The University Record, October 7, 1998
By Jane Elgass
A renewed focus on private support and increased efforts designed to help legislators and the public understand the importance of support for public higher education are among the major issues confronting the University that were outlined by President Lee C. Bollinger at the Sept. 28 meeting of the Senate Assembly.
He also touched on the campus master plan, Academic Freedom Lecture and tobacco divestment.
Detailing budget issues, Bollinger explained that about one-third of the U-M's overall $3 billion budget is related to the Health System. State support, federal grants, income from endowment and tuition are the other primary revenue sources, with the state accounting for about $350 million or one-third of the general fund budget.
Cost-cutting efforts, reorganization and the creation of new partnerships enabled the Health System to avert the "feared fiscal crisis" of several years ago and the System "is in the black, but not deeply," Bollinger said.
The National Institutes of Health are the primary sources of federal support and suggested increases for the NIH budget ranging from 9 to 12 percent "present a rosy picture if we are positioned academically."
Thanks to an aggressive investment policy implemented over the past decade and the highly successful capital campaign that was completed last fall, the endowment stands at about $2 billion.
However, if the current course of increases ranging from 2 to 4 percent in state and federal support and tuition income continues into the next decade, "there will be a very significant disparity in wealth between the publics and privates," the president predicted.
The University competes directly with major private colleges and universities-for students and for faculty-that have endowments three to six times greater than that of the U-M.
"This is a serious problem that creeps up on you, one not to be neglected," Bollinger said, offering this vivid illustration: Offers for LS&A faculty from other institutions have been averaging about 45 percent more than what the U-M is able to offer.
"There is a reality there that we have to pay attention to," he said.
State support, private gifts
The U-M must make a more effective case of the value of higher education for everyone with both government officials and citizens.
Higher education's primary competition for state funds is the prison system, which poses a difficult problem. The prison population stands at about 40,000 and is expected to increase to 70,000 by 2005, a result of what Bollinger termed "a very unfortunate set of laws and public policy."
"We need to make sure that the benefits of higher education and the risks involved in not supporting it are well known," the president said. Rather than going head-to-head in a prisons vs. education battle, Bollinger said the debate should focus on "deciding what we should be doing and how effectively we can do it with the resources we have."
The president noted that criticism over the past decade that higher education costs are out of control has manifested itself in the "insistence to not raise tuition higher than the Consumer Price Index," characterizing this approach as a way of "artificially disciplining" colleges and universities.
Annual giving now stands at about $200 million and while the U-M may lead public colleges and universities in this area, "we are not close to the privates," Bollinger noted, adding that he anticipates the launch of another capital campaign within the next two to five years.
Priorities for funding would include faculty compensation, which goes beyond salary and includes "all the things that make possible scholarship and teaching," and support of "core institutions" such as the libraries and the renovation of the Rackham Building and Hill Auditorium. These are "crucial places" that the recent capital campaign "tended to neglect. We made choices. It's time to put them on the table," he stated.
Phase I activities necessary for the development of a comprehensive master plan for the University have been completed by Venturi, Scott Brown and Associates, and yielded a great deal of basic information, Bollinger reported, noting that the project is a long-term one, given the scale of the institution.
An initial focus of activities likely will be on ways to make North Campus a more vital environment, with such things as commercial outlets in Pierpont Commons and with exploring ways to create a better physical link with the rest of the University.
Many Medical School laboratories are in need of renovations, particularly in light of the increased focus on the life sciences that Bollinger announced earlier this year. "We need to be prepared in terms of our physical operation," he said.
The life sciences initiative calls for increased links between LS&A units and the Medical Campus, which are separated now by Washtenaw and Huron, characterized by the president as both "a physical and psychological barrier to interaction."
The life sciences initiative will allow the University to focus on "really vital areas of human discovery, and it is extremely important that we be good at this," Bollinger said, adding that it is the "scale of the University and the willingness of people to work together that makes this possible. We should be really, really good in this important area for human society."
The Life Sciences Commission is scheduled to report to Bollinger in November.
Academic Freedom Lecture
Bollinger announced that the President's Office will sponsor the annual Davis-Markert-Nickerson Lecture on Academic Freedom, and that the Regents are "absolutely and fully supportive" of his action.
"There are parts in our past we wish weren't," he said. These faculty were "unjustly treated in an era of rabid intolerance."
In 1954, Chandler Davis, Clement Markert and Mark Nickerson were called to testify before a Congressional Committee on Un-American Activities. All invoked constitutional rights and refused to answer questions about their political associations. The three were suspended from the University. Markert was subsequently reinstated and Davis and Nickerson were dismissed.
The lecture has been sponsored by the Academic Freedom Lecture Fund, the U-M Chapter of the American Association of University Professors and the Senate Advisory Committee on University Affairs.
Senate Assembly passed a resolution last October supporting divestment of tobacco stocks. But the issue of divestment of holdings in tobacco companies is a complicated one for the University, "a clash of principles," Bollinger said. "We like to not do wrong and we care about our behavior and its consequences. But we must be very careful to not become politicized."
Bollinger, Chief Financial Officer Robert Kasdin, Provost Nancy Cantor and Gilbert S. Omenn, executive vice president for medical affairs, "will bring the issue to the groups with whom we interact. Before we take any action, we need to know the scope of the feelings of the University community and then address the question in light of this."
"It is important to realize that the University needs a coherent approach" to issues of this nature, including a discussion of how the investment policy fits in the picture, Bollinger said.
'No' on M-CARE preference for now
President Lee C. Bollinger said last week that "nothing will happen [on an M-CARE preference initiative] unless it comes through the President's Office with ample opportunity for discussion before anything is done."
His statement was made at the Sept. 28 Senate Assembly meeting during a discussion of the Health System budget and was in reference to an article in that day's Ann Arbor News on Gilbert S. Omenn's first year as executive vice president for medical affairs.
The News article stated:
"Along with cost cutting, Omenn hopes to reintroduce some kind of M-CARE Preference Plan. The idea is to steer university employees into M-CARE, U-M's health maintenance organizations, by making premiums for other health plans more expensive. It was proposed last year but voted down by the U-M Board of Regents after employees complained."
Bollinger stated that he is "personally committed" that any action will be taken "only after extensive opportunity for discussion. I have no recommendation or position now."