Office of the Vice President for Global Communications

Tuesday, December 1, 2009

Provost Sullivan: A public university is more than just publicly funded

The fundamental basis of what it means to be a public university extends well beyond a school’s funding source and includes its overall mission as well as how it is governed, Provost Teresa Sullivan told faculty representatives Monday.

At a glance

Provost Teresa Sullivan outlined the principles guiding the university’s budget process:

• Protecting and investing in core educational and research missions
• Seeking stability and reducing volatility wherever possible
• Remaining competitive for faculty, students, and staff
• Leveraging U-M's size and scale
• Maintaining high quality essential services
• Eliminating duplicative and lower priority activities
• Shifting costs from the general fund to other sources where appropriate
• Avoiding short-term reductions with long-term cost or quality implications
• Introducing centralization and resource sharing when it leads to higher quality services or more effective use of high quality facilities
• Considering insourcing and outsourcing when it leads to an improvement in service at the same or lower cost
• Taking advantage of technology to achieve efficiency of operations

Read it onlineFull text of Sullivan's presentation.

And while much discussion has been focused on dwindling state support for U-M and other public colleges and universities in Michigan and across the country, Sullivan told the Senate Assembly that is the wrong approach to take in the effort to maintain a thriving public higher education system.

“It is true that state appropriations have declined. But this does not mean a state’s interest in higher education — or the public’s — has declined,” she said. “Rather than focusing on what legislatures and governors are not doing for universities, we should emphasize what public institutions are doing to help states — from careful stewardship of our own resources to spin-offs and start-ups and educated workers who energize the economy.”

The provost said that as annual state appropriations steadily have decreased, there have been calls to “privatize” public colleges and universities.

“This is a disservice to both the institutions and the states that help to fund them. While public university budget models are increasingly tuition driven, that does not make us private,” she said. “Rather than threatening to ‘privatize,’ I think we would benefit from a broad public discussion of the mission, roles, and contributions of public colleges and universities.”

Sullivan put forth three components that define a public college or university:

• Mission — Public colleges and universities are committed to serving a state’s need, its citizens and society in general. “The commitment of public institutions extends beyond the education of students, to include contributing to the development of the economy, engaging in civic activities, and providing programs that support the state such as teacher training or continuing education for health professionals.”

• Governance — Public institutions are governed by boards that are elected, or appointed by a public official. “These boards are attentive to the needs of the population that elected them. In the case of gubernatorial appointment, the governor will be quite aware of public wishes and that will bear on the board. In the case of elected boards like ours, they are aware of their constituents. Private institutions select their boards differently and they are, generally speaking, responsive to the institution itself.”

• Financial support — The funding model for public schools never was solely state support, and the level of federal support also must be considered. “Researchers in every field secure federal grants. Medical centers treat patients whose costs are paid by the federal government. A great deal of student financial aid — undergraduate and graduate — is from federal sources. These are public funds and they are a significant part of our revenues.”

Sullivan also updated the faculty governance group about U-M’s financial situation, explaining that the cost reduction and containment efforts that trimmed $135 million in recurring general fund expenditures since 2002 will target another $22 million in the current fiscal year.

Where earlier efforts were directed toward the business operations, this year’s reductions will require cooperation from academic areas as well. She outlined several efforts to consult with and inform the campus community about the coming changes, including advisory panels for faculty and students, as well as a campuswide committee of budget administrators who share ideas.

“This broadens the pool of people who understand the budget and can yield useful new ideas as well,” Sullivan said. “Bringing people from across the campus together like this contributes to the development of cross-functional cost containment ideas.”

She added the efforts to reduce costs involve incentives to encourage savings, setting targets and establishing metrics, and maintaining a disciplined process.

“Incentives to encourage savings will often motivate schools or departments to think creatively,” Sullivan said “If a school can keep some of the money it saves, it can reallocate those funds to areas of higher priority. When money is tight, this provides an opportunity to strengthen something a department or school values highly.”