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2011-13 Biennial Budget Update

Robert Cramer -Assistant ChancellorJuly 5, 2011

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Background - Funding Sources• General Purpose Revenue (GPR) – includes general funding,

specific purpose funding, and earmarked funding from the state, primarily from state sales and income taxes

• Program Revenue (PR) – includes tuition, auxiliaries, and segregated fees, as revenues received for services or from users

• Federal Revenue (PR-F) – includes federal grants, financial aid, direct loans, as revenues from a federal agency

• Segregated Funds (SEG) – includes transportation fund and other separate state accounts, credited by law to a specific state fund

• Gifts and Grants – includes revenues from the Foundation, non federal grants

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UW-Platteville 2010-11 All Funds Budget - $148.9 Million

General Purpose Tax Dollars18402962

12%Specific Purpose

Tax Dollars11435118

8%

Tuition43852004

29%Federal

4119131028%

Gifts and Grants1216604

1%

Auxiliary En-terprises

3227025022%

Extension560106

0%

General Purpose Tax Dollars Specific Purpose Tax Dollars Tuition FederalGifts and Grants Auxiliary Enterprises Extension

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UW-Platteville 2011-12 All Funds Budget – $158.6 Million

General Purpose Tax Dollars16595483

10% Specific Purpose Tax Dollars10985487

7%

Tuition47078879

30%Federal

4915571031%

Gifts and Grants1216604

1%

Auxiliary Enter-prises

32967056.995430221%

Extension591846

0%

General Purpose Tax Dollars Specific Purpose Tax Dollars Tuition Federal Gifts and Grants Auxiliary Enterprises Extension

Based on UWS allocations of July 1, 2011 – subject to change

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Funding Impacts

• GPR Cuts – $250 million total, $125 million per year– $3.5 million estimated annual GPR reduction for

UW-Platteville’s share (7.1%)– $2.4 million reduction for UW System (25% of UW

System GPR) – September 1, 2011 report deadline– 51.17 FTE position reduction for UW System– UW Madison reduction of $47.2 million rather

than $62.5 million

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Funding Impacts - Tuition

• Tuition – – Budget bill limits resident undergraduate tuition

increases to 5.5% in 2011-12 and 2012-13– UW-Platteville increase is between $1 million and

$1.2 million each year– Differential tuitions approved prior to June 1,

2011, would be exempt from this limit.– Delete current law language limiting increases in

resident undergraduate tuition.

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Funding Impacts – Other Items

• Provides $61.7 million GPR annually for cost to continue items including restoration of furlough funding, past pay plans, and other costs

• Cut $47.4 million GPR annually to reflect increase state employee contributions for health insurance and retirement benefits

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Bottom Line – Estimated Funding Impacts

estimate

FY2010-11 FY2011-12 Change

General Purpose Tax Dollars $18,402,962 $16,595,483 ($1,807,479)

Specific Purpose Tax Dollars $11,435,118 $10,985,487 ($449,631)

Tuition $43,852,004 $47,078,879 $3,226,875

Federal $41,191,310 $49,155,710 $7,964,400

Gifts and Grants $1,216,604 $1,216,604 $0

Auxiliary Enterprises $32,270,250 $32,967,057 $696,807

Other $560,106 $591,846 $31,740

$148,928,354 $158,591,066 $9,662,712

Based on UWS allocations of July 1, 2011 – subject to change

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Funding Impacts - Compensation

• Retirement Contribution 5.8% (50% of total)– The required state and local employee retirement

contributions are pre-tax income for purposes of federal and state income taxes, but not for federal employment (FICA) taxes.

• Health Insurance Contribution 12.6% (up from 6%)

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State Employee Monthly Contribution Rates

2011Prior Law AB 10 Change

Single Family Single Family Single Family

Tier 1 $36 $89 $84 $208 $48 $119

Tier 2 $79 $198 $122 $307 $43 $109

Tier 3 $188 $471 $226 $567 $38 $96

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Additional Compensation Information

• Detailed information is available at: http://www.wisconsin.edu/hr/benefits/repairbillfaq.pdf

• Wisconsin Act 10 (budget repair bill), as amended by Wisconsin Act 32 (2011-13 biennial budget bill), makes statutory changes to several benefit provisions to the Wisconsin Retirement System (WRS) and State Group Health Insurance. Act 10 was effective on June 29, the day following publication by the Secretary of State.

