University of Wisconsin on Defense Over Reserves

The University of Wisconsin has come under fire after the recent disclosure that it holds $648 million in reserves lawmakers had not previously known about, prompting calls for sanctions that range from an expanded audit to cuts in state aid and demands to freeze tuition.

The heads of the legislature's Joint Audit Committee called for a more detailed look at the reserves in a planned state audit. Lawmakers learned of the size of the university system's reserve fund from documents submitted to two nonpartisan legislative review bureaus as part of an annual review of the system's financials.

Lawmakers from both parties said they were irked by the size of the reserve given the university's decision to impose a 5.5% tuition hike annually over the last two years and some said the system could now afford a freeze.

"You are probably aware that the concealment of these funds has raised serious questions as to the governance and oversight of the University of Wisconsin System," state Senate President Mike Ellis wrote university leaders.

The university said its reserve levels were no secret and it defended their size-- more than $1 billion when designated federal funding is counted — noting that just $200 million is unreserved. The size is comparable to peer institutions and they are needed to provide financial flexibility amid fluctuations in state aid, officials said. Their growth is due in part to growing enrollment trends.

"We welcome a conversation about the appropriate levels of fund balances, how those funds should be used to benefit students and the state, and what level of unrestricted reserves should be maintained as we manage a complex higher education enterprise in uncertain times,"  UW president Kevin Reilly said in a statement.

The university plans to raise tuition 2% annually over the next two years, but that could change due to mounting pressure from lawmakers and Gov. Scott Walker. The state Building Commission also moved last week to put on hold a handful of university building projects due to the controversy.

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