The UW System says it found no other “illegal guarantees or loans” beyond those the system is suing two former UW-Oshkosh officials over, though some minor concerns over transactions between campuses and their private foundations were found.
The system has for months been reviewing any payments between UW campuses and their affiliated foundations, which help fund scholarships and campus initiatives.
During its review, the UW System needed to get additional clarification on roughly $5.4 million of about $35 million in transactions it reviewed between July 1, 2010 to Jan. 31, 2017.
Although the system found campuses could’ve handled some of those transactions better, none raised the level of concern that popped up with the UW-Oshkosh Foundation.
The system is currently suing a former UW-Oshkosh chancellor and former vice chancellor, alleging that the two approved “illegal transfers” of money for five real estate projects managed by the private UW-Oshkosh Foundation, which has now declared bankruptcy.
Since announcing the lawsuit in January, the system has clarified policies for UW campuses and undertaken the review released today. The review flagged several cases with minor concerns.
For example, at UW-La Crosse, the campus paid its foundation $183,805 years after the completion of the Veterans Memorial Stadium, which got state approval and was finished in 2009. The foundation had pledged and paid $500,000 for the Hall of Honor memorial project at the stadium, but because of the recession, the foundation was only able to raise $316,195. The foundation later asked UW-La Crosse to make up the difference so it could use that money to help the university with other initiatives, and UW-La Crosse made the payment in 2015.
The UW System says the foundation should’ve told the campus about the fundraising shortfall as the project was under construction so that its funding sources would’ve been adjusted at the State Building Commission.
At UW-Milwaukee, cash that the foundation had raised during some events was converted into checks at UW-Milwaukee offices instead of being taken to a bank “as a matter of convenience and safety.” The analysis says that’s not a best practice but is allowed if clearly documented, though the UW System recommended that in those cases, taking the cash to a bank is preferred.
The UW System wrote in its report that the Foundation Principles document, which chancellors received in April, outlines best practices in working with foundations that campuses and foundations must adopt, saying preparing those guidelines were one of the several steps the system has taken on the issue.
“The UW System has taken decisive, transparent, and accountable steps to protect our universities, protect taxpayers, and improve the important relationship with affiliated foundations,” the report says. “These improvements ensure transparency for students, families, the Board of Regents, legislators and the general public.”
The system noted that “there are valid, legal reasons” for payments to foundations. For example, campuses sometimes have to pay foundations for scholarships that foundations had funded for students who later withdrew from the university.
Other actions that the UW System said it’s taken are: requiring chancellors to sign each year a document stating that campus financial records are accurate and materially complete; requiring the foundations to give more detailed financial reports every year; and ensuring that campus officials who are on foundation boards must be non-voting members, which the system says “helps reinforce independence” between the two institutions.
See the UW System review: