A campus update from Chancellor Biddy Martin

Students, faculty and staff,

As the semester draws to a close, I want to extend my thanks to each of you for doing your part to keep UW–Madison extraordinary. Preserving and enhancing one of the state’s greatest assets is an enormous responsibility, one that takes the efforts of each and every one of us.

I write to provide you an outlook on the state budget process and what we can do to ensure that the university has all the tools it needs to continue thriving.

First, a few notes of celebration. Once again, UW–Madison has been ranked among the top 20 world universities by the Shanghai Jiao Tong rankings, which grade public and private universities all over the world on the basis of faculty quality and productivity. We are the only Big Ten university, and one of only a few public universities in the U.S., to make it into the top 20. This fall, the National Research Council’s Survey of Graduate Program rankings was released, and although the presentation of the data purposefully makes absolute rankings very difficult, the Graduate School reports that UW–Madison has 40 programs that rank among the top 10 in the nation. Rankings alone do not capture the quality or significance of our university. I cannot begin to do them justice here, but let me offer a short list of highlights.

For the first time in the university’s history, UW–Madison’s research expenditures exceeded $1 billion.
We are one of only two universities in the U.S. that has been ranked in the top five in research expenditures for 20 straight years.
Nineteen of our students received Fulbright awards for overseas study this year, and we continue to send one of the largest groups of graduates to the Peace Corps.
We are celebrating the Year of the Arts and have hosted National Endowment for the Arts director Rocco Landesman and documentary filmmaker Errol Morris.
The Go Big Read program, in its second year, distributed more than 8,000 copies of Rebecca Skloot’s “The Immortal Life of Henrietta Lacks” to students across campus. More than 80 academic courses used the book as part of the curriculum.
In September, the campus was host to President Obama, the first visit by a sitting president since 1950, when President Truman spoke in the Stock Pavilion.
In August, we opened the newly renovated Education Building, and last week, we celebrated the opening of the Wisconsin Institutes for Discovery, the twin research institutes devoted to interdisciplinary science and science outreach.
In response to faculty, staff and student interest, and in the spirit of the Wisconsin Idea, we have named and supported two university-wide initiatives in global health and in sustainability. Both are seeding activities that will enhance our ability to make significant contributions to the public’s health and well-being.
The Madison Initiative for Undergraduates (MIU) has allowed us to add 55 new faculty positions, 25 new staff members and 80 additional teaching assistants. Moreover, funds from MIU added $5.1 million in need‐based institutional grants in 2009-10. Institutional grant dollars increased by 86 percent during the prior year, and more than 6,000 students from families with incomes less than $80,000 received hold-harmless grants as part of the program.
Our football team is going to the Rose Bowl.

This list is incomplete, to say the least, but still indicative. You have ensured that the Wisconsin Idea is alive and well at UW–Madison; the entrepreneurial spirit among faculty, staff and students leads to an extraordinary amount of creative work with limited funding; students are the beneficiaries of excellent teaching, research and extracurricular programs; and those same students are contributing to the university and the larger community in countless ways.

I want to devote the rest of this letter to what we are likely to face in the months ahead, as economic uncertainty and ongoing change in higher education challenge us all to think creatively about our future. I will also post a video of this statement next week.

All of you know how serious the current economic conditions are, not only in Wisconsin, but also across the country. I understand the professional and personal sacrifice made by those who work at the university through such measures as the furloughs, and I appreciate how you’ve contributed as the state works through its serious economic challenges. Given the projected structural deficit at the state level, the absence of one-time monies from the federal government and the new governor’s commitment to dealing with the deficit without raising taxes, I believe it is unrealistic to expect new funding for UW–Madison. It is much more likely that we will face significant cuts. Our task is to advocate for as much funding as possible for the university and for higher education more generally, both for the good of UW–Madison and for the good of the state of Wisconsin. I have been spending a good portion of my time making the compelling case for what a major research university contributes to the well-being of the region and the state, meeting with people across the state and using available media opportunities to make the public aware of how important higher education is to all of us. It is also our responsibility as stewards of this beloved university to make realistic assumptions about the impact of the state’s deficit and to come up with possible approaches that would help us help ourselves.

