Walker Plan for UW System Could Backfire

Financial and academic reductions could actually result in fewer and less prepared workers for the rapidly changing workplace.

By - Apr 6th, 2015 01:23 pm
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UWM Union. Photo by Dave Reid.

UWM Union. Photo by Dave Reid.

Since the Great Recession of 2008-09 ended, the state has cut the UW System’s base budget by $121 million, including $15.7 million for UW-Milwaukee over 4 biennia. Now that the Wisconsin economy is once-again growing, albeit at half the national rate, university system administrators asked for a $90 million increase to help cope with past cuts. Instead, Governor Scott Walker proposed an even larger cut: $150+ million in the 2015-16 budgets, including a $20-26 million cut for UWM in just one biennium, including both the funding cut and additional costs being passed to UW System institutions.

Many in the media and other observers view these cuts to be small and manageable whereas university leaders are describing it as large and crippling. The university’s position is accurate for two reasons: 1) previous budget cuts effectively removed whatever fat existed in their budgets, and 2) most campus budget items are earmarked for specific items such as student financial assistance and research grants and cannot be diverted to meet the cuts being proposed. On those items in the university budget that are not so earmarked, the Governor’s proposed cuts come to 6.5 percent.

Skeptics assert that there are piles of cash lying around in large unspent balances that can easily be tapped to meet the proposed cuts. The reality is not so simple. Each campus does, of course, have contingency funds (carry-forward balances) that are used to insure against uncertainties in their operating revenues and costs. Such balances are used by all well-managed organizations, both public and private. Because university costs and revenue fluctuate, an institution’s accreditation depends in part on the size of these carry-forward balances. Accreditation agencies must be assured those fluctuations will not cause a significant deterioration in the quality of student degree programs; similarly, granting agencies, like the National Science Foundation, must be assured that a university can sustain its physical facilities and its support of its research environment before they will sponsor a research project.

This was explained in detail by UWM’s then chancellor Michael Lovell in 2013. As Lovell noted, the National Association of College and University Business Officers recommend that public universities should carry contingency funds of 40 percent of operating expenditures. For UWM, the Legislative Audit Bureau found it had only $8.8 million in true reserve or discretionary money not earmarked for specific purposes at the end of the 2011-12 year, or about 1.7 percent of expenditures. Recently the new UWM Chancellor, Mark Mone, reported this figure had dwindled to about $1 million, or 0.14 percent of expenditures!  That is 1/286th of the recommended size.

Perhaps the discussion of university budget woes should go beyond the consequences internal to the university to include the broader, more public consequences of such degradation. Consider, for instance, the negative impacts on business and professional interactions with UWM, and the impact on the workforce of the future.

The main ingredient that any university offers is the talent of its people, led by the quality of its research professors. There is a highly competitive market for top research faculty, and the UW campuses have done well in that competition. Significantly downgrading the research and teaching environment will encourage top talent to leave these campuses and will discourage others from coming here. Wisconsin can ill afford to let this happen.

Business and professional bodies in Milwaukee often speak of their desire to form partnerships with UWM. They value the expertise in its professional schools and scientific departments, and they have been generous in their financial support given to students in these units. Yet, what is often little understood by these UWM champions is that the professors in the humanities and social sciences provide more than one-half of the curriculum for the very students they most value. When we lose top research professors, whatever their area of expertise, their loss permeates the entire university. We can ill afford to suffer further attrition.

The push by Walker and others to have state universities emphasize preparation for the workforce could also achieve just the opposite. A good education prepares students for a lifetime of meaningful work by bringing critical, analytic thinking to a high level. Well-educated students should be able to navigate a rapidly changing world of work over the next 50 years, not just jobs that may exist at the moment. Young people and their older advisors, looking at the proposed reductions in the UW System’s financing and academic breadth, may recognize in it a disinvestment in their future and a narrowing of their choices. They may be more inclined to migrate to other states, seeking a better educational environment. And if so, they will likely remain there for the entirety of their productive careers, adding to the brain drain that has worried business leaders for decades.

