Dustin Quantrell applies insulation to make cooling and heating systems more efficient at the Center for Energy Conservation and Advanced Manufacturing at MATC???s Oak Creek campus. Technical college officials say they expect a financial crunch triggered by state budget proposals. Credit: Gary Porter

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State funding for Wisconsin's 16 technical colleges would drop to a dollar level not seen since the late 1980s, despite enrollment growth of 40% over the last decade, if cuts in Gov. Scott Walker's proposed budget ultimately gain approval, college officials said last week.

That could lead to longer waiting lists for classes, more limited access to courses and programs, and ultimately, challenges for Wisconsin manufacturers, health care providers and other employers looking for skilled workers as the state's economy struggles to recover, officials said.

"We had to turn away a lot of students last year because we had filled classes," said Lee Rasch, president of Western Technical College in La Crosse. "We easily turned away a couple thousand students. The jobs are here, but we don't have the funding to increase capacity. If the goal (stated by Walker) is to create 250,000 jobs, these are the kinds of jobs we need."

Collectively, the technical colleges enroll more than 400,000 students. The technical colleges are widely considered among the state's primary engines driving economic development, as Wisconsin has a greater proportion of middle-level jobs than the rest of the nation - jobs predicted to see a higher-than-average rate of growth in the next decade.

Last year, Western saw a 9.5% enrollment increase, but the budget for operating expenses went up by less than one-half percent, Rasch said.

"We're really on a very thin margin now," he said, noting that Gunderson Lutheran Medical Center in La Crosse and the Mayo Clinic about 60 miles away in Rochester, Minn., have created an especially strong demand for training at Western.

Walker's budget proposal would cut $4.5 million in state aid to the college over two years and create a 4.5% funding gap, Rasch said.

Western is limited in its ability to make up for lost state aid because it already has set its property tax rate at the maximum amount allowed by law.

Technical college officials said they expected Walker's state aid cuts but did not expect him to propose a freeze on property tax revenue.

Raising tuition is not an attractive solution. Technical colleges are considered affordable two-year options for middle-class Wisconsinites and those less well-off. That means technical colleges would be forced to slash operating expenses.

Cut in aid at MATC

Like Western, Milwaukee Area Technical College already sets the maximum property tax rate allowed.

The Walker budget proposal would cut an estimated $7.5 million in state aid for the college over the next two years, MATC President Michael Burke said Friday.

MATC already was projecting a $23.4 million revenue shortfall next year, though Burke said officials had come up with several "budget assumptions" to cut operating expenses.

Asked whether MATC could be forced to lay off workers, the MATC president said: "That's hard to predict."

The MATC Board two weeks ago approved a new contract for full-time faculty, guaranteeing no layoffs.

MATC has been able to expand program offerings by capturing federal dollars, Burke said.

"We were able this year through very aggressive efforts in grant writing to bring in about $9 million" for new programs, including one for health information technology, managing digital data and records of patients, he said. "We'll continue to try to find other revenue streams."

Government watchdog groups in recent years have warned that MATC's heavy dependence on property tax revenue, in light of reduced state aid, could present critical funding challenges in the future, especially with property values declining because of the recession.

Property values in Milwaukee dropped 4.5% last year, and MATC expects a 2% decrease this year, which would amount to $2.2 million more in lost tax revenue, Burke said.

Property tax support represents about 60% of MATC's operating revenue, while tuition is 17% and state aid is 14%. Federal funding, fees and miscellaneous revenue make up the rest.

State aid has dropped from 33% to 14% since the mid-1980s. Tuition increases at MATC have averaged 5.6% per year over the last 10 years - nearly 40% from 2005 to 2011 alone.

MATC has taken on increased importance in light of the economic downturn and communitywide efforts to increase the number of college-degree holders in Milwaukee. About three-fourths of MATC graduates take jobs in the Milwaukee area, and MATC programs are designed to suit the needs of the local job market.

Salary costs

Salaries and fringe benefits make up the bulk of technical college budgets, and MATC has taken heat for its high salaries.

Among all Wisconsin public colleges and universities, the average faculty salary in 2008 at MATC ($86,687) was second only to UW-Madison ($90,149) and was 26% higher than the next closest institution, UW-Milwaukee ($68,575), according to an analysis last fall by the Public Policy Forum, a government watchdog group.

A Journal Sentinel data analysis last fall found that average total pay was just over $95,000 for full-time MATC instructors, including pay for administrative duties and for teaching courses beyond the nine-month contract requirement. Almost 40% of the full-time faculty earned more than $100,000 in total pay.

Fringe benefits and salary increases made up about three-fourths of all spending growth at MATC in a five-year period reviewed by the Public Policy Forum. Health care spending rose 35% from 2005 to 2008, more than twice as fast as that at Milwaukee County and the City of Milwaukee governments, the report says.

"Whether one thinks MATC's wages and benefits are too high is not the point," Rob Henken, president of the Public Policy Forum, said last week. "The point is that MATC now finds itself needing to make significant spending cuts in response to reductions in state aid and the realities of limited property tax growth."

The MATC Board last month called a special meeting to approve a new three-year contract for teachers and paraprofessionals, whose contract was not set to expire until June 30.

Contract negotiations began in October, and board members said they thought that health care plan concessions, a two-year wage freeze and a freeze on 19 vacant full-time teaching positions were adequate concessions from the union.

The board is set to meet in special session at 4 p.m. Monday to consider a new three-year contract for MATC's service workers.

Details of that contract have not been released, though union leaders say they offered to pay higher health insurance premiums and contribute to their pensions.

Full-time faculty will not make pension payments, and will pay health care premiums based on their total pay - a maximum 9% of premium costs. Walker's budget proposal calls for state workers to pay 12%.

MATC and Western aren't the only technical colleges that cannot look to property taxes to replace the proposed $71.6 million reduction in state aid systemwide.

Southwest Technical College in Fennimore, in southwestern Wisconsin, also has set the maximum property tax rate allowed, said Morna Foy, spokeswoman for the Wisconsin Technical College System. "Several others are close to the cap," she said.

"The bigger concern is the reason we have a mix of funding - to ensure equitable access to technical colleges," Foy said.

If property values start to recover within the next two years, those colleges would be required under Walker's proposed budget to cut their levy rate so property tax revenue would remain the same.

Drop in property values

Wisconsin's property values declined by an average of 3.1% in 2010; values are expected to stagnate or further decline in 2011.

Technical colleges will be hamstrung at a time when the need for their services has never been greater, said Dan Clancy, president of the Wisconsin Technical College System.

"The majority of new jobs created in Wisconsin in the next decade will require the skills earned through technical college degree and certificate programs," Clancy said. "The ability of state employers to sustain new growth is dependent on their access to a skilled workforce. Thousands of displaced Wisconsin workers need retraining to succeed in the jobs being created in emerging and rapidly changing industries."

Walker recommends preserving the existing level of financial aid funding for technical college students. That move recognizes technical college graduates "are critical to building a strong future for our state," Clancy said.

MATC wasn't the only technical college to give its teachers a new contract before Walker's proposed budget cuts could go to a legislative vote.

Western on Feb. 28 gave its faculty a new one-year contract effective immediately, two weeks after Walker announced his budget-repair bill for the current fiscal year. The new contract covers about 400 teachers and other staff, who agreed to make 5.8% contributions to their state pension and pay higher health insurance premiums "if required by law."

The contract calls for a 1.64% annual salary increase.

Rasch, the president of Western, said a new one-year contract was necessary to provide stability and give the college time to adjust to whatever action the Legislature takes.