Harry Peterson speaks to Rotary Club of Madison about flexibility and public authority.

I appreciate the opportunity to speak to you today [April 27, 2011].  The Downtown Rotary has a great tradition of providing a forum for important ideas to be discussed.  I believe this issue certainly qualifies.

Kevin Reilly has described how the proposal by the Board of Regents would provide some much needed flexibility and additional autonomy for the universities in the UW System, including the UW-Madison, as they go about their business.

I strongly support that proposal.  Donna Shalala, my former boss, referred to the State of Wisconsin, meant ironically of course, as having what she described as a “world class bureaucracy.”  This has always been a burden.  Now that the universities are experiencing huge and continuing budget cuts, the lack of flexibility is even more painful.

I am here today to explain to you why I believe that the Biddy Martin proposal for the UW-Madison to break off from the UW System and become a public authority is not a good idea for our university.  I not only think it is not a good idea—I think it is a very bad and dangerous idea, one that puts the university that you and I love at considerable short term and long term risk. I am involved in this issue at my own initiative and have written several articles on this subject and spoke at a forum at the UW-Madison last month.

I mentioned our love for the UW-Madison.  I am here today for that reason—although virtually all of you could be up here speaking if that was my major qualification—in fact, I suspect I would need to get in line, because many of you are or were a part of our university for longer than I was.  So that is not enough of a qualifier.

I also am here today because I have a perspective that is informed by having worked at another UW System institution—the UW Green Bay, when it opened before merger.

I did my dissertation about the leadership at the UW-Oshkosh, another university in the UW System;

I lobbied for higher education in four states, including Wisconsin.

I served as Deputy Chancellor, at the Minnesota State Colleges and Universities, and helped put together the most ambitious merger in higher education in the last 10 years in the mid-1990s.

I also reported to governing boards and understand the crucial role they play in serving as a buffer between universities and day to day political pressures—such as those that we are experiencing in Wisconsin today.

I understand politics, legislators, boards and systems of higher education.       In the brief time that I have I will outline three major consequences of going from our current system to that  of a public authority separate from the UW System.  I will conclude with a checklist of subjects I believe you need to be comfortable with before you support this proposal.

There are many unstated and sometimes not thought about assumptions that go into any proposed course of action.  It is often these assumptions that cause things to not work out as we had hoped, in both our personal and our organizational lives.

Everything I have read by supporters of this proposal focuses entirely on what they believe to be advantages of the flexibility that will come from the New Badger Partnership.  They do not begin to address the complexity and unintended consequences of this proposal.

I will focus on only three of what I believe will be outcomes if this idea becomes law.

I.   Opposition from other universities: This proposal has to assume that the reaction of the other 13 universities in the system to the UW-Madison breaking away will be benign.  We must assume that the other universities will not unite in opposition, initially to the proposal and, should it become law, to the UW-Madison

In fact, the other 13 universities are united and are working hard in opposition to this idea as we meet

The executive branch of Wisconsin government has become increasingly strong in recent years.  Each of the last several governors have made more political appointments and retained fewer career professionals in leadership positions.  This is bi-partisan.  Removing from the DNR board the authority to appoint the DNR secretary, a change supported by Governor Doyle, and the requirement by Governor Walker that all administrative rules go through his office are recent examples.  Governors are becoming more influential and more directly involved in the affairs of state entities.  Governors would argue that the public is demanding that government be responsible, that the public is holding them accountable, and they need this executive authority to do their job.

Given this strong trend, the idea that any governor and any legislature would permit the UW-Madison to become a mostly independent public authority over which they would voluntarily and statutorily have little influence contradicts everything that we have experienced in Wisconsin and national politics in the last 20 years.

If the public authority does become law the other 13 public universities will remain united and they will be a very effective force politically.  While the UW-Madison is the strongest single university, with loyal graduates throughout the state, the collective political influence of the other universities far exceeds ours.  This relates directly to funding.

