The Board of Regents approved a 2002–03 budget July 18 that continues momentum on major University initiatives in a framework of widespread cost savings and reallocation of expenditures around campus.
Included in the plan is a 7.9 percent tuition increase for undergraduate students—the lowest of any public university in the Big Ten and second lowest in the state. The increase amounts to about $550 per year. Graduate student tuition varies by program but most rates will increase by 5.8 percent.
State appropriations for higher education will be flat for the coming year, not increasing over FY2002 funding. Michigan public universities agreed to pass tuition increases for the coming year of no more than 8.5 percent or $425, whichever is greater. Both educators and legislators regarded this as a positive development because severe budget pressures in Michigan could have led to actual cuts in state funding and much larger tuition increases.
“This University and higher education in general have been spared widespread cuts in state funding, and in this regard we have fared better than most of the major public universities in the country,” says Interim Provost Paul Courant. “This is our lowest increase in the state appropriation since FY1994, which was also zero, but given the state’s circumstances we recognize how fortunate we are. For our state to have held to a zero increase in these economic times shows an extraordinary commitment to public higher education.”
The University’s General Fund budget for the Ann Arbor campus, as it has in recent years, will continue to focus most new resources on academic programs. Areas of priority include the life sciences, undergraduate education, distinguished scholarship and research, and the use and understanding of new information technologies.
Examples of new or expanded efforts include:
The overall budget projects growth in the General Fund of about 5.5 percent (down from 6.3 percent last year), or $57.7 million. The General Fund comprises state appropriations, tuition revenues and indirect cost recovery from sponsored research. Indirect cost recovery is expected to grow by nearly $7 million, reflecting continued record levels of research conducted at the University. As both research volume and student enrollment continue to rise, they bring with them not only revenues but also corresponding costs associated with increased activity levels, Courant says.
The University is seeing relatively rapid growth in costs in a number of areas, and the expenditure budget reflects these cost increases. These areas include employee benefits, particularly health insurance premiums and prescription drug coverage; maintenance of computerized data management systems; and upkeep of physical facilities. For example, the budget includes new funding of $2 million to replace chillers across the campus and another $1 million for debt service of renovation and construction. Insurance premiums for liability and property coverage also are increasing sharply, part of a national trend in response to the attacks of Sept. 11.
Heading into this extremely tight budget year, Courant says University units must find ways to cut costs in order to support their academic priorities, fund new initiatives and provide for salary increases for faculty and staff.
He cited several examples of the type of cost cutting that is taking place across campus:
The University budget was approved 6–1, with Regent Andrea Fischer Newman voting against the plan.