• Health insurance premiums for employees covered by the Graduate

Assistant/Short-Term Academic health insurance will increase to half of the premium listed above.

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Additional Compensation Information

• Employees paid on a biweekly basis will have the new premiums taken from the paycheck dated 8/25/2011

• Employees paid on a monthly basis will have the new premiums taken from the paycheck dated 9/1/2011

• Academic year employees, who had multiple health insurance deductions taken from the June 1 check, will have an adjustment made to reflect the amount that should have been paid for the payroll month of August (September coverage).

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Additional Compensation Information

• The law prohibits the employer from picking up the employee-required WRS pension contributions on behalf of the employee.

• All UWS employees, with the exception of those who are in the executive retirement category, will pay 5.8% of earnings for the remainder of calendar 2011 (Executives will pay 6.65%).

• The employee required contributions will begin with the same paycheck as the new health insurance premiums, noted above.

• The pension contributions will be taken on a “pre-tax” basis; not subject to state and federal tax withholding.

• Changes the multiplier for calculating a formula benefit for the executive retirement category from 2.0% to 1.6% for service earned prospectively.

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Additional Compensation Information

• Wisconsin Act 32 (2011-13 biennial budget bill) also makes several changes to benefit provisions under the WRS. The Act will be effective on July 1, 2011, unless otherwise noted.

• Eligibility for participation in the WRS will change from a 1/3 of full time to 2/3 of full time for those initially hired on or after the effective date of the law. At this time we are unsure how the new provisions will be applied and are waiting for additional clarification.

• New WRS participants, those hired on or after the effective date of this provision, will be subject to a five year vesting provision.

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Additional Compensation Items

• DOA shall ensure that all state agency expenditures for state operations exceeding $100, including salaries and fringe benefits paid to state agency employees, are available for inspection on a searchable Internet Web site maintained by the department.

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New Flexibilities- GPR

• GPR Block Grants - only two GPR appropriations for the UW System, one GPR “block grant” to fund general program operations and one GPR debt service appropriation.

• Specify that the Board of Regents would allocate GPR general program operations funding to UW System institutions in the form of block grants.

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New Flexibilities - PR

• Create five program revenue appropriations under the UW System: one for general program operations, one for debt service, one for gifts and grants, one for funds transferred from other state agencies, and one for interest earnings.

• Specify that the UW System would be able to retain the interest earned related to its program revenues.

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New Flexibilities – Block Grants

• Still working to understand the implications and opportunities

• Utilities are one example - $3.6 million GPR for 2011-12 – UW-Platteville should keep any savings – at risk for spending over this

• Allocations and tracking of funds being worked on by controllers and UWS

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New Flexibilities - Compensation

• Authorize the Board of Regents to provide supplemental pay plans for UW System employees, excluding UW-Madison employees during the 2011-13 biennium.

• Authorize UW-Madison to provide supplemental pay plans UW-Madison employees during the 2011-13 biennium.

• Supplemental pay plans would be in addition to compensation plans approved for such employees by the Joint Committee on Employee Relations (JCOER).

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New Flexibilities – Personnel System

• Authorize the BOR to establish a personnel system for all UW employees excluding UW-Madison

• Authorize UW-Madison to establish a personnel system for UW-Madison employees.

• Specify that these personnel systems would include a civil service system and grievance process. Both the UW-Madison personnel system and UW System personnel system must be approved by JCOER.

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New Flexibilities – Collective Bargaining

• Effective July 1, 2013, create bargaining units under Chapter 111 of the statutes for UW System employees other than UW-Madison employees and for UW-Madison employees.

• These collective bargaining units would mirror existing statewide collective bargaining units.

• Partial veto removed Wisconsin Employment Relations Commission from reviewing these.

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New Flexibilities - Travel

Travel by Employees• Provide that, beginning on July 1, 2013, the

Board of Regents would establish travel policies for UW employees and establish a schedule for reimbursement of UW employees for travel expenses.

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New Flexibilities – Capital Projects

• Provide that UW System projects with costs of less than $500,000 and funded entirely with gifts and grants would not require approval by the Building Commission. These projects would be exempt from DOA supervision and oversight, exempt from current law provisions regarding bidding, and would not be subject to the 4% fee charged by the Division of State Facilities.

