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State operating appropriation request for FY04 presented to regents

Despite a slow economic recovery and its impact on the state, U-M enrollment is at record levels, research awards have reached $741 million and the economic return on investment in education is as high as it has ever been, Provost and Executive Vice President for Academic Affairs Paul N. Courant said in a presentation to the Board of Regents at the November meeting. His comments addressed the operating appropriation request submitted by President Mary Sue Coleman to the state for the coming fiscal year.
Courant (U-M Photo Services)

The president's budget request notes that a weak economy increases, rather than decreases, the demands on the institution as students seek long-term economic security by investing in knowledge.

Nor can innovation or research slacken, the budget request notes, citing as a notable example of the University's ongoing intellectual leadership its expanded investment in the life sciences, and its partnership with the state's Life Sciences Corridor and with other academic institutions in the state. The University's commitment also is demonstrated by the construction of the Life Sciences Institute and the Undergraduate Science Instruction Building.

"We owe it to the taxpayers, to our students, to our sponsors and to the larger society to continue to be the sort of institution that is known for education and research of the highest quality," Courant said, "and known for doing so while exercising careful fiscal prudence on behalf of the taxpayers and the tuition payers."

In this challenging climate, the University is acutely aware of its stewardship obligation, Courant said. He listed a variety of long-term initiatives that the University has undertaken to realize efficiencies and cut costs. Purchasing reforms are saving the University more than $7.5 million a year. Energy conservation measures save $6 million a year now,
with savings slated to reach $10 million a year relative to prior ways of doing business. Vigilance is being exercised to contain health care costs. Attention to smaller areas of savings across the University's thousands of operating units is an ongoing activity. The impact of these actions is harder to estimate but results in real savings each year.

Coleman expressed appreciation for the state's continued support at a time when it faces significant financial pressure, and when many state agencies experienced reductions. "We are extremely grateful that higher education (indeed, all public education) was spared the budget cuts of the past year," Coleman said. She added that the state's approach "demonstrates the value that the people of this state place on higher education, and it brings with it an obligation on our part to deliver education and other services to the state in the most efficient way possible."

In the budget request, Coleman noted that "an increase of 4 percent, or $14.5 million, in conjunction with continuing belt-tightening, would enable us to make progress on our most important initiatives without cutting into essential educational activities and infrastructure, while exercising restrained tuition growth. These are not ordinary times, and given the state's circumstances we think it unrealistic to expect any increase in our appropriation."

"This is clearly not the year to make extraordinary requests to the state, notwithstanding the increased demands that we face and the importance of our contributions to the state's economy," Coleman said. "We are willing to share in the belt-tightening of other state-supported activities."

The likely stringency of state support in the coming year will come at a cost, Courant said, citing such anticipated consequences as deferred searches to fill vacant faculty positions, which will have an impact on course offerings and class size; delayed maintenance; and pressure on other revenue sources, including tuition. Contingency planning is underway, he said.

"In the event of budget cuts from the state, which we recognize as a real possibility, we have a planning process in place to reduce our rate of expenditure," Courant said. "But implementing these plans will necessarily entail some reductions in what we are able to deliver." U-M­Dearborn and U-M­Flint also prepared requests for the state appropriations, each asking for an increase in funding.

Related story: Commission seeks university-state compact>

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