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University of Wisconsin System President Kevin Reilly responds to a question during a hearing before the state's Joint Committee on Employment Relations at the Wisconsin State Capitol in Madison, Wis. Tuesday, April 23, 2013. The university system has come under fire recently after a disclosure revealed it held an unexpected $638 million reserve last year. John Hart - State Journal

JOHN HART - State Journal

If Gov. Scott Walker and the Legislature move forward with a vow to freeze tuition at the University of Wisconsin for the next two years, they have some numbers to stand on.

Wisconsin has seen the largest percentage tuition increase of Midwestern state universities over the past five years, according to The College Board, with tuition and fees up 23 percent for in-state undergraduate students. UW tuition has risen 5.5 percent each year since 2007 but had jumped even more in previous years — including an 18.7 percent hike in 2003 at some campuses.

But Wisconsin certainly isn’t the only state where the cost of college continues to rise at public colleges. The College Board data show increases of 21 percent in Minnesota and Illinois and 20 percent in Michigan over the past five years, just under Wisconsin's 23 percent. Nationally, increases since 2007 have ranged from 78 percent in Arizona and 72 percent in California to 2 percent in Maryland and 3 percent in Ohio.

Despite the increases, tuition at the UW remains largely in the middle of the pack compared to other states, as reported by The College Board.

UW officials have defended the tuition increases as necessary to offset declining taxpayer support at the state level. The UW System faced the third-largest funding cut of any public university in the nation last year, according to one study.

Still, a series of tuition hikes — coupled with a reserve fund that critics say is too large — are now bringing heavy pressure on the UW from politicians of all stripes, not to mention students and families facing mounting debts.

A new state report showing the UW with $648 million in reserves, including $414 million from tuition payments, prompted an unprecedented round of UW bashing by top Republican lawmakers during a hearing earlier this week. That report also showed the system with a $393 million tuition surplus as of mid-2011 and a $213 million tuition surplus as of mid-2009 — suggesting the UW was asking for tuition hikes even as its reserves were swelling.

As a result, Democrats in a rare show of bipartisanship have joined the GOP in calling for a tuition freeze and asking for answers on the appropriate level of reserves.

“Students have been hit too hard too long,” says a letter signed by 35 Democrats and sent to UW Regent President Brent Smith.

Also, on Thursday Walker hinted he would back off on an earlier promise to boost UW funding by $181 million in his new budget.

The UW has defended its surplus, saying that at roughly 25 percent of the operating budget, it is in line with accepted accounting practices. During the hearing this week, UW System President Kevin Reilly noted that Illinois has nearly a 34 percent reserve while Minnesota is at 29 percent.

UW budget analysts have further defended the surplus. A memo from Vice President of Budget and Planning Freda Harris notes that the National Association of College and University Business Officers recommends keeping a 40 percent surplus. While acknowledging 40 percent is on the high end, the UW maintains its reserves are in line with other public universities who are increasingly vulnerable to non-tuition funding variability and ongoing cuts in public support.

But those arguments have failed to impress lawmakers like longtime UW critic Rep. Steve Nass, R-Whitewater, who issued this blistering statement earlier this week:

"President Reilly and the Board of Regents knowingly jacked up tuition ... on Wisconsin families over three years even though the funds weren’t needed," he said. "These actions are nothing short of a betrayal of the public trust."

Nass aide Mike Mikalsen has further taken issue with UW claims about its reserve levels. He maintains that most other public universities have specific uses intended for their reserves while the UW is simply stockpiling cash.

“Year after year they have passed along these large increases to Wisconsin families while quietly building up a huge cash balance,” he said.

UW System spokesman Dave Giroux disputes that characterization and notes that the UW's books are always open to review. He says the UW has earmarked $440 million of its $648 million in reserves for specific projects, including IT upgrades and new buildings, even if those plans have not been finalized or approved by the Board of Regents.

“If lawmakers think the cash balance is too high, fine, let’s have that discussion,” said Giroux. “But we are dealing with a volatile revenue stream.”

So is the UW building up too much in reserve?

Businesses across the country have been trying to strengthen their balance sheets since 2007, hoarding cash amid an uncertain future and a stagnant economy. That’s one reason economists say the unemployment rate has remained so high, as companies are afraid to invest their reserves in new equipment or additional staff.

National observers say universities need to safeguard themselves as well. Jane Wellman of the National Association of System Heads, a group representing university officials, says a 25 percent reserve is well within reason for a large institution like Wisconsin.

“Public institutions should be managing resources more like private nonprofits, which means strategic investments and a multi-year horizon,” said Wellman.

While a tuition freeze at the UW seems all but certain, the question going forward is what impact it might have on the university system’s 181,000 students and 39,000 employees.

UW employees, like most state government workers, have been subject to pay freezes, furloughs and increased contributions for health insurance and retirement as Wisconsin scrambled to close a $3 billion budget gap.

Spokesman Giroux declined to speculate on the impact a tuition freeze might have on the UW System, whether it would preclude any salary hikes or force cutbacks in other areas.

“It’s too soon to tell,” he said. “We share a desire to hold costs down but need to work with our regents to understand how this fits into the total budget.”

The UW is hardly the only public university facing pressure to hold the line on tuition.

In Minnesota, a House committee this week approved a budget plan that would cap tuition at 2012 levels while also ensuring the state would provide $2.72 billion for higher education. By comparison, Wisconsin provided $1.15 billion for higher education in 2012, down from $1.46 billion the previous year.

The budget plan is in line with a proposal from University of Minnesota President Erik Kaler to freeze tuition while also offering employees a 2.5 percent pay increase. Salaries there have been largely frozen since 2010, with employees also facing increased health care costs.

“The U of M, in essence, made freezing tuition the central focus of its biennial budget and legislative budget request, with the priority to hold down costs for Minnesota students and their families,” said spokesman Julie Christensen.

In Maryland, legislators recently approved a cap on tuition at its public universities, which have been among the most expensive in the U.S.



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