University of Wisconsin System President Kevin Reilly announced the suspension of payments for 30 struggling endowments at the Board of Regents meeting Friday.
The $700,000 suspension will result in reduced payments for a variety of system initiatives including scholarships.
The UW System manages and invests thousands of funds contributed by donors. The interest earned from the funds are granted to programs such as scholarships and academic programs, said system spokesperson David Giroux.
“A good number of those individual funds are designated for scholarships,” Giroux said. “Those scholarships won’t be issued for the next 12 months.”
Board of Regents Vice President Chuck Pruitt said the current economic climate caused the 30 suspended endowment values to drop at least 5 percent below their original worth, calling them “underwater.”
“When it gets down below its original value, not only does it earn less interest but then you risk eroding the base that was meant to be a permanent investment in the university,” Giroux said. “So rather than eat away at the principle and decrease the value, the decision was made to be very fiscally conservative and make sure we preserve those revenues for the long term.”
Reilly said UW campuses will have to reallocate their money to cover the costs of some of the programs affected by the suspended endowments, adding most programs will be suspended completely.
Giroux added of the nearly 1,000 individual funds managed by the trust office, only 38 were in the position to be suspended.
The board will reconsider the endowments in a year, depending on the economic standing of the nation
The UW System Board of Regents also approved differential tuition increases at UW-Oshkosh, UW-Milwaukee and UW-Platteville.
A differential tuition is an additional charge for high-cost programs or building projects.
The board approved an increase in UW-Oshkosh’s differential tuition charge for undergraduates by 3 percent.
The board also approved tuition increases for UW-Milwaukee students in the schools of business, engineering and architecture. This increase will result in an elevated cost of approximately $30 in tuition per year for students in the specified programs.
The tuition increase for UW-Milwaukee may rise between 3 and 4 percent a year.
A $400 tuition increase for students from Iowa and Illinois enrolled in the engineering program at UW-Platteville was also approved Friday.
“No (all-student) tuition decisions have been made for any campus,” said Board of Regents President Mark Bradley. “That won’t happen until July.”
Bradley added though no full tuition increase have been approved to date, Chancellor Biddy Martin and her staff are in the process of developing a proposal to the board.
The board has submitted its budget to Gov. Jim Doyle for the 2009-11 biennium, calling for a tuition freeze for students attending two-year UW colleges.
