UW–Madison tuition balance drops by 41 percent, UW System reports

October 6, 2014 By Greg Bump

In response to state legislative directives to reduce fund balances, the University of Wisconsin–Madison has lowered its tuition balance by 41 percent from 2013 to 2014, according to a new report.

“We will continue to manage our balances in a manner that is fiscally responsible, transparent and builds trust with regents, legislators and the citizens of Wisconsin,” Vice Chancellor for Finance and Administration Darrell Bazzell says.

University of Wisconsin System President Ray Cross this week released to the Board of Regents a report on the status of fund balances at system schools.

The report shows that UW–Madison’s tuition balances have been reduced by 41 percent, from $143 million in 2013 to $84.5 million in 2014, or from 14 percent of expenses to 8 percent, well below UW–Madison’s Big Ten peers. Of the $84.5 million in tuition balances, $80.5 million is obligated or planned for expenses the campus will incur in 2014-15. Only $4 million is a true reserve.

The fund balances were the subject of controversy leading up to the passage of the state budget in 2013, and led to deep cuts to the UW System budget.

Chancellor Rebecca Blank says the university followed legislators’ request to tap the fund balances to cover the funding gaps left by cuts imposed in the state budget. But, she says, further spending down of the tuition balance would not be prudent.

“Most of our fund balances are already fully committed to approved programs, but just haven’t been spent yet, so we have little that can be labeled as true reserves,” Blank says. “That means that we cannot continue to fill budget gaps with fund balances, and it means that the university has very few discretionary dollars available to meet needs that might arise on campus this year.”

To address legislative and regent concerns, Blank and Bazzell worked with system officials, regents and lawmakers to develop a reporting method for the balances. A key piece of the policy approved by legislators and the regents limits the carryover of funds to 12 percent of expenses. If a fund exceeds the 12 percent threshold, institutions are required to explain the purpose of the funds and provide a timeframe for spending them.

In addition to the reporting requirements enacted by the regents, UW–Madison instituted a system of internal quarterly reporting for balances.

UW–Madison’s auxiliary fund balance, which includes dollars collected for housing, dining, parking and other services, increased from $78 million to $116 million, or from 19 percent carryover to 30 percent carryover. The balance increase is caused primarily by dollars obligated for upcoming building projects that are awaiting approval from state officials.

Overall, UW–Madison’s fund balances fell from $419.7 million in the 2013 fiscal year to $386.5 million in the 2014 fiscal year, a drop of nearly 8 percent. The fund balances contain no state tax dollars.