UW System officials defend big cash reserve

2013-04-23T00:00:00Z 2013-04-23T06:08:58Z UW System officials defend big cash reserveBy PATRICK B. ANDERSON | panderson@lacrossetribune.com La Crosse Tribune

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.”

Copyright 2015 La Crosse Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(6) Comments

  1. spirit3
    Report Abuse
    spirit3 - April 23, 2013 4:05 pm
    actually this excess revenue was built on the increase of student tuition nothing more, and that is appalling
  2. allcav
    Report Abuse
    allcav - April 23, 2013 12:14 pm
    I don't believe that our legislator farmers have ever understood how university finances work. They just like to make public grumblings. If I received only twenty percent of my funding from the state, I certainly wouldn't let them have overreaching authority in how I ran my business.
  3. FUBAR
    Report Abuse
    FUBAR - April 23, 2013 10:19 am
    . You are correct.

    West Salem school district had "reserve money" and most of it was giving to the Teachers as Holiday bonuses. That money could have been kept in reserve for needs down the road. ie. The public pool which is owned by West Salem School District had the heater go down, and now the West Salem residents will be on the hook (with a tax increase) to pay for the new heater. The reserves are used for themselves and not for the betterment of the students or the tax payers.
  4. David Lee
    Report Abuse
    David Lee - April 23, 2013 7:08 am
    No one ever actually explains what the purpose of these reserves are. In the case of lacrosse, they could have used the reserves to build the new school, and still had money in reserve. They called it a rainy day fund. Hey folks, it's raining. Stop with taxing people for money they already were taxed for.
  5. Jobaba
    Report Abuse
    Jobaba - April 23, 2013 7:06 am
    June 28, 2012 6:35 pm • By BOB SEAQUIST | Special correspondent

    An unusual and unanticipated budget surplus that could exceed $600,000 will be set aside in something like a rainy-day fund for the Onalaska School District.
    Board members Monday approved having what Director of Finance Larry Dalton calls a District Stabilization Fund to house the money. Among its possible uses would be to reduce short term borrowing.
    The surplus resulted from fewer retirements than expected, savings from the new health insurance plan, federal job creation funds being not fully spent and open enrollment numbers being better than expected.
  6. Jobaba
    Report Abuse
    Jobaba - April 23, 2013 7:06 am
    June 28, 2012 6:35 pm • By BOB SEAQUIST | Special correspondent

    An unusual and unanticipated budget surplus that could exceed $600,000 will be set aside in something like a rainy-day fund for the Onalaska School District.
    Board members Monday approved having what Director of Finance Larry Dalton calls a District Stabilization Fund to house the money. Among its possible uses would be to reduce short term borrowing.
    The surplus resulted from fewer retirements than expected, savings from the new health insurance plan, federal job creation funds being not fully spent and open enrollment numbers being better than expected.
    And now they are coming, hat in hand, to ask for more money.
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