OK, I believe there is some confusion here.
First: They are trying to ban the morning after pill in UW pharmacies only, not any pharmacy.
Second: The pharamacies are funded by student fees, as are most of the retail things on the campuses (thus, why they get a discount on things like software and drugs).
Third: There is more to this than just the moral issue; it is also a political one. As long as I can remember, the Republicans in our Congress have been at odds witht the UW, particularly Madison (it is, generally, one of the most liberal places in the US). And now, especially since their have been professors in Madison abusing things like state funded cell phones and trips (they make it sound like they're dealing w/ the devil), they have taken every opportunity they can to smear the UW and make the generalized idea of the UW system, seen as being quite liberal, look bad. Here, the UW (madison in particular, again) is much more than just a school; it is a political entity more powerful than any interest group, because it gets so much money and has so much influence, so that Madison can compete w/ places like Harvard. Really, it's also a part of a conservative campaign to publisize the wrongs of the UW -- we are having a budget battle right now, and UW does use lots of money...they want the UW to have less.
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