VICE CHANCELLOR VINCE SWEENEY: Good morning.  Good morning, and welcome to today’s campus forum.  Just a few housekeeping items before we get started.  Just a reminder if you could put your cell phones on silent or vibrate and any pagers, so that it doesn’t interrupt the flow of the meeting.

When we get to the question and answer session, we have portable microphones.  The event is live stream, so if you would not mind please, if you have a question, if you can wait until the microphone gets to you, so that the people who are watching this via the live stream will be able to hear your question.  So with that, I would like to introduce Vice Chancellor for Administration, Darrell Bazzell, who will begin this morning’s discussion.  Darrell?

VICE CHANCELLOR DARRELL BAZZELL: Great.  Thanks, Vince.  And I think we’re going to dim the lights a little bit here.  What I’d like to do to kick this off is just provide a little bit of basic budget overview for you to provide context for the conversation we’re going to have a little bit later today, and then we’re going to turn it over to Chancellor Martin to walk you through the particulars around the budget, specifically around the public authority model.  Okay?

So we’re just going to go through a couple slides, and we’ll see if the technology’s working there.  Yeah.  So here are just some general highlights in terms of some of the major elements of the governor’s budget that was just introduced yesterday.  As we know, the public authority status has, in fact, been proposed to campus, and the chancellor walks through the particulars of that later this morning.  We can have conversation about those particular provisions.

As you’ve also have heard, the governor is also wanting UW-Milwaukee be considered for a similar status, and he’s proposing that $250,000 be spent over the course of the next year to study that specific idea.  The budget cuts, obviously, another major portion of the budget that’s of concern.  Overall, UW Systems budget has been cut by $250 million.  That’s the same size of cut that we saw back in 2003-2005, former Governor Doyle’s very first budget.

So within that $250 million cut, remember this, this is biennial math, the actual base cut to individual campus budgets is actually $125 million.  As you heard yesterday, our campus is being asked to bear half of that base cut or $62.5 million.  The other important point to make here is that the base cut I just described has to happen in the first year of the biennium.  So a $62 million base cut in the first year, carried forward in the second year, that’s how you get to the $125 million figure that we’re all reading about.  Okay?

The last point is not an unimportant one.  We all know that it’s critical that we remain affordable and accessible.  The governor has inserted a provision in the budget protecting student financial aid money from cuts.  Not that we want to cut that ourselves, but he’s making it clear that that sort of idea is off the table as campuses look to find ways to deal with the large cut that was proposed yesterday.

Moving forward, I wanted to give you just a quick view of what the campus budget looks like by component.  The overall campus budget is $2.7 billion.  The portion that we’re really focused on with the cuts, obviously, is the state appropriation piece.  That’s currently 17% of our budget.  In terms of actual dollars, I think it’s about $476 million comprises that amount.

Now I want to give you just a little detail about that.  Within that, remember, we have two different types of appropriations.  We have the general purpose appropriation, which is our Fund 101.  We’re all familiar with Fund 101 that has, you know, state money, tuition revenue, and other revenue sources in that account.  That’s the account that will be the focus of how we address the budget cuts.

But we also have other state dollars that helps us pay for our debt service, for our facilities, helps us pay for heating and cooling the campus and other kinds of things.  Those are special types of appropriations that allows us to get to this larger amount.  So within this $476 million number, $279 million of state funds are in Fund 101, and that’s really the focus of where the budget cuts will be, so keep that nuance in mind.

We want to just do a little comparison.  I referenced the 2003-2005 budget just a moment ago.  In that budget, what we saw was an overall cut of $100 million over that two-year funding period.  Within that, there was a $53 million base cut, and that’s what you see there, $53 million.  To satisfy that level of reduction, back in 2003-2005, the Board of Regents increased tuition by 18% the first year and another 16% the second year of the biennium to offset the cut.

And the way that translated for our campus was, of the $53 million cut, $38 million of that was satisfied through a revenue enhancer by increased tuition, if you will.  And the campus then cut its own base budget by the $15 million to get us to the $53 million figure.

We’re looking at, in this budget, again, a $62 million cut, a little bit higher.  But clearly, what you’re hearing from me and including what you’re going to hear from the chancellor is that we’re not going to over rely on tuition offset as a way to satisfy the cut.  We’re clearly going to be looking at other strategies, as you read, from the chancellor’s message last night.  Clearly, tuition is a component.  But we see it as a smaller component than what we have seen in the past, and we clearly want to look to things like the flexibilities provided in the public authority proposal.

We want to look at efficiency opportunities that might be available through a consultant study.  We have to look at cuts as part of the mix as well, and, of course, tuition revenue could be, you know, a much smaller component of how we deal with a fairly sizable cut that’s going to be in our future.

So I just want to provide this fiscal information with background to help, you know, with the conversation we’re going to have in just a minute.  So let me bring up our Chancellor Biddy Martin to walk you through the public authority proposal.  Chancellor Martin?

CHANCELLOR BIDDY MARTIN: Before I start, I think it would be important to allow you to ask questions of Darrell if any what he presented was, I don’t think it was unclear, it seemed clear, but you will, no doubt, have questions about it anyway, and I’m just wondering if you want to ask us those before we talk about the public authority model?  Any informational questions or clarifications for Darrell?  No.  Yes?

MAN: Just by way of contrast, just by way of comparison so we’re getting this cut this year, how does that compare to cuts in past years?

BAZZELL: Again, the cut is larger than anything we’ve seen in recent years.  The cut that comes closest to this, of course, is the 2003-2005 cycle that we saw.  We’ve not seen anything of this magnitude.  If you look at the last budget cycle, for example, Governor Doyle provided a fairly generous definition of what would be subject cuts.  And I think the overall System cut at that time was only $15 million, even though we were dealing with the structural deficit that was actually much higher than what we saw.

Now I think the structural deficit in the last budget was in excess of $6 billion, far higher than what we see now.  But you saw other measures being taken, things like furloughs, which are obviously not very popular, that will be used as measures to offset those cuts and actual reductions asked of by campuses was much smaller.  So, again, the best comparison in terms of magnitude is the 2003-2005 budget.

WOMAN: Could you just clarify the distinction between the two parts of the 17% of the budget?

BAZZELL: Yeah.  So to be clear, when you think about the state resources we get, or GPR, if you will, it kind of comes to use in two types of baskets.  One is the Fund 101 basket, where $279 million of that $476 million resides, and that’s kind of flexible spending for us.  That’s money that’s put together with tuition revenue.  There’s some federal indirect overhead money in that appropriation.  That’s going to be the focus of what we have to cut our budget to meet the target reduction.

But in addition to that, we see other state resources that are targeted that have to be used for that very specific purpose.  It could be for debt service to pay off general fund supported borrowing obligations.  It could be to pay for heating and cooling.  Our 402 account for minority and disadvantaged, for example, is another one of those special purpose appropriations.  But the point is those dollars are not flexible.  They can only be spent for the purpose that the legislature indicates when the bill passes, so that’s kind of the distinctions.

WOMAN: Assuming the requirements for employees to pay more into their pension and healthcare go through, will those, and I don’t want to set off a firestorm by using the word savings, will that be applied to the $125 million, or is the $125 million cut on top of those changes?

BAZZELL: Yeah.  A great question.  And the $125 million is on top of the savings that accrue by virtue of asking employees to pay a larger share of the retirement benefits and their healthcare benefits.  There were savings to our Fund 101, and those savings were swept as part of the governor’s budget balancing act, so you should think about the numbers we just talked about as being on top of those other savings.

