Lawmakers Approve Reporting Requirements For UW System Budgets

University of Wisconsin institutions would have to justify fund balances that get too high, but they’d be allowed to run their balances down to zero, under a plan approved by lawmakers.

The plan was drawn up in an effort to make the UW’s finances more transparent after lawmakers felt the system was hiding financial reserves in the last budget cycle. The UW System had input. It suggested requiring reports to the Board of Regents justifying higher fund balances when they get above 15 percent of expenditures. The legislature’s Joint Finance Committee lowered that to 12 percent.

River Falls state Sen. Sheila Harsdorf, R-River Falls, called that 12 percent level “a trigger.

“It’s a reporting trigger,” she continued. “It’s basically saying when you get to that point, we really need more details justifying why you’re at that higher level.”

The UW System had also recommended reports to the Board of Regents whenever fund balances dropped below 10 percent. Lawmakers dropped that to zero, saying they worried a higher floor would be used as an excuse to build up balances.

UW System President Ray Cross was asked after the meeting whether keeping no fund balance would be good management.

“No, but there may be a plan that says, ‘you’re going to spend down your balance, we’re going to borrow from something else for a period of time to do something and pay that back over time,’” Cross said. “So no, it wouldn’t typically be good practice, but there may be logical reasons for doing it.”

Cross said he was fine with the range lawmakers chose, saying it would help the System and the legislature better understand the UW’s finances. The guidelines passed on a unanimous vote.