DATE:
February 26, 2013
TO:
Chief Business Officers
FROM:
Freda J. Harris
Associate Vice President
Office of Budget and Planning
RE:
Executive Budget Changes Related to the UW System
The following is a summary of the components of the 2013-15 Executive Budget that are
relevant to the university.
General GPR/Fee Changes
1. No limitations or required tuition increases beyond $3.9 million needed in 2013-14 for
standard budget adjustments.
2. Full funding of the cost-to-continue request for fringe benefit costs through the 2011-12
fiscal year, for lease and directed move costs, and for DMCs. ($28.7 million biennially)
3. $32.4 million in 2013-14, increasing to $57.1 million in 2014-15, to preserve current levels
of college access and educational quality at UW institutions. This funding would be
provided to the UW System in a flexible “block grant.” This includes funding for fringe
benefits cost adjustments for 2012-13 through 2014-15, and the GPR share of new
compensation increases. ($89.4 million biennially)
4. $16.6 million in 2013-14, increasing to $25.8 million in 2014-15, for GPR debt service for
previously approved construction and renovation projects. ($42.4 million biennially)
5. $10.8 million in 2013-14, increasing to $28.2 million in 2014-15, for program revenue (not
tuition) supported debt service. ($39 million biennially)
6. No funding for the Board’s requested Quality, Access and Economic Development Initiative
to make improvements on the Act 32 Performance Measures.
7. No additional funding for fuel and utilities. Per DOA, there was a negative adjustment to
fuel and utilities included in the flexible funding as part of the block grant.
Compensation and Benefits
1. Authority for the UW System to establish compensation plans for its employees, plus
increased funding to retain and reward faculty and staff (part of the $89 million in new
Page 1
flexible GPR block grant funding). Removal of restrictions on use of all funds for salary
increases and the types of adjustments that can be made with base funds.
2. The Group Insurance Board is required to impose a health insurance premium surcharge of
$50 per month for eligible employees who use tobacco in in 2014 and 2015.
3. The Group Insurance Board must offer all state employees the option for a high-deductible
healthcare plan that includes a health savings account.
4. Under current law, health insurance plans are assigned to three different tiers, depending on
cost. Currently, the state may not pay more than 88 percent of the average premium costs of
the lowest cost health insurance plans. This bill provides that the state may not pay more
than 88 percent of the average premium costs of the health insurance plans in each tier. In
addition, the bill provides that if any tier contains no health insurance plans, but is used to
establish the premiums for employees who work and reside outside of the state, the amount
these employees must pay is based on the premium contribution amount for that tier in the
prior year, adjusted by the average percentage change of the premium contribution amount of
the other tiers from the prior year.
Rehired Annuitants
1. Rehired annuitants are no longer permitted to receive an annuity if working more than twothirds time.
2. The Governor recommends increasing the break in service requirement from 30 days to 75
days. Rehired annuitants may not receive an annuity if they began work within 75 days of
retirement.
Capital Planning
1. The Governor recommends language that enables the sale of state heating plants, but no
changes in funding or FTE are included. [13.48 (14) (br) and 16.848 (1)]
2. The university’s exemption to the sale or lease of property under 13.48 (14) (a) has been
deleted. The building commission’s authority to sell or lease state-owned buildings and
lands has been expanded to include all real property. [13.48 (14) (am)] The commission
may sell or lease property without the approval of the agency having jurisdiction over the
property.
3. The statute exempting the university from DOAs authority to sell or lease state property and
facilities is repealed. [18.848 (2) (b)]
4. DOA is required to let all construction projects that exceed $185,000 through a modified
single prime contracting process. The existing law allowing the building commission to
grant waivers for other delivery methods is retained. [16.855 (14) (am)] and 13.48 (19)]
Requires DOA to issue public notice and conduct at least one public hearing before issuing a
template for a contract under the modified single prime contract process. [9101 (2)]
5. The university must submit a biennial inventory to DOA with the estimated fair market value
of all real property. [13.48(14)(d)]
Page 2
Procurement
1. UW System did not specifically gain any additional purchasing flexibilities in this budget.
Neither “research” nor “instruction” authority was proposed. Full purchasing authority was
not proposed for the Board. UW System and UW-Madison retained flexibilities in the
FY11-13 budget that would go into effect on July 1, 2013
2. All references to official sealed bid purchasing thresholds are raised to $50,000, including
sole source waivers.
