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State universities and colleges wade into uncertain economic times

Todd Finkelmeyer  —  11/19/2008 5:42 am

It's no secret that many with ties to higher education in Wisconsin were giddy upon learning Nov. 4 that Democrats had secured control of the state Assembly, putting the party in charge of both houses of the state Legislature and the governor's office for the first time since 1986.

University of Wisconsin System leaders have been frustrated for years by what they perceive to be inadequate financial support from the state.

Perhaps most notably, the change in power means Republican Rep. Steve Nass, a perpetual outspoken critic of UW-Madison who often butted heads with former Chancellor John Wiley, will no longer head the Assembly's Committee on Colleges and Universities come January.

"Now you're going to have people in charge of key positions who support the university and for whom the university is very close to their heart," said Rep. Spencer Black, a Democrat from Madison and a current member of that committee. "That's a dramatic contrast with the current chair of the Committee on Colleges and Universities, who, I think it's fair to say, looked for every opportunity he could find to take pot shots at the university. So there's going to be a dramatic change in attitude."

What the shift in power will ultimately mean for higher education in Wisconsin, however, is open to debate -- especially following last week's announcement by Democratic Gov. Jim Doyle that the state is facing a projected $5 billion budget shortfall over the next two and a half years.

"From a purely political perspective, supporters of the UW System maybe cheered the replacement of Steve Nass as the chair of the Committee on Colleges and Universities," said UW-Madison political science and law Professor Howard Schweber. "But I'm not sure how much that is going to matter now, because 'dire' is the only way to describe the current economic situation."

To put in perspective how quickly this all turned: Just two days after the election, on Nov. 6, the UW System Board of Regents reviewed a briefing on academic recruitment and retention challenges. Part of that report suggested system President Kevin Reilly should request a 7.8 percent pay increase for faculty -- in each of the next two years -- so system educators' salaries could rise to the median of those in peer institutions by the end of the 2009-11 budget cycle. No one suggested such hefty raises were simply out of the question, though Reilly and some regents acknowledged the tough economic climate.

But on Nov. 11, exactly one week after the election, Gov. Doyle delivered a blow to the gut when he announced the projected budget shortfall was far worse than his earlier prediction of a $3 billion deficit.

"That means there are going to have to be cuts for the UW System, there is no way around it," said Noel Radomski, director of the Wisconsin Center for the Advancement of Postsecondary Education, which serves as a clearinghouse for research on undergraduate and graduate education. "There will be cuts. So now the question is, how will the system and how will the campuses deal with those cuts?"

How the state and higher education leaders in Wisconsin ultimately handle this budget crisis remains to be seen. But in late October, Reilly took the unusual step of asking UW System chancellors to approve all new hires on their campuses. Previously, department heads generally made those calls.

"I think pressure has been building for some time to reconsider the ways in which everything from tax-exempt status to public funding to the allocation of funding within an institution is handled," said Schweber. "I think a crisis of this magnitude not only invites, but requires, reconsidering those issues."

He said university officials, as well as state government leaders, will need to come forward with "careful and serious" proposals outlining what steps they'll take to deal with an environment in which resources are scarce.

For a feel of how seriously some in higher education are taking this financial crisis, consider this anecdote from Radomski: "President Reilly called over here recently wondering if we could look and see what the UW did during the Great Depression to both maintain its excellence and continue to serve the people of Wisconsin during such difficult times."

At the same time that higher education is struggling to pay its bills, the economic downturn will likely increase demand on the state's technical schools and universities, said Rep. Jennifer Shilling, a Democrat from La Crosse who is a member of the Assembly's Committee on Colleges and Universities.

"During tough economic times -- seeing job layoffs and companies scaling back -- certainly we need to realize that this is a time when people need to be retrained and maybe go back to school and complete a degree," Shilling said in an interview. But, she added, "as we head toward a $5 billion deficit, everybody needs to realize that they'll need to maintain or maybe even make some cuts.

Public and private colleges and universities in Wisconsin and across the nation are already starting to take significant steps to address potential problems in the wake of the economic crisis.

The California State University system, which features 23 campuses, is facing a mid-year budget cut of more than $66 million. So CSU Chancellor Charles Reed is proposing the system limit enrollment and cap the number of students admitted at the current level of 343,000. If that proposal is ratified this week by the governing Board of Trustees, it's predicted that thousands of otherwise eligible California freshmen and community college transfer students will be turned away.

"You can't be chronically underfunded and over-enrolled as we have been for the past few years," CSU spokeswoman Claudia Keith told the San Francisco Chronicle. "Then the quality of everybody's experience starts to go down."

