As a part of his plan to solve the state’s budget problems, Gov. Jim Doyle called recently for $250 million in cuts to the UW System along with a proposed 56 percent increase in financial aid, Wisconsin’s biggest spike in student aid.

The source of money for the increased financial aid for System students, however, would be taken from the System itself.

“(Those) funds are coming from the auxiliary balances,” Vice Chancellor Andy Soll said.

In short, he said UW-Eau Claire is being asked to play its part by helping to fund a System-wide increase in financial aid to help “get over the hump” in the upcoming biennium’s financial deficit.

The money would come from balances in accounts, such as room and board, bookstore revenue, vending machines and food services — essentially anything related to segregated fees, Soll said.

He stressed that the Eau Claire campus would not have to raise segregated fees.

The balances on hand represent about 15 percent of the prior year’s operating budget, he said.

The question, Soll said, is what are appropriately sized reserves. These amounts are reported to the Joint Finance Committee, the overseer of the funds.

The state is aware of any excess in the balances and, as a result, Soll said all of the UW campuses have tried to bring the balances down.

“We’ve been nervous about this,” he said.

If the auxiliary funds are limited to the 2003-05 budget “no significant, if any, auxiliary operations in the short term” would be affected, Soll said.

If the auxiliary funding, however, is not replaced in the 2005-07 budget, he said it would create a reason to be very concerned.

Although the auxiliary funding is considered a one-time use, it is not the first time it has been used before.

In the early 1980s, about $22 million was taken from the System and placed into the state treasury, Soll said.

He pointed out that $22 million 20 years ago represents a significantly larger number than the current $26 million. He added that the removal of the funds had no benefit to students.

The $26 million for the next biennium would be used for the aid of students.

That money would go toward the Wisconsin Higher Education Grant program that provides grants to students.

Financial Aid Director Kathleen Sahlhoff said she is excited about the plan.

It would provide more students with financial gifts rather than repayable loans, she said.

Soll agreed, saying grants are more desirable than making students take on more loans.

The state government repays the System over time, Soll said, but no details have been made for repayment in the 2003-05 biennium.