University of Wisconsin officials on Monday defended their decision to maintain a $648.2 million budget surplus even as they raised tuition for students.
Republican lawmakers called for a tuition freeze last week in the wake of a Legislative Fiscal Bureau report showing the surplus.
Brent Smith, president of the UW Board of Regents, said Monday the UW System is following prudent accounting practices by keeping that much cash on hand.
“It’s appropriate because of the uncertainties that can happen in any type of business, including the business of college education,” said Smith, who is also a lawyer in La Crosse.
The bureau’s report gave a snapshot of the UW System’s budget on June 30, which included enough unrestricted money on hand to make up about a quarter of the system’s budget.
Smith said the UW System follows accounting practices recommended by the Government Finance Officers Association, which recommends all forms of government keep at least two months worth of yearly revenue — or nearly 17 percent of its annual budget — unrestricted.
Other groups, like the National Association of College and University Business Officers, recommend at least 40 percent of the budget be unrestricted.
Smith points out the money found in the fiscal bureau review accounts for roughly 25 percent of the UW’s 2012 budget from similar fund sources — between the recommendations from both groups.
UW is not alone. La Crosse public schools also kept an unrestricted fund balance of about 25 percent of the district’s 2012 budget.
The amount of uncommitted dollars kept by UW is conservative compared to the accounting practices of many private businesses, Smith said.
“I think the whole issue is what type of reserve balance we should have,” Smith said. “If there is some question on it, let’s have discussion on it.”
Most of the extra money highlighted by the report is committed to specific purposes such as technology, capital projects and UW’s new flexible degree program.
“I’ve seen some comments from legislators who don’t understand that we have things earmarked,” said UW-La Crosse Chancellor Joe Gow.
Still, about $207 million is unaccounted for, including about $82.1 million from tuition. Enrollment increases bolstered UW’s cash balance last year.
UW students have shouldered regular tuition increases of 5.5 percent a year while wages for UW faculty and staff stayed the same.
Growing enrollment may have padded UW’s reserves for that June 30 budget snapshot, but even with a surplus, uncertainty over future funding means the system still can’t afford long-term salary increases, Gow said.
“The way it gets interpreted is that we have a lot of extra money,” Gow said. “And that is not the case.”