UW System costs audited

Recommendations contained in an audit of University of Wisconsin System administrative costs and staffing were embraced by UW System President Kevin Reilly, despite concerns about how auditors arrived at some of their findings.

Systemwide, the Legislative Audit Bureau found that 25 percent of its employees have administrative duties and that 15 percent of its expenditures were for administrative expenses. The report made four specific recommendations, calling for the system to:

• provide the Legislature with complete periodic reports on executive salaries, fringe benefits, and cash and noncash compensation from outside sources,
• provide all UW institutions with guidance in coding contractual expenditures,
• seek statutory changes to streamline and improve its position reporting, to ensure accuracy, and
• report to the Joint-Legislatures Audit Committee by Feb. 1, 2005, on administrative staffing and service-delivery costs by institution.

Reilly says the audit provides suggestions that will help the system operate more efficiently.

“We intend to implement all of them, and I believe this will improve the quality and usefulness of the financial and staffing information that we provide to the Legislature and governor,” he says.

Reilly notes, however, that one of the challenges of the review lies in how auditors counted those performing administrative duties.

“The LAB used its own unique method of assessing our administrative staffing,” Reilly says. “For example, they counted positions that have supervisory responsibility and all clerical and secretarial positions as administrative costs — positions in student affairs, career planning, athletics and financial aid that most students and citizens do not generally associate with ‘university administration.'”

The audit did confirm that, when applying national standards for institutional support used by the federal government, the UW System has the lowest administrative expenditures among its 18 peer institutions — 6.9 percent, compared to a national average of 10.2 percent.

But auditors went further, adding other types of employees to its analysis.

Darrell Bazzell, UW–Madison vice chancellor for administration, says the new definition makes it hard to assess where the campus stands nationally in terms of administrative costs.

“Because they devised their own definition, it makes it very difficult to determine where we stand in regard to similar universities,” Bazzell says. “Without a benchmark to measure ourselves against, we can’t say whether 15 percent is high or low.”

He also stresses that not all noninstructional costs are strictly administrative.

“Police provide campus security, staff members process student financial aid forms, advisers help students make course and career choices,” Bazzell notes.

The audit also notes that between March 2003 and March 2004, the system added nearly 90 new positions, despite recent state budget cuts. But Reilly says that growth has come with nonstate dollars, and has helped fuel the state’s economy.

“We believe that the more we can leverage state dollars to increase outside federal and private grant and gift funding, the greater the benefits for the people of this state,” Reilly says. “It is important to note, in that regard, that the number of UW employees supported by state tax dollars today is lower than it was in 1986.”

Bazzell says that grants drive UW–Madison’s research mission and help stimulate the state’s economic climate.

The audit’s findings will be discussed in a meeting of the Joint Legislative Audit Committee on Wednesday, Oct. 6, at 9 a.m. A copy of the audit is available at http://www.legis.state.wi.us/lab/.