October 31, 2014

Fallout following UW surplus bombshell

An audit finds a surplus in the University of Wisconsin System financial accounts and critics want to fire the system president.

The new Legislative Fiscal Bureau memo shows a $1 billion surplus at the UW, though, the audit shows much of the money in reserves is already earmarked for specific purposes, leaving just a little over $648 million — much of which, UW Spokesperson David Giroux says, is also spoken for. “Of that $648 million we have earmarked $332 million of commitments that we have already made. So it’s a bit like looking at the balance in your checkbook a month ago.”

AUDIO: Giroux :12

Giroux says data published by the LFB shows that only about $207 million of UW’s cash balances are unrestricted or uncommitted. Of that, about $82 million is from tuition revenues.

At the same time the LFB releases its audit report late Friday afternoon, UW officials vow to freeze tuition.

Giroux says, “We will recommend nothing more than a 2 percent increase in tuition over each of the next two years. That combined with what the governor has provided for us in the proposed biennial budget should be enough to cover all of our ongoing costs.” He says that’s good news for students and the university as a whole.

UW System President Kevin Reilly has also proposed the reallocating of existing funds to eliminate the waiting list for financial aid, according to Giroux, who says the large surplus is needed as a “safety net.”

State Representative Steve Nass (R-Whitewater), Chairman of the Assembly Colleges and Universities Committee, is calling for the firing of President Reilly in response to the discovery of the surplus. Nass calls the newly-discovered money a “betrayal of public trust.”

Nass calls Reilly a “fraud,” saying, “At the same time the legislature is trying to hold down tuition, he’s traveling around the state bashing legislators about how cuts to the UW System will destroy it. He used very harsh language while doing that. At the same time, he’s sitting on hundreds of millions of dollars in tuition money taken from students.”

AUDIO: (Nass questions whether any laws were broken. :24)

Nass says he will also introduce a budget amendment to freeze resident undergraduate tuition for four years.

Fellow Republican Glenn Grothman, a state Senator from West Bend, won’t go as far as calling for Reilly’s “head,” but says he’s outraged the University President has been pushing for a tuition hike.

Governor Scott Walker says in a statement, having a sizable surplus is disturbing, “especially at a time when students, families, and lawmakers have continually heard from the UW System about the need for more money to offset ‘devastating cuts’.” Walker’s budget allows for $181 million in funding for the colleges, but now some Republicans question whether that should happen. Reilly had said that $153 million of that amount is already committed for things like previously-approved UW construction and renovation projects, fringe benefit increases, as well as leases and utility costs.

GOP leaders in the state legislature are “outraged” with what they call the “mishandling of taxpayer dollars and the incompetence shown by university system administration.” In a press release Speaker Robin Vos (R-Rochester), Senate Majority Leader Scott Fitzgerald (R-Juneau), Joint Finance Co-Chairs Senator Alberta Darling (R-River Hills) and Rep. John Nygren (R-Marinette) and Assembly Majority Leader Scott Suder (R-Abbotsford), say: “We want to assure the university students and their parents that, at a minimum, this budget will include a two-year tuition freeze.”

The Republican leaders say, “It is not only unfair to the students and their parents who keep getting hit with tuition hikes; it’s unfair to the taxpayers of Wisconsin.”

Even University supporters in the Legislature were surprised at the amount of the fund, and have not been quick to come to the system’s defense. There’s bipartisan support for at least a freeze in tuition for the next two years. Racine Democrat Cory Mason, a member of the Legislature’s Budget Committee, says there also should be a “serious conversation” about reducing student debt by lowering tuition, or increasing financial aid — or both.

John Colbert, WIBA, contributed to this story.