Category Archives: Explainers

UWM faculty: setting the record straight

Yesterday, just prior to the UWM faculty’s historic, unanimous vote of no confidence in UW System President Ray Cross and the Board of Regents, Wisconsin Governor Scott Walker issued a press release that was highly critical of UWM faculty.

The Governor cited a number of statistics about the faculty that are either misleading or false. Here we respond to the Governor’s remarks in order to set the record straight.

We begin by noting that a number of the figures cited by the Governor are a result of UWM’s increased research focus. Earlier this year, UWM achieved the highest research designation, R1, from the Carnegie Foundation. This shows the success of UWM’s research focus, and it enhances the value of a UWM degree for our students and state alike.

We would hope the Governor would welcome this achievement, rather than bashing the faculty who have worked to make it possible on one of the lowest costs to educate per student of any R1 university in the country. UWM is a national low-cost leader.

Faculty salaries at UWM:

The Governor’s cited average salary figure of $101,700 includes only those faculty who have earned the rank of full professor. These are the most accomplished scholars and the top earners, representing approximately 29% of the UWM faculty. This figure may include the salaries of senior administrators who also hold the rank of full professor, such as UWM’s Chancellor, who earns $340,000 (though without access to the dataset used by the Governor’s office, it is impossible to know). [Update, May 12: Pat Schneider at the Capital Times has located the source of the figure cited above. The Governor’s press release linked to the corresponding document from 2003.]

The term “full professor” is not synonymous with “full-time professor.” The full-time faculty at UWM are those who hold the ranks of assistant professor, associate professor, and full professor. Assistant professors are those on the tenure track; associate professors are those who have earned tenure but not yet earned promotion to full professor.

According to 2013 UWM salary data made available via the Milwaukee Journal-Sentinel, the median salary across all categories of full-time faculty at UWM is $85,325. Among assistant and associate professors, who together make up 71% of the full-time faculty at UWM, the median salary is $80,150. [Update, May 12: According to the LFB’s 2015 overview document mentioned above, the average salary for assistant professors at UWM is $70,700, and the average salary for associate professors at UWM is $75,200.]

State funding accounts for approximately 19% of UWM’s overall budget. On a proportional basis, the median faculty salary at UWM costs taxpayers approximately $16,200, or roughly a third of the average annual salary in Milwaukee County cited by the Governor. In return, the state reaps the benefits of tens of millions of dollars in external funding generated by UWM faculty, while tuition at UWM is roughly a quarter of what it is at Marquette University.

As a top-tier research university, UWM exists in an academic labor market that is international in scope. According to UW System data, faculty salaries at UWM continue to lag those at peer institutions by 13.5%.

UWMsalarygap.png

Spending per student:

The Governor cites a 40% increase in spending per student from 2002-03 to 2015-16. This figure blends together all sources of funding to the university. In fact, state funding to the UW System has declined precipitously in recent years. The bulk of the increase in per-student spending over the period cited by the Governor comes from the steep increases in tuition that he elsewhere decries.

UWfundingbysource.jpg

Student-to-faculty ratio:

The Governor cites a student-to-faculty ratio at UWM of 2.8 to 1. UWM’s homepage cites a ratio of 18 to 1. UW System accountability dashboard data show figures of 23,108 students (FTE) and 814 faculty at UWM for fall 2014. This yields a ratio of 28.4 students per faculty member. The Governor’s cited figure is off by a factor of between 6.5 and 10.

Student contact hours:

The Governor cites a 20% drop in average student contact hours per faculty member from 2000 to 2013. Because of the timespan involved, this is not an apples-to-apples comparison.

During the period cited, UWM opened research-focused schools of Freshwater Sciences and Public Health, along with doctoral programs in other colleges. The change in student contact hours (i.e., classroom hours) reflects UWM’s increasing research focus, and excludes contact hours spent mentoring graduate students.

As stated above, we find it curious that Governor Walker would choose to criticize UWM faculty based on a statistic so closely connected to UWM’s newfound R1 status.

Enrollment:

The Governor states that student enrollment decreased much faster than the size of the faculty workforce from 2010 to 2014. The choice of 2010 as a baseline is deliberately misleading: 2010 saw an unprecedented population-driven enrollment peak. UW System accountability dashboard data show that, from 2000 to 2014, student enrollment (FTE) at UWM increased by 29.7%, while the size of the faculty increased by only 19.7%.

