FOR IMMEDIATE RELEASE:
May 6, 2019
Contact: Sen. Cowles: (608) 266-0484 / Rep. Kerkman: (888) 529-0061
Audit Examines UW Financial Management and Operations
MADISON– Today, the nonpartisan Legislative Audit Bureau (LAB) released its fiscal year (FY) 2017-18 financial audit of the University of Wisconsin System (report 19-5). Total tuition revenue increased from $933.4 million in FY 2008-09 to $1.3 billion in FY 2017-18, or by $382.6 million. Of this increase, $150.9 million, or 39.4 percent, is attributed to tuition paid by nonresident students. LAB found that from academic year 2008-09 to academic year 2017-18, nonresident enrollment increased by 10,558 students and resident enrollment decreased by 12,881 students.
UW System’s total program revenue balance was $1.3 billion as of June 30, 2018. Of this amount, $906.9 million was from unrestricted sources such as tuition. LAB found that, over the past ten years, UW-Oshkosh has increased housing rates despite having an available program revenue balance of approximately $7.0 million that could have been used to offset or avoid room rate increases. LAB recommends that UW System take steps to ensure that UW institutions do not report expenditures that are budgeted to be paid out of current-year revenues as also being funded from existing program revenue balances. LAB also recommends UW System ensure UW institutions consider available program revenue balances when establishing rates for auxiliary services, such as housing.
In FY 2017-18, Salary and Fringe Benefits was UW System’s largest expense and totaled $3.2 billion, or 63.1 percent of total expenses. As required by statutes, UW System created two new personnel systems, which were implemented on July 1, 2015, and included compensation changes related to merit-based pay and new pay structures. Because UW System did not ensure appropriate policies and guidelines were established for some areas of its new personnel systems, LAB found some UW institutions could not consistently document that all employees receiving merit-based salary adjustments had met performance expectations. In addition, LAB identified employees that were paid more than the established salary range for their job title. LAB recommends UW System develop or revise policies and guidelines for its new personnel systems.
“This audit covers a lot of ground across multiple areas of concern,” said Rep. Samantha Kerkman (R-Salem Lakes). “From the lack of policies in personnel systems, to renewed concerns about reporting program revenue balances, to continued issues with IT security – it raises a lot of questions and threatens trust of the institution. They spent $80 million dollars for a new Human Resource System (HRS) that a short eight years later isn’t meeting their needs. That, combined with a lack of accountability with the flexibilities they were given with regard to personnel systems – well, it feels like UW-System isn’t keeping their end of the bargain.”
LAB found UW System took some steps but did not complete implementation of all of the recommendations from report 18-4 related to its relationships with certain affiliated organizations. UW System implemented an administrative policy requiring UW institutions to annually prepare a cost-benefit report. However, these reports do not include a complete accounting of all support that a UW institution provides to an affiliated organization. The policy also did not address how the reports will be evaluated by UW System Administration nor did it specify what information, if any, will be formally reported to the Board of Regents. To provide better transparency, LAB recommends UW System improve oversight and monitoring of its relationships with all affiliated organizations.
“While the UW-System has taken some steps in the right direction on improving its relationships with affiliated organizations, this analysis showed once again that more follow-up will be required to ensure smart practices are employed when using student and taxpayer funds. I encourage the UW-System to revise its administrative policies to reflect recommendations from LAB in a swift manner,” said Senator Robert Cowles (R-Green Bay).
Copies of LAB’s report (report 19-5) may be obtained from its website at www.legis.wisconsin.gov/lab or by calling (608) 266-2818. Report concerns related to state government activities, including at UW System institutions, to LAB by calling the toll-free hotline at 1‑877‑FRAUD‑17.