After Supporters Claim Less State Aid Would Decimate the UW, Cross Finds $55 Million Lying Around for Salary Increases

Which is it? UW has been so devastated by recent aid cuts that students are being impacted or the UW is so flush with cash it can “find” enough savings to pay for $35 million in staff salary increases on its own?

May 12, 2016

By Brett Healy
MacIver Institute President

One of the more controversial debates recently here in Wisconsin has been over the subject of higher education and specifically, how much taxpayer support does the University of Wisconsin (UW) system deserve?

Taxpayers, and any parent with a child at the UW, will remember that back in 2013, as Governor Walker’s budget proposal was making its way through the legislative process, members of the “CPA caucus” discovered that the UW had over a billion dollars in surplus funds.

After being told for years – six years to be exact – by the UW administration that 5.5 percent tuition increases were necessary and unavoidable, lawmakers were so outraged at the unearthing of the pile of taxpayer cash that they imposed a tuition freeze on the UW and cut their proposed state aid by $150 million, or just 2.68 percent of the UW’s then $5.6 billion annual budget.

In predictable fashion, supporters of the UW claimed that, without the ability to raise tuition to make up for the reduced aid, the sky would fall and our platinum-covered university system would quickly fall into disrepair and be forever ruined.

Parents were so thankful for the halt to the seemingly never-ending and unjustifiable tuition increases that the freeze quickly became one of the more popular legislative proposals in recent memory. So popular, in fact, that
Governor Scott Walker proposed another tuition freeze in the 2015-2017 budget when it was discovered a year later that the UW still had a sizable slush fund.

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Recent articles in various news media outlets have focused on the potential impact the state aid cut is having on students. The Milwaukee Journal Sentinel ran a story on May 1st entitled, “Amid cuts, UW System campuses seek to preserve student advising.” The Wisconsin State Journal’s story from April 12th was even more foreboding, “Across UW System, campuses reduce courses, advising and jobs as budget cuts take hold.” According to these media reports, the aid cut was having a real impact on the ability of some of our students to graduate because of a reduction in course offerings, fewer faculty and less services essential to a student graduating.

While the supporters of the UW have been pushing the idea that the aid cuts and the tuition freeze have hurt the UW and have started to impact the education of our students, UW System president Ray Cross recently announced at UW-Stout that he was going to use $35 million dollars in savings to pay for staff salary increases. Cross said he wanted “to get that to faculty as quickly as we can” so that, even though the UW has lost staff recently, “we’re going to pay the ones we have better.”

The $35 million in one-time savings came from lower-than-budgeted benefits costs. Cross also announced that the mild winter had led to a $20 million savings in utility costs. Apparently there is at least one upside to global warming.

While the unexpected taxpayer savings is welcome news, it does, once again, raise more questions about the true state of the UW’s finances and whether taxpayers can trust the UW leadership team to be honest with us.

Taxpayers have been led to believe that the recent state aid cuts have left the UW teetering on the brink, barely able to survive and provide a quality education to our children. But if President Cross was able to find $55 million in painless savings, it begs the question – is the UW really hurting from the state aid cut? If the UW was truly cut to the bone, there wouldn’t be $55 million lying around to help “fix” this problem. This isn’t a couple of bucks taken from the petty cash fund that President Cross can use to pay for Bob’s retirement cake. This is tens of millions in taxpayer savings I’m sure the taxpayers would like to have some say in how it is spent.

The $55 million in one-time savings equals 44 percent of the planned $125 million cut in state aid to the UW. With no real heavy lifting or a genuine austerity plan to curtail spending, Cross is almost half-way home in reaching his reduced budget target. Well, that was easy. If we ban unnecessary travel, eliminate non-essential vacancies and suspend discretionary merit compensation awards, we might be close to filling the budget gap.

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Taxpayers would also love to know what Cross and the UW did with the over $500 million in taxpayer savings from Act 10. That $500 million in Act 10 savings is more than all the recent aid cuts combined.

