UW System Audit Evaluates Funding Reserves

During this spring’s budget hearings, it was revealed that the University of Wisconsin System had large cash balances sitting in reserve. In response, the legislature froze tuition for two years and directed the Legislative Audit Bureau (LAB) to audit the UW System’s program revenue balances.

LAB found that the UW System’s program revenue balances totaled more than $1 billion as of June 30, 2013. Of that amount, LAB focused on reviewing the $755.4 million in balances that did not have a restricted use. The audit broke the total $755.4 million unrestricted balance into five categories: obligated, planned, designated, reserves, and undocumented. 18.8%, or $142.2 million, was “undocumented” meaning it had no documentation of an obligation or plan for the funds.


The $755.4 million in unrestricted funds came from fours sources: Academic Student Fess ($414.1 million), Federal Indirect Cost Reimbursement ($147.9 million), General Operations Receipts ($138.6 million), and Extension Program Receipts ($54.8 million). The majority of these undocumented dollars comes from federal reimbursements.

In its letter of response to the audit, the UW System explains that these federal funds are held in reserve as a hedge against the potential of cuts to federal funding during down economic times.

The audit also breaks the total $755.4 million unrestricted balance out by institution:

2013 Wisconsin Act 20, the 2013-15 Biennial Budget, requires the UW Board of Regents to propose a methodology for the calculation of program revenue balances and reserves and to submit that to the Joint Legislative Audit Committee for approval. The Committee will hold a hearing on November 20 to consider the methodology proposed by the Board of Regents. Once these policies are adopted the LAB will audit them.