MARTIN: Okay.  So we can come back to any aspect of Darrell’s presentation that you wish to cover.  So let me talk a little bit about the public authority model.  The first thing I want to say I said in my note to campus last night, but I don’t want to assume that all of you had a chance to read that.  As far as we can tell, the budget bill actually has in it features that are consistent with the last drafts of documents that we saw.

We, there are some what are called errata, that means there are some things that don’t appear to be entirely accurate in the details.  We will be working with the governor’s office on those.  That apparently always happens in budget bills.  But on the whole, there’s nothing major of the sort that people were worried that might appear in the bill that hadn’t already been known.

So the summary we gave you all last week is still the summary of what this contains.  So let me just review quickly some things that we’ve already said in other forums.  But, again, I don’t want to assume that everybody’s exactly on the same page in relation to these issues.

Public authority in the State of Wisconsin has no single definition.  That is, it is allowed for by the state, but there is no one form that a public authority takes in state law.  It’s an entity that’s created by the legislature to support a public purpose, a public good.  The UW Hospital is a public authority, and it became a public authority some years ago, as many of you know, at a point at which it became apparent that the state could not afford to support the hospital in a way that would allow it to thrive.  And the UW Hospitals and Clinics are a public authority.

UW-Madison would become a public authority, but it would not operate in just the same way as the UW Hospitals and Clinics operate, because we’re a different kind of organization.  And our partnership with the state would be closer, a closer partnership than the one that the hospital has with the State of Wisconsin.

So UW-Madison will remain a public institution of higher education.  We’ll continue to receive state funding.  We’ll maintain very significant ties to the state.  We would be independent from the University of Wisconsin System as the bill stands.  We would have important relationships with the System, and I think it’s incumbent upon all of us, not just at UW-Madison, but across the System to think through what sorts of interactions, formal and informal, will enable us to keep the coordination of our universities going.

The bill creates Chapter 37 of the Wisconsin Statues that’s specific to UW-Madison.  It has within it the language of Chapter 36.  Chapter 36 is the chapter in state law that protects shared governance, protects tenure, protects academic freedom, protects the qualities that make us what we are as a university.  All assets and liabilities, including real property contracts and trust funds, will transfer to UW-Madison.

A Board of Trustees, consisting of 21 members, will govern the authority.  Let me talk a little bit about that board.  I think it’s the single issue about which I’ve heard the most or heard the most questions.  The bill contains language about the qualifications of these board members.

They must have a demonstrated commitment to the welfare of the university.  They must have management experience or possess expertise in the aspects of the university’s mission such as, and then we listed, and this stayed in the bill, these are the areas in which they would need to have demonstrated experience or expertise, undergraduate, graduate, and professional education, research, intellectual property, the support of existing industries in keeping with our land grant mission, new business startups, in order to help us with our contribution to the state’s economy going forward, and public service.  So these are the qualities of the members of the board.

The governor would appoint 11 members, 7 of whom must be alumni of UW-Madison and must have the qualities that were listed on the prior page, all of them.  One member from the Board of Regents for the UW System, now this is among the 11 that the governor appoints, one would have to represent the Board of Regents.  One member representing agriculture interests in the state and 9 additional members.

Why one from agriculture?  In keeping with our land grant mission.  It’s typical for public universities with a land grant mission to have boards on which the major industry, historically, that was associated with the land grand designation in the first place be represented.

The other 10 members would be appointed as follows, from the faculty, from non-faculty employees, and students.  Then the rest of the members have to be appointed by a process that doesn’t directly involve the university.  The university cannot choose its own board members.  And the mechanism that got developed was that those members would be selected by WARF, the WAA, and the UW Foundation.  They would not represent those entities.  They would be selected by them.

In fact, on a board of this sort with fiduciary responsibility for a university, none of the members are considered to be representatives of any group.  They all have fiduciary responsibility for the entire set of operations and policies of the university as a whole.  A chancellor serves as a nonvoting member.

Now some additional features of the bill that are part of the definition of what we would need to do and be as a public authority, there are forms of accountability and oversight.  They are not spelled out.  The process of spelling out and approving forms of accountability and oversight that would need to be entailed by this shift is something that the campus needs to discuss and that a board, once it’s up and running, would need to approve.

So there are areas of accountability and oversight for which we feel responsible, including access, affordability, research contributions, innovative educational programs, solid education for our students.  These are included as broad categories of areas in which we would need to remain accountable to the state and beyond the state.  But the actual, there’s no detailed language about what outcomes, as the lingo goes these days at the national level, would be entailed.  That’s to be decided by the campus with the approval of a board.

There are a number of policies and procedures that are included in the bill that I won’t try to go through now.  Sovereign immunity and liability coverage is really an essential feature.  It’s essential to every university.  It can, of course, be extraordinarily costly for universities that are not public universities.

One of the things we achieve by remaining a public entity and by having a board of which the governor appoints 11 members is we keep sovereign immunity.  We keep liability coverage.  That’s associated with being part of the State of Wisconsin.  That’s very important.  A Public Records and Open Meetings Law continues to obtain, and then there are, there’s language in the bill that you will have to read.  We’ll all have to read and go through carefully.

We did not get everything that we would have ideally liked to have in areas such as procurement and facilities management, but what we do have is going to be extremely helpful.  When I say we didn’t get everything, this is a genuine partnership with the state in my view.  There are areas in purchasing that would hurt the state, and its ability to purchase with appropriate discounts, if we pulled all standard purchases out and did them all ourselves.

But there are areas unique to research universities, and we were allowed to list some of the kinds of purchases that are specific to our mission and our environment that we would be able to do differently, much more quickly, and purchase through university consortia where appropriate at much better prices.  So that’s a sort of compromise.

You have to look at the language and consider it.  On facilities management, those facilities projects, using non-state funding, would be managed by UW-Madison, and we would not pay the 4% fee to the Department of Administration for those projects.  Right now, about two-thirds of our facilities projects are funded with private dollars and program revenue, so we believe that this is a very big plus for us going forward.

There are other things.  I don’t want to try to go through everything, for lots of reasons, partly because I haven’t yet read the entire bill, which only came out later last night.  Some of my colleagues may have stayed up even later than I and have finished reading the whole thing, and we’ll try to answer whatever questions you have about it.

Quickly, on tuition and financial aid.  Obviously, there is no university in the country, in this country, anyway, that can set tuition without approval by a board, and that would be the case here too.  The current tuition policies would remain in effect until July 1^st until changed.  I was going to say 2013.  That didn’t make sense to me.  The tuition policies and procedures would remain in effect unless the new board changed them.  And there are policies, obviously, here at UW-Madison that we have been pursuing and will continue to pursue to ensure affordability.

I’m going to stop there.  I think there, oh, sorry, there was one more slide.  Employees will become UW-Madison employees not state employees.  The employees at the University will be considered state employees for the purposes of pension and health benefits, will participate in those programs as we do now.

The Board of Trustees will be responsible for implementing a personnel system in accordance with the principles that are developed on the campus.  We estimate it’ll probably take a year for on-campus discussion of what makes sense for us, and then a board, obviously, would have to approve the personnel policies that the campus puts forward.

Collective bargaining rights, UW-Madison will have rights equivalent to peers in state agencies.  We’re working on, which doesn’t seem to mean very much right now, and we’re working on clarifying some language, but we need to meet with the working group that’s been advising us on principles for this over the past couple months.  And we’re going to do that this morning, so that we can see what the best approach will be on this score.  Right now, this is where things stand.  Questions and answers.  Yes?

WOMAN: I have a question on the Board of Trustees, the 21 members.  Who came up with the idea that the governor should appoint 11 of them?  Whose decision was that?

MARTIN: Whose idea was that?  That actually was the idea of some of our staff on campus.  Because if the doesn’t appoint a majority of a board of this sort, we lose sovereign immunity, we lose liability coverage, and we are, we don’t have public status of the sort that the campus has been saying forever that we want to keep.

WOMAN: . . .

MARTIN: Oh, you mean, could it have been five of nine?  Yes.  But then we wanted to have representation from campus.  As you know, the Board of Regents currently has no faculty representation, no staff representation.  It does have two students, but there’s no guarantee that those students come from UW-Madison.

In order to get that representation and also get some members of a board who would really serve to enhance our international, our national and international presence and be part of a board that actually becomes key to our development function over time, we wanted to have enough slots of our own, so to speak, to have a board that would do all of those things.  And that’s where the number comes from.

Is it perfect?  I doubt it.  And might there need to be some changes that get proposed?  I’m confident that different people will have ideas.  Please bear in mind that the Board of Regents is a completely political board, by which I mean the governor appoints all of them.

MAN: Of the $279 million in 101 GPR, what percentage is tied up in faculty and staff salaries?  And anticipating a large percentage, what strategies do you look at employing to protect our human resource?

MARTIN: That’s a great question.  Darrell, do you have the percentages?

BAZZELL: I think about, last time I looked, 86% of the funding within Fund 101, not just the GPR piece but overall, is tied up in salary and fringes.  So we’re really talking about human labor here.  I mean, that’s really what that money is devoted for.  So I will say that looking back in recent budgets, you folks, and the campus in general, has done a great job in helping to match the cuts in ways that really minimize human impacts.

We’ve had very few layoffs in past budget cycles as we’ve dealt with those cuts.  But that is, in fact, I think, Dick, you have defined the challenge, that we need to find ways to keep our business thriving, while at the same time, living within the means that are proposed in the budget.

JONATHAN: Okay.  So I have, this Thursday we have a distinguished lecturer coming from UW-Milwaukee.  We’ve got a lot of collaboration across the state, and there’s concern that we are becoming a public authority, and we are abandoning our partners.  And so my question is why isn’t the entire UW System doing this, or should they?  You know, why are we so separate from the rest of the System, because there is concern amongst our collaborators.

MARTIN: Thank you, Jonathan.  So I have a couple of responses to that.  First of all, the research collaborations, in the form of Seed Grants that we’ve established and have up and going over the past couple of years, are the consequence of direct relationships between Madison and Milwaukee administrators.  They are not mediated through System.  And those collaborations not only will continue, they’ll continue to be enhanced.

We have, as many of you know, funded the Seed Grant projects for this coming year at an even higher level than we did previously.  Mike Lovell, the Interim Chancellor at UW-Milwaukee and I, have been working really closely together.  We continue to work really closely together.  And I think most really strong collaborations, particularly in research, emerge from faculty and post-doc and graduate student interest and are direct connections that the university wants to continue supporting.

They don’t get inaugurated at the System level.  Now as to why the System is not going forward as a public authority, that’s not a question I can answer, because it’s not an issue over which I have authority or control.

The System did put forward a proposal for public authority status for the entire System.  It put one forward, floated one early in January.  That was on in which chancellors and regents were not involved.  It put forward another one in February in which we chancellors were involved.  It was a more detailed proposal, but it came at the very last minute.  And I cannot mind read for us what the governor’s and the governor’s staff response was.

What they said to us in the meeting of chancellors and the System president was that Madison had, by far, the most detailed proposal and had been working on it over a year, and that they also thought Madison was unique in the System, that they’re interested in protecting the flagship, that they need a major research university in the state, and it’s important that that major research university continue to thrive, and that they’re interested in helping other campuses going forward as they bring forward proposals that can be assessed.

They also did allocate $250,000 in the budget for a study of UW-Milwaukee and the possibility that it too might become a public authority over time.  We are absolutely committed, not just committed to the existing agreements we have for student transfers, educational collaboration and research, we have been working for two and a half years on the ideas about how we can enhance them.  And those are, again, campus-to-campus commitments.  They’re not mediated through an administrative structure for the most part.

There’s absolutely no reason why this university would abandon its connections with the state.  That’s one reason why this takes the more complicated form than it would take if what we really wanted was to privatize, as some people have worried.  And we are absolutely committed to doing even more with other campuses, and we’ll do that.

We have a list, which anyone here who’s interested should take a look at.  It’s a quite, several, well, thick maybe not for our standards, but several page long document where we list all of the collaborations we have, all the partnerships we have with other System campuses and institutions where we have administrative function overlap.  And we have made that list because we want to reconfirm our commitment to all of those things, but, also because we’re studying how we can enhance them.  And when we look at that long list, many of those collaborations are campus to campus.

WOMAN: Yeah.  Just a quick question.  With the board, is there Wisconsin residency requirement for membership

MARTIN: No.  There isn’t.

WOMAN: For any?

MARTIN: For any?  Actually, if you look at the language itself, there is no requirement other than that people be Wisconsin residents except for a representative agriculture.  And I’m confident that a governor would want to appoint alumni from UW-Madison who are Wisconsin residents, but there’s no language about the remaining members of the board that constrains us from having people who are really strong alumni, strong supporters with relevant expertise, who have the capacity to give us even more national and international presence from being on the board.

So I could foresee people like the Morgridges or other really strong supporters of this University serving on the board in order to provide us with some forms of expertise that are relevant to UW-Madison specifically.  I’m not suggesting that they, themselves would serve.  I’m just saying the sorts of people that a major research university with international presence needs include people with expertise of all kinds.

And while I think the majority probably will and should come from Wisconsin, I also think we need people on a board of this type who are experts in what we really have to do, which is compete on an international stage, increasingly, for the best faculty, the best staff, the best students, and the best programs.  And more help from people who are focusing specifically on what it takes to be a competitive research university in the 21^st century, I think, can only help us.

WOMAN: Another question up here.  Are you, and maybe you’ve already answered this.

MARTIN: That’s okay.

WOMAN: But it’s another collaboration question.  So has Madison . . .

MARTIN: I think your mic is not working.

WOMAN: It’s not on?  I’m sorry.  You may have already answered this.  It’s another kind of a collaboration question.  So as Madison becomes or moves towards a public authority, will Madison participate in the common, the system-wide common systems technology projects as they are now, like HRS and other things like that?

MARTIN: We will need to participate in those in the near term, certainly, and we’ll need to enable other campuses to make use of the things that we have provided and do provide.  That’s absolutely a commitment.  Over time, we have different needs.  And as we can afford to set up systems that are better suited for our purposes, we will probably also want to gravitate to things that are really well suited.  But for now, yes, we’ll continue not only to participate in them and use them, but make sure that we do our part to keep them going for everyone else.

MAN: So I’m still a little confused on some of the numbers.

MARTIN: I’m sorry.  Where are you?  Okay.  Thank you.

MAN: So I’m a little confused about the numbers.  Is it true that we have to remove $62 million from base, where the only portion that it comes of is the $279 million of 101?  And if that’s the case, that’s almost 25%, and if 86% of that is in salaries, how do we avoid a lot of pain?

BAZZELL: Great question.  Let me clarify again.  The cut is derived in, with regard to the amount of state support we receive.  The focus of where the cuts have to be is our Fund 101.  But, remember, there are other revenue sources within Fund 101 as well.  So if you take a look at overall Fund 101, what the $62 million translates into if we took all of this as a cut, and not using some of the other techniques that we alluded to, that would result in a 9% cut to Fund 101 overall once you incorporate all the other revenue streams that are a part of Fund 101.  Is that more clear?

MAN: Yeah.  But, again, I understood you to say that it was really from the $279 million part of the 101, that that was where the cuts had to come.  That’s apparently not true.

BAZZELL: No.  What I’m saying is that the cuts, the GPR we have to cut is the GPR that sits within Fund 101.  For those who are familiar with Fund 101, you can’t distinguish which people are funded with GPR within Fund 101 versus federal indirect overhead.  It’s one homogenous pot of money.  And if you look at it from that perspective, we’re talking about a 9% cut to that particular fund source.  But we don’t distinguish between the different revenue streams within that fund in terms of how we might manage to cut.

MARTIN: And I think it’s important to emphasize again what I said in the note I sent out last night.  Does this entire 9% need to come in the form of cuts?  No.  Should the entire 9% come in the form of tuition increases?  No.  Should the entire 9% be found through efficiencies?  It won’t be possible in the short term.

But if you put all of those different approaches together, then you’re talking neither about 9% cuts to the base, nor about the equivalent increase in tuition to make that up, nor about other forms of flexibility providing that much.  You’re talking about needing to find the balance among all of those tools that we will have.  And that discussion about how to find a balance is something that will occur over the next couple of months.  Yes?  Oh, I’m sorry.

MAN: Hi.  I have a question for Vice Chancellor Bazzell.  You mentioned in your presentation that financial aid would be protected.  Does that refer to student financial aid?  And if you could, can you elaborate on what types of financial aid?  Does that refer specifically to scholarships, or what other details can you provide to us on that.

BAZZELL: Yeah.  I believe the provision in the budget protects state funding associated with financial aid that the state provides.  It could be through WEG(?).  It could be through other sources.

It doesn’t address, you know, for example, if we have scholarships by virtue of private giving, now that’s protected because that’s the nature of the gift itself.  But the general message that’s being conveyed in the budget is that we should steer away from, as we always have without guidance, away from using student financial aid as a technique to balance the budget.

MAN: I received something from UW System this morning on the Executive Budget Summary, which I really question.  It relates to the authority, the UW-Madison authority, and it’s under UW Hospital and Clinics Board, and I’ll read it, what it says.  All funding and positions related to the board are eliminated as is the board.  The board becomes part of the UW-Madison authority.

MARTIN: No.  That’s incorrect.

MAN: Okay.  I just wanted to verify that, because I didn’t think our relationship would change with . . .

MARTIN: That’s completely incorrect.

MAN: Okay.  Thank you.

MARTIN: Sure.  You will hear a lot of incorrect things.  I mean, it’s inevitable.  People, in perfectly good faith will, you know, interpret things, because the language of these bills is never immediately clear.  And that’s why we’re here, and that’s why we’re trying to make ourselves available in as many ways as we can.  Yeah?

MAN: Okay.  So creating a public authority means a different governing body.  Will that result in duplication between us and System, and will that cost us money versus what we save?

MARTIN: That’s a really good question.  Boards are not paid.  These are non-paying positions, so the fact of a board for UW-Madison is not a cost in that sense.  The Board of Regents is an unpaid board.  These are not private corporate boards where people get paid to serve.  But the other question, go ahead, you want to . . .

MAN: I think you’re getting to it.

MARTIN: I’m going to get to it, I think, yes.  You want to know about duplication of effort, which a lot of people are discussing.  UW-Madison already has staffing and capacity in all of the major functional areas that are under discussion.  Other System campuses, the comprehensives, do not.  And the pooling of resources at the System level to provide functionality and capacity that other campuses don’t have on their campuses individually is absolutely critical.

Other campuses, the comprehensives, for example, don’t have legal staff.  We do.  They don’t have the kinds of facilities management staff that we do.  We do.  When it comes to other key areas, HR and other major functions, UW-Madison is unique in that sense too.  That because of our operations, because of the kind of university we are, we have staff in those major areas already.

Would we need to add any staff in any of these areas once we’re doing this for ourselves?  Indeed, we would probably need to add staff on the margin.  Would this be a major cost, especially relative to the savings to us over time?  No.

MAN: As a department chair, I’ve been asked to start preliminary planning for budget cuts, but, of course, we didn’t know what number we should be shooting for.  Vice Chancellor Bazzell has posted the number of 9%.  My faculty and staff would really like to know where we’re heading.  Is that 9% a target or something less because of tuition increases, or are you not ready to give us those kinds of numbers?

MARTIN: I think that we feel the number you had already been given to use is a good number for planning purposes, but we don’t think the entire, as I said, the entire 9% should come in any one of these forms alone.  So will that be the ultimate cut number?  Probably not.

MAN: . . .

MARTIN: I think it would be less than 9%, yes.

MAN: I have a question about the board.  What are the terms?  If a new governor’s administration comes in, does the whole board turn over, or do we have some continuity, because there’s overlapping lengths of terms that they serve?

MARTIN: That’s a really good question.  We ensure that there would be staggered terms, so that the board wouldn’t turn over quickly on election of another governor.  I think that, I can’t, they’re four year terms, three year terms, I’m sorry, two years terms for students, three year terms for others, and those three year terms are renewable once, I believe.  Bu they’re staggered from the outset, so some of the initial members won’t serve that wrong for that reason, so that we have the continuity that you’re describing.

MAN: So I have kind of a two-parter.  After the governor’s address yesterday, there was a, some bullet points put up, and there was an indication that there was going to be a 25% reduction in administration.  And so, first of all, what’s your interpretation of that?  And, secondly, with regard to classified staff under the public authority, if they’re university employees, do they lose their right to transfer out of university positions and into other state agencies?

MARTIN: Thank you.  Those are two different ones.  I think I know the answer to the first one, and I’m going to get help on the second one.  On the first question about 25% cut to UW System administration, I have to tell you, even though I said I could answer that one, I’m confused by that.  I’m confused by the percentages that were put out there for different campuses and System, but what I take it to mean is that the governor wants a 25% reduction in UW System administration’s GPR funding.

And that, it seems, is a way of trying to hold down the cuts to the campuses, where employees, students, and programs would be affected.  But, again, that’s a part of the budget in which we’ve not been involved in the slightest, and so I only know what you know, which is what I’ve read about that.

When it comes to employee status, I’m going to have to ask Lisa Rutherford to answer that one.  So would this mean that classified employees could not transfer out of UW-Madison automatically to other state agencies?

RUTHERFORD: On July 1^st, every employee will become an employee of the UW-Madison.  However, written in the bill for one year, all classified employees would maintain the same rights, protections that they have currently under Chapter 230.

After that one year, and during that one year, we should be creating our own personnel system.  So the expectation is that after one year, they become employees of ours, no longer under Chapter 230, and at that time, they would lose transfer rights to other state agencies.

BAZZELL: Before you finish.  One thing we tried to do was try to get our arms around the question of to what extent were people transferring in and out of the campus between, with state agencies.  We couldn’t get a number in terms of the transfers out.  But we know on a typical, in a typical year, about 40 people transfer into the university from other state agencies through that provision, so that’s the best we can characterize it right now in terms of the potential impact.

