The University Record, September 28, 1992

Multiple factors affect budget

Provost Gilbert R. Whitaker Jr. last week told Senate Assembly members that the University must make better use of existing resources for a number of reasons, including:

—Appropriations from the state are flat due to a sluggish economy and may decrease. Passage of Proposal C in November would reduce property taxes by 30 percent and require the state to replace revenues lost by local school districts. About half of the state’s budget now goes for K-12 and higher education.

“I suspect that there are threats to the state appropriation in Proposal C,” Whitaker said.

—Tuition constitutes 50 percent of the General Fund. The U-M raised tuition substantially this year, Whitaker noted, and it would be difficult to continue raising tuition at that rate because of price competition with private schools and resident tuition rates that are comparatively low but are viewed as high.

—A $6–$7 million decrease in General Fund revenue due to low interest rates on investments.

—$9 million lost to the General Fund due to a decrease in the indirect cost rate negotiated for federally-sponsored research.

—Increasing costs for library acquisitions, utilities, litigation and compliance with government regulations.

—Increased costs associated with opening new space and renovated buildings. Whitaker said that because of the addition of air conditioning and better lighting, buildings cost about twice as much to operate after renovation.