We need to ask as well about the use of one-time cost savings to pay for an on-going expense that will be built into the UW’s base appropriation. If President Cross wants to spend this one-time savings to increase the compensation of employees, at least have the common sense to send the money to the employees through a one-time, temporary UW faculty hardship grant, appreciation bonus or whatever you want to call it. Just don’t build it into your base. That would be reckless budgeting.

It also puts the UW on another collision course with the Governor and the legislature. During next year’s budget debate, when the UW goes from office to office asking for more state aid just to support its “cost-to-continue” budget proposal, they are unlikely to be welcomed with open arms. Fiscal conservatives will surely point out that paying for permanent salary increases with one-time savings is a bad idea and a self-inflicted wound.

And if our university students and the services they receive from the UW have been truly hurt by this 2.1 percent cut to the UW’s annual budget, why is Cross spending this newly-found savings on staff salaries?

Why didn’t Cross immediately pledge to put the money into additional class offerings, guidance counseling or other services directly used by the students? If we are to believe the media reports, there are students at the UW in danger of not graduating thanks to the draconian aid cuts. If the situation is so dire for our students, how can Cross, in good consciousness, propose giving the savings to his staff?

Could it be that Cross and the leadership team at the UW has been playing politics all along? Could it be that instead of having an honest, open debate about the true mission of the UW and how much money Wisconsin taxpayers can afford to give to higher education, the UW has treated this as a public relations problem? A temporary PR problem that, if managed properly, will convince the public that the UW has been picked on and unfairly targeted with punitive cuts?

Instead of using this opportunity to rebuild the UW brand and strengthen the UW system by jettisoning the dead weight and streamlining operations top-to-bottom, the UW is pursuing a “never let a good crisis go to waste” strategy that they hope will end with the public demanding that lawmakers give the UW hundreds of millions of dollars more in state aid.

While Wisconsin taxpayers have fortunately seen through this doomsday prediction strategy from the defenders of big government in recent years, only time will tell if Cross and the UW have masterfully used this crisis to their advantage.

Let’s hope taxpayers see through this deception and lawmakers are up for one more fight.

UW System Facts
  • The UW System serves more than 180,000 students at 13 two-year colleges and 13 four-year universities with an annual budget of $6 billion.
  • The 2015-2017 state budget provision reducing state aid to the UW system by $125 million a year is approximately a 2.1% decrease to the UW’s overall $6 billion annual budget.
  • According to the 2014-2015 UW Fact Book, the UW spent $2,969,431,519 on total employee compensation and employed 32,333 FTEs (full-time equivalent positions). That works out to an average compensation package of $91,839 a year for every UW employee ($2,969,431,519 total spent on employee compensation/32,333 full-time equivalent positions = $91,839), or approximately three times greater than the salary of the average Wisconsinite, $27,907.00 (2014 U.S. Census Bureau).
  • According to the 2014-2015 UW Fact Book, the average salary of full-time UW professor is $68,311.
  • The UW system offers more than 250 undergraduate majors and more than 25,000 degrees (undergraduate, graduate and doctorate) were awarded to graduates.
  • The Wisconsin Alumni Research Foundation (WARF) and the University of Wisconsin Foundation (UWF) – two non-profits born of UW-Madison and created specifically to help UW-Madison be successful – have more than $6 billion in assets, but contributed less than five percent of that amount back to the university in fiscal year 2014 (FY14). Both foundations had surplus revenues in excess of $100 million in 2014 alone.
  • According to a recent report, the UW System has saved $527,177,316 from the implementation of Act 10.
  • Spending per student at the UW has increased more than 40 percent from 2002-03 to 2015-16.
  • UW System student enrollment has dropped four times more than the faculty employed from 2010 to 2014. 
  • The number of UW students per faculty member has dropped slightly from 2000 to 2014.
  • The tuition freeze has saved the average UW student over $6,000 during the last four years.