The state funding for the U-M Ann Arbor campus has failed to keep up with inflation as measured by the Higher Education Price Index, so that the purchasing power of the appropriation has declined over the past seven years by almost $36 million, Provost Gilbert R. Whitaker Jr. said. In other words, nearly $36 million of costs that were being covered by the state appropriation in 198788 are now being covered by student tuition.
This $36 million is not available to provide additional financial aid for needy students, it is not available to support smaller classes, it is not available to support additional outreach to our states K-12 system. Instead, it is needed merely to maintain the level of these activities that existed in 198788 and were supported with our state appropriation.
This erosion of the real value of our state appropriation has resulted in a decline in its share of our total General Fund from 50 percent in 198788 to only 37 percent this year.
The Ann Arbor campus is requesting an increase of $26.9 million in state funding for 199596. The request was approved by the Regents at their October meeting.
Whitaker said, Our states leaders will face serious challenges this year as they attempt to balance the many competing needs for the states limited resources, but the way in which those challenges are met will be of critical importance for the future health and well-being of Michigan and its citizens.
It is vital that our leaders recognize the centrality of the role played by human resources in the growth of our economy, and the importance of education (pre-school through post-graduate) in the development of those human resources.
We have emphasized the special role played by research universities, and the U-M in particular, as a force for economic development and growth, in addition to its basic function of training tomorrows citizens and leaders. It is this special role that must be considered when appropriations are being made.
The only way the state government can reverse the downward trend in the real value of its appropriation to the
U-M is to increase that appropriation at a rate greater than the expected rate of inflation, Whitaker noted. This year we are proposing that the state begin the process of restoring its real support to the U-M to the 198788 level, a process to be completed in two annual steps by 199697.
Such a process can be thought of as consisting of two parts. The first part will prevent any further deterioration from occurring, by providing an increase equal to the expected rate of inflation of 3.2 percent, implying an increase of $9 million in our appropriation. The second part will be the first step in a two-step process designed to recover the ground that has been lost over the past four years: an additional $17.9 million.
Whitaker emphasized that our increased state appropriation is only one part of our budget strategy for 199596. The requested increase, even if provided in full, will amount to only 3.8 percent of our total General Fund, so we will still need to identify other sources of increased revenue, as well as to continue our strong emphasis on cost reduction and internal reallocation.
Whitaker concluded, Our twin goals are continuous improvement both in the overall quality of our instructional and research programs and in the efficiency with which we utilize the resources that are entrusted to us. We believe that our record is one of success in the achievement of both of these goals.
We urge our states leaders, as they contemplate the alternatives before us, to renew their own commitment and dedication to the support of public higher education.