FOR IMMEDIATE RELEASE:
March 2, 2018
Contact: Sen. Cowles: (608) 266-0484 / Rep. Kerkman: (888) 529-0061
Audit Recommends Increased Oversight and Monitoring of UW Relationships
MADISON– Today, the nonpartisan Legislative Audit Bureau (LAB) released its audit of the relationships between University of Wisconsin (UW) and certain affiliated organizations, including primary fundraising foundations that support the mission of individual UW institutions, real estate foundations, alumni associations, and other organizations (report 18-4). In fiscal year (FY) 2016-17, information provided by UW System Administration indicated UW institutions had relationships with 90 affiliated organizations. From FY 2007-08 through FY 2016-17, LAB found that UW institutions had paid an estimated $257.9 million to affiliated organizations.
“Again, this is exceptional work by the LAB. To have a comprehensive look at the relationship between UW institutions and affiliates is necessary and revealing,” said Representative Samantha Kerkman (R-Salem Lakes). “In a snapshot, these relationships are historically clouded by smoke when what students, taxpayers and the Legislature want and deserve is absolute transparency. Clearly, strong policies are warranted to ensure taxpayers and students are protected.”
In December 2017, and while the audit was underway, the Board of Regents established a specific written policy governing the relationships between UW institutions and primary fundraising and real estate foundations. LAB examined the relationships between UW institutions and 25 primary fundraising foundations, prior to the establishment of the policy, and found that the operations of many UW institutions and foundations were not fully separate and independent from FY 2007-08 through FY 2016-17. LAB also examined four other affiliated organizations and found they were not fully separate and independent from their UW institutions, in part, because UW employees were voting members of the boards of directors. In particular, LAB found concerns with the relationship between UW-Oshkosh and the Business Success Center, which was dissolved as an independent entity in April 2017. The Board of Regents has not established a policy governing the relationships between UW institutions and affiliated organizations that are not primary fundraising or real estate foundations, and LAB recommends such a policy be established.
“The UW System needs to address these issues surrounding affiliated-foundation relationships. By developing consistent and comprehensive transparency policies we can help avoid future situations, like those that have occurred in the past at UW-Oshkosh, in addition to new findings in this audit regarding the Business Success Center,” said Senator Robert Cowles (R-Green Bay).
As of June 30, 2017, UW employees also worked as the executive directors of most foundations affiliated with four-year universities. UW institutions indicated that nine foundations reimbursed them for some or all of the salary and fringe benefits costs of an additional 50 employees who also worked for the foundations as of that date. Because UW employees did not track the amount of time they worked for the foundations, it was not possible for LAB to determine whether foundations fully reimbursed UW institutions. In addition, LAB found that UW institutions and foundations executed operational agreements in 2017 that did not consistently comply with the Board of Regents policy.
To help ensure the UW System President maintains fiscal control over UW System, as is statutorily required, LAB makes a number of recommendations for increased monitoring of the relationships between UW institutions and all affiliated organizations. LAB also recommends that UW System Administration annually assess each relationship and determine whether any changes are necessary.
Copies of report 18-4 may be obtained from LAB’s website at www.legis.wisconsin.gov/lab or by calling (608) 266-2818. Report concerns related to state government activities, including those related to UW System and its institutions, by calling the toll-free hotline at 1‑877‑FRAUD‑17.