The release of a state audit that revealed the University of Wisconsin System held a balance of over $1 billion at the end of June 2012 has prompted discussion among state legislators, system administrators and campus leaders over the role of tuition dollars and cash reserves.
According to an April 18 memo UW System administrators sent to the state’s Legislative Fiscal Bureau, the recommendation for a reserve fund is 25 percent of the system’s gross spending. Despite what appears to be a large surplus, the UW System’s total reserve ratio is approximately 17 percent, based on the UW System’s reported $6 billion operating budget.
Also according to the memo, over $420 million of the UW System’s $1 billion surplus came from UW-Madison’s cash reserve, and of that total $100 million came directly from UW-Madison students’ tuition.
After the announcement of the surplus April 19, student and faculty leaders reacted with disappointment and frustration toward the system’s repeated tuition increases over the past six years despite its excess funds.
Sara Goldrick-Rab, associate professor of educational policy studies and sociology at UW-Madison, said in an email although it is not uncommon for large university systems to keep “rainy-day funds” to maintain long-term financial security, it is an issue with the UW System’s surplus that tuition dollars fund it instead of state appropriations.
Goldrick-Rab said UW System officials should have been more transparent in communicating to Wisconsin families the state’s refusal to support the system’s rainy day fund, which instead has depended on tuition dollars.
“By avoiding this ... System leaders missed a critical opportunity to engage the Legislature and public in a discussion about the public/private balance of funding for higher education,” Goldrick-Rab said in the email.
In the memo, UW System administrators emphasized the System needs a reserve fund for special circumstances, such as covering unanticipated expenses, which could include enrollment shortages and excesses as well as providing a safety net for research projects if funding needs were not met.
Beth Huang, vice president of United Council of UW Students, a statewide student lobbying organization, emphasized the university should use excess funds to increase class options, decrease tuition or increase pay for university employees.
“Faculty and staff have been talking about how they haven’t gotten a pay raise for around six years,” Huang said. “To retain faculty and staff members, it’s important they receive some kind of incentive to stay here.”
In addition to a call for a two-year tuition freeze Friday by Gov. Scott Walker and a number of state legislators, other lawmakers also recommended a closer look at Walker’s proposed budget for the UW System, which includes $180 million in new investments.
In a statement Monday, state Sen. Rick Gudex, R- Fond du Lac, said the budget should be revisited.
“The added flexibility may not be the correct direction for the UW System” Gudex said. “More audits and tighter oversight will need to be part of the upcoming discussion.”
The Joint Finance Committee is set to take up the state biennial budget within the week.
