Falbo, Cross, Schmidt at Capitol

University of Wisconsin Board of Regents President Michael Falbo, left; System President Ray Cross, center, and UW-Eau Claire Chancellor James Schmidt listen to a question during an early March budget hearing with legislators.

M.P. KING — State Journal

The University of Wisconsin System Board of Regents on Thursday approved a budget that will absorb the first of two years of deep cuts in state aid to higher education and reduce funding for UW-Madison by nearly $60 million.

The $6.2 billion budget includes $180 million drawn from the System’s reserves — a move officials said was necessary as campuses wait for various cost-cutting measures to result in lower expenses but one they said will further drain the reserve fund in a way that cannot continue.

Legislators this week approved a state budget that will slash System funding by $250 million over the next two years. That budget is now on its way to Gov. Scott Walker.

The one-year UW System budget passed Thursday includes a $125 million reduction in state aid and the first year of a two-year freeze on in-state tuition. Cuts will be spread across the System, with the largest, at $58.9 million, going to the flagship campus in Madison.

Several campuses, including UW-Madison, have offered buyouts to senior employees or issued layoff notices in anticipation of the cuts.

“There is hurt in this budget,” Regents President Regina Millner said.

All but two of the board members approved the budget in a voice vote, with Regent Charles Pruitt and state schools superintendent Tony Evers opposing it. Pruitt said he cast his no vote to express his “profound disagreement” with state legislators who voted to cut higher education funding.

While several speakers at Thursday’s meeting praised the UW System and bemoaned the budget cuts, Regent Margaret Farrow said university officials must do a better job showing lawmakers and the public how UW benefits the state and how cuts to higher education impact Wisconsin as a whole.

“This is what we have to find a way to express,” Farrow said. “Unless we (do) that, we’re never going to win the battle of true understanding of the value and the cost of this effort.”

‘Last year’ for reserves

UW-Madison and the System as a whole will lean on reserve funds in the first year of the two-year state budget, System President Ray Cross said.

The Madison campus will use $10 million in reserves this year to deal with the cut and other reductions in state funding that bring its total shortfall to more than $60 million. It has also raised nonresident and graduate school tuition.

Campus officials have not said how the cuts will be carried out or what services will be affected.

Chancellor Rebecca Blank said in the spring that UW-Madison would have to cut more than 400 jobs, most by eliminating vacant positions and others through layoffs, to absorb the reduced funding. A spokesman said Thursday that layoff notices have been sent to employees, but he did not know the exact number.

Once cost-saving measures reduce campuses’ expenses, Cross said, the System will rely less on the reserve funds in next year’s budget.

It won’t have a choice, according to David Miller, senior vice president for administration and fiscal affairs.

The System’s cash reserves, which were over $1 billion when they sparked controversy in 2012, have steadily shrunk as a result of state budget cuts and tuition freezes, Miller said, and have dropped by 40 percent over the past three years. By the end of this fiscal year, he said, the balance of the tuition reserve is expected to dip to 8.4 percent of that fund’s expenses — below what the Regents had identified as the minimum level of 10 percent.

“This should be the last year available” to use the reserves, Miller said.

Editor's note: This story has been changed to reflect that campuses are offering buyouts or extending layoffs.

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Nico Savidge is the higher education reporter for the Wisconsin State Journal.