An ongoing case between the UW System and embattled UW-Oshkosh Foundation will go to trial, despite the System’s request to resolve the issue after a federal judge’s April 12 ruling.
The trial will decide whether or not the state will have to cover $15.8 million of debt which came from five UW-Oshkosh building projects, The Oshkosh Northwestern reported.
The case began January 2017 when the state Department of Justice and UW System filed a civil lawsuit against three top officials at UW-Oshkosh for mishandling millions of dollars and making illegal financial transfers to the foundation. The lawsuit stated the officials also allegedly spent $600,000 on a foundation project with no strings attached.
A ruling from Chief U.S. Bankruptcy Judge Susan Kelley last January made it possible for Wisconsin taxpayers to still have to shell out millions of dollars to cover illegal real estate deals between UW-Oshkosh and its foundation after a ruling from a federal bankruptcy court.
Kelley denied the UW System’s request to dismiss or postpone the foundation’s claim, leaving the door open for the possibility that taxpayers could foot the bill for the illicit deals.
But in June, System Audit Committee Chair Michael Greve announced that no state dollars would be spent on paying off the real estate debts of UW-Oshkosh’s Foundation. He said the use of state funds to aid the foundation in paying off its debts “would be inappropriate.”
The Board of Regents chose to withhold state funds after state Sen. Stephen Nass, R-Whitewater, urged it to do so.
“You need to keep your commitment that the public won't be forced to fund the inappropriate decisions of two campus administrators and the failed oversight of the System,” Nass wrote in an email to the Board of Regents.
After the Board of Regents backed out of the potential deal to use taxpayer dollars to aid the UW-Oshkosh Foundation in paying off its debts, the foundation filed for Chapter 11 bankruptcy last August.
Tim Mulloy, the chairman of the UW-Oshkosh Foundation’s board, chastised the June decision, saying the Board “bow[ed] to political pressure” and that the decision left the foundation “with very few options.”
Nina Bertelsen and Noah Habenstreit contributed to this report.