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Finance committee OKs college system's budget plan

  • Article by: TODD RICHMOND
  • Associated Press
  • May 6, 2014 - 5:30 PM

MADISON, Wis. — The Legislature's finance committee approved a new policy governing University of Wisconsin System surpluses on Tuesday, wrapping up a nasty clash between Republicans and UW officials over the system's massive balances.

System officials have taken heavy criticism since word broke last spring that the system finished fiscal year 2012 with $1 billion on hand while forcing students to pay steeper and steeper tuition every year.

The policy requires campuses with surpluses of more than 12 percent of yearly expenditures to justify them to the Board of Regents and supply spending plans. The regents, in turn, will have to submit those details to legislators.

Schools with balances of less than zero in their tuition or auxiliary funds would have to give the regents a savings plan. Schools would be barred from using the need to build balances as a reason to seek a tuition increase.

The committee approved the policy 15-0 with little debate.

"Our goal is to maximize our transparency," said Sen. Alberta Darling, R-River Hills, the committee's co-chairwoman. "We're going to know what the dollars are going for. I think it's a tremendous step in the right direction."

Kevin Reilly, who led the system when the budget surplus first came to light, told legislators during a hearing at the state Capitol last April that most of the money was meant for specific purposes and that campuses built the surpluses to protect themselves as state funding dwindles.

Republicans responded with a two-hour tongue-lashing, questioning how system officials could raise tuition when they have more than enough money. Senate President Mike Ellis, R-Neenah, told Reilly he was disgusted and later told reporters that system officials think they're better than everyone else.

The state budget Republican Gov. Scott Walker signed in June froze tuition and mandated that the system come up with a plan governing the surpluses.

The system's original plan called for schools to finish each fiscal year with surpluses in tuition and auxiliary operation accounts of at least 10 percent of the past year's spending. Auxiliary accounts consist of revenue from parking fees, student housing and dining fees and athletic events.

The Board of Regents would have had to sign off on any surpluses larger than 15 percent of expenditures and submit a report detailing the surpluses and the money's purposes to lawmakers.

Republicans on the finance committee said they imposed the 12 percent justification threshold because it creates more transparency than the 15 percent trigger. They said they erased the 10 percent minimum balance out of concerns campuses might use it as a reason to raise tuition.

Reilly stepped down in December and new system President Ray Cross has been trying to repair relationships with the GOP since he took over in February. Cross looked on from the audience as the committee discussed the policy but didn't address the panel. After the vote he approached the committee's dais and started shaking members' hands.

"We've put tools in place," Cross told reporters. "It opens a window into our finances. This allows us to better understand what we're sitting on."

Projections show the system will finish the fiscal year that ends this June 30 with about $1.1 billion left over. Walker has called for freezing tuition again in the 2015-17 state budget.

© 2014 Star Tribune