Controversy over the University of Wisconsin's "Surplus" & Ongoing Tuition Increases

Karen Herzog & Patrick Marley

Gov. Scott Walker and his fellow Republicans in the Legislature called for freezing tuition for two years Friday after a state review revealed that the University of Wisconsin System had cash reserves of nearly $650 million at the end of the last fiscal year.

While the UW System said the amount of uncommitted cash was much less than that, the disclosure infuriated Republican lawmakers just as they begin deliberations on the next two-year budget.

Republicans questioned whether Kevin Reilly should remain as president of the UW System, and Assembly Speaker Robin Vos (R-Rochester) said he was unsure the system should get any of the $181 million increase in taxpayer funds Walker had previously recommended, including $20 million for new initiatives.

Reilly could not be reached for comment, nor could UW System Regents President Brent Smith.

Vos said it was too early to say whether Reilly should remain as the head of the UW System, but said he saw a pattern of financial mismanagement during Reilly's tenure.

"I have serious concerns about whether the credibility of the UW System can recover with the current leadership in place," Vos said.

In the past, Vos has supported giving UW-Madison more flexibility, but that has changed because of Friday's disclosure, he said.

"They have now pushed me entirely in the opposite direction," Voss said of UW System leaders.

Many links:

• Gov. Scott Walker, state leaders call for tuition freeze following news of UW System surplus by CHeyenne Langkamp

  Many state legislators reacted with outrage to Friday morning's announcement the University of Wisconsin System currently holds over $1 billion in surplus in its reserves, prompting some to advocate for a tuition freeze over the next two years.

  According to a document from Legislative Fiscal Bureau Director Bob Lang sent to members of the Joint Committee on Finance, the UW System has accrued $1,045,200,572 in its program revenue reserves from the 2011-'13 funding cycle.

  The Legislative Fiscal Bureau and Legislative Audit Bureau discovered the surplus through an audit that began after information regarding $33 million in Human Resources overpayments surfaced in February.

• Dan Simmons:

  The System has always maintained a cash balance, Giroux added, and its finances have always been public as the Legislative Audit Bureau audits it yearly. The cash balances have grown in recent years because of rapid enrollment growth and the System's increased reliance on non-state revenues, he said, calling them "an essential safety net."

  System leaders told the fiscal bureau that about $441 million of the reserve was allocated for future projects and expenses. With that spending included, it left a $207 million balance from the end of 2012. Vos said lawmakers should have been notified of the surplus in recent times of tight state budgets and maximum tuition increases for System students.

  Gov. Scott Walker and Rep. Steve Nass, R-Whitewater, chairman of the Assembly's committee on higher education, also criticized the System over the reported surplus.

  "At a minimum, on behalf of students and their families, I am asking legislative leaders to freeze tuition increases for two years for the entire UW System during their deliberations on the budget," Walker said in a statement.

  The news about the surplus broke shortly after System President Kevin Reilly released details of his budget proposals, which include tuition increases of 2 percent each of the next two years and a $30 million boost in financial aid awards.

• UW-Madison Student Fees Could Use a Review.
• Republicans learn of UW System surplus, call for tuition freeze by Polo Rocha:

  United Council of UW Students has been pushing legislators to include a tuition cap of 3 or 4 percent. Dylan Jambrek, the group's government relations director, said he was pleased students can now "have the comfort of a tuition freeze" but expressed concerns over the memo's findings.

  "Whatever the money was going towards, it's concerning that they were raising tuition to stick it in the bank account," Jambrek said.

  Jambrek said he does not want legislators to overreact and do something that ends up harming students, such as cutting Walker's proposed investments.

  Rep. Cory Mason, D-Racine, is the ranking Democrat on the Legislature's budget committee, which has 12 Republicans and 4 Democrats.

  Mason called for a potential tuition reduction because he said UW System students are already graduating with $27,000 in student debt on average.

  "Not only should we be freezing tuition given the news of the UW's surplus, but the state budget deliberations should include a serious conversation about reducing student debt by lowering the cost of tuition, increasing student financial aid or both," Mason said in a statement.

• Massive University of Wisconsin Slush Fund Discovered by Brian Fraley.
• Marge Pitrof.
• Sara Goldrick-Rab:

  The University of Wisconsin System just ceded to the demands of students across the State and agreed to cap a tuition increase at no more than 2% for the coming year and eliminate the waiting list for the Wisconsin Higher Education Grant. This is a stunning reversal, as President Kevin Reilly had been lobbying against students, insisting that no cap was necessary.

  What happened? Well, as I have long insisted, the issue is not entirely about a lack of state funding being provided to higher education but how administrators are spending it. When the incentives for administrators cause they to advance the interests of institutions over the needs of students, accountability measures are required to prevent that. UW System just got called out, as an audit just revealed that a $404 million balance from tuition payments in 2011-2012 was leftover, unspent, while tuition was hiked by 5.5%. SERIOUSLY??? Those cash reserves were being held for "specific planned future activities," according to the System. Sorry Charlie, no way. That is something you do with appropriations, not tuition. If you aim to help future students and promote stability, that's a public good, and should be on the public dime. This is an outgrowth of the same mindset that's diminished tuition and pushed students into debt-- the same old public / private benefits nonsense. Honestly, the students should demand NO increase and hold firm on doing it for 2 or more years!

  So, here we are-- they said it couldn't be done-- the net price of attending UW System schools will likely stay flat or decline over the next year. HURRAH!

Posted by Jim Zellmer at April 21, 2013 2:59 AM
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