BY JOSEPH LICHTERMAN
Daily News Editor
Published March 2, 2011
LANSING — Since he took office in January, Republican Gov. Rick Snyder has repeatedly spoken about the “shared sacrifice” required to right Michigan’s economy and balance the state’s budget. In response, University President Mary Sue Coleman and presidents from other public universities across the state have been preparing for potential cuts to higher education funding, while still emphasizing the importance of higher education to the state's long-term fiscal health.
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Snyder’s budget proposal calls for a 15-percent across-the-board cut to the state’s higher education appropriations. But schools will receive even less money from the state if the cost of their in-state tuition increases by more than 7.1 percent — the state average of tuition increases over the past five years. If the University increases tuition above this percentage, it will see about a 20 percent reduction in state funding.
Despite the prospect of facing such a large cut in state funding, University officials said they knew drastic reductions were coming, and they’ve been preparing for the scenario for several years.
In an interview with The Michigan Daily last month, University President Mary Sue Coleman said the University has projected cost savings for the next several years to ensure the University’s financial solvency. She added that the University began cutting costs five or six years ago to prepare for potential budget cuts.
"We’re in a cycle now to continue the cost savings," Coleman said. "We’ve even projected out to 2017 because in our view we’re going to have to make ourselves more efficient, get value for every dollar that’s being spent (and) make tough decisions because we don’t see the economic climate in the country bouncing back any time soon.”
In a continuing effort to reduce costs, University Provost Philip Hanlon said in an interview last month that the University has undertaken cost savings measures by combining several IT units— saving the University $7 million, and by decreasing the amount of general fund money given to the schools within the University by $20 million.
“Looking ahead to the next fiscal year (the cuts) could get deeper, but that’s what we’re executing right now,” Hanlon said. “That’s having impacts on how often small classes are offered (and) the hiring of staff. We’re doing our absolute best to protect our core academic missions and have the impact on students be as minimal as possible."
On Wednesday, Coleman joined Grand Valley State University President Thomas Haas, Ferris State University President David Eisler and Oakland University President Gary Russi in testifying before the state Senate and House Appropriations Subcommittees on Higher Education at the State Capitol in Lansing.
In her testimony before the House subcommittee, Coleman emphasized the University’s commitment to cutting costs and its dedication to ensuring that tuition is affordable for all students. The University plans to reduce costs by $100 million by 2012 and by another $120 million by 2017.
Coleman also said the University has offered “historic” levels of financial aid to students in recent years.
“These extraordinary amounts of support mean that a typical Michigan resident undergraduate student with an income of under $80,000 pays less today than in 2004,” Coleman said. “… We are a better bargain today than when I first came to the University in 2002.”
A 15-percent slash in state funding would translate into a nearly $47.5 million reduction in state funding from the current $316 million state dollars allocated to the University. That amount would increase by about $14 million, or 5.2 percent, if the University doesn’t meet the state’s tuition guidelines.
Both Hanlon and Coleman said at this point in the budget process they don’t know whether the University will be able to keep tuition increases below the 7.1-percent threshold.
“Ultimately it's up to the regents to approve tuition, so I don’t want to get ahead of that process at all,” Hanlon said. “… I’m hopeful that we would want to stay underneath that cap anyway, but again, I always hate to say anything about tuition because it’s up to the Board to make tuition.”
The University’s Board of Regents typically sets tuition levels at its June meeting when the University’s budget is released. In 2010, the regents increased tuition by 1.5 percent for in-state students — the smallest increase since 1984— but increased tuition for out-of-state students by 3 percent. The last time tuition was raised by more than 7.1 percent was for the 2007-2008 academic, when the regents increased the price of in-state and out-of-state students’ tuition by 7.4 percent.
A 7.1-percent tuition hike would translate to an increase of $827 for Michigan residents paying lower division LSA tuition, and non-resident students would be have to pay $2,542.66 more for lower division LSA tuition.
Coleman said in her testimony last week that she will work to guarantee that the University fulfills its mission, regardless of how much state funding is ultimately cut.
“The University of Michigan is a treasured public asset, and my job as its president is to ensure its future for the next 200 years,” Coleman said. “I will not allow its value to diminish under my leadership. Everyday we honor the public’s longstanding investment by attracting talented students and faculty to Michigan as well as watching the bottom line that ensures taxpayers receive a strong return on their dollars."
Coleman added that the University has remained steadfast in its goals to educate students and conduct research even in economic downturns. She said the University has actually grown and expanded during previous economic slumps and cited that the Law Quadrangle, Rackham Graduate Building and Burton Memorial Tower were built during the Great Depression in the 1930s, and the University Hospital was built during the recession in the 1980s.
“This is not the first time our state has faced difficult economic times,” she said. “We can all point to challenging eras of dwindling resources, and yet generation after generation of the state’s leaders and citizens have supported the University of Michigan.”
Coleman added that like her, Snyder also believes higher education will be the catalyst for economic turn-around in the state.
“As Governor Snyder has said, world-class universities are one of our biggest assets,” Coleman said. “Higher education, with all of its contributions to society, is how Michigan will reclaim its prominence. We know a University of Michigan education makes a difference.”
Coleman said in an interview after the hearing that it was important for her to testify before the committees because a number of senators and representatives are newly elected.
“I was really happy to (testify) because a lot of these people were brand new, and they haven’t heard me talk about the University of Michigan and they don’t know necessarily about some of the programs,” she said. “And one of my jobs is to educate them … And I think based on some of the questions they asked, they got it. They understand what I was talking about.”
State Rep. Bob Genetski (R–Saugatuck), chair of the state House Appropriations Subcommittee on Higher Education, said in an interview last week that he was glad the university presidents testified, as it provided more education for the Legislature to make its “big decisions” about the budget.
Like Coleman, Genetski said the state’s public colleges are important in turning around the state’s economy. But he also said the higher education budget was one of only a handful of places where the Legislature could cut funds.
“When you look at the higher ed budget, almost all of it is general fund money,” Genetski said. “… Unfortunately, universities are one of the few places from where we can cut.”
Genetski pointed out that in Snyder’s proposed budget for the 2013 fiscal year, also released last month, there are no further reductions to the state’s higher education budget beyond what Snyder proposed for 2012.
“(There are) no cuts next year in the two-year budget,” Genetski said. “That’s a very good and very optimistic thing.”