Office of the Vice President for Global Communications

Friday, February 12, 2010

Granholm’s budget maintains support for U-M, higher education

Gov. Jennifer Granholm on Thursday proposed a 2011 budget that attempts to restore some cuts made to U-M and higher education including a revamped, more targeted Michigan Promise Scholarship proposal.

The plan asks lawmakers to appropriate $325 million to U-M’s Ann Arbor campus in fiscal year 2011, all in general fund support. The current FY 2010 budget was approved with $317 million in general fund support and an expected $8 million in one-time federal stimulus funds from the American Recovery and Reinvestment Act.

“The budget reflects Michigan’s priorities: investing in education and job creation,’’ Granholm told a joint meeting of the House and Senate appropriations committees Wednesday. “Education is directly correlated to job creation.’’

The state appropriation remains below the $363 million appropriation the campus received in FY 2002.

The state appropriation accounts for 22 percent of the Ann Arbor campus’ general budget, a percentage that has been declining steadily since the 1960s. On an inflation-adjusted basis, the current U-M state appropriation is more than $100 million less than it was in 2002.

The budget was part of a tax overhaul proposal that would lower the state sales tax from 6 percent to 5.5 percent while broadening it to tax a much larger number of services that currently are not subject to the sales tax. Increased revenue would go toward K-12 school aid.

The plan also calls for appropriations of $21.4 million for UM-Flint and $25.4 million for UM-Dearborn, with an overall recommendation of $1.46 billion to the state’s 15 public universities.

She again challenged the Legislature to pass a budget by July 1 to help universities and local governments better plan their own budgets.

The plan includes a new, more targeted version of the Michigan Promise scholarship, which was eliminated by the Legislature last fall.

The previous $140 million Promise program awarded grants up to $4,000 to in-state college students, deducted from their tuition bills each term. The new Promise is far more targeted and would be “restructured as an income tax credit targeted to students who attain a degree and work in Michigan,’’ according to the budget.

Under the new tax credit, qualifying students could receive a $4,000 refundable tax credit but only if they complete their degrees and work one year in the state of Michigan.

Granholm said the budget’s spending reductions, structural reforms and tax restructuring would eliminate a projected $1.5 billion deficit. The 2011 fiscal year begins Oct. 1.

Work on the governor’s budget recommendations begins next week with the Senate Higher Education Committee conducting its first meeting Feb. 19 at Western Michigan University.