3. Approvals for Sole Source and requests to waive the bidding process would be moved from
the Governor to the Secretary of DOA. This would streamline these approval processes.
4. Grants DOA the power to purchase and host an E-Procurement System (Sciquest is an EProcurement System). DOA may require that any agency use the system. Gives DOA
authority to charge agencies and vendors for the cost of the system in a method determined
by DOA.
5. Under IT-related statutes, grants DOA authority to implement an ERP system, which
includes finance, purchasing, payroll, and HR modules.
6. Deletes UW System’s authority to maintain a Bidder’s List, unless directly delegated the
authority by DOA. This authority does not currently exist in UW System or UW-Madison’s
delegation agreements. UW would be required to notify all bidders on the state’s bidder’s list
of opportunities regardless of dollar level, which includes simplified bids. Only DOA would
have authority to remove bidders from the list for cause.
7. Adds that contractual services in the U.S. must be performed in the 50 states or D.C. with
exceptions
8. In addition to the State’s ineligible vendor list, UW System would not be able to award
contracts to vendors on the Federal debarment list.
9. Requires State Agencies to adopt Standard specifications, but for nonstandard items may use
trade names.
10. Purchases can only occur “upon requisition” to DOA.
11. Amends the UW System/UW-Madison delegation language.
12. Limits energy equipment definition to HVAC, heating, cooling, refrigeration, and lighting
greater than $5,000.
Economic Incentive Grant
A $10 million incentive grant fund ($20 million biennially) to support UW initiatives in three
areas: further economic development, address employer needs through development of a skilled
workforce, and improve affordability for students.
1. Economic Development. Activities must encourage the establishment and growth of
business in Wisconsin, including the creation and retention of jobs. Any economic
development activity must be coordinated with the Wisconsin Economic
Development Corporation [36.11(29r)(b)].
Page 3
2. Skilled Workforce. Proposals in this category can be in three categories: a) Increasing
the number of degrees awarded in fields identified as high-demand by the Department
of Workforce Development and WTCS; b) Increasing the number of student
internship and cooperative work experience opportunities; c) Enhancing research and
development.
3. Affordability of Post-Secondary Education. Reducing the time required to obtain a
degree, increasing opportunities for high school students to earn credit toward a postsecondary degree, or improving the transfer of credit between institutions of higher
education.
Within 90 days after the effective date, the Board shall submit to the DOA secretary a plan to
establish the incentive grant program for approval. The plan shall include the following:
1. Application procedures and procedures and criteria for awarding grants.
2. A plan to establish performance goals and accountability measures for each grant
recipient.
3. A plan to track and report program results reported by grant recipients.
4. An acknowledgment that the amounts awarded are not base building.
The Board is required to prepare an annual report on the goals, results, and budget of each
program.
Financial Aid
1. $4 million in 2013-14, increasing to $8.1 million in 2014-15, in the Higher Educational Aids
Board budget to fund grants for Wisconsin Covenant Scholars. ($12.1 million biennially)
2. Indexing the college tuition tax deduction to inflation using the same methodology to adjust
state income tax brackets.
3. No change in funding for the UW Wisconsin Higher Education Grant (WHEG) program. The
Governor recommends that HEAB be permitted to transfer funds between fiscal years for the
WHEG grant for UW System students. The link connecting WHEG to resident
undergraduate tuition increases would be suspended.
Wisconsin GI Bill
Currently, a qualifying veteran needed to have been a Wisconsin resident at the time of entry into
military service in order to qualify for the Wisconsin GI Bill. Under the Governor’s
recommendations, a veteran from any state may qualify for the Wisconsin GI Bill by living in
the state for five consecutive years.
This change also applies to the eligibility of spouses and children of disabled or deceased
veterans. The spouse and children of any disabled veteran who lives in Wisconsin for 5
consecutive years are eligible for the Wisconsin GI Bill.
Page 4
Residency determinations are made by the Wisconsin Department of Veterans Affairs.
The governor also recommends removing the ten-year eligibility limit on the spouse or surviving
spouse of an eligible disabled or deceased veteran.
The executive budget adds a requirement that all Wisconsin GI Bill participants maintain a 2.0
cumulative GPA.
