Monitoring UW’s financial management, academic performance
By State Sen. Luther Olsen
One of the jobs of the legislature is to hold executive branch agencies, including the state’s university system, accountable for the tax dollars they receive.
To create a good accountability system, one of the first things that you need to do is figure out what you are going to measure. To this end, the Joint Finance Committee included a provision in the 2015-17 state budget that would require the University of Wisconsin Board of Regents to identify accountability measures for four areas: financial management, administrative management, academic performance and research and economic development. The Board of Regents must submit these accountability measures to the legislature for approval by the relevant standing committee.
Last month, the UW Board of Regents submitted these measures to the legislature.
To measure financial management, they propose looking at the overall financial health of each institution, cost per degree and revenue over expenses. To measure the overall financial health of each institution, the Board of Regents would look at each institution’s Composite Financial Index (CFI). A CFI of 1.1 or greater is considered an indicator of good financial health.
The cost per degree measures the educational and related expenditures per degree. It looks at resources spent on instruction, student services and the educational share of institutional overhead costs. The revenue over expenses measurement includes the tuition margin ratio and tuition fund balances. A tuition margin ratio of 1 or greater tells us that revenues exceed expenses.
The Board of Regents propose using three tools to measure administrative management: administrative expenditures, average credits to degree and affordability. Administrative expenditures measures the ratio of administrative expenditures to total operating expenditures. The UW system works to keep these expenditures low while still efficiently and effectively managing operations.
The second tool, average credits to degree, has been used by the UW System since 1993. According to the UW System, reductions in “credits to degree” means greater affordability and increased access for additional students. Affordability measures tuition and fees as a percentage of median family income. This helps the University understand the financial impact of college on families, but this measure does not include the impact of financial aid.
To measure educational performance, the UW System suggests looking at three factors: graduation rates, equity gap and degrees awarded. Graduation rates are an important indicator of how well an institution is guiding students toward their educational goals.
The UW System looks at both four and six year graduation rates. While four years is the standard length of time to complete a degree, some degrees cannot be completed in four years due to study abroad opportunities, internships or double majors, for example. The equity gap examines the difference in graduation rates between underrepresented minority and low-income students and their peers.
By looking at the number of degrees awarded by degree level, the UW System hopes to show its commitment to providing the state with graduates for today’s jobs and growing economy.
Research and economic development require looking at research funding and public service funding; STEM and health degrees; and alumni who stay in Wisconsin in order to get an idea of the UW’s impact in these areas. Looking at research funding can tell us how much research is occurring systemwide. Public service funding provides information about educational outreach such as conferences, cooperative extension services and institutes.
Finally the UW system suggests looking at the percentage of STEM (science, technology, engineering and math) and health degrees as a percentage of all degrees conferred and looking at the percentage of UW graduates who live in the state. Job growth, employment rates, and wages are often higher in more STEM and health-based economies and having more UW graduates remain in the state may increase the quality of the workforce and benefit Wisconsin.
These measures would give us a good look at how the UW System manages its finances, works for student success and impacts the state’s economy. The true benefit of these accountability measures will be our ability to look at the UW System over time and see changes in areas that could be improved.