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New Flexibilities - Purchasing

• Require DOA to delegate to the Board of Regents and to UW-Madison the authority to enter into contracts for materials, supplies, equipment, or services that relate to higher education and that agencies other than the UW System do not commonly purchase.

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New Flexibilities - Purchasing

• Increase the threshold for lowest responsible bids, sealed bids and sealed proposals from $25,000 to $50,000 for state agencies (partial veto expanded this from UW System)

• Eliminate uniform cost-benefit analyses for contractual services

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New Flexibilities – Overload Payments

• Dual Employment - Modify current law to permit UW full-time employees to receive more than $12,000 in compensation for work performed in addition to the employee’s normal duties at the UW institution where the employee is assigned, another UW institution, or the UW-Extension.

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New Flexibilities - Gifts

• Gifts of Vehicles - Authorize the Board of Regents to accept gifts of vehicles.

• Gifts of Real Property - Authorize the Board of Regents to accept gifts of real property up to $150,000 in total value without prior approval of the Building Commission.

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Accountability Reporting

• Accountability Reports:– (a)Performance: graduation rate, total number of

graduates, time to graduation, credits-to-degree, retention rates, placement of graduates, and the percentage of resident and non-residents who live in Wisconsin within ten years of graduation.

– (b)Financial: financial reports from each institution and each UW Colleges campus using GAAP reporting standards.

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Accountability Reporting

– (c) Access and affordability: the profile of enrolled students, including mean per capita family income, percentage of resident and nonresident students who are low-income, percentage of resident and nonresident students who are members of minority groups, transfers from other UW System and in-state institutions, published cost and actual cost to Wisconsin residents once financial aid is subtracted, and increases in available institutional financial aid for students with demonstrated need;

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Accountability Reporting– (d)Undergraduate education: the extent of access to

required courses and to popular majors, majors offered, improvements in overall student experience, efforts to close the achievement gap between majority and underrepresented minority students, and post-graduation success;

– (e) Graduate and professional education: number of graduate degrees awarded, number of professional graduates in key areas including physicians, nurses, business, engineers, pharmacists; veterinarians, and lawyers, and incentives provided for staying in Wisconsin after graduation;

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Accountability Reporting

– (f) Faculty: the profile of faculty, including faculty teaching loads, success or failure in recruiting and retaining scholars and teachers who are rated at the top of their fields;

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Accountability Reporting• (g) Economic Development: the amount and source of

research funding and other new revenue brought into the state, the number of government contracts received, the number of research projects in progress or completed, the number of patents and licenses UW-Madison and UW System inventions, the number of new businesses created or spun off, the number of secondary businesses affiliated with the UW or UW-sponsored research projects, support provided to existing industries throughout the state, job growth from support to existing industries and new businesses, the number of jobs created in campus areas, the number of jobs created statewide, a comparison of economic indicators for campus areas and non-campus areas;

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Accountability Reporting

• -(h) Collaboration: partnerships and collaborative relationships with UW System Administration and UW institutions.

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Special Task Force on UW Restructuring and Flexibilities

• 17 persons– Assembly Speaker and Senate Majority leader

each appoints six members (a) three business or public leaders; (b) two current or former UW chancellors or members of the Board of Regents; and (c) one member of the Legislature

– Assembly and Senate Minority leaders each appoint one member of the Legislature

– Governor appoints two members– Joint Finance Chairs jointly appoint chairperson

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Task Force is to Address:(1) whether there is a need to restructure the UW System and, if so, make recommendations as to

a new governance structure(2) how UW-Madison employees and all other UW System employees would transition from the

state personnel system to the new personnel systems(3) whether tuition flexibility can be extended to the UW System while ensuring access and

affordability and what role the Legislature should have in establishing tuition rates(4) how compensation plans for UW System employees should be determined in future biennia(5) additional operational flexibilities that could be provided to UW System institutions; and (6)

how articulation and the transfer of credits between UW institutions could be improved.

Specify that the task force would submit a report to the appropriate Senate and Assembly standing committees as determined by the Speaker of the Assembly and Senate Majority Leader,and the Joint Committee on Finance no later than January 1, 2012. Provide $50,000 GPR in2011-12 for expenses related to the task force in a new appropriation under miscellaneousappropriations.

