Transcript Current UW Budget Process - University of Washington

Paul Jenny
Vice Provost, Planning & Budgeting
March 28, 2012
2
HIGHER EDUCATION: THE UW IN CONTEXT
I.
National Trends
II.
Snapshot of Washington State and UW
III.
Trends and Challenges for the UW
IV.
Our Responses
V.
A New Way?
3
NATIONAL TRENDS: DECADES OF GROWTH


Huge growth in institutions, enrollment, and
participation since World War II
Increasingly skilled workforce and demand for
educated workers = growing college wage premium
COLLEGE-TO-HIGH SCHOOL WAGE PREMIUM
120.0%
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
4
NATIONAL TRENDS: FIVE EMERGING CHALLENGES





Demand for educated workers outpacing supply
Stalled completion rates
Changing demographics
Increasing international competitiveness
Declining public funding leads to increasing price
$12
$10
$8
Appropriations per FTE
(Thousands)
$6
Public FTE Enrollment
(Millions)
$4
$2
$0
1980-81
1985-86
1990-91
1995-96
2000-01
2005-06
2010-11
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NATIONAL TRENDS: COST OF ATTENDANCE

College costs often increase higher than inflation:
• Higher education is a service industry, and prices
behave similarly to other personal services offered by
highly educated providers (e.g. dentists, lawyers)
AVERAGE TOTAL COST OF ATTENDANCE BY SECTOR
CONSTANT 2011 $ (COLLEGE BOARD, 2011)
$45,000
$40,000
$35,000
$30,000
Private Nonprofit Four-Year
$25,000
Public Four-Year
$20,000
$15,000
$10,000
$5,000
$0
1981-82
1986-87
1991-92
1996-97
2001-02
2006-07
2011-12
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SNAPSHOT: WASHINGTON STATE

Public Institutions provide 2/3 of BA degrees in WA:
• 2 doctoral research, with 5 branch campuses
• 4 comprehensive undergraduate
• Plus community and technical colleges
FALL 2010 UNDERGRADUATE ENROLLMENT, WASHINGTON STATE

2 YEAR PUBLIC
61%
4 YEAR PUBLIC
28%
4 YEAR NOT FOR PROFIT
9%
4 YEAR FOR PROFIT
2%
In WA, 46% of state higher education
appropriations go to all 4-year institutions and 54%
to 2-years (the most unbalanced state higher
education funding distribution)
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SNAPSHOT: WASHINGTON STATE
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SNAPSHOT: WASHINGTON STATE
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SNAPSHOT: WASHINGTON STATE
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SNAPSHOT UW: WORKHORSE & SHOWHORSE

UW provides 30% of all BA degrees in WA
(40% of public BA degrees) and 39% of graduate and
professional degrees (72% of public degrees)
• 50k students plus 41K outreach students
• Produced 14K degrees last year alone
• Over half of BA students graduate with no debt
rd
• Oversees four hospitals provide 1/3 of state’s
charity care
• Ranked in the top ten public research universities
in the country by US News & World Report
• Top five in the country for federal research funding
11
SNAPSHOT UW: FY11 OPERATING BUDGET = $5.5B

State support dominates our conversations because
when combined with tuition it forms our core
foundation of educational support.
While state support has
fallen significantly, it still
represents 31% of our
core education budget.
Some units produce
significantly less tuition
than others and rely
disproportionately on
state funding.
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TRENDS & CHALLENGES FOR THE UW


Changing Sources of Revenue
• Effect on Tuition
• Effect on Financial Aid
Other Funding Considerations
• The changing role of capital, federal and
philanthropic funding
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SHIFTING SOURCES OF EDUCATIONAL REVENUE
STATE AND TUITION FUNDING PER FTE
(in 2013 Dollars)
$25,000
$16,000
$17,000
$20,000
$15,000
$10,000
$5,000
$0
Tuition Revenue per FTE
State Funding per FTE
Total Funding per Student FTE
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TUITION RATES COMPARED TO PEERS
YEAR
PEER GROUP
RESIDENT UNDERGRAD
TUITION & FEES
NON-RESIDENT
UNDERGRAD
TUITION & FEES
STATUTORY PEER GROUP
$10,887
$30,790
UNIVERSITY OF WASHINGTON
$8,701
$25,329
STATUTORY PEER GROUP
$11,700
$33,100
UNIVERSITY OF WASHINGTON
$10,571
$28,055
2010-11
2011-12
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EFFECT OF INCREASING TUITION ON AID

As undergraduate tuition has increased, the amount
of institutional aid represents an increasing
proportion of revenue from undergraduate residents
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COMPETITION FOR ADMISSION