Flexible Option Degree Program
$650,000 and 6.5 FTE in 2013-14, increasing to $1.3 million and 13 FTE in 2014-15, to develop
new UW Flexible Option degree programs. ($2 million GPR biennially)
Core Credit Transfer
1. The UW System and WTCS would be required to enter into an agreement that ensures that
no less than 30 credit hours of core general undergraduate courses would transfer between
institutions without loss of credit toward graduation or completion of a specific course of
study.
2. Independent and tribal colleges would be permitted to enter into and implement the 30 core
credit agreement. The Governor recommends including information on the agreement in the
annual report submitted to the Governor and the Legislature.
Information Technology
The Governor recommends permitting the UW System to continue as a member, shareholder, or
partner in a third-party internet consortia that advances research or higher education. UW
institutions may continue to belong to entities of which they were part on February 1, 2013. The
DOA secretary determines if new entities meet the statutory criteria.
WiscNet is specifically excluded from the definition of “third-party entity.”
UW Medicine and Public Health
1. A $3.75 million one-time state taxpayer investment in the UW Carbone Cancer Center (all
funding included in 2013-14) to accelerate the development of and access to cutting-edge
molecular imaging technology, contingent upon proof of matching funds. The funding will
be in a separate appropriation. ($3.75 biennially)
2. $1.5 million annually to expand the Wisconsin Academy for Rural Medicine (WARM) and
Training in Urban Medicine and Public Health (TRIUMPH) programs at UW-Madison’s
School of Medicine and Public Health. ($3 million biennially)
Page 5
3. The Joint Committee on Finance is added to the list of recipients for the existing report on
Family-Practice Residency Program that is prepared by the Medical College of Wisconsin
(MCOW) and the UW-Madison School of Medicine and Public Health. [13.106 (3)]
4. Creates a new report on rural and underserved medical programs to be submitted to the
Governor and Legislature. The report is prepared by MCOW and the UW-Madison School
of Medicine and Public Health. [13.106 (4)]
Department of Public Instruction Course Options Program
The part-time open enrollment program (Wis. Stat. 118.52) has been significantly modified to
become the Course Options program. The program is expanded from including only
“nonresident school districts” to “educational institutions,” including the university.
The school board of a pupil’s resident school district may reject an application if the school
board determines that the course does not satisfy a high school graduation requirement or the
course does not conform to or support the pupil’s academic and career plan. Students may take
up to two courses at a time.
School districts will pay an amount equal to the cost of providing the course to the pupil, as
calculated by DPI. Educational institutions may not charge the pupil or the pupil’s school
district any additional payment.
These students would have all of the rights and privileges given to all other UW students.
WTCS Performance Funding
The performance funding will be gradually phased into the program over the next several years.
State aid to WTCS will be allocated under the new performance funding formula based on the
following schedule:






10 percent in 2014-15
20 percent in 2015-16
30 percent in 2016-17
40 percent in 2017-18
50 percent in 2018-19
100 percent in 2019-2020 and each year thereafter.
The WTCS Board needs to establish a funding formula model by Dec. 31, 2013 and submit it to
DOA for approval. Performance will be measured by:



Placement rates of students in jobs related to their areas of study
Number of degrees and certificate awarded in high-demand fields.
Number of programs or courses with industry validated curriculum
Page 6


Transition of adult students from basic education to skills training
Workforce training provided to businesses and individuals
Appropriations for all technical college categorical aid and grant programs are consolidated into
one appropriation. These funds can be used as needed and should help fund new initiatives that
deliver on performance measures. WTCS is getting an additional $5 million in GPR to
help transition to the performance funding model.
There is no minimum guaranty of funding under this proposal, and the board may withhold,
suspend, or reduce payments under this formula if performance measures are not met, if rules are
broken, or if aid to certain programs is no longer needed.
Miscellaneous
1. UW-Milwaukee and UW-Parkside are no longer permitted to establish or operate a charter
school. They may, however, contract with an individual to operate a charter school. Both
institutions may continue to operate existing charter schools. The chancellors are no longer
required by statute to receive approval from the Board to enter into a contract to establish a
charter school. (Section 1774)
2. The statewide longitudinal student data system, of which the UW is a part, must now include
the Department of Children and Families and the Department of Workforce Development
and must be interoperable with the workforce data system. (Section 1739-1743). Agencies
must submit an annual report to DOA on their progress.
If you have any questions related to this information, please contact me (608-262-6423), Lynn
Paulson (608-263-7481), or Renee Stephenson (608-263-4422).
Page 7