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UW Fund Balances Tied To Campus Donations Increased 132 Percent Since 2013

While Tuition Fund Balances Have Been Cut By Nearly 56 Percent In Last 6 Years, Increased Donations Pushed Total Program Revenue Balances Up

Microphone at UW System regents meeting
Photo courtesy of UW System

Fund balances tied to donations at University of Wisconsin System campuses have increased by nearly 132 percent since state lawmakers first criticized the UW for holding what some called “slush funds.”

But UW System officials said nearly all those gifts are earmarked for specific projects and can’t be used for anything else.

During a meeting of the UW Board of Regent’s Business and Finance Committee on Thursday, Sean Nelson, UW System vice president for finance, said the account balance for gifts to campuses has steadily increased over the last decade.

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“We’re up to about $346 million in gifts, restricted funding,” said Nelson. “It’s remarkable. It really is the sole component that drives up our total program revenue balances when you take in unrestricted and restricted.”

In 2009, fund balances tied to donations to UW were less than $23 million, which represents a 1,425 percent increase in the last 10 years.

Nelson said that while campuses have been spending down balances from student tuition since they hit an all-time high in 2013, growth in restricted balances, like donations and auxiliary funds planned for building projects, have grown. That has pushed the UW System’s overall program revenue balances up by just more than $11 million between 2018 and 2019.

When lawmakers balked at UW fund balances in 2013, they objected to campuses keeping large tuition fund balances during years when the Board of Regents approved tuition increases. Nelson told regents that data from 2019 shows tuition fund balances across the system have been cut by $306.5 million, or more than 55.5 percent, in the last six years.

Tuition at UW’s four-year universities has been frozen for six years and the freeze will continue through 2021. For the state’s two-year campuses, tuition will have been frozen for 12 years by the end of the current biennium.

Regent Robert Atwell, who was appointed to the board by former Gov. Scott Walker, said the tuition fund balances have been the “crux of the relationship between the university and the Legislature” since 2013.

“If the tuition freeze served any policy purpose, whatever it was intended to do has been accomplished,” said Atwell. “That’s the therefore argument that I think flows out of this and it provides support for sunsetting the tuition freeze.”

When asked about the growth of donation fund balances at state campuses, UW System President Ray Cross said it’s important for people to remember that nearly all gifts are dedicated for specific projects.

“A donor says we want you to do this with that money,” Cross said. “So, that becomes a restricted pot of money and it shows up on our fund balance because it hasn’t been spent yet or it is being spent in increments as we accomplish something.”

Cross said it’s obvious that the ongoing tuition freeze has made campuses more reliant on other sources of funds and they’ve gotten better at bringing in donations.

“But it’s also an indicator that people don’t want us to lose quality,” said Cross. “And I don’t care whether the money comes from the state or comes from tuition. We have to think that through. But we cannot just let the quality of a UW education diminish. That’s just critically important.”

According to budget documents provided to regents, the UW System received more than $1.7 billion in total gifts, grants and private contracts during the 2018-2019 fiscal year. Of that, 80 percent went to UW-Madison.

Editor’s note: Wisconsin Public Radio is a service of the University of Wisconsin-Madison and the Wisconsin Educational Communications Board.