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Updated 12:00 PM June 23, 2005




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Formulas won't work for higher ed. funding

The Michigan House passed a massive budget bill June 9 containing the fiscal year 2006 spending plan for higher education. The proposal, while well-intentioned, amounts to a one-size-fits-all policy for all state universities, says Provost Paul N. Courant.

The House plan is based on a funding formula that could do more harm than good to the state's colleges and universities and will not achieve the desired outcome of improving Michigan's economy, Courant warns.

"At the root of the problem with the formula is the implicit assumption that we want all 15 of our universities to look the same," Courant says.

Under the plan, universities that focus future efforts on prescribed academic areas, enroll more in-state students, improve graduation rates and increase certain research activities would receive a greater share of funding.

"If the universities respond to the powerful incentives in the formula, they will put far greater emphasis on technical and health fields than on other essential elements for success in a global workforce: reasoning, communication, math, statistics, and even how to learn from the past," Courant says. "The incentive is huge: the formula gives over $28,000 for each undergraduate degree granted in architecture or communications technologies as compared to barely $7,000 for a degree in mathematics, statistics, foreign languages and business.

"There is no economic or cost rationale for creating incentives of this magnitude, and there is no doubt in my mind that our ability to compete in the knowledge economy will require that we have more students with skills in math and languages, not fewer."

Further, Courant says, the incentives likely will lead universities to restructure programs to include these areas for financial rather than academic reasons. He says the plan rewards universities that offer additional degree programs, which could lead to a situation in which schools rush to put programs in place just to garner funds, risking the dilution of all programs.

"For example, the formula provides an incentive for four-year institutions to offer associates degrees along the way. It would make more sense to provide incentives for each university to enhance and improve performance in the high-value degree programs that it already offers," Courant says.

The plan also caps support for research funding, which would impact U-M more than any other institution and flies in the face of the state's goal to increase startup companies that are derived from research that makes its way to the marketplace, Courant says.

Additionally, he says, the formula encourages universities with small or no research programs to grow their efforts, requiring them to invest in lab space, graduate programs and staff without knowing if they would be successful in attracting large amounts of research funding over the long run.

At a time when colleges and universities have seen unprecedented erosion in state support over three years, Courant says the incentives serve only to create keen in-state competition for dwindling state resources.

"Overall, the formula will neither increase our capacity to educate our young people nor reduce pressures on tuition," Courant says. "To the extent that it induces our universities to bend themselves out of shape responding to the very strong financial incentives, there is the real possibility that scarce resources for higher education will be wasted, rather than deployed efficiently."

The Senate also has been working on a budget plan—one Courant says is a "more moderate approach" that is "much less risky and is likely to be less wasteful." The full Senate will decide this week on its plan, and the process of resolving differences will occur during the next several weeks.

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