Coleman: Cuts bad for University, state recovery

Updated 4:00 PM April 1, 2005

Coleman: Cuts bad for University, state recovery

By Laurel Thomas Gnagey

In budget testimony before the House Higher Education Appropriations Subcommittee March 23, President Mary Sue Coleman reiterated that a key to the state's fiscal health lies in part with colleges and universities—for their crucial role in training and educating Michigan residents, and for research and technology transfer opportunities that often translate into jobs from new business startups.

"We must develop and apply new technologies so we can create brand new industries and more jobs. And we need a highly skilled, college-educated workforce to do it," Coleman said.

"Innovation is the key to aggressive economic development in the future. The University of Michigan intends to partner with the state to foster innovation and to fuel a strong economic engine."

Coleman also noted U-M brought in $536 million in research dollars last year—twice as many as other Michigan universities combined. Additionally, it provides the state with some $4 billion in personal income tax and $270 million in state tax revenue a year, according to a recent economic impact survey.

But Coleman warned cuts in state funding threaten the ability of higher education institutions to assist in the state's economic recovery.

"We need to focus on the overall affordability of an excellent college education, not simply on tuition. Students and families need accurate and understandable ways to assess the true costs of a college
education."
—President Mary Sue Coleman

"If the funding situation is not stabilized, it will begin to affect the quality of our entire enterprise and limit our ability to do just what the state needs most right now: educate students and foster innovation," she said.

Coleman's remarks came just hours before Gov. Jennifer Granholm announced the latest plan for balancing the state budget for this fiscal year, which includes a $30 million cut to colleges and universities that the governor says will be restored if tax revenues come in at higher than expected rates this spring and summer.

The cut represents about $5.7 million from U-M-Ann Arbor, $373,000 from U-M- Flint and $433,600 U-M-Dearborn. The governor's plan for the next fiscal year continues the nearly
2 percent cut in funding for higher education.

"Here's the reality of the situation: If the FY 2006 budget proposal is enacted, it will mean that the University of Michigan's Ann Arbor campus will have lost more than $50 million from its General Fund in just three years," Coleman said. "As you know, the General Fund is the primary source of support for undergraduate education, so this has been a significant strain."

Granholm's executive order cut for the current year makes $200 million available for capital outlay projects. But Coleman said the additional money for building projects cannot make up for the loss in funding for academic programs.

"I have promised the University community that our first priority must be and will be core academic quality. We cannot compromise on excellence," she said. "There's one more thing we can't compromise: affordability. We have to reach out to students with financial need because our state and our country cannot afford to leave one talented student behind if the only barrier is a financial one."

Coleman said U-M will continue a 30-year tradition of making a Michigan education affordable by meeting the full demonstrated financial need of every in-state undergraduate student. She highlighted for lawmakers the University's recently announced M-PACT financial aid program, which is expected to reduce loans for almost 3,000 resident students by increasing grants $1,500, $1,000 or $500, depending on need. The University has committed an additional $3 million a year to the program.

"We need to focus on the overall affordability of an excellent college education, not simply on tuition. Students and families need accurate and understandable ways to assess the true costs of a college education."

Coleman highlighted cost-saving measures the University has taken, including introducing a cost-sharing model for health care benefits that will save about $6 million this year; installing energy-efficient lighting, heating and cooling systems for a savings of $9 million; and adopting e-business practices that led to reduced staffing, postage and printing costs.

She also told lawmakers about reductions in the U-M workforce last year, including 125 staff positions that were eliminated and 50 faculty positions left open from retirement or attrition.

To address the reduced state support and resulting cost cutting, the University has increased some class sizes, reduced some course sections, and cut about 1,000 journal subscriptions from the library, she told panelists.

Coleman told the subcommittee investments in life sciences, public policy, teacher education, information technology and the arts are important to sustain academic excellence. She also said the University's plan to renovate and add residence and dining space on campus is essential if the University is to keep up with the demands of today's students for technology-ready, modern living spaces.

Coleman was joined on the panel by the leaders of Wayne State University and Michigan State University.

Coleman: Cuts bad for University, state recovery

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