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College of Letters and Science Faculty Document No. 641
December 5, 2002

Recommendation of the Course and Curriculum commitee to Approve A Request for Authorization to Implement a Major in Actuarial Science


Recommendation:

That the L&S Faculty recommend to the Dean approval of the Request for Authorization to Implement a Major in Actuarial Sciences and, upon implementation of the new major that the actuarial science option of the mathematics major be eliminated.

Rationale:

See Section 2.3 and III of the following request.

Major in Actuarial Science

  1. Program Identfication

    1.1   Title: Bachelor of Arts in Actuarial Science
    1.2 Department: Department of Mathematical Sciences
    1.3 College: College of Letters and Sciences
    1.4 Timetable for Initiation: Fall 2003.
    1.5 Distance Education: There are no plans at the present time to develop this program for distance education.
  2. Context

    2.1   History of Program: For many years the Department of Mathematical Sciences has offered a sub-major designed to prepare students for several in a series of examinations administered by The Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS). Actuaries advance in their careers by passing these exams, and in fact nearly all actuarial jobs require applicants to have passed at least one or two. Until the year 2000 the first few examinations were based solely on mathematics and statistics, and a major in mathematics was sufficient to prepare students to pass the early examinations needed to gain employment. However, the examination system changed in 2000. In addition to preparation in calculus, probability theory and statistics, students now need preparation in finance and economics as well.

    In anticipation of these changes, the Department redesigned the sub-major in Actuarial Science in the fall of 1999, replacing nine credits of junior/senior level course work in mathematics and statistics with three credits of economics, 3 credits of finance, and 3 additional credits from mathematics, finance, or economics. The addition of the junior/senior level course work outside of mathematics requires students to take freshman/sophomore level course work outside of mathematics and statistics as well. The purpose of the proposed plan is to make the sub-major an independent major, administered by the Department.

    There are two reasons for pursuing this plan. First, the redesigned sub-major no longer fits neatly within the definition of a mathematics major in the usual sense. Second, the Department has found that while there is significant demand for the program, it lacks visibility due to its status as a sub-major.
    2.2   Instructional Setting of Program: This program will only utilize existing courses at UWM. Students will take courses offered by the School of Business Administration, the Economics Department, the Computer Science Department, and the Mathematical Sciences Department in order to fulfill the degree requirements. No comparable program exists at UWM outside of the existing sub-major in Actuarial Science currently administered by the Mathematical Sciences Department.
    2.3   Relation to Mission Statement and Academic Plan: The insurance industry is well represented in Wisconsin, particularly in Milwaukee. UWM graduates already are highly regarded in the industry, and the Department has had considerable success in the past in placing its students in both permanent positions (see Sec. 3.3) and internships. UWM actuarial graduates are already well regarded in industry. To maintain its successful program the Department has to adapt it to meet the changing requirements of the profession, and a separate major is the best way to go about doing this. It will make the program more visible to the public and make it easier for employers to verify that UWM's actuarial students have the preparation they are looking for in future employees. This program will foster cooperation between UWM and the business community, a tangible way for the Department to contribute to the Milwaukee Idea.
    2.4   Program Array History: Information will be provided by System Administration.
  3. Need

    3.1   Comparable Programs in Wisconsin: According to data from the Society of Actuaries (http://www.soa.org/academic/schoollist.html) there are only two actuarial programs designated "Undergraduate - Advanced (Curriculum covers all topics on first two CAS/SOA exams plus 12 semester hours of topics on third and fourth)" in Wisconsin. One is housed in the School of Business at UW-Madison and the other is the sub-major in the Mathematical Sciences Department at UWM.

    There are also programs designated "Undergraduate - Introductory (Curriculum covers all topics on the first CAS/SOA exam, and includes intro. math of finance and micro/macro economics courses)" at UW Eau Claire, -Platteville, -Superior and -Whitewater. Finally, students at UW-Madison can emphasize actuarial science by choosing Option II within the mathematics major. Few actuarial students choose this path, which has not been given a Society of Actuaries designation. In any case, these programs are not comparable in scope to the proposed major, and this proposal does not discuss them further. However, comparisons with the program at UW-Madison's School of Business are in order.

