Budget '25: UW System Analysis

The University of Wisconsin System's (UW System) purpose is "to disseminate knowledge, to extend knowledge and its application beyond the boundaries of its campuses and to serve and stimulate society by developing in students heightened intellectual, cultural and humane sensitivities, scientific, professional and technological expertise and a sense of purpose."

In the current 2023-25 biennial budget, the UW System receives a total of $13.7 billion from all funding sources (All Funds). Of this $13.7 billion, 58% comes from program revenue (PR), 24% comes from the federal government (FED) and 18% comes from general purpose revenue (GPR).

In the Governor's proposed budget, he has requested that the UW System's total funding be increased by $2.8 billion compared to the current budget, an increase of 18%. Half of this increase is due to an additional $1.4 billion in PR (tuition and fees), 32% is due to an additional $900 million in GPR (taxes), and 18% is due to an additional $510 million in federal funding. Interestingly, the UW System actually requested more funding than the Governor did. Just a few months ago the UW President, Jay Rothman, was asking for an additional $855 million in funding compared to the Base Year Doubled and actually submitted that request in the System's budget proposal.

However, although the Governor's funding request is $2.8 billion more than the previous budget, that's not how the State calculates budget increases. Instead, budget proposals are compared to the Base Year Doubled. A budget request's "Base Year" is the second year of the current budget. Whatever funding an agency received in that year is then doubled to attain the Base Year Doubled (BYD). So when the Governor's request is compared to the BYD, the increase in UW funding amounts to "only" $697 million, not the actual increase of $2.8 billion.

If approved by the legislature, more than 90% of this $697 million would go toward four major budget items: Operations and Outreach, Student Financial Aid, Innovative Technologies, and Student Support.

Most of the UW System's budget is allocated toward administering the university System--approximately 100% (p. 36). This makes sense since the System's primary purpose is to deliver services to its students. Naturally, most of this administrative expense comes in the form of salaries and benefits paid to the System's employees.

On average, since fiscal year 2020 (FY20) roughly 48% of the System's expenses (p. 4-5) are due to salaries paid to employees, while 16% of its expenses (p. 6-8) are due to employee benefits.

The reason salaries and benefits make up such a large portion of the System's overall expenses is because the System employs more than 35,000 people as of May 2024. In that year, 79% of the System's employees were Academic or University Staff, i.e. employees in part- or full-time administrative roles. Some of these employees are cross-listed as faculty, but even when taking that into account, only 5,400 employees have teaching duties, or just 15%.

As for salaries, the median salary of full-time Academic Staff (p. 16) in 2024 was $71,000--9% higher than in 2022. With respect to faculty, the median salary was $96,500 (p. 19)--8% higher than in 2022. On average, then, a UW employee takes home roughly $89,000 in gross income and receives about $30,317 in fringe benefits--making average gross compensation for UW employees more than $119,000 per year.

When compared to the cumulative level of price inflation that occurred between May of 2022 and 2024, the increase in total compensation of UW System employees has more than kept up with the general level of price inflation (CPI increase = 7.5%; Salary increase = 8-9%; Benefits increase ~ 39% per employee).

Looked at in a different way, salary ranges for UW employees show that 70% of Academic Staff earned $60,000 or more in 2024 while 74% of Faculty earned $75,000 or more. Whether these wages are justified is a matter of opinion, but what does not appear to be justified (and which is also a matter of opinion) is the employee composition of the System.

The chart below breaks down the number of students per employee by type of employee. When it comes to Faculty, there are roughly 30 students per teacher, while the number of students per administrator (when including Limited Appointees) is about 6.

In other words, there are roughly 6 times more administrators in the UW System per student than there are teachers, meaning every teacher in the System is assisted (or, more likely, managed) by 6 administrative staff. This level of administrative overhead is only sustainable in the public sector. No private firm could possibly justify such levels of administrative support, yet the System is nevertheless sustained by taxpayers' contributions.

One final point of interest warrants mentioning when it comes to the Governor's budget request for the UW System: how the new money will be allocated.

As was said in the beginning, more than 90% of this $697 million in new GPR funding would go toward four major budget items: Operations and Outreach, Student Financial Aid, Innovative Technologies, and Student Support. The table below comes from the Governor's budget request and summarizes how the new GPR funding will be allocated. However, there are a couple dirty secrets within this request.

