After University of Wisconsin officials announced plans for spending part of a $648 million surplus on Friday, the governor and state Republicans fired back by instead calling for a tuition freeze for students and condemning the system’s “incompetence.”
Of the $648 million balance, $414 million comes from tuition revenues, a number that has grown from the $212.8 million tuition balance of June 2009, according to a Legislative Fiscal Bureau memo. The surplus increased despite the UW System facing about $300 million in funding cuts in the state budget over the past two years.
Republicans said they were “outraged” to learn about the balance, which was laid out in a memo that stemmed from an investigation of about $34 million in UW System benefits overpayments last year. The UW System had planned $441 million in spending from the $648 million balance, according to the memo.
Of the $414 million tuition balance, the UW System has already laid out $332 million it plans on spending, part of it in initiatives UW System President Kevin Reilly announced shortly before the memo’s release Friday. Those initiatives included eliminating a financial aid waiting list, increasing work study, economic development grants and increasing spending on the new flexible option degree.
Republican legislative leaders released a statement criticizing the “pattern of incompetence” at the UW System. In a statement, Gov. Scott Walker joined in the criticisms and ensured a tuition freeze in the budget.
“It is very concerning to learn the UW System has been running a surplus balance of this size, especially at a time when students, families and lawmakers have continually heard from the UW System about the need for more money to offset ‘devastating cuts,'” Walker said. “At a minimum, on behalf of students and their families, I am asking legislative leaders to freeze tuition increases for two years.”
The actual balance at the UW System is more than $1 billion, although that includes federal aid, gifts, grants and contracts that cannot be spent elsewhere, so the LFB narrowed down the balance to $648 million. With those sources included, the UW System’s total budget is $5.6 billion, and without, its budget is $2.5 billion.
A UW System statement released after the balance was made public said the system has “only about $207 million” in uncommitted cash balances, $82 million of which comes from tuition.
“We welcome a conversation about the appropriate levels of fund balances, how those funds should be used to benefit students and the state and what level of unrestricted reserves should be maintained as we manage a complex higher education enterprise in uncertain times,” Reilly said in the statement.
UW System spokesperson David Giroux said the system has always run on a balance, and it increased because of higher enrollment and state cuts to the system. As the state gives less funding to the system, he said, the system has to rely more on program revenue sources like tuition.
As those revenue sources can change often, the balance ensures programs can be paid for if revenue decreases, Giroux said.
“As we become more dependent upon these somewhat volatile program revenue streams, we need to make sure that we are hedging against that volatility to some degree,” Giroux said. “The more program revenue you bring in, the more dependent you become [on that source], the more you need to set aside some kind of safety net.”
For the past six years, UW System students have seen 5.5 percent tuition increases, which Reilly said would substantially decrease if Walker’s budget proposals go untouched. Before the memo’s release, Reilly proposed a 2 percent tuition increase, which would be the lowest tuition increase since 1974.
Republicans had capped tuition increases at 5.5 percent in the last biennial budget, in which they cut $250 million from the UW System and later cut an additional $66 million in a budget lapse.
Walker removed that cap in the budget he proposed earlier this year, which included a $181 million investment in the UW System. A large part of that comes from splitting the UW System payroll from the state budget to the system’s budget, although Walker’s budget would also invest in new programs.
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, the ranking Democrat on the Legislature’s budget committee, 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.
Reilly’s proposals announced Friday, part of the $332 million in planned spending from the tuition balance, included reallocating $30 million to end the Wisconsin Higher Education Grant waiting list of more than 5,000 and making work-study more available.
The plans also included $20 million to match Walker’s proposed economic development grants, as well as $10 million more for the new flexible option program that Walker plans to spend $2 million on.