There may be some pre merger nostalgia among some of you here today.  Why can’t we go back to the way things used to be?  Times have changed.  The other universities used to be small, sleepy teachers colleges.  Today they are neither small nor sleepy.  During the 2009-2010 academic year the UW-Madison conferred about 10,000 degrees, while the other public universities awarded more than 20,000 degrees.  These 20,000 graduates register and they vote.  They are more likely to come from within Wisconsin and they are more likely to stay here.    57 of them are in the State legislature, compared to 23 UW-Madison graduates.

The competition for funding would very likely come from an existing pot of money—not additional money—and the UW-Madison would lose. This occurs in other states that do not have a unified system.

Politics, to a large degree, is a struggle over the allocation of resources.  That is part of democracy—the question is where the struggle takes place.  I want to keep the conflict out of the Capitol and have it remain among higher education colleagues, Chancellors and the System President.  Also, not incidentally, the UW-Madison fares better under such a system.    In Van Hise Hall we can argue on the merits.  In the Capitol we get beaten on the politics.

II. UW-Madison will receive one block grant each biennial budget: The size of that grant will not only be dependent upon the recommendation of the Governor, but the decisions of the legislators.  The other universities will lobby for more money.  Does anyone here think legislators from LaCrosse, Stevens Point, Eau Claire and Superior will look to the school aids and aids to cities coming to their area for additional funding for their home town university—or will they look to the block grant designated for the UW-Madison.

The proposal for the UW-Madison is often compared with the status of the University of Michigan and the University of Virginia—the former was created by the Michigan constitution and the University of Virginia has a great deal of autonomy.  The State of Michigan does not have a system—all of their universities go to the State Capitol in Lansing and fight it out.

The concern about politics dictating funding is not an abstract one.  In Michigan, Representative Dominic Jacobetti was a Democratic Representative from the UP.  He chaired the Appropriations Committee.  He had such a powerful position that Northern Michigan University received many times the amount of state aid per student as any of the other state institutions. Northern Michigan University had a difficult time adjusting to life without Dominic Jacobetti because their state appropriations dropped so much after his death.

The University of Virginia is also not in a system because that state does not have a system.  Because the funding decisions for each university are made in the State Capitol,  George Mason University, because it is in rapidly growing Northern Virginia, and has more voters,  is receiving more generous funding at the expense of the University of Virginia and other universities in that state.

The UW System will have 13 universities, including the University of Wisconsin-Milwaukee, united in opposition to the UW-Madison.

The money that the UW-Madison and all of the other universities receive from the state comes in two different allocations.  The first is for operating funds, for the costs of operating the universities.  The other funding is for faculty and staff salaries.  Under the plan proposed by the Chancellor his will no longer be true for the UW-Madison.  Our funding will come in the single block grant, out of which salary increases must be paid.

Salaries are the largest single expense in higher education—why not—we are in the people business—although we have some wonderful facilities—they are worthless without our highly trained, loyal faculty and staff.  Almost every day I drive by the Institute for Discovery, and I marvel at the new building.  Spectacular though it is, the most important thing about it is the people who work there—our faculty and staff.

We will be required to get any salary increases from that block grant, or private funding and tuition increases.  Let me give you an idea of the magnitude of the additional funding we would need for salary increases if we did not receive the money from the state.

Private fund raising:

A 1% salary increase for all faculty and staff amounts to $5.4 million per year.  If this was paid for by the private donations to the UW Foundation, donations would need to increase by that amount each year to maintain the 1% salary increase for that year alone.

A 1% increase each year would have an additional and multiplying effect so that the cost for a 1% increase each year, by year ten, would require additional annual donations of about $369 million.

From the year 2000 to 2010 the support the UW-Madison has received from the State has increased by about $77 million.  If, during that time the university had to make up that support from private donations it would have had to increase its endowment by $1and 1/4 billion.  Yes, that is $1 and 1/4 billion—that assumes a 5% return annually, amounting to $77 million per year.