Public research universities, shared challenges and possible models

For some time, state support for core mission activities has been decreasing, not only in Wisconsin, but also in virtually every other state in the country. Every public research university now relies heavily on other sources of revenue to provide quality education, support research and development, serve the public and preserve the value of our graduates’ degrees. For that reason, the traditional relationships between research universities and their state governments are changing to reflect new realities. State tax dollars once made up a much more significant portion of UW–Madison’s budget, but federal and private funding have assumed an increased share during the past few decades. In 2010, state funding accounted for approximately 18 percent of the total budget. That 18 percent is an extremely important part of our budget, supporting salaries and instruction. Like all universities, UW–Madison is a labor-intensive enterprise, and we rely heavily on state tax dollars to support our outstanding workforce.

What are other public research universities doing to respond to these challenges? Some universities have already renegotiated their relationships with their states, reaching agreements that give universities greater operating flexibility as funding models change. For more information about the forms of decision-making flexibility that other public universities now have, please visit the New Badger Partnership website at http://newbadgerpartnership.wisc.edu/.

Our response to the economic challenges in Wisconsin

During the past year, I have spent much of my time talking with our alumni and donors, members of the state’s business community, my colleagues from other campuses, political candidates and people on campus about the university’s importance to the state’s economy — to job creation, to our industries and to Wisconsin’s tax base. I have emphasized the important and often overlooked fact that UW–Madison is a thriving export business for the state of Wisconsin, bringing in more than $1 billion a year in research funding, nearly $100 million from outside the state in philanthropy, and millions in tuition and other expenditures on the part of out-of-state students and their families. UW–Madison is unique in the university system in the degree to which it attracts new money, investment and talent from out of state. A new study by NorthStar Economics shows that the university produces $21.05 in economic activity for every $1 of state support and is responsible, directly and indirectly, for more than 97,000 jobs, including jobs created by the spinoffs of our intellectual property. Many new jobs have been created with nonstate funds.

I will continue to make the case for the economic, social and cultural importance of UW–Madison, and I hope I can call on many of you to help. I will also continue to argue that our university can no longer thrive in the increasingly competitive world of higher education if it is managed as though it is like any other state agency. What makes us different? We compete for our faculty and students with universities all over the world. Like it or not, higher education has become an increasingly market-driven sector. If we are to serve the citizens of the state, we need to be able to compete for the best faculty, staff and students. The talented people who come here attract new revenue to the state, educate future leaders, serve the public, and create public and private sector jobs. While the rest of the world rushes to build universities of UW–Madison’s quality, we are challenged in our efforts to preserve our quality if shrinking state funding is combined with outmoded constraints on our ability to help ourselves. But we also have opportunities to become even more innovative and more helpful to the citizens of Wisconsin. The New Badger Partnership is aimed at realizing those opportunities.

At the moment, we are limited in our efforts to pursue opportunities and compete for talent by the many layers of bureaucracy and administrative process that encumber our hiring, pay, procurement, human resources and facilities management efforts. These constraints result, in part, from the accumulation over time of Systemwide and state regulations and policies. The number of steps required to hire, purchase goods, pay employees and manage construction ends up costing tremendous time and, therefore, money. It also overtaxes our staff and our faculty. Some of the policies and processes that govern our activity do not suit the needs of a major public research university. Sometimes they even stand in the way of what accountability would entail or require. We need to be able to take more responsibility for our own destiny, not so we can renounce our public mission, but so we can fulfill it.

The New Badger Partnership is not a detailed plan. Rather, it proposes a set of principles about how we could enhance our ability to serve our students and the world around us. It suggests changes in our relationship with the state and System. It argues for greater differentiation among different kinds of campuses, for greater flexibility in a number of administrative domains and for the opportunity to operate in ways that are appropriate for a university setting. It also affirms our intent to remain accountable to the citizens of the state. On campus, we have the strongest shared governance model in the country, and the university will always be subject to a board with fiduciary responsibility for the university. We need relationships with the state and the System that would allow us to take a holistic view of the challenges and opportunities we face, rather than being subject to ad hoc decisions on specific issues that typically take the form of one-off constraints or accumulated layers of bureaucracy.