    Located in the Actuarial Science, Risk Management and Insurance Department, the program at UW Madison is large. According to data supplied to the Society of Actuaries, the program has graduated an average of 25 undergraduate majors per year over the last three years. As students need to have junior standing to be admitted to the program, this implies a total of 50 to 75 students in the program at any one time. The program emphasizes the business aspects of actuarial science. Students take the required mathematics and statistics courses from the Mathematics and the Statistics Departments.

    Like the current UWM sub-major, the proposed major will be housed in the Department of Mathematical Sciences and, thus, will be a liberal arts degree. Among 37 mathematics majors, there currently are 16 students enrolled in the actuarial science sub-major. Since Fall 1999 the sub-major has graduated about 3-5 students per year. The Department believes these numbers would grow significantly if the sub-major became an independent major, due to its more visible profile.
    3.2   Comparable Programs Outside Wisconsin: There are only 65 comparable programs in all of North America. Those in the Midwest include:
    • Ball State University
    • Bradley University
    • DePaul University
    • Drake University
    • University of Evansville
    • University of Illinois at Urbana-Champaign
    • Illinois State University
    • University of Iowa
    • University of Michigan
    • University of Minnesota
    • Purdue University
    • Southern Illinois University-Edwardsville
    All offer roughly the same curriculum as that offered currently at UW-Milwaukee. The average number of graduates annually is about 13 per institution, with a range of 2 (Bradley University) to 30 (University of Illinois).

    It should be noted that Wisconsin students may take advantage of reciprocity agreements to study Actuarial Science at the University of Minnesota at in-state tuition rates. However, it is not known how many Wisconsin students do so. The Minnesota program allows students to pursue the degree either through the Mathematics Department or through the School of Business. This gives Wisconsin students a way to pursue actuarial training through a liberal arts major. The proposed program thus offers such students an in-state alternative.
    3.3   Regional, State and National Needs: Judging from the number of requests the Department receives for graduates, the employment opportunities for UWM actuarial graduates seem quite good. In Fall 2001 alone, the Department had five inquiries for graduates from the present program, even though the program is virtually invisible to the outside.

    All of the most recent graduates of the current program are employed as actuaries. At least four recent alumni are employed at Northwest Mutual Life, at least two at William Mercer, and at least two at Milliman (all of these are at local offices). Firms with operations in Milwaukee have offered to help financially in hopes of increasing the number of actuarial graduates. In particular, Northwestern Mutual has established a scholarship of up to $5,000 for UWM students specializing in actuarial science, and Towers-Perrin (a consulting firm) has offered to explore arrangements by which they would pay students' examination fees.

    In November 2002 a search of the Society of Actuaries Job Link (http://secure.matrixgroup.net/soa.org/jobs/jobs searchResults.cfm) showed 71 openings posted nationally in the previous 60 days.

    According to the Bureau of Labor Statistics (http://www.bls.gov/oco/ocos041.pdf), "actuaries held about 14,000 jobs in 2000. Over seven-tenths of the actuaries who were wage and salary workers were employed in the insurance industry." The BLS projects continued growth in actuarial employment through 2010. "The fastest employment growth is expected in the computer and data processing services, health services, and management and actuarial consulting industries." This growth will come from "changes in managed healthcare," the "growing attention" to "healthcare issues and Social Security reform," environmental and international risk management," and changes in the financial services industry.
    3.4   Student Demand-Future Enrollment: At the Fall 2002 UWM Open House there were about 20 inquiries about the program. (To put this in perspective, there were more inquiries about the actuarial program than about all other majors currently housed in the Department combined). The Department's last three informational meetings, held annually, have each attracted over a dozen students, the first two each yielding about 6 new majors.

    Student enrollment in MthStat 361, a keystone course for the sub-major and for the proposed major, has increased dramatically in recent years, from 17 in Fall 1998 to 31 in Fall 2001 and 38 currently (Fall 2002). The Department believes that in five years' time it can achieve half the enrollment of UW-Madison I actuarial science, on the order of 30 students, with 10-12 graduates per year, if the new major is approved.
    3.5   Collaborative or Alternative Program Exploration: The program already exists as a sub-major in the mathematics major. As outlined previously, this does not allow the program adequately to meet its goals.
    3.6   On-campus program: This program will be offered on-campus. There are no plans at the present time to develop it for distance education.
  4. Program Description and Evaluation