Similarly, UW System leaders have stressed for years that they need more financial support from the state. In 1974, they note, state taxpayers supplied 52 percent of the total UW System budget; by 2008 that number had dropped to 25 percent. And while state funding to the UW System has increased by 22 percent between fiscal year 1997 and 2007, UW System officials note that, when adjusted for inflation, state funding of the system has actually dropped 4 percent.

And even though Democrats are about to take control of state government in Wisconsin, Radomski doesn't expect that trend of decreased UW System funding to reverse itself anytime soon.

"We've done quite a bit of research here looking at the history of financing higher ed in the United States, including Wisconsin," Radomski said. "There is a myth out there that Democrats support higher education more than Republicans -- the research debunks that myth."

Radomski said the funding of higher education is based on available revenue and the "public priorities" of those who are in power. "So, right now, the cuts to the UW System will most likely continue because I think the Democrats are going to focus very strategically on Medicaid, K-through-12 finance and unemployment compensation."

Even the country's richest university isn't sheltered from the economic storm.

The Boston Globe noted Harvard is looking for ways to reduce spending across its campus, raising the specter of cuts to programs and compensation, as the university's legendary endowment nose-dives.

Noted Harvard President Drew Faust in a recent e-mail to faculty, staff and students: "We must recognize that Harvard is not invulnerable to the seismic financial shocks in the larger world."

Closer to home, Beloit College officials announced earlier this month that the liberal arts school of about 1,300 students plans to cut up to 40 jobs. A shrinking endowment, a projected fundraising dropoff and a dip in enrollment of 36 students forced that college's hand.

"I think it's instructive to go back and look at what Beloit did when they had to cut back," said Rolf Wegenke, president of the Wisconsin Association of Independent Colleges and Universities. "They took it out of their own flesh, if you will, as opposed to hurting the students by making them pay more. We, and everyone in higher education, have to make the students a priority."

Most experts and those associated with higher education in Wisconsin seem to agree that, no matter how individual institutions deal with their own budgets, keeping college affordable and accessible must be a top priority.

"The federal government must give the same attention and sense of urgency to preserving America's system of public education as it appears prepared to give to preserving America's auto industry," said the UW's Schweber. "I think there is no question that the long-term future of our economy -- and, for that matter, of large segments of our society -- depends far more on our ability to have affordable, accessible higher education than it does on our car companies to maintain their operation. Keeping access to higher ed has to be a priority for the incoming administration."

Most students already have to resort to loans to afford college.

According to a report by The Project on Student Debt, an advocacy group that tracks student loans, the average debt of students graduating with loans in 2007 jumped to $20,098 -- up from $18,976 for those graduating in the previous year, according to the report released in October. The study reported that 64 percent of those who graduated from a college in Wisconsin owed money in 2007, with an average debt of $19,241.

And those numbers are only likely to increase in the near future as the economic downturn and slumping stock markets have continued to take a bite out of programs like Wisconsin's EdVest and Tomorrow's Scholar. These state-sponsored investments plans, which offer tax advantages to encourage savings for higher education, fell 8.4 percent in the last quarter.

"I'm very worried about access to higher education, because I'm sensing an uneasiness, if you will, from students who no longer believe they can afford college," said Wegenke.

Gov. Doyle and other state leaders have said they want to increase the number of Wisconsinites with a college degree in hopes that more residents will be better equipped to succeed in a knowledge-based economy. Wisconsin currently ranks 26th nationally in the percent of residents 25 and older who hold undergraduate degrees. In order for that ranking to go up, the state is going to have to start graduating more low-income and minority students.

"One of the signature accomplishments since World War II has been the expansion of the access to higher education," said Schweber. "And this financial crisis has the capacity to reverse that trend in a way that has sociological consequences, to genuinely reshape American society by contracting the availability of higher education to a large number of people. There are a very large number of small colleges, community colleges, technical colleges and smaller public institutions that depend not only on student loans, but bond issues, borrowing and the availability of money in the state budget to stay afloat."

Perhaps one glimmer of hope came last week when U.S. Treasury Secretary Henry Paulson changed course after previously indicating that the federal government's $700 billion financial rescue program would focus on purchasing mortgage-backed securities from lenders. Paulson last week said the bailout would be broadened to include other troubled credit markets -- including those that provide student loans.

Radomski, for one, has both a professional and personal stake in seeing that higher education rides out this era of economic insecurity.

"Higher education in Wisconsin has been the great equalizing factor," he said. "My dream is that my kids, and I've got three, will have a better life than me. And that's what my parents told me when I was a kid. My parents didn't go to college, so they made sure I did.

"So if we believe that everyone should have access to that dream, what are we going to do?"

Todd Finkelmeyer  —  11/19/2008 5:42 am