The New Badger Partnership and tuition

There has been a pattern of nationwide of cuts in state funding and compensatory tuition increases at public universities. I believe that reasonable increases in undergraduate tuition at UW–Madison are necessary and warranted, as long as we continue to build our financial aid resources. Undergraduate tuition increases are warranted in three senses. First, the return on investment to graduates of universities such as UW–Madison continues to increase nationwide. As state funding goes down and students’ earning potential increases, public universities have re-balanced the responsibilities for financing higher education. Second, it makes sense to create opportunity for students of low and middle-income backgrounds by charging those who can afford it an amount closer to the actual cost of educating a student. Third, UW–Madison undergraduate tuition remains, with the University of Iowa, at the bottom of our public peer group, while our academic standing is at the top.

The financing of public higher education has always been a four-legged stool: investments by federal and state governments, contributions from alumni and donors, entrepreneurial activities on the part of universities and, finally, contributions from students and their families. What is now occurring is a re-balancing of the sources of funding, with private support, increases in efficiency and creativity at the university, and students/families assuming a greater share of the costs. Our goal at UW–Madison is to be at the top academically, without adopting the high-tuition model characteristic of private universities. UW–Madison aspires to an arrangement that would make tuition more competitive with our public peers. Raising tuition at the rate at which it has been increasing is unsustainable over the long haul, and it makes sense to think in terms of a range for annual rates of increase over time, assuming stability in state funding and increases in other funding sources. In the shorter term, UW–Madison first needs to reach a level that allows us to preserve quality as we face the consequences of the state’s budget woes.

Address the challenge with change

With the New Badger Partnership, we are trying to address a serious challenge by taking a holistic view and proposing a mechanism that would help us move forward in the most effective way possible. Our university is already a hybrid of public and private funding sources, and has been increasingly reliant on private funding for a long time. Despite legitimate concerns about these long-standing changes, it has not abandoned its public status, its public mission or its union jobs, and I am unaware of any support to abandon them now. At this point, preserving the status quo in our operating relationship with the state while facing shrinking state support will threaten, rather than protect, the university’s ability to be the resource it has always been for Wisconsin, its young people, its citizens and its businesses. To make change, I need your ideas and your support. What I ask is that you think carefully about the big picture and the long-term value of the university and the degrees it awards; that you think realistically about the economic environment we face; and that you contribute positively to the discussion, regardless of your point of view. This is about the future of a great university and a state economy adjusting to the realities of a global knowledge economy. We face not only challenges, but also opportunities to change some of the ways in which we operate, in the service of even greater creativity and contribution.

Process

I will continue meeting with newly elected and continuing political leaders to make the case for state funding and for flexibility. In late February or March, when we know more about the new governor’s budget and his approach to higher education, we will hold more on-campus forums and work with governance groups on details. The dates for the forums will be set before we leave for the semester break so you have the best possible chance of being able to attend. If there is support for new approaches, it will then be time to expand these principles into details. In the meantime, our focus remains on enhancing effectiveness. An independent outside consultant will begin working with us on opportunities to organize our administrative functions more effectively, regardless of whether there are changes in our arrangements with the state and System.

Conclusion

Based on what I know now, I believe the greatest risk to the university and, therefore, to the state, is the risk of more budget cuts in the absence of new tools for UW–Madison. The New Badger Partnership initiative seems to me to be a reasonable way to make better use of what we have. If it goes forward, you will be not only be apprised of details but will be involved in shaping the future. I am confident that we can work together over the coming months not only to meet the challenges we face, but also to create the conditions for even greater achievements.

Best wishes for an enjoyable holiday season and a happy new year.

Chancellor Biddy Martin