Office of the Vice President for Global Communications

Wednesday, March 2, 2011

Coleman commits to shared sacrifice, highlights U-M fiscal discipline

President Mary Sue Coleman told state legislators on Wednesday that U-M is ready to answer the call for shared sacrifice and highlighted budget cuts that preserve the institution’s academic excellence as well as access to a U-M education.

 

More information

• Visit Michigan Model, the new U-M cost-control website: www.vpcomm.umich.edu/pa/key/budget

• To read President Mary Sue Coleman's complete remarks, click here.

• To read Coleman's answers to subcommittee questions, click here.

  

The Michigan Model of showing great discipline in the institution’s fiscal practices — such as making changes to health benefits for $30 million in savings annually and reducing energy costs by $5.2 million a year — has helped the university to soften the blow of continued funding cuts without sacrificing the academic mission, Coleman testified before House and Senate appropriations subcommittees on higher education.

“I will not tell you that a 20 percent reduction in state support will be anywhere close to easy. It is not,” Coleman said. “If the budget is enacted, the fiscal year 2012 appropriation would be almost $100 million less than in 2002 and the same amount we received nearly two decades ago.”

 
 

President Mary Sue Coleman testifies before the House Appropriations Subcommittee on Higher Education in Lansing. (Photo by Eric Bronson, U-M Photo Services)

Still, she said, U-M understands the need for shared sacrifice in the FY 2012 state budget. She said the U-M community is ready to do its part this year, with the confidence that Gov. Rick Snyder will uphold his pledge to support higher education in the future.

Coleman — as well as the presidents from Oakland University, Ferris State University and Grand Valley State University — testified before the Michigan State House and Senate subcommittees on higher education in Lansing to address the governor’s fiscal year 2012 budget proposal.

The governor presented a plan on Feb. 17 that would cut $1.2 billion in permanent spending from the state’s $45 billion budget.

The governor’s proposal for state universities includes two components. The first is a reduction in operations funding for universities of about 20 percent. The second component includes $83 million in funding to be shared by universities that keep tuition-and-fee increases around 7 percent or less.

For U-M Ann Arbor, the state appropriation would be reduced to $254.9 million, a 19.4 percent reduction from fiscal year 2011. An additional $13.8 million in funding would be distributed to U-M as long as tuition increases meet the governor’s recommendations. These combined actions would result in a reduction of $47.5 million, or 15 percent, from the $316.3 million U-M received in the fiscal year 2011 budget. Such a cut would reduce the Ann Arbor campus appropriation to $268.8 million, or slightly more than the amount the university received in the 1990-91 school year.

Snyder has asked state legislators to approve a budget by May 31 for the state fiscal year that begins Oct. 1. U-M typically sets its budget in June for a fiscal year that begins July 1.

“Our campus community has responded to the current economic climate by saying we will contain costs, we will remain affordable and accessible, and we will protect the academic enterprise to ensure a vibrant tomorrow,” Coleman said. “If I can leave you with one message, it is my steadfast commitment to sustaining the academic excellence of the University of Michigan.”

During the six years ending in 2009, U-M reduced its general fund spending by $135 million, Coleman said.

“We have been doing everything, from reducing how many flowers we plant and re-negotiating contracts with suppliers, to streamlining information technology practices and making tough choices about retirement benefits,” Coleman said.

In addition, she said, U-M is on an intensive track to reallocate another $100 million by 2012 and to identify another $120 million in savings by 2017.

The university is prepared to share in the pain in the FY 2012 state budget, Coleman said, with the confidence that Snyder will uphold his pledge to support higher education in the future, especially given the fact that one of the university’s highest priorities is supporting the economic rebirth of Michigan.

“We are seeing an explosive surge in entrepreneurship amongst our students, “ Coleman said. “In fact, the national Entrepreneur of the Year is U-M student Allen Kim, a graduate of Ann Arbor Huron High School. … Our students are excited about turning their ideas into new businesses and technologies.”

U-M faculty are equally enthusiastic, Coleman said, recording more than 2,800 discoveries, applying for 1,337 patents and launching 93 startup businesses in the last decade. And the U.S. Patent and Trademark made the decision late last year to open its first-ever satellite office outside of Washington, D.C. — in Michigan, Coleman said, calling it a “clear acknowledgement of the growth of the innovation economy in our region.”

U-M has made its many cuts and continues to look for more efficient ways to operate, Coleman said, in order to protect the academic mission that is responsible for those discoveries and economic impacts. Those cuts also ensure access to that education for all qualified Michigan students regardless of family income.

“This commitment has resulted in historic levels of financial aid in our annual budgets,” Coleman said. “Those extraordinary amounts of support mean that a typical Michigan resident undergraduate student, with a family income of less than $80,000 pays less today than in 2004.”

Following the hearings, Coleman told reporters that even before Snyder announced his budget proposal, U-M understood the likelihood that higher education would again face a decline in state support and was prepared to share in the sacrifice.

At the same time, she said, she is determined to work with the governor and the legislature to guarantee the excellence of U-M for future generations.

“The University of Michigan is a treasured public asset,” Coleman said, “and my job as president is to ensure its future for the next 200 years. I will not allow its value to diminish under my leadership.

“Every day, we honor the public’s longstanding investment by attracting talented students and faculty to Michigan,” she said, “as well as watching the bottom line to ensure that taxpayers receive a strong return on their dollars.”