Donors are not enthusiastic about contributing to maintain salaries for faculty and staff.  They are interested in making a difference with their donation, not maintaining the status quo.  In the four states in which I have worked in higher education, donors believe that base salaries are the responsibility of the state.

Tuition increases:

If the UW-Madison was to pay for salary increases and operating expenses through tuition the cost to the students would be high.  For example, if the UW-Madison recruited 220 additional nonresident students, and charged them $25,000 in tuition it would collect just over the $5.4 million for each of the 4 years they were at our university.  Of course, the UW-Madison would need to continue to recruit those students annually to increase or at least maintain that number of high paying students to pay for that 1% salary increase.

These illustrations are not meant to suggest that this is precisely how the UW-Madison would go about trying to cover operating expenses or salary increases.  I do mean to suggest, indeed make very clear, that the costs would be enormous and that we would be at risk.

Implications for funding and tuition increases: In the Joint Finance Committee meeting on this subject at the end of last month it was suggested that the UW-Madison is seeking a divorce from the State and the UW-System.  I think that is an apt term.  Now, although one legislator was quoted as saying that he went through a divorce and found it quite liberating—this divorce would be like others you and I have known about.  I could go on to talk about issues of custody, and that might be interesting, but I only have a few minutes.

The UW-Madison seeks a divorce from the Regents and the State—because it seeks autonomy.  Let’s be clear—divorces go in both directions—if our university obtains the divorce and independence, the State of Wisconsin will also be free and independent from the UW-Madison.

If this proposal passes, when the UW-Madison comes to the Governor and the legislature—one that is facing tough financial times, with much competition for funding for other worthy sources it will come with explicit statutory authority to raise tuition to any level it wants with no legislative approval.

Do you think it is possible that legislators will reply that they are struggling with aids to their cities and K-12 education, and the UW System universities, and that the UW-Madison has unlimited authority to raise tuition—they sought that authority and now they should use it?  I think is not  only possible, but likely.

I understand that Chancellor Martin has said she would support tuition increases of 8.5% for this fall if she receives the authority she is seeking.

However, this change is being sought not on a trial basis not for this year and next to see how it works—it is forever.  It will be in the state statutes.  The forces on tuition increases will be inexorable over the years—and those increases will accumulate and be large.  Already, we can see the effects.  The UW-Madison is taking a disproportionate cut of the budget reductions proposed by Governor Walker.  Why not?  He is offering authority for the University to raise tuition as much as the new board would like, with no legislative review or approval.

One of the most important lessons I learned from the three Chancellors with whom I worked is that we are stewards of this institution and to be good stewards we must act as though it will be here forever, even though we will not.

If the Biddy Martin proposal passes we will not have obtained a trial separation, but a divorce.   First, we will be separated from the legislature and the Board of Regents.  Ultimately, because we will have many of the features of a private university, including high tuition, we will separate ourselves from the people of the State of Wisconsin.  The University of Wisconsin was founded before the State of Wisconsin.  There is much at risk.

III The loss of the current governing board: Earlier this month the Board of Regents, a member of whom is in the audience, received a summary of its support for academic freedom over its history.  The board members were emphatic about the interest in continuing that history.  This received virtually no media attention because it was not news and we have taken for granted one of the finest traditions of our governing board.  We only need to look to other states to see what might happen.

On July 1, if the Biddy Martin proposal becomes law, there will be a 21 member board, 11 of them appointed by the Governor.  They will become board members without a Senate hearing or a vote of confirmation by the full Senate.  There will be no opportunity to ask these nominees at a Senate hearing about their support for academic freedom, tenure or stem cell research, research on global warming, evolution, or how they feel about political parties soliciting emails from faculty members.  All governors from this summer on will make appointments with the knowledge there will be no public scrutiny of their choices before a legislative committee.  These board members will have 3 year terms—shorter than any public higher education governing board in the country.

