UWM’s Financial Plight Is “Catastrophic”

If ever there were a time for the big hitters in the Milwaukee area to rally behind UW – Milwaukee and the other UW campuses in Southeastern Wisconsin this is it.

In this COVID-19 crisis, Gov. Tony Evers and the Republican legislators have proven they are no friends of the 26 UW campuses in the state. The campuses are reeling from abrupt revenue fall-offs that include collapses in enrollment and tuition (except for UW – Madison), dormitory rentals and food services.

The revenue drop at UWM, for example, will cause a deficit of $9 million to $18 million for the current budget year and as much as $50 million to $100 million for the 2020-21 school budget year. That’s a gigantic slice out of a current budget total of about $650 million.

The first round of costs cuts, already under way, on top of successive bipartisan reductions over the last decade, may be manageable through massive restructuring on the Milwaukee, Waukesha and West Bend campuses. But where, oh, where will the UWM leaders find enough cuts to navigate the 2020-21 revenue drop?

Instead of riding to the rescue with some kind of major help to get the university through the crisis in the short and long term, the governor and legislature added to the pain by slicing its contribution to the system by 5% — $46 million.

UWM Chancellor Mark Mone told the UW regents that the current financial situation is “catastrophic” and added that the projected losses for next year put the campus “on peril.” It’s hard to think of stronger words for his plea for help.

Mone will have to make major changes in the near term, and he will need the support of community leaders as he makes his decisions. Regional business leaders, who have dealt with similar challenges, can help.

There will be a lot or resistance on campus, primarily from faculty. But make moves he must. The pandemic and the deepest of recessions give him no choice.

Here are some of the near term changes he will probably have to make:

• Raises and bonuses will be gone.
• Furloughs will be extended for many staff members. Some layoffs will be unavoidable.
• Colleges and departments will be consolidated. Dean positions will be eliminated. For example, the two health care colleges could be combined.
• UWM will open in the fall with on-campus classes, but more online classes will be added for all degree programs. UWM already leads the system with 11,000 students taking some on-line offerings.
• Judicially collected reserves will be tapped.

For the longer term, major restructuring of the system is in the cards. Here are some of the moves that the Regents need to be considering, regardless of who the next UW president is:

• Prune the UWS balance sheet to raise money from non-core assets. UW health is an example.
• Re-examine the split of general purpose revenues to the campuses. Madison, which has multiple, major revenue streams (R&D, foreign students, foundation earnings, hospital profits) gets the lion’s share of GPR dollars. The other 25 campuses have lower reserves and fewer places to go for crisis money. The Wisconsin Idea says the boundaries of the state are the boundaries of the system. Walk the talk in this challenging time.
• Allow the bonding by the four-year regional campuses.
• Move smartly and decisively into online learning. UWM can lead the way across the state.
• Follow President Ray Cross’ lead and sharpen the missions of the four-year campuses. Examples are natural resource management at Stevens Point, recreation management and nursing at LaCrosse, and engineering at Platteville.
• Use a small portion of the $8 billion in foundation assets around UW-Madison for bailouts for the next two years. Invasion of principal is OK in severe crises.
• Close or merge campuses that are no long sustainable. A regional framework makes that more palatable.

These are all bigger and bolder moves than UW regents have entertained in the past. But the status quo doesn’t cut it when then state and country are facing a triple whammy, the pandemic, the resulting economic collapse and now a racial confrontation.

All three, plus the enrollment declines, mandate that the regents, governor and legislature make major structural and financial changes to keep our very valuable public university system vital and sustainable.

John Torinus is the chairman of Serigraph Inc. and a former Milwaukee Sentinel business editor who blogs regularly at johntorinus.com.