Walker and the University

Christian Schneider at NRO has a nice post on Scott Walker and the University of Wisconsin System.  Well, at least until the last paragraph.  He has great chart that shows that since 2000 state aid to the System is essentially unchanged while tuition revenue has about tripled.  Students have paid for the increasing cost of a university education under all administrations and legislatures.  We’re not barely scraping by but we are frustrated by micromanagement from the legislative process.  We’re frustrated again because neither the political process nor System Administration has been able to distinguish quality from non-quality.  Most cuts are distributed among the parts of System by the same formula.

Therefore, Schneider is correct that the opportunity to eliminate micromanagement and make significant decisions about poorly performing units is attractive to most of the denizens of UW.  There are, however, two to four schools that are scared to death to lose their political protection.   Authority could be a great thing if we have the courage to take action.

Then he his last paragraph goes off the tracks:

It also didn’t particularly help UW’s case when legislators found the system had been sitting on nearly $1 billion in reserves, stashed away for a rainy day. Perhaps Walker’s budget will provoke them to pull out their umbrellas.

The link doesn’t support him.  It says this:

the UW regents will discuss at a meeting in Stevens Point later this week, details how nearly $1 billion is set aside to cover specific expenses, make up unexpected shortfalls, pay for emergencies, and be used at the discretion of chancellors.

The link identifies the first problem with reserves.  They are there for a purpose.  They can be built up for major expenditures like a building remodel.  They are there for uneven spending.  Our textbook rental system buys more books some years and less in other.  It can’t go negative or students would not have books.  The number is exacerbated by the nature of the university.  Tuition is paid at the beginning of the semester but many expenditures are paid later.  Therefore we have money on hand to pay.

The second problem is that he cuts are base budget cuts.  As Schneider points out many oversell that cuts at $300 million when it is really a base budget cut of $150 million.  The small amounts in reserve that can actually be spent are one-time.  Once spent they are gone.  The budget cuts are base budget cuts so that is like firing an employee.  We have eliminated that salary forever.  So if we use the reserve to pay the employee we will have a problem shortly.

Just ignore the last paragraph and it is a good summary.

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