Commentary on certain University of Wisconsin system funds and reserves

Kelly Meyerhofer: The System reported $867 million in total unrestricted program revenue balances as of June 30 — a figure that includes tuition balances, as well as other accounts, such as dining halls, parking fees and federal reimbursement for indirect costs related to research. About 86% of the money was already designated for a specific … Continue reading Commentary on certain University of Wisconsin system funds and reserves

University of Wisconsin tuition and reserves are soaring, but the same is true elsewhere

Mike Ivey: If Gov. Scott Walker and the Legislature move forward with a vow to freeze tuition at the University of Wisconsin for the next two years, they have some numbers to stand on. Wisconsin has seen the largest percentage tuition increase of Midwestern state universities over the past five years, according to The College … Continue reading University of Wisconsin tuition and reserves are soaring, but the same is true elsewhere

California state UNIVERSITY hid a $1.5 billion surplus while raising tuition. Where is the accountability?

Sacramento Bee: Here we go again: Another scandal involving a state-funded entity hoarding a secret stockpile of money. This time, an investigation by California State Auditor Elaine Howle discovered $1.5 billion in surplus funds hidden in outside accounts controlled by the California State University system. Yes, that’s billion with a “b.” While CSU was squirreling … Continue reading California state UNIVERSITY hid a $1.5 billion surplus while raising tuition. Where is the accountability?

Another look at University of Wisconsin system finances

John Torinus:

The flap in Madison over the appropriate level of reserves for the UW System tees up an opportunity for a broader look at the financing of what may be the state’s finest asset.
First, an observation: if the auditors had found deficits or fund shortages, the flap would be a lot more serious and even more politically combustible. So, at least we have a problem of too much money on the books, not too little.
Further, there is even more money floating around the system than the Legislative Fiscal Bureau discovered in an audit of its general accounts. It’s in the off-balance sheet accounts of organizations like the UW Foundation, the Wisconsin Alumni Research Foundation (WARF) and other foundations like the UW Madison Hospital Foundation and University Research Park.
Take WARF as an example. It has assets of $2.5 billion, not counting the present value of its flow of royalty income. Those assets are included on the balance sheet of other major universities, but not in Wisconsin.
WARF brings in royalty income from patents
of more than $50 million per year, and, at a modest 5% return on its portfolio, another $125 million per year. That’s $175 million per year. (It probably does better than 5% in most years.)
Its mission is to support UW – Madison, so it gave $48.3 million in research awards on the campus in 2010-11. The question arises as to where the rest of the dollars go. Some supports its staff, and some gets plowed back to build its principal. That’s how it got to $2.5 billion.

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!

Wisconsin Governor Doyle Proposes 7.4% Spending Increase & $426M More for K-12

Jason Stein:

Boosted by federal stimulus dollars, Doyle’s budget calls for a 7.4 percent increase in total state and federal spending. But the proposed spending from the state’s main account actually drops by 1.7 percent to $27.9 billion over 2010 and 2011. It would leave the state with $270 million in reserves.
The budget includes a host of major proposed changes:
• Cutting $900 million from existing agency budgets, including a 1 percent across-the-board cut, and rejecting $1.8 billion from the amount those agencies sought in new spending. The cuts include closing three dozen Division of Motor Vehicle offices, two state trooper stations and 25 Department of Natural Resources offices and cutting state staff at welcome centers for tourists.
State employees would avoid large layoffs and furloughs but the amount of state jobs would shrink by 209 to 69,038 by June 2011.
• Levying $1.4 billion in new taxes and fees, including a tax on oil companies of $544 million. That includes increasing the income tax rate on spring 2010 returns by 1 percentage point to 7.75 percent for single filers earning more than $225,000 a year and married filers earning more than $300,000. The proposal would also lower the state’s exemption for capital gains taxes from 60 percent to 40 percent, raising up to $95 million.
• Providing $426 million more in mostly federal money for K-12 schools over two years, a move Doyle said was essential to holding down property taxes. The budget would hold funding for the University of Wisconsin System essentially flat, leaving universities to manage rising costs through tuition increases, new efficiencies or service cuts.

