After a nonpartisan analysis of the UW system’s relationships with affiliated organizations, some lawmakers are calling for stricter legislative oversight when it comes to university relations with private foundations.
The independent audit, conducted by the Legislative Audit Bureau, scrutinized the relationships between UW schools, 25 primary fundraising organizations that support university endeavors and four other affiliated groups.
After nearly a year of work, the bureau concluded that they have concerns that university actions with some affiliated groups violated a Board of Regents policy.
This comes after top officials at the embattled UW-Oshkosh Foundation were sued in January for mishandling funds and making illegal financial transfers to the foundation. In June, the Board of Regents backed out of a potential deal to use taxpayer dollars to aid the foundation in paying off its debts and in August, the foundation filed for Chapter 11 bankruptcy.
But after a ruling from a federal bankruptcy court in January, Wisconsin taxpayers may still have to pay millions to cover the real estate deals between UW-Oshkosh and its foundation. In order to cover its debt with state dollars, the foundation is suing the UW System. The UW System is also involved in another lawsuit, suing a bank that financed one of the building projects.
“In particular, we found concerns with the relationship between UW-Oshkosh and the Business Success Center, which was dissolved as an independent entity in April 2017 after UW System Administration determined that the organization was not legally separate from UW-Oshkosh,” the audit stated.
UW-Oshkosh contracted with the Business Success Center, an economic development and consulting firm, while at least half the members of the firm’s board of directors were also UW-Oshkosh officials or members of the Board of Regents, raising significant controversy.
“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 state Sen. Robert Cowles, R-Green Bay.
UW System President Ray Cross was quick to defend the university’s relationships in a letter to one of the auditors, arguing that the controversial actions at UW-Oshkosh were quickly “identified and resolved by the Board of Regents” and were isolated incidents.
“As you are aware, LAB’s audit began in March 2017. Even before the LAB audit started, we had already begun to make internal changes to review and update our oversight of primary fundraising and real estate foundation relationships,” Cross wrote. “As indicated in your audit, we have made significant progress on this front.”
Still the auditors didn’t get all of the information they requested from the individual UW System schools. While they got most of it, some schools didn’t provide the materials or refused to provide them unless the auditors traveled to the schools themselves.
And many legislators on the Senate’s committee on universities remain unswayed.
“We can’t rely on the Board of Regents to enact policies to regulate themselves in these situations,” said state Sen. Steve Nass, R-Whitewater. “I will be drafting legislation to, by law, regulate the relationship between UW system campuses and private foundations.”