UW System’s Program Revenue fund balance continues to drop (day 1 news summary)

MADISON – University of Wisconsin System President Ray Cross told the Board of Regents today that the UW System’s program revenue fund balance at the end of fiscal year 2015 was $923.9 million – a 15.7 percent decrease from two years ago. That balance is further projected to drop to $690 million by the end of the current academic year – for a 37 percent decrease since FY 2013.

Cross also reported that the program revenue balance for the tuition fund is dropping significantly. At the end of FY 2015, the tuition fund balance was $337.4 million – down from $551.5 million in 2013, a drop of nearly 40 percent. The tuition fund balance is further projected to be $204 million by the end of FY 2016, a 63 percent drop from FY 2013.

“That ongoing decrease reflects the use of balances to address the tuition freeze and to bridge the 2013-15 budget reductions,” Cross said.

Eight institutions have now fallen below the 12 percent reporting threshold for tuition balances, Cross noted. Last year, three institutions were below the threshold.

“Balances are being wisely managed as they decrease,” Cross said. “But we have to be cautious. What should the low watermark be? This is a concern I’ve shared before.”

The Board of Regents unanimously approved the UW System’s report on its program revenue fund balances for fiscal year 2015.

The full report, presented at the Board’s Thursday meeting, is the result of a collaborative effort between the campuses, UW System and the legislature to better define and manage the fund balances held and managed by institutions and campuses within the UW System. The 219-page report identifies the fund balances using definitions provided by the Legislative Audit Bureau and provides detailed analysis of each fund by campus, including how the funds are generated, how they are being managed, and how they are planned to be spent.

“This year, for the first time, the use of fund balances was integrated into our annual budget process to you would have a comprehensive picture of finances, by institution and by fund,” Cross told the Board.

Program Revenues are funds collected at the campuses for tuition as well as for services provided, such as residence halls, food and parking. Because the funds fluctuate based on factors like enrollment, campuses must utilize long-term strategic planning to ensure these resources are being managed responsibly. The report includes guidelines and reporting requirements that will make those efforts part of each institution’s budget preparations moving forward.

Other highlights from the 2015 Program Revenue fund balance report include:

The total UW System balances comprised of reserves and undocumented or discretionary funds have decreased by $28 million in the last year.
The Auxiliary operations fund balance increased by $12.9 million. These balances consist of funds collected on campuses for services provided, such as food, general program operations, residence halls, and parking.
Approximately $704.7 million of committed funds are expected to be spent on institution-specific initiatives within the next few years.
- Of that $704.7 million, $269.2 million is obligated, indicating that there are firm commitments for these funds such as contracts and encumbrances for purchases already made. Approximately $435.5 million is set aside to fund near-term and long-term specific institutional plans.

Regent José Vásquez questioned how the drop in the tuition program revenue fund could affect the student experience, and expressed concern about how long reductions can or should be sustained.

Cross responded that he didn’t know where the “danger point” is, but some believe the tuition fund balance should probably be in the 10 percent range; the projected $204 million for tuition fund balances at the end of FY 2016 would drop below that, he said.

Education Committee recommends approval of nonresident enrollment limit waiver

The Education Committee unanimously recommended approval of UW-Madison’s request to waive the current 27.5% nonresident enrollment limit for 2016-17 through 2019-20. As part of the request, UW-Madison also will commit to enroll and maintain a minimum of 3,600 Wisconsin residents in each new freshman class over the four- year period. The resolution will go before the full Board for consideration on Friday.

President Cross told Regents that Wisconsin’s demographic projections show a steady decline in the number of high school graduates in coming years, with significant implications for Wisconsin’s workforce. After a peak of 71,000 in 2009, the number of high school graduates in Wisconsin is expected to decrease to fewer than 60,000 by 2025.

“That decrease troubles me. It should trouble all of us,” Cross said. “It will have an impact on our UW System enrollment, which has been flat in recent years despite the fact that overall enrollment in higher education institutions has decreased during that time.”

Adding to the challenge, Cross said, the state has recently averaged between a 10,000 and 14,000 annual net loss in recent college graduates leaving Wisconsin – while the number of older workers and retirees in Wisconsin continues to grow.

“If you think we need workers now, just wait 10 more years,” Cross said.

Cross added that the proposed non-resident enrollment limit waiver could be considered an extension of the Talent Development Initiative, which the UW System introduced last year.

For the plan to work, he said, UW System must hold UW-Madison accountable. “This might involve new strategies ranging from increasing the number of UW-Madison’s Wisconsin high school visits to expanding high school counselor collaborators to increasing scholarship aid for Wisconsin students,” Cross said.

“Will this reverse our demographic destiny? No, but it’s a start,” Cross said.

UW-Madison Chancellor Rebecca Blank said the proposal will require UW-Madison to work harder to recruit an increased share of top Wisconsin high school graduates, to make sure it brings in good talent from out of state, and to increase efforts to keep them in Wisconsin after graduation. “That’s a commitment I’m quite willing to make, and it’s a commitment this proposal really facilitates,” Blank said.

