Some UW System regents say financial transparency may have averted lawmakers' budget-slashing

MILWAUKEE — A legislative move to slash the University of Wisconsin System's budget might have been averted had system officials been more transparent about its financial status, several regents told UW leaders Thursday.

The Joint Finance Committee recently voted to eliminate a proposed spending increase of $181 million for the UW System in the upcoming budget, and also cut an additional $2.5 million. The committee also voted to freeze tuition for two years.

The moves were prompted in part because an audit revealed the UW System was sitting on $650 million in reserves in June 2012. Republicans were outraged, and Democratic lawmakers, typically among the UW System's staunchest supporters, said there was no justification for such a large surplus.

UW officials defended the surplus as a safety net in case of volatile economic circumstances. They also said the money wasn't just gathering dust in a bank, but mostly earmarked for certain mandatory expenses.

The board of regents met at UW-Milwaukee on Thursday for its first meeting since the finance committee's vote two weeks ago. Most regents expressed concern about the system's lack of transparency, and said the current crisis represents a "teaching moment" for UW officials.

"We need to work with the Legislature to make sure they understand that the funds we are entrusted with are being used as well as possible, and are being reported in a way that's as transparent as possible," Regent Tim Higgins said.

The net result of the latest budget proposal, including certain unfunded obligations, would be a loss of nearly $203 million, said David Miller, the system's senior vice president for administration and fiscal affairs. That would lead to a funding shortfall of $62 million in the second year of the two-year budget.

"This gap should concern anyone who wants a public university that strengthens the Wisconsin workforce and boosts its economy," he said. However, he added, the budget in its current form "does not absolve us of our responsibility and the eed to confront this challenge using every tool at our disposal."

The audit, released in April by the nonpartisan Legislative Fiscal Bureau, said the money was spread across multiple accounts at system schools as of June 2012. The figure included $414 million in surplus tuition.

While some of the figures were revealed in the system's 2012 annual report, they were often lumped together rather than broken out separately in way that would be easy to decipher. Some regents suggested providing more detail to clarify exactly which dollars were already spoken for and which represented a true surplus.

Regent David Walsh questioned whether the Legislature's budget cut was really about the surplus numbers. He said there's always tension between the board of regents, which is responsible for the university system, and lawmakers, who also have other agendas and political pressures.

Walsh suggested focusing less on what lawmakers think, and more on sharing the message with Wisconsin families and students that the UW System provides world-class education and resources.

The budget must be approved by the Senate and Assembly, and then signed by Gov. Scott Walker, before it becomes law.

Regent Jose Vasquez said he was concerned by the degree to which the Legislature was weighing in on UW affairs.

He suggested the regents have in-depth conversations with Walker and lawmakers to understand what role they think the board needs to have in running the UW System.