biennial budget in Wisconsin and we are spending a lot of time preparing for that. You all know that the last state budget left us with an $86 million deficit. As a result we have cut or redirected $50 million over the past year. The bad news is we had to cut $50 million. The good news is that we ONLY had to cut $50 million, because we’ve been able to expand other revenues over these two years to fill the rest of the gap.

These cuts continue to be felt across the university, and we spoke in detail about them at the Sept. 14 Budget Forum, which I know a number of you attended. For those who couldn’t be there, you can watch the video at We have one main message for this year: It’s time to reinvest in UW.

I have spoken very directly about the impact of the cuts we’ve taken, and I plan to continue to do that as we advocate for new state dollars.

The Regents have requested a budget with $92.5 million more in state funding over the next two years than we received in the last budget. That includes $50 million that will be restored to the UW System – money we were required to lapse back to the state in the current biennium. The governor has already said he will restore this $50 million. The Board of Regents request also includes a request for $42.5 million in new funds.

The Regents are also asking for a standard capital budget, which funds construction, renovation and maintenance across the system. As you know, there was almost no capital funding in the last budget.

  • The request includes authority for projects at Slichter Hall and the Walnut Street Greenhouses, and much-needed improvements to our utility infrastructure.
  • It also seeks state funding for basic maintenance and repairs. The current state budget provided zero funds for building maintenance. That means that when a steam pipe breaks, we have to take money away from our educational programs to fix it. The state must meet its basic obligations and provide maintenance money in this coming budget.

And finally, the Regents are asking for some important flexibilities. This includes a request that the System be able to issue its own bonds for building projects such as dormitories that generate revenue, which is then used to pay off the bonds.

The outcome of a state budget debate that will wrap up nine months from now is very uncertain. But we are working hard on two fronts: A new budget communications strategy, and financial strategy that will allow us to achieve greater independence from uncertain state dollars.

I want to tell you a little bit about both of these efforts.

Budget Communications Strategy: Reinvest in UW

Let’s start with budget communications strategy.

For too long, we have allowed those who don’t understand, or believe in, the importance of higher education to our state’s future to control the narrative.

We need to change that narrative.

But this can’t be just a conversation between the two ends of State Street. It has to involve the citizens of the state. This is their university, but we can’t take for granted that they understand what a research university does and why it’s important.

Last month, we launched a three-part campaign in partnership with the Wisconsin Foundation and Alumni Association to reach out to media, the public, and state policymakers with one key message:

It’s time to reinvest in UW.

The first part is Project 72, which is built around 72 news stories – one for each county – that spotlight a few of our top alumni and research and outreach programs making a difference across the state.

All 72 stories are being pitched throughout the month of September to local, state and national media and highlighted in paid media placements including billboards. Maybe you’ve seen the one on Hwy. 12 not far from Middleton.

We’ve had excellent response to Project 72 so far, and we hope that it sparks conversations around the state about the importance of reinvesting in this great university.

The second part is the “Reinvest in UW” Campaign. This will be a true multi-channel media campaign beyond what we have done in recent memory. I hope you have seen or heard some of the spots. They began this month, and will run through next May.

We’re on cable TV – primarily in the Milwaukee market – statewide radio on WPR, and online with digital ads. We expect to achieve 46 million impressions – in other words, views – over the 9-month campaign.

I want to emphasize that this campaign is privately funded … no state tax dollars or tuition dollars are involved.

The third part of the campaign is outreach to the public and policymakers. One of the efforts is based on an idea that came from our faculty: the Faculty Hometown Engagement Project.

The project invites faculty who grew up in Wisconsin, or who have research projects or outreach work in a Wisconsin community, to consider returning there to give a talk. We’ll help match them with the best opportunities. 

We announced this program in late August, and I am happy to tell you we already have more than two dozen faculty registered from all across campus.

Outreach to policymakers is our other major focus. As they say in the Capitol, if you’re not at the table, you’re probably going to find yourself on the menu.

We’ll be connecting with alumni and parents to ask them to advocate on our behalf, and I will be traveling the state – I have five joint appearances scheduled this fall around the state with other chancellors to talk about the importance of reinvesting in the UW System.

All of these efforts are focused on creating opportunities to have conversations about the critical need to reinvest.

