As the dispute on the University of Wisconsin System’s reserve assets continues, the fate of Gov. Scott Walker’s original $181 million budget proposal for state higher education funding is becoming clearer.

Walker said Monday some of the money originally budgeted for the system would support K-12 public education and increased tax cuts, although he did not specify how much, according to the Associated Press.

After a Legislative Fiscal Bureau report indicated the UW System has $648 million in unrestricted assets, the governor first called for a tuition freeze two weeks ago, then said he would reconsider his biennial budget proposal to the system a few days later.

UW officials have since projected the system’s total reserve balance to grow another $150 million by the end of June.

Interim UW Chancellor David Ward said in a statement the amount of cash in UW System’s reserve is “relatively small” compared to other peer institutions. Ward said reviewing tuition policies is “certainly appropriate” and UW System President Kevin Reilly and he are working to create a new method of sharing revenue funds.

UW spokesperson Vince Sweeney said Ward and other UW officials hope to see the system receive its original $181 million budget proposal, but said he understands that option is now unlikely.

“We’re working hard to see how much of that we could keep in the final budget,” Sweeney said, adding the decision is not up to UW to determine how much state funding it receives. “If it were to be $181 million, that would be wonderful. Realistically, we’re fighting to see what we might be able to get.”

Sweeney said it would be difficult to maintain all current educational operations at UW schools if the system does not receive any state funding in the new budget, like Senate Majority Leader Scott Fitzgerald, R-0pJuneau, is advocating.

In addition to reallocation of UW System dollars to fund its tuition freeze as well as primary and secondary public education, the funding originally targeted for higher education would expand Walker’s proposed $343 million income tax.

Andrew Reschovsky, a UW public affairs and applied economics professor, said Walker and other state lawmakers are overreacting to the UW System’s surplus. He said Walker is not diverting the system’s proposed funding to the right places.

Reschovsky said he is unsure whether Walker’s decision was politically motivated. But regardless, he said the proposed plans are “fiscally unsound” budget shifts.

“The governor is a politician and his job is to make allocation decisions,” Reschovsky said. “I don’t think the tax cut is a wise use of public funds. Public education has been treated very poorly in the budget, but I’m not an elected official. As an economist, I may have some personal judgment whether those are the right choices.”

Reschovsky added UW System experienced hundreds of million of dollars in budget cuts during the last biennial budget and said the state’s failure to increase the system’s funding may continue.

He said despite the system’s reserves, the future of UW schools and their ability to retain faculty, fund scholarships and maintain educational programming may be inhibited by upcoming decisions by the Legislature.

“It would be tragic if the University of Wisconsin suffers and students suffer for decisions made by the Legislature from politically poor judgments,” Reschovsky said.

The Associated Press contributed to this article.