The proposed policy calls for a review by the Board of Regents after four years, with at least one interim report in December 2017.

Regent Drew Peterson called the waiver proposal “the right decision.” “We have put on the table a good challenge … to recruit our best and brightest,” he said.

Expressing his “strong support” for lifting the cap, Regent Mark Tyler noted that to address the shrinking workforce, “engagement between universities and businesses has to increase.” Connecting students with Wisconsin businesses has to be more aggressive and start even earlier in students’ college experience, he said.

Regents updated on Universal Credit Transfer Agreement

The Universal Credit Transfer Agreement (UCTA), which went into effect in 2014-15, currently includes 11 course subject sets, interim VP for Academic and Student Affairs David Ward reported to Regents. The total sum of transferable credits within the course subject sets range between 34 and 48 credits.

Ward said enhancements to the Transfer Information System (TIS) Wizard — a collaborative effort by UW System and the Wisconsin Technical College System – will help students, university personnel, and others find out if a course transfers into a particular UW System or into a WTCS institution. It is expected the Wizard’s new functionality will be available in November 2015.

In 2013-14, the TIS Wizard had more than 325,000 visits.

Through its transfer policies and practices, the UW System seeks to increase students’ educational attainment and success, accommodate student mobility, and promote equitable treatment of transfer and continuing students …

Annually, over 23,000 students apply to, and approximately 20,000 are admitted to, UW System institutions as new transfer students. At matriculation, more than 16,000 of new and continuing UW undergraduate students are classified as transfer students.

See the UW System PowerPoint: Student Credit Transfer Pathways

Early data shows freshman enrollments up Systemwide

Looking at very preliminary fall semester data, interim Vice President David Ward told the Education Committee that freshman enrollments appear to be up about 1.2 percent Systemwide. With an overall freshman headcount increase of 351 students, 11 institutions are reporting new freshman increases.

Early data reports total headcount enrollment across the UW System is 178,430 students, down about 1.4 percent from last fall. Undergraduate headcount enrollment is 154,640, down about 1.6 percent, while graduate student headcount enrollment has largely held even at 23,790.

More complete enrollment numbers should be available in November.

Capital Planning and Budget Committee

The Capital Planning and Budget Committee:

Approved UW System’s request for approval of three All Agency Maintenance and Repair projects totaling approximately $8 million that address utility renovations. Projects are located at UW-La Crosse, UW-Madison, and UW-Platteville;

Research, Economic Development & Innovation Committee

Drake Bortolameolli, a senior in Geography at UW-Eau Claire and the student winner of the inaugural WiSys Quick Pitch event, presented his winning pitch to the REDI Committee. The WiSys Quick Pitch event is part of broader efforts to expand the reach and presence of WiSys with new campus initiatives and programs. A pilot project in 2015, the WiSys Quick Pitch Competition gives student innovators the opportunity to present their research in a three-minute pitch for a chance to win a cash prize and a presentation slot at the 8th Annual Wisconsin Science & Technology Symposium.

In other business, the REDI Committee:

Heard from WEDC’s Assistant Secretary and Chief Operating Officer Tricia Braun, who provided an overview of the Annual Report on Economic Development and highlighted key programs and outcomes of state-led economic development efforts;
Received an update from Regent Tim Higgins on the Regent Scholar grant program for 2016. These grants are offered to faculty to help recognize and reward their work with undergraduate students and other collaborative partners whose activities focus on developing entrepreneurial ideas and innovative project outcomes; and
Heard a report from Susan LaBelle, UW-Madison’s Director of the Office of Corporate Relations.

Education Committee

In 2015, the Wisconsin legislature enacted Act 28, requiring the UW System to report the number of students from each high school required to take remedial English or mathematics. The first annual report will be presented in September 2016.

As part of a presentation on UW-Stout’s data-sharing project with area PK-12 schools to address remedial issues, professor Jackie Weissenburger told Regents that there is an apparent disconnect between high school and college educators as to what is considered “college ready.”

Weissenburger cited a 2012 ACT National Curriculum Survey which found that high school teachers reported that 89% of their students were prepared well or very well for college. At the same time, college faculty reported only 29% of freshmen were prepared well or very well for college.

Increased collaboration should produce better curricular alignment between high schools and colleges, Weissenburger said.

In other business, the Education Committee:

Heard an update from interim VP David Ward on program and department accreditations maintained by UW institutions in certain academic disciplines, particularly in professional and career-related areas;
Approved UW-Stevens Point’s B.A. in Sustainable Food and Nutrition;
Retroactively approved UW-La Crosse’s M.S. in Therapeutic Recreation, which has been delivered by UW-La Crosse since 1991. UW-La Crosse noted a coding error in the summer of 2015. The M.S. in Therapeutic Recreation had previously been reported to UW System as a track in the Regent-approved master’s degree in Recreation, now renamed Recreation Management; and
Approved re-appointment of Dr. James Bennett and appointment of Dr. David Mladenoff, both of UW-Madison, to three-year terms with the Natural Areas Preservation Council (NAPC).