The first dirty secret is that 28% of this new GPR funding is earmarked for Salaries and Fringe Benefits totaling $190 million. Using the average compensation of UW employees as a reference point ($119,000 total compensation), this amounts to the UW System hiring 1,600 new employees, 240 of whom would be new Faculty if using the current employee composition, while the rest would be administrative staff.

The second dirty secret is that 53% of the new funding is earmarked as "Unallotted Reserves." Meaning? 53% of the funding the Governor has planned to give may be used by the System however it sees fit--no strings attached.

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Every discussion about the University of Wisconsin inevitably turns to the “Wisconsin Idea.” The Wisconsin Idea is the belief that the university and the state government should work hand-in-hand to improve the lives of Wisconsin’s residents. It is widely considered to be sacred, and it is even enshrined in the state’s constitution.

The Wisconsin Constitution declares that "Provision shall be made by law for the establishment of a state university at or near the seat of state government..." (Article X, Section 6).

Over the years, the UW has secured a position of unmatched privilege within state government. It is basically autonomous, and yet still receives generous direct support from state taxpayers. Any attempt by the legislature to provide direction or oversight is quickly rebuked as anathema to the Wisconsin Idea.

Meanwhile, the Wisconsin Idea, itself, has degenerated into just another vehicle for the radical left to force its ideology on the rest of society. You can see the fruits of the Wisconsin Idea for yourself on the UW’s dedicated website. Here are some examples:

• Imagining Ideal Gender Futures for Education into Reality with Trans and Nonbinary K-12 Students
• Reducing Alcohol Abuse among LGBTQ Youth in Wisconsin
• LGBTQ Narratives, a queer activist-writer's group created in collaboration with OutReach and initial funding from UW's Center for the Humanities
• Inclusive Tai Chi: Promoting Leaders of Color to Adapt Tai Chi for Latinx & African American Elders
• Retrofitting Latinxs into the Wisconsin Historical Narrative
• UW-Madison Division of Diversity Equity and Educational Achievement and the L&S Center for Academic Excellence

Obviously, there are strong differences of opinion on what improves the lives of Wisconsinites, which complicates the application of the “Wisconsin Idea.” This highlights that the current relationship between the state and the UW is unsustainable, but there are significant barriers to reform.

Ideally, the MacIver Institute believes that either the state needs to exert more control over the UW, or the UW needs to be privatized. Neither is a straightforward proposition, but both present unique benefits to key stakeholders.

Increasing state control would enable the state to address some ongoing concerns, such as admissions policies. Wisconsin parents frequently express frustration at the number of foreign students gaining admission to UW-Madison in particular, while Wisconsin high school graduates with 4.0 GPAs are rejected. From the UW’s perspective, more state control would also mean more state funding. A major disadvantage of this option would be the need to completely redesign the system’s organizational structure. Currently it is structured as an independent organization that merely reports to the state.

Privatizing the UW would face more obstacles. It would require an amendment to the state constitution and an abandonment of the Wisconsin Idea. However, both sides would have a lot to gain too. For the UW, it would mean lawmakers would no longer be endlessly second-guessing policy and operational decisions. DEI, worthless degrees, Marxist ideology, etc. would no longer be subject to politics. The system would be free to manage its own affairs however it chooses. It would have total control over its curriculum, grants, admissions – everything. The main advantage to the state is that it would no longer have any financial obligations to the system. For students and parents, the system would inevitably be forced to pursue greater efficiencies and promote high returns on investment for tuition.

Given that neither the state seizing total control of the system nor the state privatizing the UW system are likely scenarios, lawmakers must seek to restore some sense of balance to the state’s relationship with the UW and hold it accountable for its missteps. The only way to that is through the threat of withholding or the promise of increasing state funds tied to specific activities and results.

The main decision point the Legislature will have to consider is whether and how much GPR funding to approve for the University System.

Nested within that decision is whether certain provisions like the Governor's proposal to earmark funding for the creation and expansion of an Artificial Intelligence education and research fund ought to be approved.

The Legislature will also have to consider whether the Governor's proposed increase in Program Revenue (PR), which comes from tuition and fees charged to students, is a reasonable increase that tracks with the historical level of price inflation observed in the education sector.

The UW System requested $855 million in additional funding over the course of the biennium when compared to the Base Year Doubled.

The Governor has requested $697 million in additional funding over the course of the biennium when compared to the Base Year Doubled, mostly in the form of GPR.