UW System’s slush fund grows

Empower Wisconsin | Dec. 27, 2022 

By M.D. Kittle 

MADISON — When University of Wisconsin System officials come hat in hand pleading poverty, the Legislature should take a close look at the Legislative Audit Bureau’s latest review of the System’s finances. 

All things considered, the state’s public higher education system appears to be in pretty solid financial shape, recording a double-digit boost to its slush fund. 

The report also found UW institutions misspent nearly $240,000 in federal COVID aid. 

The UW System’s net position increased approximately $400 million over the year, to $6.4 billion as of June 30, the close of the fiscal year, according to the audit. 

Revenue climbed 4.4 percent, to $5.9 billion. Student tuition and fees totaled $1.4 billion and accounted for 24 percent of UW System’s total revenue in fiscal year 2022. 

The system’s unrestricted program revenue balances hit $1.6 billion, up 13.2 percent from the previous year. A good portion of that revenue comes without strings attached — the so-called slush fund that led to a system-wide tuition freeze nearly a decade ago. Of that amount, $1.1 billion came from unrestricted sources, such as tuition and auxiliary operations. The latter includes housing, dining, parking and transportation services and much more. All significant money makers for universities. 

“Program revenue balances from unrestricted sources increased at 11 UW institutions after increasing at all UW institutions in FY 2020-2021,” the audit states.  Unrestricted program revenue balances ranged from $14.1 million at UW-Superior to $469.9 million at UW-Madison. 

Still, the system is asking for an 8 percent increase in state funding (general purpose revenue), or another $115 million over the next two years. The increase “acknowledges the inflationary cost of goods and services and provides ongoing funding to support key student success initiatives at the UW universities,” the system noted in its budget request. 

It’s fair to note that Wisconsin taxpayers, too, are dealing with historically high inflation.

UW System expenses increased by about $400 million, or 8 percent, year over year, to $5.5 billion in fiscal year 2022, according to the audit. Salary and fringe benefits accounted for about 62 percent of the expenses, or $3.4 billion. 

Chancellors recently received raises. UW-Madison Chancellor Jennifer Mnookin’s base pay climbed from $750,000 to $765,000 and UW-Milwaukee Chancellor Mark Mone’s saw his salary rise from $452,090 to $461,132. UW System President Jay Rothman turned down his 2% salary increase. He’ll continue to earn $550,000 a year. 

Meanwhile, the Legislative Audit Bureau’s review found University of Wisconsin institutions misused $239,200 in federal Higher Education Emergency Relief Fund grants. That’s a sliver of the nearly $564 million in supplemental federal funds Wisconsin’s universities received in response to the pandemic. 

The Audit Bureau’s review of supporting documentation for 116 transactions found UW schools used $48,900 to offset lost revenue from the sale of alcohol at sporting and other events, to cover overhead costs of advertising and student recruitment, even to show a film for entertainment purposes at a pre-semester student program. Those items are not allowable uses under the federal aid programs. 

Auditors also found UW institutions used another $190,000 to cover unallowable costs such as consulting services and the creation of online tours for recruiting. And three UW institutions did not report spending funds from the Higher Education Emergency Relief Fund on two activities required by the American Recovery Plan Act.

We recommend that UW System Administration improve how UW System administers funds from the Higher Education Emergency Relief Fund, including by working with the federal government to resolve the $239,200 in unallowable costs that our review identified,” the report states. 

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