    4.1   Objectives: The primary objective of the current sub-major and of the proposed major is to prepare students for careers as actuaries in the context of a liberal arts program. To accomplish this goal, two things are necessary. First, students must gain a solid foundation in mathematics, statistics and economics so that they will be prepared for the years of self-study needed for advancement in the field. Secondly, students must be well prepared to meet the challenge of passing at least the first two actuarial examinations. (A description of the Course 1 and Course 2 examinations may be found at http://www.soa.org/eande/examinations.html)
    4.2   Curriculum: The proposed course of study will lead to a Bachelor of Arts degree from the College of Letters and Sciences. As such, students will be required to meet all existing College requirements for earning such a degree. No new courses are proposed. Required courses are listed below, followed by a list of recommended courses. Finally, we list a proposed schedule showing how a student can be expected to meet these requirements in eight semesters, not including Summer or UWinteriM.

    Students who intend to complete the program in four years should have a UWM mathematics placement level of B (precalculus) or better. Roughly 30% of entering UWM freshman have sufficient preparation to do this (as measured by the UW System Mathematics Placement Examination). Many students with a lower placement level can still complete the program in four years by taking summer courses.

    Upon admission to the University a student must consult with a Department of Mathematical Sciences advisor to plan a course of study that will allow the student to graduate in a timely manner, as there are many dependencies among the required courses, and the program is very structured. There is a minimum of 34 credits of preparatory course work and a minimum of 28 credit hours of advanced course work.
    Preparatory Curriculum
    In addition to the preparatory curriculum required of all mathematics majors, the following courses are required:
    • At least 6 credits to be completed from among
      - Business Administration 230: Introduction to Information Systems. 3 cr.
      - Computer Science 151: Introduction to Scientific Computing. 3 cr.
      - Computer Science 152: Computer Programming I. 4 cr.
    • One of
      - Mathematical Statistics 215: Elementary Statistical Analysis. 3 cr.
      - Economics 210: Economic Statistics. 3 cr.
      - Business Administration 210: Introduction to Management Statistics. 3 cr.
    • Business Administration 201: Understanding and Using Financial Statements. 3 cr
    • Economics 103: Principles of Microeconomics. 3 cr.
    • Economics 104: Principles of Macroeconomics. 3 cr.

    Advanced Coursework
    The following course work is required:
    • Mathematics 311: Theory of Interest. 3 cr.
    • Mathematics 571: Introduction to Probability Models. 3 cr.
    • Mathematical Statistics 361: Introduction to Mathematical Statistics I. 3 cr.
    • Mathematical Statistics 362: Introduction to Mathematical Statistics II. 3 cr.
    • Economics 301: Intermediate Price Theory. 3 cr.
    • Economics 302: Intermediate Income Theory. 3 cr.
    • Mathematics 599: Capstone Experience. 1 cr.
    • At least one of
      - Business Administration 350: Principles of Finance. 3cr.
      - Business Administration 450: Intermediate Finance. 3cr.
    • One of the following courses:
      - Mathematical Statistics 563: Regression Analysis. 3 cr.
      - Mathematical Statistics 564: Time Series Analysis. 3 cr.
      - Mathematical Statistics 565: Non-parametric Statistics. 3 cr.
    • At least 3 credits chosen from the following courses, excluding courses chosen to satisfy the preceding requirements:
      - Mathematical Statistics 461: Data Analysis and Graphing Using SAS-I. 2 cr.
      - Mathematical Statistics 462: Data Analysis and Graphing Using SAS-II. 2 cr.
      - Mathematical Statistics 489: Internship in Mathematical Statistics, Upper Division 1-6 cr.
      - Mathematical Statistics 563: Regression Analysis. 3 cr.
      - Mathematical Statistics 564: Time Series Analysis. 3 cr.
      - Mathematical Statistics 565: Non-parametric Statistics. 3 cr.

    Potential Course of Study
    The following is a possible progression of courses, assuming students start in Math 116 and 117 in a fall semester. (These are appropriate first courses in mathematics for a student who meets UWM's entrance requirement of three years of high school mathematics. As mentioned earlier, roughly 30 percent of entering freshman meet or exceed this level of mathematics preparation). The program's required courses total 60 to 67 credits, depending on the student's initial mathematics background. Twelve to 16 of these credits are not in Letters and Science. Twenty-five or 26 credits of Letters and Sciences course work at the 300 level or above are required.

