UW review finds few questionable payments, but no repeat of UW-Oshkosh's problems

MADISON - University of Wisconsin officials on Wednesday turned up questionable payments by campuses to foundations — including one worth more than $180,000 at UW-La Crosse —  but found none like the allegedly illegal ones that rocked UW-Oshkosh.

UW officials questioned whether the UW-La Crosse payment was appropriate as part of a broad review of the relationship between campuses and the foundations supporting them.

Attorney General Brad Schimel sued former UW-Oshkosh officials in January over what he and the UW System allege were illegal financial transfers the campus officials made to the school's foundation. The foundation declared bankruptcy in August. 

Former Chancellor Richard Wells and former Vice Chancellor Tom Sonnleitner allegedly approved transferring more than $11 million from the university to its foundation to support five building projects. Using university funds for foundation projects violates state law.

In response to the problems in Oshkosh, the UW System's Office of Finance reviewed more than 2,000 payments totaling over $36 million between campuses and foundations affiliated with them. The payments were made between January 2010 and January 2017. 

Of those, 48 transactions worth $5.3 million required a more detailed review to find out what had happened.

In the end, the review did not find any illegal guarantees or illegal loans like those allegedly made between UW-Oshkosh and its foundation.

RELATED:Taxpayers could be on hook as UW-Oshkosh Foundation files for bankruptcy in wake of scandal

"This analysis demonstrates the integrity of foundations across the system, and we will continue to take the appropriate steps to ensure transactions are handled appropriately," UW System President Ray Cross said in a statement. 

Payments are made between campuses and foundations in a number of ways, such as to make lease payments or reimburse a foundation for a scholarship when a student withdraws, according to UW System.

But the report took issue with some transactions, such as a nearly $184,000 payment UW-La Crosse made to its foundation.

That foundation pledged to put $500,000 toward the Hall of Honor at UW-La Crosse's Veterans Memorial Stadium, which was completed in 2009.

It paid that amount to UW-La Crosse but wasn't able to raise that much money and later asked the campus if it could recoup $183,800 from the school. UW-La Crosse paid the foundation that amount in 2015.

"Finance staff question whether it was allowable for the university to pay the UW-La Crosse Foundation for this purpose," the report says, noting the UW Board of Regents and state Building Commission would have had to sign off on the deal if it had been done before construction was completed.

In another arrangement that was handled improperly, UW-Oshkosh gave more than $186,000 it received from Pepsi to its foundation. The report found the university should have kept the money, which was paid by the beverage giant for space rental and the exclusive right to sell its products.

In another payment on the Oshkosh campus, the school gave $20,000 in federal funds to the foundation so it could provide the City of Oshkosh an emergency vehicle. 

Wednesday's report showed UW-Milwaukee had by far the largest number of payments — 137 — by a campus to a foundation. Next highest was UW-Platteville, with 62. Most campuses had six or fewer transfers. 

The report found that cash collected by the UW-Milwaukee Foundation was turned over to UWM, which would then provide the foundation with checks of the same amount "as a matter of convenience and safety." That arrangement was used for book sales and a number of athletic fundraisers, the review found. 

"While this process is not considered a best practice, it recognizes the risk of fundraisers, such as students carrying cash, and is allowable if transactions are clearly documented," the report said.

The report recommended that the UWM foundation use a traditional bank for these services in the future.

Campuses must follow new policies for their foundations. Among them: UW officials can no longer be voting members of foundation boards; foundations that receive more than $500,000 a year must submit annual audits; and the financial documentation for foundations must be "understandable to an independent third party without additional information."