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UWM’s New Budget Model: An Explainer

There’s a new budget model slated to be approved soon by UWM’s Chancellor, and it’s a major change from the current one — and if approved, will effectively transform individual schools, colleges, and other units into little financial economies of their own, responsible for generating their own income and spending within their revenues. In this post, I’m going give a rundown on this proposed new budget model.

In addition to pushing individual units into an “entrepreneurial” stance, the new model will also create a brand new central pool of money — the Subvention Fund — from which administrators will have great discretion to fund administrative and support units that don’t produce tuition (e.g. Libraries, UITS, the Chancellor’s office), to pursue strategic initiatives and special projects including “partnerships with businesses,” and if they choose, to “subsidize” schools that don’t produce enough tuition to fund themselves. Although this model has been in development since 2012, and is slated to be approved by the end of the year, there’s still no public proposal for how decisions will be made about how to spend this Subvention Fund.

The implications of the model are complex and enormous, and with the Chancellor scheduled to approve the new model in the next three months, the time is now to register feedback and concerns.

On Oct. 1, I attended one of two recent open forums on the new model, led by Associate Vice Chancellor, Finance & Administrative Affairs, Jerry Tarrer. (See an abridged version of the slides he presented here.) Below, I will outline the big messages I took away from the forum, and look at how these proposed changes fit in with trends at other universities.

Accounting details are dry — I’ve tried to make these as readable and understandable as possible. Rather than to repeat the work done by Jerry Tarrer to explain the technical financial details of the old and new models, my aim is to focus on the questions that we encourage students to address every day: What do all these details mean? Why should we care? What impacts will the new model have on units, departments, students, faculty and staff, and, most importantly, the type of education that we’re creating at UWM?  Mr. Tarrer’s presentation was quiet on these bigger-picture questions, in keeping with the messaging we’ve been receiving from the administration on all recent budget issues.

So: What does it all mean?

The Context: Responsibility Center Management.
UWM’s new budget model seems to be based at least in part on Responsibility Center Management, an accounting model that U.S. universities are adopting at a high rate (though it’s been around a while — the University of Pennsylvania adopted it in the early 1970s in response to a financial crisis). In its general form, RCM requires that each unit’s budget consists of the “revenue” that it “generates” (e.g. tuition, research grants), minus a “tax” that goes to a central pool to fund administrative and support units and special projects. UWM’s central fund is called the Subvention Pool. [1]

In theory, the RCM model can bring positive benefits to the university. Many financial decisions are decentralized — each unit is responsible for managing the full costs of their operations, including things like fringe benefits, which were previously managed by the central administration, and is allowed to make programming decisions that can increase their revenue (through recruiting more students and research funding) and then spend what they earn. Accounting becomes more transparent, and the administration gains flexibility with the use of the Subvention Fund to spend on strategic projects, including “partnerships with businesses,” according to Mr. Tarrer.

That’s the theory, at least. But the problems, of course, can arrive when the only evaluation of the success of academic units is defined in financial terms. Good business practices can be applied to help the successful management of nonprofit organizations like universities. But at the end of the day, a university is not a business. Its goal is to produce not profit, but educated humans who are ready not only to take part in a market economy, but to take part fully in their society and be informed members of their democracy. [2]

The Devil’s in the Metrics?.
The key to using economic incentives effectively is to carefully plan what exactly you’re incentivizing. In the UWM model, there are two main mechanisms for influencing the management choices of deans and other managers.

Most importantly, the primary revenue generated by schools and colleges will be calculated by the formula below. All undergraduate tuition will be pooled, then distributed:

  • 70% by student credit hours
  • 20% by enrolled degree majors (as declared by juniors and seniors)
  • 10% by degrees awarded.

Mr. Tarrer explained that the primary goal in designing these metrics was to reward retention and graduation of students. He said that various distribution schemes and metrics had been examined by the Budget Model Working Group, but gave little sense of the content of those discussions other than to say that the team felt that if less than 70% of the formula was based on credit hours, then the formula would “starve” the College of Letters and Science, which enrolls a disproportionately high number of students in classes who are not planning to major in L&S departments.

