U-M plans largest ever investment in financial aid
Faced with the toughest economic times since the Great Depression, the Board of Regents voted 6 to 2 Thursday to approve a general fund budget that calls for $118 million in centrally awarded financial aid, including an 11.7 percent increase in financial aid for undergraduates. It is the largest investment in central need-based financial aid in U-M history.
The $1.46 billion FY 2010 general fund budget proposed by President Mary Sue Coleman and Provost Teresa Sullivan is part of a forward-looking budget planning process to ensure U-M remains financially and academically strong and continues to provide students access to a high-quality education despite economic uncertainty in the state and nation.
The budget assumes U-M in FY 2010 will receive $316.6 million in state support, the amount it received in 2006 and $10 million less than it received this year. The state agreed to maintain support for higher education at 2006 levels as a condition for receiving federal stimulus money. Based on state revenue forecasts, U-M budget planners must prepare for uncertain state support for higher education by FY 2011.
"These challenging economic times call for a historic response from the University of Michigan. We know this is a difficult period for our students and their families and, for some, the economic recession is affecting their ability to cover educational costs," Coleman said.
"The economic downturn has only reinforced our commitment to ensuring a U-M education is accessible to students," Coleman added.
Prior to voting on the budget, each regent addressed the plan and his or her intention for the vote. Common themes in their comments included the acknowledgement that considerable care had been taken through the budget process to consider all options, and that the uncertainty of the state economy made planning very difficult.
Regents unanimously agreed that the budget situation is likely to get worse, not better in the coming years. And all agreed accessibility and affordability for students and maintaining the quality of the academic experience are important considerations.
Regents Denise Ilitch and Julia Donovan Darlow voted against the plans for all three campuses, saying they believe more cost-cutting and efficiencies are the answer, not increased tuition.
The budget continues the university's ongoing commitment to meet the full demonstrated financial need of all undergraduates who are state residents, and to continue to boost financial aid at a greater rate than tuition. It includes a 5.6 percent tuition increase for resident and nonresident undergraduate and most graduate programs.
Tuition and fees for first-year undergraduates in the LSA in 2009-10 will be.
• $11,659 (a $622 increase from the previous year) for Michigan residents, and
• $34,937 (a $1,868 increase) for nonresidents.
Sullivan said that with the encouragement of the regents, the university has considered a longer horizon in preparing this budget to project revenues and expenditures, which will give U-M time to make adjustments and help it avoid the severe upheaval and double-digit tuition increases that some universities have experienced.
"We continue to pursue a very disciplined approach to our budgeting," Sullivan said. "We have been cutting expenses for the past seven years and continue to look for ways to enhance revenue and contain costs."
The university's fiscal planning process calls for $36.5 million in budget cuts over the next three years. Units were asked to pare their budgets for FY 2010, resulting in $15.2 million in savings through elimination of some positions, not replacing equipment and other operational efficiencies.
"We have several difficult years ahead," Sullivan predicted. "However, the U-M is better positioned financially than many universities because of our pay-as-you-go policy, prudent investment strategy, highly diversified portfolio and conservative endowment-spending rule that reduces the effect of market volatility on our endowment funds."
In recognition of the difficult financial situation, Coleman has requested that she receive no merit salary increase from the Board of Regents in FY10. In addition, her leadership team of executive officers as well as U-M's 19 deans will forgo any merit salary increases in FY10. The budget does include resources for a modest merit salary program for faculty and staff so the university can maintain its competitive position among peer institutions.
U-M also competes for the best students and is committed to making the U-M financially accessible to academically qualified students. The average rate of growth in U-M tuition over the past five years has been among the lowest among public universities in Michigan and in the Big Ten.
Nearly 80 percent of in-state undergraduate students and about 55 percent of nonresident undergraduates receive some financial aid.
Sullivan credits generous donors for the U-M's ability to increase the amount budgeted for financial aid at a rate higher than tuition again this year.
In U-M's recent capital campaign, donors contributed $545 million for student support, including nearly 2,000 new endowed scholarships valued at $260 million. These funds are in addition to increases included in the general fund budget approved Thursday.
In 2009-10, thousands of U-M students will receive more in grant aid and have fewer loans to repay than previously:
• As many as 3,300 students will benefit from increases in the federal Pell Grant program. Maximum grant awards will increase from $4,731 last year to $5,350 this year and are proposed to increase to $5,500 in 2010.
• Approximately 22,000 U-M families will benefit from the American Opportunity Tax Credit for an individual earning less than $80,000 a year, or $160,000 for a couple filing jointly. The tax credit for money paid to cover education expenses increased from $1,800 in 2008 to $2,500 in 2009 and 2010.
• U-M will receive $1.6 million more for work study another 440 job opportunities for students meeting work-study criteria under the federal stimulus package.