University of Wisconsin System President Kevin Reilly responds to a question during a hearing of the state's Joint Committee on Employment Relations last week at the state Capitol in Madison.
If you haven't heard, the University of Wisconsin System has a surplus. It turns out the university system, whose annual budget of $5.6 billion is about the size of Bermuda's gross domestic product, has about $650 million in reserve funds. A Legislative Fiscal Bureau report last week revealed these funds, and it was immediately taken up by lawmakers who questioned how that much money could be sitting in reserve at the same time tuition rates have been rising.
Given that we're in a budget cycle, this is not a low-stakes matter. And lawmakers who are longtime critics or opponents of the UW System have been more than happy to use the news of the reserve as a club to beat up on the state's universities.
It's disingenuous, but that doesn't mean they don't have a point.
There really are several issues here.
? Rising college tuition is a serious problem. A tuition increase is a major economic stressor on middle-class families. It has been a nationwide trend; the UW System has not been more prone to cost increases than other universities but neither has it been immune. The cost of tuition really does require an average family to stretch a lot more to send their kids to college than it did even 10 or 15 years ago. In that context, of course there will be political friction.
? Politics. This part is pretty simple. The state budget is a zero-sum game; money that goes to one place cannot be allocated somewhere else. For people - elected officials and not - who do not see the UW System as a priority, this is a convenient weapon.
? How the reserve amount was released. UW defenders point out that the fund was disclosed in regular financial reports, and so it was. We suspect, however, that few Wisconsinites sit around reading those reports. So the news of the reserve did come as a surprise to many of us, leading to a sense that the university had been less than forthcoming about its finances as budgets were debated in recent years. That's not quite fair, but it's clearly contributing to the dynamic.
And yet, the rush to judgment on the surplus - and more to the point, the calls by some to punish the UW with more budget cuts - feels wrong, and misses facts. We should expect an institution as large as the UW System to keep a significant amount of reserve cash. In other circumstances, it's possible to imagine wild criticisms of the UW for failing to reserve cash, if it ran out of money to pay operating expenses, say, or otherwise bumped up against the kind of extraordinary circumstances that reserve cash is for.
Opinions will vary on the right size for the reserve, although a report last week by Wisconsin Public Radio suggested that the UW's reserve is not out of line with other universities of its size. The point is that, despite sturm and drang, it's not obvious that this is evidence of financial mismanagement.
Where does this leave us? We reject some of the more strident attacks on the UW from the usual suspects, and we do not believe lawmakers should reduce the System's budget allotment as a result of this issue. On the other hand, Gov. Scott Walker's call for a tuition freeze feels reasonable, and something that would at least reduce the squeeze on families across the state.
That squeeze is the reason there is any political pressure around this issue in the first place, and that's something the entire higher education establishment should be aware of - no matter how big are their reserves.