    In order to meet the Letters and Science requirement of 36 credit hours in upper division course work, students will be advised to satisfy as many Letters and Science and GER (UWM General Education) requirements as possible by taking upper division courses. In the sample course of study below, an (R) indicates the course is required, and an (S) indicates it is suggested. All courses are 3 credits, except as noted.

    The sample program specifies 110 credits of course work out of the 120 needed to graduate, and 37 hours of Letters and Science course work at the level 300 or higher. A student who takes Math 231 the first semester instead of Math 116 and Math 117 would complete Math 234 one semester earlier and would have 105 credits instead of 110. A student who takes Math 221 (Honors Calculus) the first semester instead of Math 116 and Math 117 would complete Math 234 two semesters earlier and would have 103 credits instead of 110.

    Fall I: 14 credits
    • Math 116 College Algebra (R)
    • Math 117 Trigonometry (R)
    • Econ 103 Principles of Microeconomics (R)
    • Commun 103 Public Speaking (S)
    • Econ 248 Economics of Discrimination (S)

    Spring I: 16 credits
    • Math 231 Calculus and Analytic Geometry (R)
    • Econ 104 Principles of Macroeconomics (R)
    • Commun 105 Business and Professional Communication (S)
    • MthStat 215 Elementary Statistical Analysis (R)
    • English 205 Business Writing (S)

    Fall II: 14 credits
    • Math 232 Calculus and Analytic Geometry (R)
    • Bus Adm 201 Understanding and Using Financial Statements (R)
    • Philos 211 Elementary Logic (S)
    • Bus Adm 230 Introduction to Information Systems (R)

    Spring II: 13 credits
    • Math 233 Calculus and Analytic Geometry (R)
    • Math 311 Theory of Interest (R)
    • Philos 241 Introductory Ethics (S)
    • Math 341 Seminar: Introduction to the Language and Practice of Mathematics (S)

    Fall III: 15 credits
    • Econ 351 Introduction to International Economic Relations (S)
    • Math 234 Linear Algebra and Differential Equations (R)
    • MthStat 361 Introduction to Mathematical Statistics I (R)
    • Physics 209 Physics I (S)
    • Physics 214 Laboratory for Physics I (S)

    Spring III: 11 credits
    • Math 571 Introduction to Probability Models (R)
    • MthStat 362 Introduction to Mathematical Statistics II (R)
    • Physics 210 Physics II (S)
    • Physics 215 Laboratory for Physics II (S)

    Fall IV: 13 credits
    • Econ 301 Intermediate Microeconomics (R)
    • Econ 455 International Finance (S)
    • MthStat 564 Time Series Analysis (R)

    Spring IV: 14 credits
    • Bus Adm 350 Finance (R)
    • CompSci 152 Computer Programming (R)
    • Econ 302 Intermediate Macroeconomics (R)
    • MthStat 563 Regression Analysis (R)
    • Math 599 Capstone Experience (R)

    4.3   Interrelationship with Other Curricula: Students who complete the proposed major will be 3 credit hours short of a minor in Economics and 12 credit hours short of a major. They automatically will complete the requirements for a minor in Mathematics, and they will be 12 credit hours short of a major. Thus it would be a simple matter for students to fulfill a double-major in Actuarial Science and Mathematics, and a triple-major that also includes Economics is within reason.

    The overall benefit of the proposed major to the University will be to attract more students with superior mathematics preparation. There is also a direct benefit to the Economics Department as there will be an increased number of minors, as evidenced by the number of students in the current sub-major who have chosen to minor in Economics.
    4.4   Method of Assessment or Evaluation: Since this is a pre-professional degree, the most important measure of its success is its record of placing students into actuarial and related positions. Students' academic performance can be measured not only by their grades, but also by their performance on the Course I and Course II Actuarial Examinations. Clearly any disparity between grades in some technical courses and performance on these examinations would indicate problems in the program.

