Friday, May 27, 2011

The Truth About the Proposed NBP: LFB Weighs In

The New Badger Partnership is -- reportedly-- dead. In the meantime, the Legislative Fiscal Bureau has just released its analysis of what Public Authority would look like if the NBP were passed. The report is quite interesting, and in particular I think the following points are worth highlighting:

(1) Despite the Chancellor's claims that what she wanted was "part of a national trend" the governance structure Madison asked for was quite unusual, when considering arrangements in other states.

"Attachment 1 provides an overview of the governance structures of institutions that are similar to UW-Madison in terms of size and federal research and development funding. These institutions are all public or "state-related" institutions with large student populations, high six-year graduation rates, and federal research and development expenditures above $400 million in 2008-09. As shown in the Attachment, these institutions have a variety different governance structures. Of the institutions shown, the University of Michigan, the University of Washington, and the University of Pittsburgh have governance structures most similar to that proposed for UW-Madison under the bill. Each of these institutions is governed by a board that oversees that institution and a limited number of smaller regional institutions. However, in Michigan and Washington, most other public four-year institutions similarly have their own governing board. In Pennsylvania, there are separate governing boards for Pennsylvania State University, the Pennsylvania State System of Higher Education, Temple University, and Lincoln University. None of the states shown have one governing board for the flagship institution and one governing board for all other public higher education institutions as Wisconsin would under the bill."

(2) Madison's claims that it has suffered disproportionate losses over time in the race for funding and that it especially needs these flexibilities-- or at least, it should get them NOW before other schools-- seems quite off considering these facts:

"When adjusted for inflation, state funding provided for UW-Madison and for all other UW System institutions decreased from 1990-91 to 2010-11. Over that period of time, state funding for UW-Madison decreased by 2.8% while state funding for all other UW System institutions decreased by 6.8%. At the same time, enrollment at UW-Madison increased by 1.5% while enrollments at all other UW System institutions increased by 23.4%. When these increases in enrollment are controlled for, state funding for UW-Madison decreased by 4.2% while state funding for all other UW System institutions decreased by 24.4%. Given that state funding for UW System institutions other than UW-Madison have decreased by a greater amount than state funding for UW-Madison over the past twenty years, it is unclear whether UW-Madison or the other UW System institution would benefit most in terms of state funding if UW-Madison were no longer part of the UW System."

"Salaries at UW-Milwaukee and the comprehensives are significantly farther behind their peers than salaries at UW-Madison are. For this reason, the Committee may want to extend any compensation flexibilities that may be provided to UW-Madison to all UW institutions."

(3) Madison's claims about the monetary savings from NBP appear to be over-stated.

"..As an authority, UW-Madison would not be required to deposit most of its program revenues or any of its federal revenues in the state treasury. The UW-Madison Chancellor has asserted that keeping these accounts separate from other state moneys would protect these funds from being transferred to support other state programs as has occurred in the past. In the Wisconsin Idea Partnership, the UW System Board of Regents similarly proposes that most of its program revenues and all of its federal revenues similarly be kept outside of the state treasury. The UWMadison Chancellor contends that the UW System, which would remain a state agency, would not be able to deposit these revenues outside of the state treasury leaving them susceptible to transfers. However, the cash management policies proposed for the UW-Madison authority may not fully protect these funds from future transfers, either. Regardless of where UW-Madison authority funds are deposited, it appears that as a matter of law, the Legislature could compel UW-Madison, as an authority created by state statute, to transfer funds to the state at any time."

(4) There was significant potential for tuition to skyrocket in order to increase faculty salaries.

"Under current practice, many UW faculty and academic staff positions are funded through a combination of state GPR and tuition. Compensation plans approved by the Joint Committee on Employment Relations (JCOER) therefore include a GPR portion and a tuition portion. If the UW Board of Regents or the proposed UW-Madison authority Board of Trustees were provided both unlimited tuition authority and the ability to approve pay plans for faculty, academic staff, and senior executives, the Legislature would not be able to limit the amount by which resident undergraduate tuition would be increased to fund those pay plans."

(5) Tying tuition increases to accountability for increasing financial aid was an option-- but not one Madison proposed.

"A third option could be to grant the Board of Trustees and the Board of Regents full authority to set tuition rates but to require them to report to the Legislature on certain specified measures such as the number of low-income students enrolled, retention and graduation rates for low-income students, and the amount of need-based financial aid provided through federal, state, and institutional programs. The Legislature could set goals for the UW-Madison authority or the UW System and could penalize the institution or institutions, either by reducing GPR funding or limiting tuition authority, if sufficient progress towards those goals is not met."

Good thing this bad idea has been recognized for what it truly was. A mess.

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