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Updated 11:00 AM March 22, 2004



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Coleman to recommend regents accept state budget plan

As the University continues to work with the state to address Michigan's economic crisis, President Mary Sue Coleman said she expects to ask the Board of Regents later this spring to go along with a proposed spending plan for higher education.

The fiscal year 2005 budget plan requires universities to hold tuition increases for in-state undergraduate students at or below the rate of inflation in exchange for some relief from a 2004 mid-year cut from the state and no further cuts in 2005.

Coleman told regents March 18 that she and the chancellors of Dearborn and Flint intend to recommend that the board accept the tuition restraint proposal on the condition that the Legislature follows through on its agreement.

"One of the most important considerations for us is the impact on our annual base appropriation for the Ann Arbor campus, which will be $321 million if we accept the proposal, but only $301 million if we do not accept it. This funding is critical to our long-term financial stability," Coleman told regents at the March meeting.

Universities that do not agree to limit their tuition increase will see an additional 3 percent cut in appropriations and will not get relief from the mid-year cut.

Coleman said an unprecedented two-year erosion of state appropriations has resulted in nearly $43 million in reductions from the base funding for the Ann Arbor campus and $20 million in one-time cuts. In agreeing with the state budget proposal, she said U-M-Ann Arbor still must face additional cuts in spending of $20 million for FY 2005. Flint anticipates cutting an additional $800,000 and Dearborn another $1 million.

The president said the University supports efforts by the governor and Legislature to make higher education affordable to Michigan families, as evidenced by U-M's decision to hold tuition increases for the current year well below the statewide average and its corresponding commitment of financial aid dollars at a percentage greater than the increase in tuition.

The University has responded to the state's budget crisis by trimming its budget aggressively, and it will continue to seek ways to trim the budget while preserving the academic core, Coleman said.

"We will be laser-focused on protecting our academic quality for the future—if our quality begins to decline, it will take far longer to rebuild than it will take to lose it."

Coleman outlined three elements she said are critical to long-term planning:

• More robust and predictable state support

• Moderate tuition increases

• Continued emphasis on financial aid, particularly grants

"The distinctive quality of our university depends on stable state support and reasonable tuition revenue," she said. "As we go forward, we must be clear that we accept the state's proposal only as a short-term measure. It is not a sustainable, long-term solution. Ultimately, we must be true to our mission and to our students. We cannot let the focus on cost trump the commitment to quality."

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