Steven Walters, Patrick Marley & Stacy Forster:

For what may be the first time in state government history, general-fund spending will actually drop for the fiscal year that begins July 1, by about 5%. Total state spending – including tuition, fees, licenses and federal aid – will rise, however.
But, Doyle said, he had no choice but to ask the Legislature to approve $1.4 billion in tax increases – the largest reworking of the tax codes in decades.
The tax increases include: $540 million paid from oil company profits; $318 million by creating a new 7.75% tax rate for the richest 1% of taxpayers; $290 million in higher taxes on cigarette smokers; $215 million in higher corporate income taxes; and $85 million paid on capital gains investments.

Think big to control the cost of college

Wisconsin State Journal

But the much bigger question is why young people and their families have to borrow so much money to begin with. Compared with the 400 percent increase in tuition and fees over the last quarter century, the interest rate debate in Congress is a sideshow.
States and universities need to think big, embrace more technology and redesign the traditional classroom to help control expenses on the front end of a college degree.
Wisconsin just froze University of Wisconsin System tuition for the coming two years. That’s a welcome change, though fees and room-and-board rates will still go up.
The governor had proposed a large increase in state aid for universities. State lawmakers canceled the boost after learning UW System had $650 million in reserves it could tap instead.

Expanded audit of UW justified in light of report

Milwaukee Journal-Sentinel:

A legislative move to expand a planned audit of the University of Wisconsin System is entirely appropriate given the recent revelation that the system has $648 million in reserves spread across hundreds and possibly thousands of accounts.
Students and families who faced 5.5% tuition increases in recent years deserve to know why those increases were necessary when university officials were setting aside money in those accounts for various purposes. Couldn’t the university have set aside fewer funds, still have a (albeit smaller) contingency and not raised tuition?
The public also deserves to know more about the reserves, including where the money came from, how the university determined the level of reserves and how the funds are allocated across the system. Are those funds in interest-bearing accounts?
And university officials need to address issues of transparency and accountability. Legislators are rightly angry that they were unaware of the size of the reserve funds, which came to light in a report by the nonpartisan Legislative Fiscal Bureau. That should not have been the case.
University officials have acknowledged that they should have been more forthcoming about the numbers and should have done a better job of explaining them. Absolutely: System officials have mishandled this from the moment the report came to light, and they haven’t been getting much better. It’s a public relations disaster for the UW System.

Clips from Madison Superintendent Dan Nerad’s News Conference on Closed Schools & Teacher Job Action

Matthew DeFour: (watch the 15 minute conference here)

Madison School District Superintendent Dan Nerad discusses on Wednesday Gov. Scott Walker’s bill, teacher absences, and Madison Teachers Inc.



Related:

Dave Baskerville is right on the money: Wisconsin needs two big goals:

For Wisconsin, we only need two:
Raise our state’s per capita income to 10 percent above Minnesota’s by 2030.
In job and business creation over the next decade, Wisconsin is often predicted to be among the lowest 10 states. When I was a kid growing up in Madison, income in Wisconsin was some 10 percent higher than in Minnesota. Minnesota caught up to us in 1967, and now the average Minnesotan makes $4,500 more than the average Wisconsinite.
Lift the math, science and reading scores of all K-12, non-special education students in Wisconsin above world-class standards by 2030. (emphasis added)
Wisconsinites often believe we lose jobs because of lower wages elsewhere. In fact, it is often the abundance of skills (and subsidies and effort) that bring huge Intel research and development labs to Bangalore, Microsoft research centers to Beijing, and Advanced Micro Devices chip factories to Dresden.

Grow the economy (tax base) and significantly improve our schools….

Why the GMCC Opposes the Taxpayers Protection Amendment

Greater Madison Chamber of Commerce [pdf] The Greater Madison Chamber of Commerce (GMCC) Board of Directors opposes the Wisconsin Taxpayer Protection Amendment and has urged legislators to vote against SJR 63 and AJR 77. What the Wisconsin Taxpayer Protection Amendment (WTPA) proposes and what the likely outcome will be are two different things. While we … Continue reading Why the GMCC Opposes the Taxpayers Protection Amendment