MAN: I just have a little bit of a question about timeline and realistic expectations about this is a budget proposal.  It still has a lot of process to go.  What is the likelihood at July 1 we actually have the tools in place to address that 9% in the flexible ways that you’re talking about with ability to, you know, having a separate board in place, a public authority, all those other things that seem like a very long process to actually get there, and we’re only four months from July 1^st.

MARTIN: That’s also an excellent question.  I think that the board can be put in place very quickly after July 1^st, and it will need to be in order to make certain decisions.  But as I said, it’s going to take us time, and it should take us time, up to a year, say, for the campus to be involved in deciding how to develop personnel policies and other kinds of policies with the board then, obviously, as is true of all such boards, making final decisions about how it should operate.

And in the interim, we will rely on the policies and procedures that we have in place now.  You’re, I think, asking will we have all the flexibility we would need to deal with these cuts on July 1^st, and the answer is clearly no.  This is a long-term benefit to the campus, I think, that’s immeasurable.  Does it mean there will be no pain in the short term?  No.  I think it’s clear that the governor and the legislature would expect that there would be some pain on the UW-Madison campus just as there will be around the state.  And there will be some.

But we will work hard to use tools that the really incredible Darrell Bazzell has put at our disposal by capturing some one-time funding that we can use in the shorter term that allows us to get to the point where some of these flexibilities will really enable us to do more.  Nonetheless, I don’t want to mislead you into thinking there won’t be short-term pain, because there’s no way around it to some degree or other.

What we need is a lot of deliberation and consultation about how we deal with the short term and the long term.  Over the long term, I am absolutely confident we’ll not only make up this 13% cut as it’s called for, you know, formal purposes, or the 9% cut, actually, in GPR, or, am I using the language correctly?  Fund 101.  Thank you.

Not only will we make it up, we’ll exceed it by virtue of having this public authority status and having a block grant that makes all of our revenue our revenue, so that there aren’t sweeps of our program revenue going forward, because it’s going to be our revenue.

We will have budgetary authority over our sources of revenue, and we will, for example, get some investment earnings on our portion of the cash flow in the general fund.  The university’s never gotten any interest back from our portion of that funding.  There are things that this will give us over time that will enable us to more than make up for this short-term gap.  But is there going to be a short-term gap?  Yes.  That’s my best and most honest answer.  I don’t see any way we can avoid some cuts.  Yes?

MAN: I had a question about employment and becoming employees of UW-Madison July 1^st.  I think one of your bullet points indicated that a personnel system would become established, incorporating the principles of shared faculty governance.  So can you explain how this will relate to the existing FP&P?  Will that be set aside, or will it be incorporated into the new personnel system?

MARTIN: The shared governance?

MAN: Right.

MARTIN: Shared governance is protected by law in this public authority.  And we said from the beginning, we would not even enter into discussions about this model unless Chapter 36 was made a critical part of it.  And it’s now Chapter 37, but it’s there, and it’s there by law.  We cannot and no board can change that core provision.

So let me repeat that.  Shared governance was a sine qua non even for discussing this.  It is there.  The university committee helped us work on the Chapter 37, which is the former Chapter 36.  It’s there in the bill.  It’s there by law, and no board and no university administrator can therefore decide that he or she prefers to do without shared governance.  Shared governance is what makes this place unique.  It works, and there’s no way to go forward without it in my view.

MAN: Hello.

MARTIN: I’m sorry.  There’s a clarification over here, which . . .

RUTHERFORD: You had specifically asked about FP&P.  All policies and procedures that pertain to employees will still be in effect on July 1^st.  FP&P, ASPP, the classified staff rules, nothing will change.  And the process for changing them will continue to be the same as they are now, whatever is set out in those particular policies and procedures.

MARTIN: Sorry.  I didn’t get to the end of your question.  Yes?

GARY: Good morning.

MARTIN: Good morning.

GARY: As this process has moved forward, and the university appears to be the one compromising our principles repeatedly, is there a point at which the campus administration is going to say this is a step too far, and we’re not going to buy into this deal with the devil?

MARTIN: Hi, Gary.  I don’t think that the public authority model compromises our principles.  I think, I know what you’re talking about, the compromise of principles by other means.

And should we, by virtue of the distress about the Budget Repair Bill, just to put it on the table, should we therefore do nothing for the university in the face of what we find problematic there?  I think it would be irresponsible of me and of all of us to say we’re not going to work on anything that will help us preserve the university because of the rest of what’s going on.

WOMAN: Thank you.  I have a question about the new personnel system.  With creating our own model, which works for us, I agree with that, what is the expected cost to the employee?  Are we going to expect our base wages to be cut?

With the increase or the possible increase of payment for health insurance and our retirement, are we going to be taking home even lesser pay, because we’re going to balance it out on salaries?  You have said that you want to recruit the best faculty and researchers, but if you make the administrators working poor, how are we going to do it?

MARTIN: That’s a great question, and so let me be really definitive with my answer.  First, I’m going to give context, as I always do, so bear with me.  This might be the tedious part.  But I think, as you all know, right now, there have been no pay plans for biennium, for anybody.  And when there are no pay plans for all state employees, we’re not allowed to have pay plans at the university.

Even, as I have frequently said, if one of our major donors gave me $300 million in an endowment and said have a pay plan for your employees, I couldn’t do it by law unless all other state employees were being increased.

One of the things that makes me excited about this model going forward is that we on our campus can make decisions about what our priorities are, and we can decide, given the amount of revenue we have, which is not going to be endless ever, and is going to be constrained in the short term.  We can decide that it’s such a high priority to have a pay plan on the campus, even if it’s a small one, that we’re willing to do other things, forego other things, make other kinds of decisions, use some portion of a tuition increase.

It is my goal to pay people.  Not to pay them less, but to put ourselves in a position where, even when it’s hard, we can make decisions about what our staff and what our faculty and what our students need to be making.  I can’t stand here and promise you that in the very short term we’re going to be able to do much, because we’re being cut by the amount we’re talking about here.

But one of the primary reasons to seek a different status is that we cannot remain competitive and treat our employees well if we have to be treated like every other state agency.  And that’s not because we’re better than every other state agency.  That’s because we’re different.  And we’re different, because we’re competing on a national and international stage for talent for many of our positions, generally, all of our faculty, our students, and for many of our staff.

And even where we’re competing only in local markets for staff, we want to be an employer that people seek out, not one that people feel demoralized about serving.  So let me be clear.  In the short term, are we going to be able to do something miraculous?  No.  Not even anything very good when it comes to pay.  But will we have the tools going forward in our quiver, the arrows in our quiver or whatever the metaphor would be?

I’m not that great with metaphors despite being a literary critic.  We’ll have the flexibility to do something that right now we can’t do.  And I believe, because I’ve been told by some of our most engaged alumni, that this new status and what it will enable us to do to remain competitive in the 21^st century will mobilize them to increase their support of the university.

And pay has to be very high on our agenda going forward.  So that’s a long answer.  It’s not going to be immediately satisfying.  But if you’re asking whether or our goal is to change the personnel system so we can pay people less, the answer is a definitive no.

MAN: Related to the budget cuts, was there a request for a reduction in FTEs?  If so, how many, and how will they be determined?

MARTIN: That’s also a good question that I’m going to ask Darrell to take.

BAZZELL: Well, that’s a really great question, and one of the, to play on what you just heard from the chancellor in terms of what’s possible under a public authority model that’s not possible now, we know traditionally, when you have to take permanent base budget cuts, there have to be FTEs reduced to accompany the salary reductions, or the salary reduction doesn’t count towards reduction.