In summary:  I am sure that many of you     know about decision trees—if you answer one way you go in one direction, if you answer another way you go in a different direction.

I close with a check list from a simple decision tree:  each question I suggest must be answered in the affirmative.

You should support this proposal if:

  1. You are not concerned that the competition for funding from the other UW institutions will result in smaller block grants for the UW-Madison.
  2. You are not concerned about the burden this will place on private fund raising.
  3. You are not concerned that statutory authority given to the new board, to increase tuition to any level will, over time, put the UW-Madison out of reach of many middle class and working class families in Wisconsin.
  4. You are not concerned about the loss of our current Board of Regents, replaced by a brand new board with 3 year terms, the shortest terms in the United States, appointed directly by this and future governors without senate confirmation, unlike our present board.
  5. You are not concerned that the decisions about funding allocations for the UW-Madison and the other universities will move from Van Hise Hall, with the Chancellors, Kevin Reilly and the Board of Regents, to the Capitol and the legislature.
  6. You are not concerned about the possibility that the loss of the UW-Madison to the UW System will have a destabilizing effect on public higher education and result in a loss for our State and its citizens, especially its young people.

Finally, and perhaps most importantly, to support this proposal you need to believe that its passage and implementation will not put at risk the relationship of this great university, one that you and I love, to its citizens, the modest, hard working taxpayers who have supported it since 1848.

I believe it will not only put that relationship at risk, it will damage it. Thank you for the invitation to speak and for listening.  On Wisconsin!

Harry Peterson

Administrator, UW-Madison, 1978-1990
Chief of Staff, Donna Shalala 1988-1990.

President Emeritus
Western State College of Colorado
Gunnison, Colorado


This entry was posted in State-University Relations, The University Budget, The University System, The UW-Madison Campus. Bookmark the permalink.

4 Responses to Harry Peterson speaks to Rotary Club of Madison about flexibility and public authority.

  1. Admin says:

    The Associated Students of Madison (ASM) apparently felt they could answer each of the numbered points in the affirmative, as they just now tweeted (late Wed.) that they voted 12-0-1 to support the public authority.

  2. Crazy Harry says:

    His presentation was horrible. It was obvious that Reilly and Peterson’s strategy was to “run out the clock” at the Rotary meeting so that there would be no time for questions.

    Quite the contrast with Chancellor Martin’s appearance the week before. She got a “standing O” when she walked to the podium as well as when she finished speaking. Reilly and Peterson got polite applause. The audience voted.

  3. Admin says:

    There’s the presentation and there’s the content. Here at S&W our hope is that readers will evaluate the words and the ideas on their own merits, irrespective of who wrote them or how they were presented elsewhere. What are Crazy Harry’s (and other readers’) opinions on the actual ideas posted above? If there wasn’t time for questions at the Rotary Club, now’s your chance.

    Here is mine: Is the six-step decision tree at the end valid or not? If not, why not?

  4. Crazy Harry says:

    You call on the Board of Regents to \lead.\ I call on President Reilly to take part in a publiv forum with Chancellor Martin and let’s have an honest and open debate about the New Badger Partnership and the Wisconsin Idea Partnership.

    The Governor proposed something and the Regents reacted. There has been no debate. The fact that there has been no debate is because Reilly and the Regents are content with playing defense and won’t talk.

    Let the debate begin!

    All of Peterson’s points can be made in the debate. The fact that his old boss, Donna Shalala, is very outspoken in support of Chancellor Martin’s position, ought to tell you something.

    The fact that Reilly apparently needs a hatchet man to do the talking for him should tell you something else. Reilly opened the Rotary presentation with nostrums, and Peterson wielded the dagger. It would have been a much better presentation if there were an open discussion. Martin would love to do it, but Reilly ducks. I wonder why?

Comments are closed.