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U-M prepared for current state budget cuts, concerned about future funding

Provost Paul N. Courant says the governor’s announcement that he will slash 2.5 percent in state appropriations mid-year for colleges and universities will be manageable in the short run. Gov. John Engler’s plan for balancing the state budget will cost the University about $9 million out of an anticipated state aid budget of $364 million for the current fiscal year, Courant says. The estimated savings from all higher education cutbacks is $55 million in a state budget with a projected $500 million shortfall.

“The state’s budget concerns are enormous, and we know that these are very difficult decisions for the governor and the Legislature to make,” Courant says. “The proposed cuts do not come as a complete surprise, and we have been taking steps to prepare for them. Nonetheless, dealing with this budget cut presents significant challenges.”

Courant says the University will manage the mid-year cutbacks by continuing to shave costs and by postponing a number of expenses: deferring maintenance, holding positions open, limiting travel, and reducing or delaying the purchase of supplies and equipment.

“We are asking campus departments to tighten their belts and do the best they can with less in the short term, and we can do this without permanent harm to our academic quality,” Courant says. “We also have continued to look for economies in our administrative areas and business operations in order to minimize the impact on our core academic activities. We will be able to handle this short-term cut without any mid-year increase in tuition.”

Courant says the biggest concern is for the next fiscal year.

“If the budget cut is permanent or goes even deeper next year, a strategy that relies in part on postponing expenses is no longer workable. We would have to make more permanent reductions in both our administrative and academic units,” he says. “In the long run, that will have an impact on our academic strength and quality, affecting class size, availability of courses and student services, and the like. It will also place upward pressure on tuition.”

Courant says he has been meeting with deans and administrative units to discuss plans for handling a mid-year rescission and possible budget scenarios for next year. He expects to make a final report in a few weeks on the University’s plan to handle the mid-year cuts.

Engler’s executive order, announced Dec. 5, also calls for a 3.5 percent cut in revenue sharing to local communities and a 2.5 percent across-the-board cut in state departments. Engler is required to balance the budget before leaving office.

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