Universities tell subcommittee the effects of reduced state funding




Updated 4:00 PM March 24, 2003
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Universities tell subcommittee the effects of reduced state funding

By Laurel Thomas Gnagey

The leaders of five Michigan universities, including President Mary Sue Coleman, say they are making tough decisions for dealing with a proposed 10 percent reduction in state support, but that cost reductions will not deter the institutions from their primary missions of providing quality education to students.

President Mary Sue Coleman speaks to lawmakers in Lansing. (Photo by Laurel Thomas Gnagey, University Record)

Coleman and the leaders of Michigan State University (MSU), Michigan Technological University (MTU), Saginaw Valley State University (SVSU) and Oakland University (OU) testified before the House Subcommittee on Higher Education Appropriations March 19. Each president addressed how his or her institution is cutting costs in the face of a 6.5 percent reduction in fiscal year 2004 on top of a midyear 2003 cut of 3.5 percent.

Elimination of programs, increased class sizes, a reduction in class offerings, tuition increases and staff reductions are among the ways universities are addressing Gov. Jennifer Granholm's proposal to balance the state budget.

In remarks before the subcommittee, Coleman said the University will reduce staff by about 200 positions through a combination of restructuring, leaving open vacant positions and, to a lesser degree, layoffs. The president said an estimated 25 faculty positions also will be cut through elimination and reconfiguration of open positions.

"We currently are making and will continue to make significant reductions in operations, programs, class offerings and staffing," Coleman said. "We are going to work hard to preserve our academic quality and the students' educational experience—our top priority will be our students and the educational environment."

Coleman was asked what she meant by class reductions and whether there would be an impact on student graduation rates. The president explained that courses to be offered less frequently would be those with low demand, so that students should not be adversely affected in their ability to progress toward graduation. She emphasized, however, that in areas of high demand the University is increasing sections.

Coleman also highlighted a number of ways the University has reduced costs in recent years, including energy savings, pharmaceutical cost reductions and streamlined purchasing.

"In addition to the $36 million that is cut in the governor's budget, we also face another $50 million in cost increases next year," she said. "Many of these increases in operational costs are necessary because of factors outside our control, such as increased federal regulation of patient privacy, increased costs of utilities, increased medical care costs, and increased costs of security systems in student housing, just to name a few. We are continually working at mitigating costs, but we cannot avoid them entirely.

"And although we can always do more, I can tell you that the University of Michigan has exercised strict cost control and has worked vigorously to reduce the cost of its operations."

Coleman would not speculate on how large a tuition increase might be, but some of her colleagues were more outspoken.

MTU President Curtis Tompkins said he is looking at a 20 percent tuition increase to help balance his university's budget. Tompkins called his decision to go along with leaders of the state's 15 colleges and universities in holding tuition to single digits last year an act of "poor judgment."

Gary Russi, president of OU, said his institution is considering a 19 percent increase. MSU President Peter McPherson said no decision has been made for his university but that an increase is likely. He and Coleman pointed out in their remarks that the two institutions have done a better job than most Big Ten universities in holding down tuition increases in recent years.

The five presidents had 10 minutes each to state their cases before the nine-member panel asked questions of the university leaders. A majority of the subcommittee members expressed their frustration with the proposed 10 percent reduction, including Reps. John Stewart (R-Plymouth), Mike Pumford (R-Newaygo) and Chris Kolb (D-Ann Arbor). Pumford called the 10 percent cut "unconscionable." Kolb said it was "hard [for me] to swallow," and that he was concerned about "long-term consequences."

The hearings before the subcommittee are the beginning of the budget process. The appropriations committee will act on a budget and recommend it to the full House. A similar process will occur in the Senate. A final compromise budget bill is expected by mid to late summer.

Three central themes emerged from five Michigan university presidents testifying before the House Subcommittee on Higher Education Appropriations March 19: A 10 percent cut proposed by the governor will hurt students and the state; universities have been practicing cost-cutting and will do more, but not without pain; and short-term budget issues should not become long-term problems that undermine the state's valuable higher education system.

Highlights of the presidents' remarks include:

President Mary Sue Coleman, U-M

"It is true that we depend on our appropriation from the state—but at the University of Michigan, we give back far more to the state than we receive in our state appropriation.

"Just as the governor is working with federal officials to obtain funding for roads and Medicaid, the University of Michigan, along with Michigan State University, Wayne State University and Michigan Technological University, is instrumental in leveraging federal dollars for the state. The results are job creation and economic development.

"For every job created at the University of Michigan, a total of 2.5 jobs are created in the state. An important mechanism in this chain of job creation is the attraction of federal funds for sponsored research.

"This research, of course, leads to new discoveries. And with new knowledge comes the opportunity for technology transfer into the commercial marketplace—in the last three years, 25 start-up companies were generated by the University of Michigan, along with the application for 254 patents and 222 licenses for our discoveries. Research universities create jobs through new ideas and new businesses.

"We know that the cuts proposed in the governor's budget will be difficult to absorb while trying to maintain the competitive advantage and national reputation that enable us to contribute to the state's economy as we currently do."

Peter McPherson, MSU

The higher education system in Michigan is one of the "jewels of the state and the envy around the country" that should be preserved.

"Over the past seven years, the rate of increase in institutional financial aid budgets has surpassed tuition rate increases. Our ability to continue this trend will depend on a number of variables, including the level of state support and tuition and fee rates."

Specific cuts at MSU:

• Eliminate the Department of Agricultural Engineering

• Phase out the graduate program in audiology

• Discontinue the doctoral program in counseling psychology

• Reduce the workforce: MSU Extension by 125 positions; Michigan Agricultural Experiment Station by 30 research faculty and 80 graduate assistantships; graduate assistant appointments by 5 percent.

Curtis Tompkins, MTU

"We will have a $10 million deficit in our general fund balance at the end of this fiscal year. That, in spite of the fact that we will reduce our general fund operating budget by $6 million. We have been cutting costs very aggressively.

"[But also] we'll have massive layoffs. In the Upper Peninsula, particularly in our area, if you lose your job at Michigan Tech, there's no other place to go.

"We're going to have a brain drain from the state of Michigan without Merit." (Merit refers to state scholarship money students receive for passing the state's educational proficiency examination and for grade point average).

MTU cuts:

• Eliminate football program for a savings of $350,000

• Eliminate vice president for administration and other positions

• Cut programs (to be determined).

Gary Russi, OU

"I am very much aware of the public perception that higher education in Michigan is expensive, and that our universities are 'inefficient.' Clearly those of us in higher education must do a better job communicating just how cost-effective our institutions are. Becoming more efficient is not something that universities do only when times are tough. Continually finding ways to cut costs allows us to minimize tuition and fee increases based on better than projected state appropriations.

"Despite all of the challenges facing our nation and state, we should never lose sight of what higher education is all about. It's about creating the future by exposing eager minds to a wide range of knowledge, experiences, people and skills."

Eric Gilbertson, SVSU

"Several of us feel a certain disappointment over the sweeping and unfair public comments that have been part of the public debate in recent weeks about our universities. The word 'fat' seems to recur—and it suggests an indifference to efficiency and an indifference to the burden on students. Those kinds of comments are unfortunate and are unfair."

"In a 20-year period, we've had what I call an unarticulated form of debate over who should bear the cost of education[during which] the costs have been shifted from taxpayers to user fees [such as] tuition."

The $3,500 per student allocation from the state proposed for SVSU this year is considerably less than it was even six years ago.

Universities tell subcommittee the effects of reduced state funding

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