    It would also be of interest to compare pass rates of UWM students with those of the general population or those of comparable institutions. The Casualty Actuarial Society and the Society of Actuaries maintain a self-reported database on programs at http://www.soa.org/academic/actcol.html, where one can view various measures of program effectiveness.
    4.5   Accreditation Requirement: There is no formal accreditation of actuarial programs at this time. However, the actuarial examinations test students' knowledge in the relevant areas, and without passing these examinations, students' career prospects are dim.
    4.6   Strengths or Unique Features: There are two major differences between the proposed major and those at UW-Madison. First, UWM's major will be housed in the Mathematical Sciences Department and, therefore, in the College of Letters and Science, rather than the School of Business Administration. It requires fewer mathematics courses than a mathematics major. Thus the program will appeal to liberal arts students, without constraining them with a large set of mathematics requirements. The second difference is that students may be admitted to the UWM program as freshmen, while the program in UW-Madison's School of Business (the main venue for Actuarial Science there) does not formally admit students until they have junior standing.
    4.7   Career Advising: The Department is already providing career advising to its actuarial students. Advisors include Professor Brazauskas (see Item 5.1), a former actuary. In addition, the Actuarial Club periodically invites actuaries and recruiters to talk to students about an actuarial career.
    4.8   Outreach: At this time, no formal outreach program is planned. Note that since all of the courses for the program already exist, outreach activities are already possible. For example, the Department already has students attending some of these courses as non-degree candidates.
    4.9   Integration of Technology: Computing courses are required for this program. Statistics and probability courses in Mathematical Sciences currently incorporate computer technology for problem solving, and several courses have on-line lecture notes and other materials.
    4.10   Collaboration and Distance Learning: There are no plans at the present time to develop this program for distance education or to collaborate with other UW System institutions.
    4.11   Access for Individuals with Disabilities: As with all programs at UWM, the proposed major will provide the fullest possible access to students with disabilities.
  5. Personnel

    5.1   Faculty Directly Participating in the Program:
    • Associate Professor Jay Beder
    • Assistant Professor Vytaras Brazauskas
    • Professor Jugal Ghorai
    • Associate Professor Eric Key
    • Professor Richard Stockbridge
    • Assistant Professor Ziyu Zheng
    Abbreviated vitae are appended at the end of this report.
    5.2   Advisory Faculty: There are no advisory faculty members at this time. The Department has consulted with Professor W. Holahan, Chair of the Economics Department, on the suitability of the required economics courses for this program.
    5.3   Additional Faculty Requirements: No new faculty members are required in order to initiate the program.
    5.4   Academic Staff: The Mathematical Sciences Department has one academic staff person, Steven Schwengels, who usually teaches Math 311, a course required for this program. No new academic staff members are required in order to initiate the program.
    5.5   Classified Staff: No classified staff members are required in order to initiate the program.
    5.6   Training and Support (Distance Education): Not applicable. There are no plans at the present time to develop this program for distance education.
  6. Academic Support Services

    6.1   Library Resources: No additional library resources are required.
    6.2   Additional Support Resources: None are envisioned.
  7. Facilities-Equipment

    7.1   Capital Resources: Existing facilities and capital equipment are adequate for the proposed program, as evidenced by the current sub-major.
    7.2   Capital Budget Needs: There are no capital budget needs for this program. No additional facilities are required. If the creation of a separate major is successful in attracting qualified students and industry support, then the potential exists for attracting funding for an endowed faculty position in Actuarial Science.
    7.3   Clinical Facilities: There is no clinical component to this program.
    7.4   Security for Distance Education: Not applicable: There are no plans at the present time to develop this program for distance education.
  8. Finance

    8.1   Operating Budget Requirements: There is no funding requirement beyond the (inadequate) funding currently available to Mathematical Sciences Department. The program is already in existence.
    8.2   Operating Budget: S&E Requirements: See 8.1.
    8.3   Operating Budget Reallocation: See 8.1.
    8.4   Extramural Research Support: Most extramural research funding in the mathematical sciences comes from the federal government, and thus the proposed major will not significantly alter the situation for the Departmental faculty. However, the actuarial industry does provide some funding on a contractual basis, and the presence of a successful Actuarial Science major is expected to improve the chances for obtaining such funding. We note that Professor Brazauskas has already received such support from the Actuarial Education and Research Fund (1 February 2000 to 31 May 2001).
    8.5   Costing Methodology: Not applicable: There are no plans at the present time to develop this program for distance education or to offer it with service-based pricing.
    8.6   Commitment to Maintain Program (Distance Education): Not applicable: There are no plans at the present time to develop this program for distance education or to offer it with service-based pricing.


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