Reaction to last week’s revelation that the University of Wisconsin System has built a $648 million reserve fund has run the gamut, from hyper-critical to shrugs of indifference.
While some Republican lawmakers have been up in arms, others say the idea of a public university carrying a surplus from year to year is nothing new.
“The UW System is in the range of other large systems in terms of its reserve,” said UW-Baraboo/Sauk County Dean Tom Pleger. “I think from a business perspective, it’s good to have reserves because it helps you respond to volatility.”
The state’s non-partisan Legislative Fiscal Bureau released an audit last week that showed cash balances from hundreds of accounts throughout the system’s campuses have left UW with $648 million in reserves from tuition hikes on students.
During questioning by lawmakers last week, UW System President Kevin Reilly said that’s on par with, or even less than, the surpluses of many similar large, public university systems nationwide.
He also said UW has plans to use $441 million of the surplus, and the remaining $207 million is enough to cover three months of operations. The reserve amounts to just more than 25 percent of the system’s unrestricted budget.
Locally, UW-BSC’s portion of the surplus is about $240,000.
That’s roughly 6 percent of the two-year campus’ annual budget, Pleger said.
The savings allow the university to supplement its food program costs and make emergency purchases when needs arise throughout the year, among other things. Pleger said a greater concern for him is ensuring that future funding is sufficient to retain quality faculty.
Some staff make less than they did six years ago due to furloughs, and those that haven’t received promotions have not had a raise in four years, he said.
“But I do agree there needs to be good dialogue between the UW System and the Legislature so people understand what’s a good reserve for the system to have,” Pleger said.
Republican lawmakers had harsh criticism for Reilly during a budget committee hearing this week, calling the surplus revelation “unjustifiable” and “appalling.”
Gov. Scott Walker asked the Legislature to reduce a funding increase allocated in his proposed budget from 2 percent to zero.
On Thursday, leaders of the Legislature’s Joint Audit Committee ordered an inquiry into the matter by state Auditor Joe Chrisman.
“I don’t know if it’s egregious,” said Rep. Ed Brooks, R-Reedsburg. “I can certainly understand having a surplus in some circumstances.”
Brooks said more information is needed to determine whether the balance is appropriate. But he said much of the frustration comes from the fact that the surplus has nearly doubled since 2009, and the UW System has hiked tuition by the maximum 5.5 percent in each of the last six years.
Brooks said UW has a credibility issue it must deal with. And future discussions should focus on keeping tuition affordable for middle class students.
Reilly has called for a 2 percent increase in each of the next two years, while Republican lawmakers have requested that it remain frozen.
But it’s not only Republicans that are calling for the freeze.
Rep. Fred Clark, D-Sauk City, said he supports keeping tuition at current levels over the next two years.
However, Clark said, lawmakers’ criticism of UW leaders has been overblown. The system must keep a reserve, especially in light of the uncertainties it faces — such as declining funding from the state and an anticipated decrease in enrollment.
“I think there’s been a lot of overreaction,” he said. “The idea that it’s somehow wrong to have cash reserves is kind of a strange notion. We want the state to have a rainy day fund. You want your bank to have cash reserves. Why we want the UW System to be broke is beyond me.”
Clark also said the hyped-up rhetoric among some lawmakers paints a bad picture of the university system in the eyes of the public at a time when state leaders should be trying to boost out-of-state enrollment.
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