Business and Finance Committee

David Miller, Vice President for Administration, reported to the Business and Finance Committee that annual faculty turnover across the UW System for FY 2015 averaged 6.0% – consistent with the 5.9% average over the preceding four years. A total of 390 faculty left UW employment during the year, of which 244 were tenured faculty and 146 were probationary (tenure track) faculty.

Average turnover for tenured faculty is 5.3% and 7.8% for probationary faculty, which compares to 5.8% for tenured faculty and 6.1% for probationary faculty in the previous four years.

In other business, the Business and Finance Committee:

Approved an Athletics Outfitter agreement for UW-Madison with Under Armour, Inc. This 10-year agreement begins a relationship with a new outfitter after a series of three (3) five-year agreements with Adidas. While the scope of the new agreement is comparable to the current sponsorship agreement with Adidas, the University will receive significant increases in cash contributions and product allotment over the life of the new contract. Under the proposed agreement, UW Athletics would receive $3.3 million in product in the first year and amounts ranging from $2.5 million in the second year to $3.1 million in the final year. Under the proposed agreement, UW Athletics would also receive an annual cash contribution of $4 million;
Approved a clinical trial agreement for UW-Madison with Alliance Foundation Trials, LLC. The agreement involves an evaluation of the safety and efficacy of specified treatments addressing early stage breast cancer. The most recent amendment brings the total expected to be generated for the institution to $530,460. Efforts under this three-year agreement will be performed under the direction of Dr. Mark Burkard in the UW-Madison Department of Medicine, Hematology-Oncology;
Approved a master clinical trial agreement for UW-Madison with Biogen MA, Inc. The language of this five-year agreement establishes the general terms to be applied to all Biogen sponsored trials at the institution. Initial work under the agreement will be conducted in the Department of Neurology under the direction of Natasha Frost, MD. While total revenues to the institution are not fixed, the University is expected to receive over $500,000 over the life of the agreement;
Approved a clinical trial agreement for UW-Madison with Novartis Pharmaceuticals Corporation. The agreement involves an evaluation of the safety and efficacy of specified treatments in patients with idiopathic pulmonary fibrosis. The institution is expected to receive up to $1,341,782 for conducting this clinical trial. The work will be conducted in the School of Pharmacy under the direction of Orly Vardeny, Pharm.D;
Approved a clinical trial agreement and related amendment for UW-Madison with GlaxoSmithKline, LLC. The agreement involves the clinical testing of material owned by GlaxoSmithKline. Work under the agreement is expected to run through July 31, 2019. The institution is expected to receive $999,763 for efforts under the agreement. The study will be conducted in the Department of Biostastics and Medical Informatics under the direction of Dr. Kevin Buhr;
Approved a master clinical trial agreement for UW-Madison with EMD Serono Research & Development Institute, Inc. While total revenues to the institution are not fixed, the University is expected to receive over $500,000 over the life of the agreement. Initial work under the agreement will be conducted in the department of Medicine, Hematology-Oncology under the direction of Dr. Ticiana Leal;
Approved a master services agreement for UW-Madison with ThromboGenics, Inc. Under the agreement, the University will provide services related to training and certification of image recording. While total revenues to the institution are not fixed, the University is expected to receive over $500,000 over the life of the agreement. Covered services will be provided by the Fundus Photograph Reading Center (FPRC) under the direction of Dr. Barbara Blodi;
Approved a research agreement and related amendments for UW-Madison with Wal-mart Stores, Inc. The most recent amendment will extend the work for an additional year with an added value of $250,000, taking the total received under the agreement to $750,000. The research focuses on crowdsourcing pattern development and will be conducted in the Department of Computer Sciences under the direction of Dr. AnHai Doan;
Approved a trademark and licensing agreement for UW-Madison with Fermata Partners, LLC. The proposed agreement runs for five years, with an option for three additional years at the University’s discretion. Projected royalties under the proposed agreement are in excess of $35 million.
Approved a master services agreement for UW-Madison with Regeneron Pharmaceuticals, Inc. Over the three-year life of the agreement, the University is expected to receive payments in excess of $500,000. Work will be conducted by the Department of Ophthalmology and Visual Sciences, Fundus Photograph Reading Center (FPRC) under the direction of Dr. Barbara Blodi; and
Heard a report from Dean Robert Golden, MD, summarizing the Wisconsin Partnership Program’s 2014 Annual Report. This program operates with funding derived from the March 2000 conversion of Blue Cross and Blue Shield United of Wisconsin from a nonprofit service corporation to a stock insurance corporation. The UW School of Medicine and Public Health is required to provide an annual report for the Board’s review under the terms of the conversion agreement.

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The University of Wisconsin System Board of Regents meeting will resume on Friday, Oct. 9, 2015, at Gordon Dining and Event Center, Madison