Financial Strategy: Developing Multiple Revenue Streams

The second part of our strategy is financial, and I am not going to talk at length about this. I’ve talked about this in some other meetings and would be happy to engage in a more extended conversation at another time.

The key issue is this: State dollars provide only 15 percent of our budget and – regardless of state politics – will probably never return to anything like their previous levels in the foreseeable future. We have to be entrepreneurial in developing alternative revenue streams.

Let me be clear why I’m working on this.

At a Faculty Senate meeting last spring I said something about our Summer Term expansion and someone said back to me, “You just want to make money.” That’s not my primary goal. My primary goal is to pay faculty and staff competitive salaries, to offer one of the best educational programs at any public university, to support research and to make sure we have the facilities needed by a top-ranked research institution.

But to do that, we have to have financial resources. We need stable revenue, with new dollars every year for investment in faculty, in new programs, or in research opportunities.

So we’re working on all four of the following fronts: 

Maintain Strength in Research Funding

Research funding makes up about 1/3 of our budget and maintaining this is central to retaining our dominance in research. We are also working hard to expand industrial partnerships in support of research and tech transfer where they fit well with our academic and research mission.

Expand Tuition Revenue, Equivalent to our Peers

Tuition is our next largest revenue stream – larger than state dollars these days. We’re focused on four areas that help us grow our tuition revenues:

First tuition strategy, in-state tuition:

We will almost surely face another proposed tuition freeze in the upcoming budget for undergraduate in-state students – at least in the first year of the biennium. We owe subsidies to state residents, but I’m not a fan of tuition freezes … I think tuition should at least keep up with inflation. We need to work with the Regents, legislature and governor on this. 

Second tuition strategy, out-of-state and professional school tuition:

Out-of-state and professional school tuition ought to be driven by market comparisons to our peer schools.

In the spring of 2015, I asked the Regents for 4 years of tuition increases for out-of-state and professional school students. They approved 2 years and told me to come back and ask again. We’ll be doing that.

Third tuition strategy, the enrollment mix:

As many of you know, the Regents lifted the cap on the percentage of out-of-state students that we could admit this past year. In exchange, we agreed that we would have at least 3,600 Wisconsin students in every entering class. Given the shrinking number of high school graduates in the state, this means we’re actually going to have an increasing share of Wisconsin’s high school graduates on campus. That’s a real win-win – a strong commitment to the students in this state, and the ability to add some additional out-of-state students if we grow. That can improve our diversity and build our revenue base.

Fourth tuition strategy, expanded educational programming:

One of our most important initiatives has been a strategic effort to expand and transform the Summer Term in ways that provide our students with important new educational options for making progress on their degrees … and that increase discretionary revenues to departments, schools and colleges.

This was a major undertaking and I want to thank those of you who took part. We offered 71 new courses this summer, including many high-demand courses that often close out in fall or spring semester. These are courses that can make it easier for our students to graduate in four years – the most important factor in reducing debt – and give them greater flexibility to study abroad or pursue internships.

We had a 10 percent increase in enrollment and a 21 percent increase in summer tuition revenues, 80 percent of which goes directly back to schools, colleges and departments.

I want to thank this group for approving the new 4-week summer session. I know today’s agenda includes discussion of a proposed change that would allow more growth and flexibility in that session. I’ll look forward to hearing your thoughts on that.

Grow Gift Revenue

The third key revenue source we’re working hard to expand is our gift revenue. The current fundraising campaign is raising historically large sums of money for things that are central to the mission of our university – support for faculty and financial aid for students.

Over the past two years we have raised $250 million in endowment for new and enhanced faculty chairs and professorships – that’s about $12 million that will pay out each year to support faculty. And we’ve raised nearly $100 million in endowment for new scholarships for undergraduates, graduate students and student athletes – that’s $4.5 million in new annual scholarship dollars.

Control Expenses

In addition to working on the revenue side, we have to constantly be looking for ways to run this institution more efficiently.

One area of focus will be our IT spending, which is highly decentralized. That can be wasteful and expose us to significant security risks.

Michael Lehman, who served as interim VCFA after Darrell Bazzell left, is now working as a Special Assistant to the Chancellor, heading up an IT governance initiative. Mike served as CFO and Chief Information Officer of Sun Microsystems for many years and he understands organizations and IT.

