Board of Regents president discusses surplus

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Board of Regents president discusses surplus

Premiere Date: 
April 25, 2013

UW Board of Regents President Brent Smith talks about the UW System's surplus.

 

Episode Transcript: 

Frederica Freyberg:

In fact, even many Democrats, usually big defenders of the UW system and its need for funding, are now calling for a tuition freeze at a minimum. 35 Democrats signed on to a letter to the UW Board of Regents citing a 49% increase in tuition in the last ten years. The letter says, "Students have been hit too hard too long. We would like the UW System Board of Regents to freeze tuition for the next biennium and urge you to conduct an in depth analysis of the appropriate level of cash reserves, and consider either increasing financial aid or a potential tuition reduction for this and/or the following biennium." Governor Scott Walker, as well as Republican legislators and budget writers, are also calling for a tuition freeze. And some want to cut the governor's proposed $181 million budget increase to the UW in response to the tuition surplus. Let's find out what the UW Board of Regents president, Brent Smith, thinks about these calls for cuts and freezes. He joins us from La Crosse. Thanks a lot for doing so.

Brent Smith:

Happy to do so.

Frederica Freyberg:

Well, right out of the gates, I will ask you, what is your reaction to idea of a tuition freeze, or even a reduction, as some are calling for?

Brent Smith:

Well, I think on the freeze, I’ve got to meet with my other regents first and get some consulting with them to see what their views would be before I take a position on that. We certainly respect the views, obviously, of students, the governor, and bipartisanship in the legislature.  Beyond that, I think the other cuts that are at least rumored about,  I think we’d want to take a look first at the impact those would have. I don't think there’s been enough work done on that as yet to see what impact that would have on our students and on our system. I hope they don't happen, and I hope before they act too quickly, we kind of, as I’ve said here, hit the pause button and take a look at what impacts such cuts would have.

Frederica Freyberg:

When you say cuts, you’re talking about cutting into the proposed increase of $180 million-plus that's in the governor’s proposed budget.

Brent Smith:

Correct. The governor’s budget was $181 million, and that's what we’re talking about.

Frederica Freyberg:

In your view though, Regent Smith, how sorely needed is that increase in state aid that's in that proposed budget?

Brent Smith:

Well, it’s very much needed. The history is,  you and your viewers know of the UW System over the last ten years, has been one of just struggling to keep the funding about where it is. There hasn’t been any increases. And as you know, there’s been cuts both under a Democratic governor, a Republican governor and a lapse last time. I think it’s critical that we at least hold our own. You know, for the first time, the governor's budget put us with the university getting the funding above what our prison system is. I’d hate to go back in the other direction.

Frederica Freyberg:

In terms of the reserves that caused much heat up at the Capitol this week, do you understand how students and families, not to mention legislators, could bristle at a surplus in tuition after it’s been increased so much even in the midst of this recession?

Brent Smith:

I can, and I do understand that concern, and that is felt throughout our system. I would say this though, there’s a misconception that we have– we’re sitting on a bunch of cash somewhere that has not been committed, not been in some ways already talked for, and that we’re just sitting on it waiting for it to go out. We have in our system over–  the number that the fiscal bureau uses, a little over $600 million, but of that $400 million has been committed to projects that are of great assistance to students throughout our system. So in a system that has an annual budget of $5 billion, we’re really talking about $200 billion that is unrestricted. I think most people would say that’s cutting it a little thin even as it is. Any further reduction on that, I don’t think would be very fiscally prudent.

Frederica Freyberg:

Now it does sound to me as though you have great familiarity with these numbers, but one of the things that Republican senator Mike Ellis said this week is, and I quote, “It appears the regents are not in charge or control of the UW System.” Referring, he says, to the board’s lack of knowledge of specific reserve accounts. How do you respond to that?

Brent Smith:

I can’t speak for every regent, but I think overall we are well informed about what the budget is and what the numbers are. Certainly we have a financial report, you know, end-of-the-year, that comes before our Business, Finance and Audit Committee in February of each year. If you go back and look at the minutes of most of those years the reserve has been discussed. If you want to call it the reserve, or a balance, whatever term you want to use. When I was on Business, Finance and Audit we talked about it, what percentage it was, how many days it would fund. So I think we have a pretty good knowledge of it. Do we have detailed knowledge of every expenditure of the University of Wisconsin System, each account on each campus, no. But I think an overall understanding of the budget, yes, I think the regents do.

Frederica Freyberg:

In light of the responses that we’ve seen this week and are likely to see as the budget process progresses, what kinds of changes do you believe should happen on the part of the UW System going forward, if any?

Brent Smith:

Definitely we’d need a better way of financial reporting. I mean, I would be the first one to say we didn’t do as good a job as we could to let, perhaps the regents, certainly the legislature and the public, know what that reserve or balance was. So we have to do that. We have to do a better job of connecting up that balance that we report, or reserve, at the end of each year, to our tuition discussions in June of the year. They’re done as different times, but there’s no reason we can’t connect it up. Those type of things certainly. And as far as financial reporting accounting I think are musts, and I think we’re already starting doing that, and that will be accomplished.

Frederica Freyberg:

Did you ever expect, very briefly in just 30 seconds left, that this would kind of blow up that way it had?

Brent Smith:

No.  You know, I thought there would be, when I started to see the reaction, and I thought there might be an adverse reaction to it. But the level of discourse, the rhetoric, has been very surprising to me.  

Frederica Freyberg:

All right. Brent Smith, thank you very much for joining us from La Crosse.

Brent Smith:

Sure.


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