That all changes under a public authority model.  Our positions are no longer considered to be state positions.  So there is no specific requirement of reducing any number of state positions to satisfy the budget reductions, and that will be a change, and something that’s only possible under the public authority model.

MAN: I have a question about graduate education.  There’s two parts to it.  Is do you envision any changes to how things work with TAs, teaching assistants, and their, you know, their contract, their collective bargaining, and, also, to the way that tuition remission works?

MARTIN: Thank you.  So on the second question, I anticipate no changes in tuition remission and how it works.  There is very little that’s more important to our faculty and the welfare of our institution than strong graduate students, and we need to provide tuition remissions, and that stays.

When it comes to TAs and collective bargaining, the outcome of that is beyond our authority to control, and we will do what we can going forward.  And I think that’s where I said initially, it’s complicated to figure out exactly how we deal with what’s going on at the state level, and what it would be possible for us to do, especially after the first year of the public authority model’s existence.

It’s complicated to figure out what would be possible for us after that, if you’re asking about collective bargaining rights, that would have the force of law.  It will depend on what the state does.  And we’re trying right now to sort out what the best language would be, and we’ll be getting back to you about that.

TAs, you know, all I can say, so, if we put aside, which at this university, and I know it well having been a graduate student here and a member of the TAA, it’s hard to put aside that piece of what it means to be a TA here, but we need to protect our graduate students and our TAs with tuition remissions and with the funding that enables them to be the contributors that they are to this university.  Yes?

MAN: To go back to the question about who appoints or nominates the Board of Trustees.  There are 2,000 faculty, and they have 2 positions.  There are 6,000 academic staffers and 5,000 classified staffers, they have 1 position.  Can you tell me how that one position is going to be appointed?

Because, clearly, if there’s only 1 for 11,000 and 2 for 2,000, one of those groups, academic staff or classified, is not going to have a person to appoint on the Board of Trustees.  I’m a little concerned about the ratio.  And to follow up on the, and on the process and to follow-up on the question that was asked about how WARF and WAA and Foundation go their two apiece, who made the decision to have two faculty members and only one staff member?

MARTIN: So it’s my understanding that the shared governance committees typically require a majority faculty membership, and that that’s a longstanding tradition here.  The two faculty doesn’t give them any sort of majority on this board, obviously, and it wouldn’t be appropriate to have them have that majority.  And I want to repeat that these positions will not be representational positions.  Once a person is on a board of this sort, your role becomes fiduciary responsibility for the whole, not to represent a constituency, and that’s very important.

Nonetheless, we wanted to have staff, faculty, and students have membership on this board and have a role.  Not in order to represent specific interests, but because they know the university.  So I think, first, it’s really important to think about that contextually.  These are not representative positions.  Not because I say so, but because a board with fiduciary responsibility doesn’t allow for that kind of representational investment.

Now as to the numbers.  How did we come up with those?  We worked with various key figures and came up with something that, as I said earlier, is probably not perfect, and we’re open to talking about how to make it better, bearing in mind that we can’t have a board, it’s already too big a board probably, and we can’t simply expand the number of people endlessly.

We can have discussions on campus about what, if any, amendments make sense for the community, for that board.  But, again, it has to be a really thoughtful one that isn’t based on representative or vested interests, because this can’t be a board about vested interests.

MAN: Thank you.  But the question still remains what about the process of the appointment?  In other words, who is going to decide, because classified staff and academic staff currently don’t have any confluence in shared governance that I’m aware of, so what is the process that’s being proposed to have two distinct entities, classified staff and academic staff, who gets to decide that appointment?  With the faculty, it’s clear it can be the faculty senate.  With this one position, it’s not clear to me at all.

MARTIN: Well, thank you.  Here’s the thing.  We didn’t specify what the process should be, because I don’t think we should decide what the process should be for those members of the board.  It could be a number of different things.  I’m familiar on other campuses, for example, with faculty representation to a board coming from an election, even where there’s faculty governance and a faculty senate, an all-faculty election, and one could imagine that for our staff and students too.

But these things need to be discussed, and the process is not constrained by language that we put in the bill.  In other words, we didn’t say the staff should be chosen by Biddy Martin and Darrell Bazzell.  We didn’t say anything thinking that those decisions need to be made on the campus.  So, I mean, let’s talk.  Let’s continue to talk about what makes the most sense.

WOMAN: Good morning, Chancellor.

MARTIN: Hi.

WOMAN: Sorry.  I was a little bit late.  So if this was covered, I apologize.  You said something a moment ago that confused me.  You said the reason that we’re taking on the public authority model is not because we’re special but because we’re different.  So my question for you is how are we different from the rest of the UW System, and why are we taking on this model but none of the other campuses are?

MARTIN: Oh, okay.  I didn’t say we’re not special, because we are special.  I said that when it comes to the uniqueness of the university and its difference from other state agencies, we’re not better.  The argument is not we’re better than other state agencies.  The argument is we’re different.  We have different needs.

So instead of talking about the difference between UW-Madison and a state agency like DNR, I’ll talk about the difference between UW-Madison and some other system campuses as well.  So here’s the argument I’ve made as part of the New Badger Partnership for over a year that I think has gained traction around the state among people who’ve listened to it and heard me say candidly that if UW-Madison is treated like every other state agency, our quality will deteriorate.  Why is that true?

But not only will our quality deteriorate, the welfare of the state will be diminished.  Why do I say that?  There is no other state agency, and there is no other campus in the system that is a thriving export business for the State of Wisconsin.  What do I mean by that?  I mean, that we bring in well over $1 billion in new money to the State of Wisconsin every year in the form of research funding, philanthropy, out of state tuition, expenditures by out of state students and their families.

Other system campuses have some out of state students, but they don’t have anything even remotely resembling the kind of research volume they do.  And why should they?  That’s not a criticism.  They have a different mission and purpose.  And our System campus has served those missions and purposes extremely well, but we have to compete in order to continue providing the State of Wisconsin with that kind of new money.  Now when I say new money, I mean as opposed to transfers of money within the state itself.

So most campuses are tuition charging and contributors to the state, but a lot of the revenue circulation all occurs within the state itself.  What UW-Madison does is bring in new money from outside the state that would not be in the state of Wisconsin were UW-Madison not to play the role it plays.  That is enormously important for this state.

How do we do that?  We do that by having the best faculty in the world, great staff, and great students from all over the world.  And if we can’t retain our quality, we no longer serve that purpose, either for ourselves or for the state of Wisconsin.  And when I say we’re unique, even relative to other UW System campuses, that’s what I mean.

We are an extraordinary research engine, an incredible economic driver for the state.  We offer students access to peers from all over the world.  Our students from Wisconsin are among the most talented, as are students who come from elsewhere, and this requires, in the current world of higher education, the ability to compete at a level that has never been required before.

So let me add one more thing to this long answer.  And I’ve said this sentence many times, so please forgive me those of you who’ve heard it in these exact words too many times, but it is a really important fact.  If you travel around the world, you will see that every region in the world is trying its best to build a major research university.  And why is that?

Because we’re in a global knowledge economy, and people realize that the welfare, economically, of their regions depends on exactly what we’ve been doing at UW-Madison for over 150 years.  Not quite that long, but close.  For this University to deteriorate in quality, because we can’t compete, I think, as I said channeling my mother the other day, couldn’t believe I said it, but I’ll say it again, would be a crying shame.  And not only for the University, but for the state and for the nation, and I think even beyond.

