Office of the Vice President for Global Communications

Friday, November 18, 2011

University offers suggestions for state higher education funding formula

President Mary Sue Coleman urges state budget officials to end the decades-long decline in state support for the university, saying in a letter that strategic investment in higher education "is essential to the future vitality of the state and its economy."

The letter outlines suggestions for a possible new higher education funding formula under consideration in Lansing. It was approved by the Board of Regents on Thursday, along with similar letters from the Flint and Dearborn campus chancellors, contingent upon more explicit statements expressing the university’s deep concern over formula funding.

State officials have discussed basing funding for the state's 15 public universities on a set of metrics used in a formula approach for the state's 2013 fiscal year that begins Oct. 1, 2012.

In the annual letter to State Budget Director John Nixon, Coleman says the university will "continue to strive for a budget that strongly supports our commitments to academic excellence as well as affordability and to continue our longstanding policy to meet the full demonstrated financial need of all Michigan resident undergraduate students."

Nixon asked each state university to submit information in support of the fiscal year 2013 higher education budget. He also asked for suggestions on the types of metrics that could be included in a funding formula.

The new approach to funding comes on the heels of the FY 2012 higher education budget that trimmed state funding for universities by 15 percent.

Coleman says in the letter that the university has long expressed concerns about formula funding, noting that such formulas must be carefully designed to avoid standardization that can erode institutional diversity.

"A formula that fails to recognize the important differences amongst the public universities will undercut the important investments already made in these institutions and harm rather than help the state," she writes.

Among the suggestions to the state are these:

• The methodology must include comparisons to similar institutions. The letter suggests using the Carnegie Foundation classifications of universities and limiting comparisons to other public universities.

• Measure performance (graduation rates and degrees granted) instead of activity (enrollment or student credit hours).

• Include both absolute performance as well as improvement in performance in the measurements of success.

• UM-Flint and UM-Dearborn officials particularly are concerned that their success in graduating large numbers of transfer students be taken into account in the funding formula. The standard six-year graduation rate is calculated based on first-time students (freshmen) and is not as reflective of their student body.

"For our state to be prosperous and successful, higher education must flourish," Coleman says in the conclusion of her letter. "The state's continued and expanded investment in our success is central to our collective future."