Wisconsin GOP blasts UW over tuition surplus

Apr. 23, 2013

MADISON – Republican lawmakers gave the University of Wisconsin System president a brutal tongue-lashing Tuesday over a report that shows system officials built a huge tuition surplus even as they demanded students pay more every year.

GOP members of the Legislature’s employment relations committee spent two hours dressing down Kevin Reilly during a hearing, telling him their constituents are outraged. They said they’ve lost trust in the system and questioned how system officials could raise tuition on struggling students when they have more than enough money.

“How can you sit there and look at that cash balance and say, ‘You know what, we’re still going to ask for a 5.5 percent increase each year?’” said Senate Majority Leader Scott Fitzgerald, R-Juneau. “Someone should have said stop.”

Reilly explained most of the money is meant for specific purposes and campuses built the reserves to protect themselves as state funding dwindles. He promised to review how much money belongs in the reserves and how to make the amounts more transparent.

“Look, I hear the anger. In many ways it’s justified,” Reilly said. “I don’t think we’ve done right in the way we’ve put these numbers out.”

“We’re not angry. We’re disgusted,” Senate President Mike Ellis, R-Neenah, shot back, telling reporters later that system officials think they’re better than everyone else. “They all think we should be working at a Jiffy-Lube,” he said.

The dust-up began Friday when the nonpartisan Legislative Fiscal Bureau released a memo showing the system finished the year that ended June 30, 2012, with a nearly $650 million surplus spread across multiple accounts at system schools, including $414.1 million in surplus tuition.

System officials had identified specific uses for about $332 million of the extra tuition dollars, including technology purchases and financial aid, but couldn’t provide a timetable for the payouts, the memo said. The remaining $82 million was unencumbered.

The memo went on to say the system had a $212.8 million tuition surplus as of mid-2009 and a $393.3 million tuition surplus as of mid-2011.

The memo left Republicans stunned. They questioned how the system could justify tuition increases year after year. The Board of Regents has raised base tuition by 5.5 percent annually since the 2007-08 academic year.

Reilly stoked the GOP’s anger by releasing a statement shortly before the memo went public, saying Republican Gov. Scott Walker has promised the system enough additional money in his executive budget that he would recommend the Board of Regents limit tuition increases in each of the next two years to just 2 percent.

GOP leaders immediately pledged to freeze system tuition for two years as they revise Walker’s budget. Rep. Steve Nass, R-Whitewater, chairman of the Assembly’s colleges committee, has called for a four-year freeze and wants Reilly fired.

The employment relations committee, which consists of Republican and Democratic leaders, already was scheduled to meet Tuesday to discuss new personnel classifications for UW System employees. Republicans used the meeting instead as an opportunity to lay into Reilly, who has served as president since September 2004.

“This is a larger issue than I think you realize, sir,” Assembly Majority Leader Scott Suder, R-Abbotsford, told Reilly. “The reality is that people really need an explanation. They feel lied to, sir.”

Reilly tried to defend himself, pointing out most of the tuition surplus is earmarked. He added the reserves are meant to protect the system financially, saying projections show enrollment will drop over the next decade, state aid and gifts fluctuate and the system must pay star faculty top dollar.

Ellis demanded to know whether the Board of Regents approved holding so much money in reserve. Reilly acknowledged the regents probably didn’t receive all the details about the surpluses. He stressed he plans to form a committee to examine how much money is appropriate to keep in reserve and how to make those figures more accessible to the public and the Legislature.

“My intent has never been to fool anybody,” Reilly said. “You want a greater level of detail than you have gotten in the past. What I’m saying is we’ll do that.”

Asked afterward about whether he’s worried about his job, Reilly told reporters he would let someone else worry about it.

It’s unclear what Republicans may do next. They’ve already committed to freezing tuition over the next two years. The Republican-controlled Joint Finance Committee also could reduce the amount of new money Walker has promised the system as the panel deliberates on the spending plan over the next few weeks.

Regents President Brent Smith said the board didn’t vote on whether to approve the reserve amounts, although the board’s business committee typically reviews them in the system’s annual financial reports. He promised to make the reserve totals more accessible.

The system’s reserves total about 25 percent, enough to run the system for three months but still lower than many other comparable university systems’ reserves, he said.

“You can’t say the tuition increases were not justified,” Smith said. “I think the system is better served by having a reserve of 25 percent. We think we’re acting pretty responsibly by doing that.”

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