So that is my answer.  I think UW-Madison is unique.  We have got to be able to compete, as we do now, with the greatest publics in the world, the great privates in the world, and all those hybrids of public and private that are cropping up in China, in Brazil, across Europe, new ones, and in other parts of the world, Korea, Vietnam.

The competition for talent has never been fiercer.  And when I was in China, and I walked into the room to meet faculty and administrators at Hong Kong Science & Technology Institute, it was like being in a Big Ten meeting, because they had just recruited to their campus people from Cornell, well, they’re not in the Big Ten, but they probably should be, Michigan, Ohio State, and Penn State.

Some of them were native Chinese, but most of them were U.S.-born.  And I’m giving you that example only because when you sit there and the competitiveness around the globe for the best talent is staring you in the face, you have to think more than locally.  We can’t just think statewide.  We have to serve the state by being great.  And being great means internationally competitive, and that’s my line.  And I know that not everybody will like that line, but I think it’s true, and I’m sticking to it.  Yeah?

WOMAN: Hi.  I work for a research group that is primarily funded by outside money, not state GPR, and someone had asked a few minutes ago about salaries.  I guess I’m just wondering if the campus does have to look at employee salary cuts, at least in the short term, would you anticipate that it would be applied across the board without respect to source of funding, or would it be targeted toward people who receive state funding and those who don’t?

MARTIN: Well, there will be no furloughs in the upcoming biennium.  There will be no furloughs for anyone.  That’s, you know, sort of, there’s nothing to be triumphal about given the contributions to pension and healthcare which affect people’s take-home pay in the way they do.  But at least we don’t have furloughs, which as far as I could tell, especially on non-state funds, helped no one.

I would say that the notion of salary reductions as a way of dealing with this cut is not something we’ve ever uttered in our discussions.  Could the campus, as we go through the next few months, I know that those of you who are part of your college APCs are discussing different approaches with your deans, and the deans are going to, and directors are going to bring things forward to us.  Maybe some of you all within the units have been talking about salary reductions as one way of trying to deal with this.

My own feeling is that our salaries are already noncompetitive.  And given the big speech I just gave, and thank you for indulging me while I gave it, salary reductions are not a great way for us to go if we can avoid it.  What is a great way to go, we’ve got to work together to figure that out.  I don’t want to prejudge what you all and your APCs and your deans are going to recommend as way of trying to deal with cuts, and I think I would just leave it at that.

WOMAN: Thank you.

MAN: Good morning, Chancellor.

MARTIN: Hi.

MAN: Understanding that tuition increases are only a component of the way we’ll address the budget cuts, and being that we will have control of our revenue, what are, what’s the commitment and your thoughts on matching any institutional financial aid to match the tuition increases to help with access and affordability?  Thank you.

MARTIN: Well, in all the modeling we’ve done of possible tuition increases, we have kept our hold harmless provision that we instituted as part of the Madison Initiative for Undergraduates, so that those students with need from families making $80,000 or less would not pay the increase.

In addition, we continue our private fundraising campaign for need-based aid, so that we can cover even more students with grant aid, and we have exceeded our goal in each of the first two years.  And we’re continuing to work with Mike Knetter, the new President of the UW Foundation and the Foundation Board, on succeeding brilliantly in that campaign.

MAN: Yes.  The proposals that you’ve outlined today certainly take place within the context of the budget proposal by Governor Walker last night, some $1.7 billion in cuts.  There’s a certain modus operandi that the governor has established, and that is create a budget crisis in a local government or a school district, and then utilize that to restructure not only wages and benefits but to promote, for instance, in the schools, charter schools, privatization schemes and so on.

So one thing I’d like to know is what private interests, perhaps corporate interests, were involved in establishing this proposal for a public authority model, and will there be private interests that benefit from this?  And then the final point, perhaps it’s more of a philosophical question, but there’s more to the conception of a public institution, public higher education than solely liability protection.  It goes down to the basic questions of equal access to higher education, basic democratic conceptions and social rights.

So how will this transformation of the University of Wisconsin-Madison undercut those principles?  What changes in curricula will take?  I mean you speak about, basically a corporate model.  The UW-Madison has to compete.  It has to compete in the 21^st century.  We’ve heard a lot of that from Fortune 500 companies and its lead to quite devastating consequences.  So what are you, perceive of what type of fundamental changes undermining these egalitarian and more basic democratic principles that the school was established upon?

MARTIN: I see absolutely nothing in a public authority model that would undermine our fundamental principles.  Indeed, I think without it, the risk of having our fundamental principles undermined by a deterioration in our ability to take care of ourselves and our people is a much bigger threat.

I’m not even entirely sure what you mean, but no corporate interests or private interests were involved in the thinking through of the public authority model at all, and no one will be served by it except the people in this room and across the campus, and the people who are the citizens of the state of Wisconsin.  I don’t know how any corporate group or entity could benefit from this.  So, you know, all I can say is no.

What is this based on?  It’s based on our commitment to the Wisconsin Idea.  And I remind you all that ever since I came here, of course, also, when I was a student here, but since I returned as chancellor, the thing that I’ve heard about most is your worry, your serious worry about retaining, recruiting the best talent, about remaining true to our core mission activities with declining state support going to our core mission activities, and your everyday frustrations, students, staff, in particular, and faculty, about the amount of red tape we go through, the amount of time that we spend on administrative detail that has to do with excess bureaucratic layers.

I’ve heard more about those things than I’ve heard about anything else.  As I said on Friday to the Regents, the 1999 Reaccreditation Report prepared by people in this room, no doubt, apparently argued that public authority status for UW-Madison might be a way to solve the problems that the campus faced.  The 2008 Reaccreditation Study, in which I know many, if not all of you participated, argued that there needed to be a major transformation in the way the University is governed if it’s to remain strong.  And the evaluation team that came in for reaccreditation purposes agreed with that.

I have been talking about the New Badger Partnership and advancing these principles based on what I heard for over a year.  There is a lot of support for those principles.  This model is a way to achieve them.  It’s all predicated on the Wisconsin Idea.  How do we balance accessibility, affordability, and public service with the need to be a quality institution?  Because let’s remind ourselves, if our quality deteriorates, the rest of this is not relevant.

And I’m committed to ensuring that we find a way forward that helps us balance our public mission and the need for quality for the good of the people of Wisconsin.  Wisconsin has always had one of the best public universities in the country, indeed, in the world.  One of only 3 public universities this year ranked among the top 20 in the world in faculty productivity by Shanghai Jiao Tong Rankings in China.  Let me repeat.  One of 3 public universities in the world ranked in the top 20 in faculty productivity.

The benefit to the State of Wisconsin of having a university with that kind of quality, that sort of revenue generation, that potential for job creation, that opportunity for its young people and for future generations of young people, that benefit to the State of Wisconsin, if lost, is devastating for the people of Wisconsin.  That’s what I believe.

It’s in the spirit of the Wisconsin Idea to do what we can to preserve the quality of education, the quality of research, the international talent magnet that we are to remain true to our public mission but find innovative ways to take care of ourselves.  That’s what I believe.

MAN: Hi.  This is a little bit more nuts and bolts kind of question.  So but as an academic staff employee, I believe that I was reading that the governor then wanted to repeal any, what Doyle actually gave us as unclassified staff, the ability to collectively bargain.  So that’s going to go away.  And then under the new system then, if we are UW employees instead of state employees, then you’re saying we’re going to get that ability back?  Is that correct?

MARTIN: That’s what we don’t know.

