Friday, April 12, 2024

UW audit says things have to change for campuses to stay afloat. But how should it change?

With several UW campuses facing layoffs and cutbacks, and some 2-year branch campuses ending in-person classes or closing up entirely, the UW System's central administration took the step of having a third party look into where things stand, and if/how this spiral can be stopped. We found out what the consultants had to say this week.
The University of Wisconsin System paid outside firm Deloitte $2.8 million to assess the financial health of its individual campuses. The reports released this week underscore the difficult financial forces facing most UW campuses and their unsustainable reliance on reserves to cover year after year of budget deficits.

None of the reports raised the possibility of consolidation or closure. UW System President Jay Rothman said he isn't entertaining the idea of closing any four-year campus. The struggle for chancellors is finding a path to remain financially sustainable while enrollment declines, concerns about college affordability grow and state funding in the most recent budget remained flat.

"I'm confident that all of our universities can get there," Rothman said. "The question is, what is the depth of those cuts going to have to be, because we have a responsibility on the expense side of the ledger to run as efficiently as we possibly can be. But in terms of having additional state support so that we can invest in things that are going to be important for our state going forward, I think that's what the balance is."
One of the reasons for the fiscal issues for many of these campuses is because of a consistent and significant decline in enrollment that has been going on since the early 2010s, reflecting the demographic challenges that many colleges have had to deal with.

The report looked at 7 of the 12 4-year schools in the UW System that aren’t Madison, with the other 5 being part of a separate report. But the 7 campuses listed in the first Deloitte report (Green Bay, Oshkosh, Parkside, Platteville, River Falls, Superior and Whitewater) seem to have the most immediate concerns, with the report saying of both Oshkosh and Platteville, "the future of the institution is at risk,", and it's not a coincidence that both campuses announced significant staff layoffs last October.

Deloitte also said River Falls and Green Bay were in need of "right-sizing" (cough -MORE LAYOFFS- cough), and that the other 3 schools also were in need of some kind of operational adjustment. I know that consultants are paid to report bad things and come up with solutions on how to fix them (no matter how necessary or useful those solutions may be), but I also note that the combined of enrollments of the financially analyzed campuses dropped by more than 5,000 between Fall 2017 and Fall 2022, before slightly recovering in this school year.

Then remember that all 4-year UW System schools have been under a tuition freeze for the past decade (one that is apparently going to end next year). So there is a general drop in tuition funds going to these schools, in a time period when costs have gone up, and especially accelerated in 2022 and 2023.

(Quick side note - River Falls is likely going to be the campus that will get the most help on the tuition side due to a recently signed law that will let them and all other UW campuses keep the additional tuition that students from Minnesota pay as part of the reciprocity agreement between those two states. So that's at least one UW financial reform that's coming in).

Not having Madison be part of Deloitte's financial analysis feels like the correct way of looking at it. because as I’ve harped on before, UW-Madison is a very different entity than the other schools, as it is a research-centered institution and flagship campus than now has more than 50,000 students, with enrollment rising by more than 8,000 since 2011.

And unlike many of the other UW campuses, Madison can draw a lot of funds from the much-higher tuition that out-of-state students pay. In fact, all of Bucky's increased enrollment (and then some) can be accounted for by out-of-staters.

Add in an alumni base that can do things like give $140 million for a new computer science facility or to chip in $150 million to replace and modernize its Engineering building, along with $1.5 billion in research grants from public and private sources, and Bucky stands alone among UW schools in the number of places it can find to help pay for its expenses. This is not to say that the Madison campus doesn’t deserve taxpayer investment - it adds a massive amount to this state’s economy and is a big reason why the Madison area adds more population than anywhere else in the state - but Bascom Hill has got a lot more in non-state financial resources to draw from than the other UW schools do.

You can even make a sizable amount of this separate state funding be designated as subsidies to ensure Madison charges significantly lower tuition to in-state students. So a key part of how I would stabilize and improve the UW System in the future would be in allowing Madison to be its own entity, with its own state funding stream (separate from what is distributed to the rest of the System). In return, I would have the State Legislature BACK THE FUCK OFF of its affairs.

The other UW System schools don't have the luxury of Madison's donor base, research funding, and rising enrollment, which makes them more reliant on state aid to make ends meet. But the GOPs also cut funding to the System during the Age of Fitzwalkerstan, leaving the campuses well below the national average when it comes to funding from state taxpayers.
The nonpartisan Wisconsin Policy Forum found Wisconsin's four-year university system ranked 43rd in the country in per-pupil funding. Rothman said it would take an additional $440 million annually to move to the median level of funding nationally.
OH? Perhaps we should lower that $440 million deficiency to help these schools' financial solvency as well? Maybe?

We're still slated to have $3 billion in the bank when the next state budget begins in July 2025. I think the non-Madison campuses can be shored up with some of that, if we actually care to stop the spiral of less revenue and higher costs that is crippling many of our UW campuses. But it likely will take more than just that to reverse the damage that has been done under the GOP's gerrymandered Reign of Error over the UW's purse strings.

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