But as with any economic incentive, incentivizing one behavior disincentivizes others. It is worth noting that the three metrics chosen for the model for distribution of undergraduate tuition reward schools for maximizing the volumes of students moving through schools and units. At first pass, this sounds fine. Who doesn’t want to fund departments with lots of students, and who doesn’t want to encourage retention and graduation? But what perverse effects can result, particularly in an environment where there is little money to go around and we can expect that schools will be scraping for every dollar? Possibilities include grade inflation, less stringent standards for classes and majors, increased class sizes, and more contingent (adjunct) faculty, none of which are incentives for better quality education. Because of these perverse effects, some universities include academic quality indicators in their models as well as financial ones. See, for example, the fourth slide of this budget model presentation from Ohio University.

The second major incentive built into the model is the distribution of indirect cost recoveries from research grants. Currently, 30% of ICR funds go to units, and a whopping 70% to campus overhead. Under the new proposed model, 80% will go to the units, and 20% to the Subvention Pool.

Who Decides How to Spend the Subvention Pool, Now and in the Future?
Despite all the slides and diagrams and years of planning, there are some very important decisions yet to be made about the new budget model. Mr. Tarrer presented a slide on this topic — a list of decisions to be made going forward — that is not included in the slide presentation available on the UWM website that I linked to above.

The questions are:

  • What level of subvention will be offered to schools and colleges that need additional support?
    {Note: This question refers to schools and colleges, such as Letters and Science, that will not be able to cover their expenses with their current tuition revenues under the new model.}
  • What proportion of funds will be allocated to support units? What metrics will be used?
    {Note: Mr. Tarrer explained that the working group has considered a model in which units like the library would send a yearly invoice to each “revenue-generating” unit for services rendered, which those paying units would be able to argue with in a nightmare-ish-sounding back-and-forth, but said that that model has been rejected for now.}
  • How will money be allocated to central administration and student affairs units?
  • In addition, but not mentioned by Mr. Tarrer, is the question of how decisions will be made about spending on special projects, “strategic” initiatives, and “partnerships with business” that the new model is supposed to support. We’ve heard no plans about how shared governance will inform choices made about spending on big projects that will impact the direction of the institution and the types and quality of education and research that we create.

Mr. Tarrer had no information to offer about the status of these discussions or possible outcomes, but it should be clear to anyone that the answers to these questions are the core answers to the question of what the model means for our institution.

The Budget Model Working Group is to make recommendations on answers to these questions in the next two months, but the final decision will be made by the Chancellor by the end of the year, apparently without meaningful input from governance groups on campus.

No Matter What, There’s Not Much Money.
No matter what model we use to split the money up, there’s just not much of it coming in to UWM.

According to Mr. Tarrer, most of the money coming into UWM from the state is for specific purposes: fringe benefits, utilities,and other earmarks. Before this year’s budget cuts, there was still a small portion of unrestricted funds coming from the state, but after the cut, those unrestricted funds have been basically eliminated. Therefore, virtually all of UWM’s general operating funds come from tuition. (Tuition surpassed state support as UWM’s largest source of revenue more than 10 years ago — see the University Committee’s 2014 fact sheet on UWM’s budget.)

In the original version of the new budget model (reflected in the set of slides posted on the UWM website and linked above), a 20% “tax” was estimated on schools’ tuition to be sent to the Subvention Pool. Mr. Tarrer explained, however, that that “tax” will more realistically be about 40%, based on new levels of state support.

What’s Next?
The clock is ticking on filing the final version of the new budget model and the Chancellor’s approval. What priorities should the model represent? How should decisions be made about spending from the Subvention Pool? How to make your voice heard?

  1. Contact the co-chairs of the Budget Model Working Group with questions:
    Associate Vice Chancellor for Finance & Administrative Affairs Jerry Tarrer (jtarrer@uwm.edu)
    Professor of Economics Swarnjit Arora (ssa2@uwm.edu)
  1. Notify your governance representatives on the University Committee and the Academic Staff Committee.
  1. Join the AAUP, and amplify your voice!

[1] At most universities, including UWM, RCM replaces a so-called incremental budget model, which simply means that units are assigned more-or-less the same proportion of the university’s overall budget as in the previous year, plus or minus that unit’s change in its percentage of overall university enrollment. Support units without enrollment numbers of their own (e.g. Libraries, administrative units) are also funded based on historic levels and at the discretion of administrators.

[2] For more information on RCM from a university administration’s point of view, check out Drexel University’s pages explaining their own recently implemented Responsibility Center Model here and here.
For a critical discussion of RCM from a scholar of the American university, see Christopher Newfield’s Unmaking the Public University: the forty-year assault on the middle class.