Statement by Chancellor Ward on UW fund balances

April 25, 2013

It is likely you have seen or heard media reports about the fund balances that the University of Wisconsin System carries and the discussion among legislative leaders and others about those balances. I would like to explain how this issue relates to our campus, and how maintaining balances helps UW-Madison succeed in our academic and research missions.

We have received and reviewed the report released last Friday by the Legislative Fiscal Bureau and understand the concerns. The figures show system-wide balances in key program revenue appropriations of $648 million at the end of the 2011-12 fiscal year. Of that amount, UW–Madison accounts for approximately $298 million. A significant portion of the balance resides in accounts dispersed across the institution in schools, colleges and other units. It’s important to note that much of the balance in these accounts is obligated to designated purposes such as additional financial aid for undergraduate students, while other funding is dedicated to supporting the growth in high-demand programs such as business and engineering.

We believe we are being prudent stewards of resources. Carrying positive account balances that allow us to fund a variety of programs and services central to the university’s mission and that help guard against fiscal uncertainty from year to year is an important component in our complex budgeting process at UW-Madison. However, given the state’s difficult financial conditions in the recent past and the fact that there are always competing demands for new state funding, the legislative reaction is understandable.

Friday’s LFB report indicated discussions about the appropriate amount for such fund balances need to take place. In our view, these discussions should focus on the appropriate level of balance based in part on the fund’s specific purpose. Although the balances we typically carry are well below higher education standards, we welcome that discussion and will be an active participant in the conversation with UW System leaders, the Board of Regents, legislators and the governor’s office.

The fiscal uncertainty facing higher education institutions across the country comes from a variety of sources, including but not limited to sequestration, the recession, reduced revenue from endowment funds, competition from emerging online institutions, and more. Our intent is to operate a stable enterprise that is less vulnerable to fiscal turbulence in order to continue to provide what defines why we are here: to provide our students with a quality educational experience and to continue to excel, innovate and foster economic development. At the same time, we must be sensitive to the situation of students and their families as it relates to tuition costs, especially during difficult economic times. There is no higher priority at UW–Madison than continuing to keep tuition affordable while providing a world-class education.

The governor’s budget proposal, presented earlier this spring, was one of the best in recent years for higher education. However, given the mood of the legislature at this moment in time we are likely to see significant changes that will be challenging for all of us. We must work together to meet those challenges at the same time we work with the governor and legislators to address their questions and concerns.

Thank you,

Interim Chancellor David Ward