Will UW financial reserve flap lead to more rural school aid?

Large reserve funds held at University of Wisconsin System campuses are embarrassing the Republican- controlled state government.

Auditors and the non-partisan Legislative Fiscal Bureau last month reported $648 million in reserve funds across UW System campuses, including more than $400 million from student-tuition and fee accounts.

Legislators swiftly rushed to promise that tuition levels would be frozen for the next two years. But they were clearly miffed at being surprised by the large numbers. Two years ago the Legislature, then also controlled by Republicans, and Gov. Scott Walker had given the university its long-wanted financial flexibility.

Senate President Mike Ellis of Neenah demanded answers to questions that almost sounded like they had been borrowed from the Watergate fiasco 40 years ago. Who made the decisions? Who knew about them? When did they occur?

It’s not the first financial mix-up for the administration. Walker’s new economic development agency lost track of $56 million of loans. Then, the administration was late recently in delivering revenue numbers to federal officials. That resulted in a federal report that was unflattering to Wisconsin.

The huge UWS reserve funds cast doubts on Walker’s plan to provide an additional $131 million in taxpayer funds to the system with much of it targeted for attempts to improve the state’s economy.

Walker hinted some of the money might be rerouted to help the state’s public elementary and secondary schools. Advocates had argued Walker seemed more interested in promoting private-school voucher programs than in helping public schools.

His initial school-aid plan for the next two years threatened to hurt public schools in rural Wisconsin where enrollments have generally become flat or declining. Many of those rural areas are represented in the Legislature by Republicans.

Dramatically expanding Wisconsin’ school voucher plan could help Walker‘s chances to be a member of the 2016 Republican presidential ticket.

Republican lawmakers sounded like they were looking for a scapegoat over the university surpluses. Budgets are developed by individual campuses across the state and UW-Extension with overall planning guidance from UW System Administration (UWSA) in Madison. Campuses respond, and provide their tentative budgets for the next biennium back to UWSA officers in Madison who pull the information together into a system-wide budget proposal. This work is overseen by System President Kevin Reilly and his cabinet; from there, Reilly presents the system-wide budget to the 18-member Board of Regents for final approval.

Did any of the regents question the financial reserve policies or numbers? Did the university explain the potential uses of the reserves to the regents? That may never be clear. It appears the reporters who cover the university system did not attend the committee meetings reviewing the policies and numbers.

Or, if they had attended the business committee session, they missed a great story.

There is some irony in a furor of having large reserves. Wisconsin state government itself is often criticized for not having sufficient “rainy day” funds to buffet against economic downturns. Are the university reserves too big for its billion dollar operation? The university flap shows reserves can also be too big.

Finally there is the question of whether UW System President Kevin Reilly can survive the furor. Forty-three years ago, Fred Harvey Harrington resigned as UW president following criticism of student riots against the Vietnam War. Harrington had neither started the war nor the protests.

A prominent Republican-appointed regent publicly told Harrington the state was “damn sick and tired” of what was happening on the campuses. Harrington had become a scapegoat. He resigned before spring ended.


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