William L. Holahan is emeritus professor and former chair of the Department of Economics at the University of Wisconsin-Milwaukee. Charles O. Kroncke is retired dean of the College of Business at UWM. They are co-authors of “Economics for Voters.”

Categories: Education

8 thoughts on “Walker Plan for UW System Could Backfire”

  1. Wisconsin Conservative Digest says:

    “To whom does this system belong?? Students, taxpayers, parents of the staff?”? When you answer that then you have to ask why the place is o poorly run that it puts it’s customers deep into debt to get their products.
    No matter how much is cut, everyone from the NY Times, Economist, most newspapers, Liberals and Conservatives are demanding reform. streamline administration, dump worth less courses etc.
    Colleges and governments are inherently inefficient, run poorly cause they are for “the kids”? Baloney they take care of themselves first last and always. I have never heard of a college professor dying of starvation or overwork.

  2. David says:

    WCD…. are university systems run poorly or do they not run like businesses because they are not businesses? It’s not ALL about the bottom line. I don’t want our university system to prepare students for the workforce. I want them to teach students how to think and to expand their perspectives. Furthermore, our most dynamic economy, Madison, owes its growth to UW. They are the third biggest research institution in the country and that belongs to all of us. In fact, I say we increase investment in our university system and try and replicate that model in Milwaukee.

  3. John G. says:

    I certainly hope simpletons like WCD are not involved in determining which courses are considered worthless. These are the same folks who still stump for supply side economics and climate change denial.

  4. john g. says:

    David, I applaud your efforts, but warn that your comments are falling on deaf ears, or blind eyes. Having a greater grasp of the world is immaterial to people who think you can change inequality by pumping out more welders getting paid $15/hour.

    Simpletons enjoy simple answers, and in their simplicity think UW producing anything but accountants and engineers is a wasteful usage of taxpayer money. The UW shortfall could be completely fixed just by rolling back the hilarious property tax furloughs that knuckle dragging simpletons lauded.

    It’s a strange kind of irony where simple thinkers opine on institutions of higher learning and what their purpose actually are.

  5. wisconsin Conservative Digest says:

    It is even stranger when the line is led by the NY Times, the Economist. Many liberals, especially students/parents are on board.. U
    Universities are not businesses, but they are also not deep holes for the taxpayers, students and parents to throw in all of their money. In my lifetime, since 1961 UW tuition has gone up from $200 to over $13,000, 65 times. At same time the administrations, staffs, ancillary groups in the U system, has gone up 10 times faster than inflation. They remind me of GM in the 50’s, just before the Japanese took them on, and the battleship Admirals of the 20’s before Billy Mitchell sunk them all.
    Two great governors, Rick Perry and Rick Scott have done the same as Scott, frozen tuition and forced the systems to turn out degrees in 4 years, for $10,000/ year. They did it.
    I know the far Left nuts believe that the govt. and the college systems should be free to rape the taxpayers and the students/parents for as much as they like, and that is why you are tossed out of power the last 6 years. GOP/Conservatives talk property tax relief and the left whines about govt. employees not paid enough and Global warming.
    Wake up kiddies, you have lost the debate.

  6. Big Al says:

    @WCD – what debate was lost? I have yet to hear any debate.

    Since 1961, how much has state support been cut? Even with flat expenses, if state support is cut, tuition will rise to make up for it.

    “great governors Rick Perry & Rick Scott”? That’s the funniest thing I’ve read all day. Thank you.

    Higher education in general needs to be looked at because costs cannot keep growing while graduates’ wages stagnate. However, that should be done outside of the budget process and actually use facts to make a decision, not just plug a number to fill a deficit that your party created.

  7. Wisconsin Conservative Digest says:

    Some of you are so ignorant, not having done any research but still have opinions. Worthless. U systems across the country with lots of research done by legislative Research Bureau, NY Times, Economist, Atlantic and many more, shows that colleges have fattened up on kids loans and they have to be forced into change. This is going to happen whether there are cuts or not. Doyle cut UW 250 million

  8. PMD says:

    When you label a criminal like Rick Scott a great governor, you demand no one listen to anything else you have to say. Even for you that is a whopper.

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