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Facing 'financial disaster' from COVID-19, UW System pushes for borrowing ability
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Facing 'financial disaster' from COVID-19, UW System pushes for borrowing ability

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UW-Madison campus

A cyclist passes the Memorial Union, at right, on UW-Madison's campus last summer.

The University of Wisconsin System estimates COVID-19 has cost campuses a net $318 million loss from last March through the end of 2020.

Never has a financial landscape like the one currently facing the System made a better case for giving campuses the authority to borrow, officials told the UW Board of Regents at a Thursday meeting, just days before the 2021-23 state budget process begins when Gov. Tony Evers unveils his proposal Feb. 16.

The System is unique in lacking borrowing ability, a constraint that is particularly challenging because of the short-term cash-flow problems the pandemic created.

UW-Madison sustained more than half of the System’s net losses, $176.5 million, since the pandemic hit last spring.

Rebecca Blank

Blank

Its auxiliary units, or entities that normally are self-supporting and provide goods or services on campus, such as athletics, conference centers, housing, dining and parking, saw the biggest revenue losses. UW-Madison also returned $51 million of its budgeted funding back to the state.

COVID-19 has caused the “biggest financial disaster” the university has ever seen, UW-Madison Chancellor Rebecca Blank said.

Through federal stimulus money, furloughs, pay cuts for leadership, travel restrictions and targeted budget cuts to different units, Blank said she’s optimistic the financial gap can be resolved over the next two years. But she also renewed her case for giving the university borrowing authority.

“This is a financial tool available to every one of our peer schools, every other system, every other flagship university in 49 other states,” Blank told the board. “When you have a short-term cash-flow emergency of the sort that we have had, what do you do when you’re a $3.4 billion organization that’s UW-Madison, much less a more than $6 billion organization for the System? You spread the current cash-flow problem against future good years with borrowing.”

Interim System President Tommy Thompson said that in his conversations at the Capitol he’s come across people who are “adamantly opposed” to giving the System borrowing authority while others are “willing to make a deal.”

Evers isn’t “totally sold yet” on bonding, Thompson said, and he doesn’t know if the governor would include it in his budget proposal. But Thompson also said he was “fairly certain” Evers would sign for the measure if the System could get it into the budget that comes across the governor’s desk for approval.

Spokespeople for Evers, Assembly Speaker Robin Vos, R-Rochester, and Senate Majority Leader Devin LeMahieu, R-Oostburg, did not respond to questions of whether they supported giving the System borrowing authority.

The arguments Thompson said he’s heard from lawmakers opposed to such borrowing authority are that it’s not needed or due to a lack of trust.

“It’s just archaic, it’s wrong and I’m doing everything I possibly can to talk to legislators to convince them we need that opportunity in order to run this huge institution,” Thompson said, adding he’s hopeful he can get it done.

Blank has unsuccessfully pushed for borrowing authority since she started her job in 2013. If the pandemic doesn’t illustrate the need for the state flagship university to have this tool at its disposal, she said she didn’t know what would.

For example, the UW Athletics Department took a roughly $45 million hit, but is poised to bounce back post-pandemic. Every other Big Ten athletics program borrowed from their university to get through this time.

“We instead are using chicken wire and masking tape to try to figure out ways through our reserves to make loans and to try and get them through this time,” Blank said. “It’s just a crazy way to operate. We need modern financial tools at this university.”


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