Over five years, freshman applications
have grown 37%
UNIVERSITY-WIDE FRESHMAN ADMISSIONS
5,497
12,264
12,965
21,268
5,338
5,287
5,540
11,511
12,094
17,808
16,634
5,438
5,000
11,355
10,000
19,906
20,000
15,000
22,843
25,000
0
Fall 2006
Fall 2007
Applications
Fall 2008
Accepted
Fall 2009
Fall 2010
Enrolled
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DEMAND FOR ENROLLMENT

Over five years, undergraduate enrollment and total
enrollment have grown by 13%
UNIVERSITY-WIDE HEADCOUNT ENROLLMENT
60,000
49,046
1,934
35,201
11,911
1,907
11,592
11,114
1,842
48,022
34,523
30,000
31,135
10,557
40,000
1,803
10,591
1,802
44,749
32,355
43,494
46,653
33,697
50,000
Fall 2008
Fall 2009
Fall 2010
20,000
10,000
0
Fall 2006
Fall 2007
Undergrad Students
Grad Students
Professional students
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OTHER FUNDING CONSIDERATIONS: CAPITAL

State capital funding extremely limited
• Declining new and renovated building funding
• Deferred maintenance needs underfunded
$350,000,000
$300,000,000
$250,000,000
$200,000,000
UW Debt
$150,000,000
$100,000,000
Local Funds
State Funds
$50,000,000
$0
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OTHER FUNDING CONSIDERATIONS: FEDERAL
The UW’s exposure to several streams of federal
funding is high ($1.6b annually)

•
83% of total research revenue ($1.1b)
•
Medicare and Medicaid payments represent 36%38% of total clinical revenues ($485m)

•
$40m in PELL grants
•
Provision of student loans/work study funding
Cost of research skyrocketing due to sophistication
of science & tech yet funding is plateauing
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OTHER FUNDING CONSIDERATIONS: PHILANTHROPIC

Increasingly key funding source but currently
restricted and focused on new initiatives
VALUE OF CONSOLIDATED ENDOWMENT FUND
1992-2011 (DOLLARS IN MILLIONS)
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UW RESPONSES: EFFICIENCIES
ADMINISTRATIVE
 Laid off or eliminated over 1,000 positions
and reduced use of overtime
 Centralized, streamlined, and automated core
services (including procurement) across units
ACADEMIC
 Accelerating change in composition of our
academic workforce
 Increasing class size
 Increase in nonresident admissions
 Degree, emphasis, and minor eliminations
and halted admissions
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UW CONSEQUENCES: CLASS SIZE

Course reductions concentrated in the lower levels:
• Mostly constant average class size (ACS) for 200, 400,
and 500+ level courses
• Increase in ACS for 100 level courses from 48 to 61
• Increase in ACS for 300 level courses from 37 to 42
100,000
2,000
75,000
1,500
50,000
1,000
25,000
500
-
NUMBER OF COURSE SECTIONS
NUMBER OF ENROLLED STUDENTS
NUMBER OF COURSE SECTIONS AND STUDENTS ENROLLED
SEATTLE CAMPUS 100 LEVEL COURSES
Enrolled Students
Course Sections
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
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UW CONSEQUENCES: ACADEMIC WORKFORCE

UW attracts top students, but costs keep cadre of top,
tenure-track/tenured professors from growing to
match demand:
• 42% of undergraduate courses taught by
tenured/tenure-track faculty in 2001 vs. 34% today
• 65% of graduate and professional courses taught by
tenured/tenure-track faculty vs. 46% today
• With retirement delayed and hiring constrained,
tenured/tenure-track faculty at the UW are graying:
AGE
<45
2001
30%
2011
29%
46-64
>60
>65
>70
62%
20%
7%
2%
54%
33%
17%
6%
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UW RESPONSES: A NEW BUDGET MODEL


Activity Based Budgeting (ABB) is a model that
directly allocates revenues to the unit that
generates them
• Increased local control
• More transparent
• More efficient
ABB was partially implemented in FY11 and
12, and will be fully implemented in FY13
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CENTRAL PUZZLE REMAINS
How should Washington State
increase degree production at all levels
in the face of waning public resources
and limited student resources,
without compromising educational quality
or research and service outputs?
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A TIPPING POINT AT THE UW?





Already doing more with less
Additional efficiencies plus student growth
threaten quality and quantity of education,
research and service
Non fungible sources are growing while
educational funding sources decline
Public investment in unrestricted form unlikely
to return
Tuition revenue can only be raised so much
before the public mission is compromised
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A NEW WAY?
First, we must accept that funding public higher
education has undergone a paradigm shift.
Then, we must ask ourselves:
What do we do best and how do we preserve it
while simultaneously expanding its reach?
Finally, we must transcend financial constraints
to define a new UW.
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The conception of education
as a social process and function
has no definite meaning
until we define the kind of society
we have in mind.
– John Dewey, Democracy & Education (1916)
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