PROFS is actively communicating with state legislators on two important issues in the state budget. The following statement was distributed to legislators today:
PROFS: State Budget Changes Needed to Keep UW-Madison Competitive
As legislators consider provisions in the state budget that have a direct impact on UW-Madison and its faculty, it is important to remember the role that UW-Madison plays in our state’s culture, our economy and the overall social fabric of the state. First and foremost is the high-quality education provided at the university. Young people in our state have the opportunity to learn from and work alongside some of the world’s premier scholars. The Wisconsin Idea, the historic partnership between the university and the state, is alive and well today as faculty work with people throughout the state to enhance our quality of life. The university secures more than a billion dollars a year in research funding, with individual faculty securing an average of $500,000. The estimated annual economic impact of UW-Madison on the state is $12.4 billion.
Current Impact of State Budget: Even before considering the items below, it is important to note that UW-Madison is already facing an extremely challenging budget situation. The current budget includes $137 million in GPR cuts ($94 million in base cuts and $43 million in cuts tied to increased employee pension and health care contributions). The cuts in take-home pay come at a time when UW-Madison faculty salaries are 11% below their peers at other major public research universities. We need to be very concerned about our ability to attract and retain the kind of UW-Madison faculty that the people of our state have come to expect.
REQUESTED CHANGES TO STATE BUDGET BILL:
- Treat required employee pension contributions as before-tax dollars (like the private sector does): In a recent article in Tax Notes, Andrew Gross, an assistant professor of business at UW-Milwaukee, and William Maas, an assistant professor of business at UW-La Crosse, detail a serious problem with the current budget bill. The budget requires state and local government employees to directly contribute after-tax dollars to the state pension plan. Because the employee will be making the contribution directly, the contribution will not be eligible for tax deferral treatment. Therefore, even though the employee must make the contribution, the amount of the contribution is still included in the employee’s income for both income tax and FICA purposes. That is in contrast to most contributions made by private employees to 401(k) plans, which are tax deferred for federal income tax purposes. After accounting for FICA, federal and state income taxes, an assumed 5.8% reduction in take-home pay becomes an effective 9.5% pay cut.
- Remove the telecommunications provisions that were inserted into the budget as part of the last-minute Joint Finance Committee motion: Sections 23-26 of the university omnibus motion would jeopardize UW’s research enterprise, reject $37 million in federal funding and dismantle WiscNet. Under the proposals, UW-Madison would have to give up its national memberships in all Internet consortia that offer telecommunications service or IT service to anyone other than the UW. This would include memberships in organizations that provide services such as Internet 2, Northern Tier, BoreasNet, and even IT organizations such as Educause. These proposals would have a devastating impact on the cutting-edge work being done by UW-Madison faculty. They would lead to the loss of top-notch faculty along with the prestige and research funding they bring to the university.