MAN: That’s what you don’t know.  Okay.  Then if that’s for unclassified, and then how does that reflect with classified as opposed to, so they’ll still have theirs, we may or may not have the ability to collective bargain, and then if we do get this ability to collective bargain, are then we classified?  Are we unclassified?

And if that happens, what does that do to vacation?  What does that do to the accrued leave that I have, and how does impact what I have, as an unclassified person as opposed to the classified, yeah, and so does that happen July 1^st?

MARTIN: So the last part is the easiest.  It does not happen on July 1^st, as Lisa Rutherford mentioned.  It will take a year for us to get a new personnel system in place, and so the current system stays.  What I wanted to say to you is some of that is not answerable at this point.  But I want to remind you that the decisions about collective bargaining that are on the table at the other end of State Street are separate from the public authority model proposed by the governor for UW-Madison.

We don’t have, as we’re seeing at this point, control over those decisions that are being made, which is not to say they aren’t being influenced, but they’re outside of our authority to decide.  So we don’t know exactly what will happen.  I don’t think anyone in this room knows exactly what will happen in that process.

We’ll certainly be affected by it one way or the other, but I think that’s the best answer at this moment to the questions you asked.  There was one other point that you made though about academic staff that I wanted to say something about, and now I’ve forgotten.

MAN: . . . benefit leave and . . . vacation.

MARTIN: Oh, benefits and vacation.  Yeah.  Thank you.  So for the purposes of benefits, UW-Madison employees, once we’re all UW-Madison employees, will remain part of the state system.  So you won’t lose any of your benefits, and there’s no provision in the governor’s bill that would strip people of their accrued vacation or sick leave.

So, you know, we would all be entitled to the benefits that we have going forward for those purposes.  For other purposes outside of benefits, we would be UW-Madison employees, which may allow us to take some decisions that might be different from what we could do if we were state employees, but we don’t yet know enough to know what those would be.

MAN: Does that include our pensions?

MARTIN: Yes, it does.  Uh-huh, pensions and healthcare benefits.  Yes?

MAN: Hi, Chancellor Martin.  I have a question about overheard, because I looked at the big pie diagram, and 33% is from federal money.  I’m interested in, after this new public authority model, are we going to gain, or is there any extra benefit for the University of Wisconsin-Madison if we can handle the overhead from the grant, federal grant itself?  Thank you.

MARTIN: Yeah.  That’s a good question.  I think Darrell Bazzell would say that the amount that the state takes out of federal indirect rates is really small.  We’d get that, but it’s not a really significant chunk of money to add to what we currently get in indirect cost recovery, less than 1%.  Yes?  I’m sorry.  You need the microphone.

WOMAN: I don’t know if anybody asked it, but is there going to be shared pain for everybody in the university?  Is it going to be shared pain across the board?

MARTIN: There will be pain, I think, for everyone one way or the other.  Will the cuts that we end up taking be across the board cuts?  I hope not.  I think that we need to be strategic about how we approach cuts, so that we preserve our strengths.  Those decisions haven’t been made.  I think what I’ve alluded to several times is the need for the process that’s already underway in the units in the colleges to make its way up for decisions at a different stage.

WOMAN: Okay.  Because I notice in your e-mail that you’re going to, in anticipation of the high-demand faculty, in anticipation of that, you had made provisions to continue that important initiative.

MARTIN: Yes.

WOMAN: Okay.  In these trying times, is that a good idea?

MARTIN: Well, I thought someone would ask about that.  Did everybody hear the question?  Well, the question was, if everybody is going to feel pain, why in my e-mail did I mention that the high-demand faculty fund, which we have gotten in the governor’s budget the past few biennia, but which is not in this governor’s budget, why would we, this is a German sentence in English, so I apologize, why would we commit to taking care of that, if the pain is going to be so great overall?

And my answer to that is we had already made provisions to enable us to provide our deans and units with what you’ve had access to in the past biennia in the way of help retaining and recruiting the greatest talent before we knew anything about any of this, before the Budget Repair Bill, way before.  I mean, I’m talking a year ago when we said to ourselves what if that ever went away?  What would we do?

And so we held aside funding.  Now is that a good idea in a bad time?  I think absolutely yes, but I am certainly willing to hear from the campus that it’s a bad idea.  Why is it a good idea in a bad time?  Well, in a bad time, it’s really crucial not simply to hunker down but also to make wise investments, and this is not an amount of money that is extraordinary relative to what we’re looking at.

I think keeping our best faculty and academic staff where that is relevant is one of the most important things we can do during a hard time.  And, again, I’m open to being told that that’s wrong.  And I realize that there are people who would say, well, okay, but then there’s a benefit to some of those faculty who might be recruited away otherwise that I’m not going to get.

Things are never completely the same across any board.  And I think the, I’ve said this many times, and I’ll say it here again today.  Fairness is really important.  I don’t define fairness as everyone doing equally badly, and that’s why I really disliked the furloughs that were mandated in the last biennium, because they didn’t help the state when people on non-state funds were asked to go on furlough.

The reason we were given for why everyone should be furloughed even if it didn’t help the state, even if it hurt the state not to be able to use the federal funding, was that everyone should be treated the same.  My view is we have an environment in which we should be as fair as absolutely possible while preserving quality and trying to enable the people to flourish who can’t.

It doesn’t help any of us for all of us to falter, and so we should be thoughtful.  We should realize that we need to preserve the strengths of this institution.  We need to do as well as we can by our employees, everyone, and we need to ensure that the best talent continues to come and stay here.  So that’s, again, as I say, that’s my view.  Yes?

MAN: We’re going to take just one last question.  We’re running a bit over our extended time, but we’ll take one last question.  Thanks.

MAN: Do you, under the public authority, anticipate renegotiating ICR from state or federal sponsors?

MARTIN: Go.  Answer that, Darrell.

BAZZELL: A great question.  One that’s on my mind all the time, as we know we get a relatively low return as compared to many of our peers

MAN: Can you tell them what ICR is?

BAZZELL: ICR is indirect cost recovery, essentially the overhead on research grants, which is really important to the vitality and economic wellbeing of the campus, and so a really, really important question.  Very quickly, here’s the strategy we’ve been using the past three years around ICR.  It’s hard to get increases, as you know.

So what we’ve been doing over the past several cycles essentially, when you negotiate a new rate, typically the rate can last anywhere from three to five years.  We’ve been able to get about a point or point and a half increase in each negotiation, but the tradeoff is we get the feds to agree to the three-year window, so we can come back sooner to renegotiate.

In fact, and just a couple months ago, we just negotiated our new rate for the next three years.  And while some universities were seeing a decline in their ICR, in part because the availability of federal stimulus money, we actually got a two-point increase, a two percentage point increase in that.  So the public authority status doesn’t interrupt the cycle of negotiations with the feds.  So we’re back at the table with them sometime in the next two years to negotiate again, hopefully get, you know, further incremental increases.

MARTIN: So if there are no more urgent questions, well, I mean, they’re all urgent, sorry, but I think that my staff wants me to stop.  And, but there will be many more opportunities in the form of Web Chats, which is a whole new thing for some of us, more forums.

The next forum is March 8^th, so next week.  And, I’m sorry, the Web, there’s a Web Chat today at 3:00 to answer people’s questions over the Web, and you can go to the homepage to figure out how to use that.  I couldn’t possibly explain it to you.  And I just want to thank you for coming and for your questions and concerns, and we’ll be seeing a lot of each other over the next couple of months.  Thank you.