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Originally published Saturday, May 1, 2010 at 5:18 PM

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UW: Hard course ahead for funding

Due to state budget cuts, the University of Washington's next president will lead an institution that is much more autonomous from the state — an institution that, in some ways, will more closely resemble a private university.

Seattle Times higher education reporter

There's a joke going around the University of Washington campus: Once, the UW was a state university. Then it became a state-supported university. Now it's just a university in a state.

With President Mark Emmert announcing last Tuesday he's leaving to take the top job at the National Collegiate Athletic Association, the UW's next president will step onto a campus that has seen its state funding slashed by one-third in the past 15 months. For the first time, students are paying for a greater share of their education than taxpayers.

With more cuts likely, UW's next president will lead an institution that is much more autonomous from the state — an institution that, in some ways, will more closely resemble a private university. There already have been plenty of campus budget cuts, and now there are plans for seismic shifts in the way UW does business.

• Seven hundred more freshmen from other states and countries will be added over time. By paying more than three times as much tuition as Washington students, these out-of-state students will help subsidize everyone else.

• A new budgeting system is in the works that will expose which subjects cost more to teach. That eventually could prompt UW to charge more for certain programs and ax others altogether

• There are hopes that existing university property — both physical and intellectual — can be better used to bring in millions more dollars each year.

Many at UW worry that even these changes won't be enough to allow the university to pay its bills in the face of unrelenting cuts.

"The Legislature and the citizens of this state really need to make a decision about whether they value, and want to keep, a truly world-class university," says Ana Mari Cauce, dean of the College of Arts & Sciences. "People think everything is fine. It's not fine anymore."

Reduced lab time

Professor Bruce Balick loves passing on his knowledge of cosmic space, spectral signs, light and matter. He's been teaching Astronomy 101 at UW for 35 years. The way it has always worked is students pack his lectures, then divide into groups of 25 and take two labs a week. Except this year, because of the budget cuts, the labs have 32 students each. And they meet just once a week.

"It was never intended that the students would start and finish a lab in one hour. They are supposed to start a lab, hit some big bumps in the road, go home and think about it, and then come back and do it again," says Balick.

"I'm sensing that in the classroom, I'm not making the headway through the lecture material that I have in the past. The puzzled look on students' faces, and their lack of questions, are a sign that something is going awry."

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Balick, who also chairs the faculty senate, is not alone in seeing the effects of the budget cuts. Class sizes are getting bigger. Language offerings have been slashed. About 850 jobs have been eliminated, including 310 through layoffs.

UW's instructional budget is now $706 million a year, about $55 million of which comes from the endowment and other sources.

At the start of 2009, the state paid $401 million toward instruction. But the state's core support has eroded by $132 million since then, according to Paul Jenny, the UW's vice provost of planning and budgeting. Add back some one-time state money, and this year the state will pay about $320 million toward instruction. Students, meanwhile, will pay $331 million in tuition.

As drastic as the state cuts have been, many administrators fear there is worse to come. The federal stimulus money that helped mitigate some of the cuts this year will be gone next year. And because that money will be gone, the state no longer will be required to maintain certain funding levels.

Higher-education and four-year colleges have been particularly vulnerable to the state's budget problems. That's because services like prisons and K-12 education are given a higher priority. With state revenue failing to keep pace with increasing costs, the higher-ed budget looks bleak.

Student ratios

It's against that backdrop, says Philip Ballinger, the assistant vice president for enrollment and admissions, that UW's Seattle campus has decided in recent months to increase the size of its freshman class — adding only out-of-state students.

Two years ago, 19 percent of freshmen came from outside the state. This fall, the ratio is expected to be 27 percent. In five more years, Ballinger said, it will climb to 33 percent.

Ballinger said the plan is to keep the base of 4,000 resident students, ensuring just as many people from Washington still will be able to attend UW. The number of out-of-state freshmen will climb over five years from the current 1,300 to about 2,000.

Resident students pay $7,700 for tuition, while out-of-state students pay $24,400. And out-of-state students don't qualify for state financial aid, freeing up that money for local students.

"The historical pact has been changed," Ballinger said. "The state, whether it had a choice or not, has basically made a decision to eat its seed corn. It's left it up to the university to figure it out."

Ballinger says he sees positives: The campus will become more residential and expose local students to different ideas and ways of life. The downside, he said, is that the campus — already jampacked — is trying to grow its way out of a problem.

Any additional students will have to be from out of state, Ballinger says. "If we grow our resident students, we just dig the financial hole even deeper."

New budgeting

On July 1, UW will begin implementing a new budgeting system. In the past, tuition and state money have been pooled to pay for instruction. Administrators say it's been hard to figure out how much each program really costs.

Under the new "activity-based budgeting" system, which is modeled on systems used by Harvard University and the University of Michigan, a student's tuition money will go directly to the student's college to pay for instruction. State money will go toward general administration.

Over time, colleges will get rewarded for graduating their students and penalized when fewer people take their courses.

"It's a more businesslike model," says Jenny, the UW vice provost for planning and budgeting.

By exposing the true cost of courses, the new budgeting system is sure to raise debate over which courses are too expensive to keep. And if UW gains control over tuition-setting authority from the Legislature, something it has sought with increasing urgency, it could start charging higher tuition rates for more expensive courses.

The idea of such "differential tuition" remains controversial. Cauce, the dean of the College of Arts & Sciences, is in favor of such a model. She says more-expensive subjects — for instance, engineering and computer science — typically lead to higher-paying jobs.

She says there are exceptions, like nursing and music. And any change would have to be accompanied with appropriate financial support for poorer students.

"You have to be careful about it," she says. "You don't want a student deciding to be a psychology major instead of doing mechanical engineering just because psychology costs less."

Inventing money

UW also harbors entrepreneurial hopes. Consider that the University of Wisconsin, for instance, has earned itself about a billion dollars over the years by bringing inventions — notably rat poison and a method for adding vitamin D to milk — from the lab to the store. Similar stories abound: Emory and its AIDS drugs. The University of Florida and Gatorade. Stanford and Google.

UW has yet to hit a home run with its intellectual property, but it hopes to. Eighteen months ago, it hired high-tech veteran Linden Rhoads to revamp the Tech Transfer office. She renamed it the UW Center for Commercialization. Rhoads says her primary goal is to make UW an attractive place for researchers to come and do business, believing the money will follow.

There's also the 11-acre swath of downtown Seattle the UW owns, which includes Rainier Tower and Fairmont Olympic Hotel. That property is worth $500 million, but it is returning to the university just $8 million a year. The UW hopes to dramatically improve its return when it regains control of the land after a 60-year lease expires in 2014.

Jenny says the UW is looking for ways to save money and to increase revenue in every budget item, no matter how arcane.

It's a job the next UW president will have no choice but to continue.

Nick Perry: 206-515-5639 or nperry@seattletimes.com

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