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BOR Requests Not Approved

• Growth Agenda• Financial Aid• Recruitment and

Retention• OSER and DOA

Procurement Chargebacks

• Tuition Increase Grants

• Restoration of 2% Pay Plan

• UW Madison Intercollegiate Athletics

• Expanded Tuition Authority

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Financial Aid

• No additional funding for WHEG and elimination of statutory link to increase appropriations with tuition

• Funding is provided for Wisconsin Covenant Scholars in 2011-12 and 2012-13

• HEAB administers the Wisconsin Covenant Scholars• Enrollment in the Covenant Scholars will cease after

September 30, 2011• Re-estimate MN – WI reciprocity funding

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Financial Aid

• WI GI Bill is extended to UW-Madison Authority• $6.5 GPR million is provided for the WI GI Bill• Lawton Minority Retention Grants – suspend the

formula that increases grants by the same percentage as tuition in 2011-13.

• No Increases for Lawton, Advanced Opportunity Program, Tuition Increase Grant, Study Abroad or Student Aid.

• Limit Tuition Increase Grant to students enrolled in 2010-11.

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Broadband Grants

• Federal Broadband Grant - Specify that UW-Extension could not commit any funds to facilities under this project to which such funds were not committed prior to June 15, 2011, unless approved by the Joint Committee on Finance

• Require the Legislative Audit Bureau to prepare a financial and program audit of the use of broadband services by the Board of Regents by January 1, 2013.

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WiscNet and Telecommunications

• Prohibit the Board of Regents, UW Institutions, and UW Extension from being a member of a group that provides telecommunications services to the general public or to other public and private entities effective July 1, 2013

• Exempt certain entities related to research activities.

• Partial veto removed the ability of Joint Finance to delay the July 2013 date.

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Other Items

• Liability Protections for Scientific Researchers– Create the following exemptions to current law

provisions prohibiting crimes against animals:– (a) teaching, research, or experimentation

conducted pursuant to a protocol or procedure approved by an educational or research institution, and related incidental animal care activities, at facilities that are regulated under federal law; and (b) bona fide scientific research involving species unregulated by federal law.

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Other Items

• Undocumented Persons – eliminate nonresident tuition and fee exemptions

• Reports – eliminate required annual reports on excess expenditures

• Sale of Land – if the board sells any real property, the board shall retain the net proceeds

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Other Items

Position Reports - Provide that UW System employees, including UW-Madison employees, would remain state employees but would not be counted in state position reports beginning July 1, 2013. Require the Board of Regents to continue to submit quarterly position reports to DOA and the Legislative Fiscal Bureau.

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Veterans Benefits• Clarify legislative intent by specifying that: (a) the Board of

Regents and the technical colleges could continue to receive payments under the federal Post-9/11 G.I. Bill;

• (b) credits or semesters for which the amount paid under the Post-9/11 G.I. Bill covered 100% of resident tuition and fees would not be counted against the 128 credit or eight semester limit; and

• (c) in the case that the amount paid under the Post-9/11 G.I. Bill covered less than 100% of resident tuition and fees, the proportion of tuition and fees that were remitted by the institution would be counted against the 128 credit or 8 semester limit

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Other Items

• Delete $1,000,000 GPR annually related to the WiSys Technology Foundation grant program and $1,900,000 PR annually related to tuition increase grants.

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Other Items

Normal School Fund Distribution:• Provide that any income or interest earned by

the normal school fund in excess of the amount appropriated under current law would be distributed to UW-Stevens Point for environmental programs. Estimate the amounts distributed to UW-Stevens Point at $100,000 annually.

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References / Useful Sites• UW System

http://www.wisconsin.edu/hr/benefits/repairbillhealth.pdfhttp://www.uwsa.edu/govrel/

• Department of Administration - http://doa.wi.gov/index.asp?locid=166

• Wisconsin Legislature - http://legis.wisconsin.gov/ • Joint Committee on Finance -

http://legis.wisconsin.gov/lfb/jfc.html • Legislative Fiscal Bureau -

http://legis.wisconsin.gov/lfb/index.html • Wheeler Report - http://www.thewheelerreport.com/ • Wispolitics - http://www.wispolitics.com/