We expect that this initiative will result in a more participative and inclusive process and will help us to align our IT priorities and improve our IT security.

We aren’t doing anything fast. But you’ll be hearing more about it and I simply want you to know that this is an important priority from my office.

But the finance side is only half of what we need to focus on. We also need to invest wisely in the institution to ensure that UW continues to be a place where outstanding people want to be.

Making sure UW is a place where outstanding people want to be 

There are many areas of needed investment. Let me talk about just three: compensation, tenure and campus climate.

  • Compensation. You’ve likely heard some things about what we’re doing on compensation. The bottom line is, too many of our outstanding faculty and staff are being paid less than their peers at other institutions … and the retention cases we handled this year exacerbated some inequities here on campus. So we need to do everything we can to better align our compensation with the marketplace.

First, we’re allowing departments more flexibility in calculating the base adjustment for faculty who are promoted (from assistant to associate or from associate to full). We’ve previously used a fixed-dollar amount that was annually adjusted for inflation; we’re now planning on using a floor (the adjusted fixed-dollar amount) and a ceiling (10 percent of base salary).

Second, we’re setting up the following block grants to help with equity and merit adjustments:

  • We will provide $3.5 million for performance-based raises for faculty, including retention. I told the deans and directors that I hope they will use some of these funds to provide raises to faculty who didn’t seek outside offers but whose pay is lower than it should be.
  • We will also provide $3.5 million for staff raises.
  • We’re also putting in $2 million for one-time bonuses for faculty and staff who have performed well beyond expectations – perhaps taking on an extra project, covering for a colleague on medical leave, or working overtime with students on specific concerns or issues.
  • We all know that we need to pay competitive salaries, so I’ve used available funding to make sure we put more dollars into compensation.
  • Tenure: Let me turn to the topic of tenure and post-tenure review.

We fought through some very difficult changes in tenure policy, and I want to thank all of you for your thoughtful participation in this process.

As I told the deans and department chairs last month, I don’t believe there is a university in the world that could have gone through this debate without substantial controversy.

The next step – and one that I hope will be far less controversial – is to revise our procedures for post-tenure review. The Regents asked that we develop procedures consistent with the System’s, and we’ve had a faculty-led process underway to put those together.

I want to thank current and former members of the UC and other members of the ad hoc committee who have dedicated many hours to this important work.

I know you’ll be discussing the committee’s recommendations today. Once the Senate approves the revisions, we will present them to the Regents for approval. We are required to do that before the end of this calendar year.

  • Campus Climate: Finally, let me say a few words about diversity and our campus climate. The bias incidents on this campus last spring were a powerful reminder that ours is not yet a welcoming community for all people.

As I told campus leadership last month, I’m frankly worried about this fall. I have no doubt that students, staff and faculty have returned to campus concerned about what’s happening in this country and what’s happening on this campus, and wanting to talk about it.

Lots of people across campus worked hard all summer to expand some of our diversity training and campus climate initiatives. I encourage all of you to go to to see what we’re doing. You should all have picked up a two-page “progress report” laying out the initiatives we’re currently working on.

Let me note one item on the list: This body as well as the Academic Staff Assembly has called upon all campus units to engage in some form of dialogue and training around living effectively in a diverse and inclusive community. I have asked all unit heads to engage their faculty and staff in some form of diversity dialogue and training over this coming year.

It’s going to take work by everybody on this campus to change some of the ways in which we interact, and some of the assumptions that we all make that limit our ability to be a truly welcoming and diverse community. I hope you will all join in this effort.


This past year has brought substantial challenges. But don’t let the challenges allow you to lose sight of all the good things that happen here every day … things that the media don’t often cover. Students who walk into a class and discover a lifetime passion. Faculty whose 10-year research project pushes the boundaries of knowledge in an important area. Work that we do across the state to bring the knowledge and resources of this university out into the community.

A few weeks ago, I invited all the faculty who received the most prestigious national and international awards over the last year to my house for a reception. There were 73 faculty members on this list. You didn’t read about this in the paper, but it’s important that we recognize the excellence of our colleagues and of this place.

Thank you for your dedication to this university. I am honored to work with you. I’ll be happy to take your questions.