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MSU 2nd in Mich. for appropriations

July 19, 2009
Photo by Chelsea McGorisk | The State News

MSU and other universities in the state are feeling the pressure from a potential cut in state funding. MSU ranks second in state appropriations only to the University of Michigan out of the 15 public universities, according to data from the state Senate Fiscal Agency.

Although there’s no set formula on how to divvy up appropriations among universities, why and how much a school receives changes from year to year.

Cuts to higher education funding come as the state tries to get out of an approximately $1.8 billion deficit, said state Sen. Roger Kahn, R-Saginaw Township, who is on the Senate Appropriations Subcommittee on Higher Education.

“In these tough budget times, the amount of additional funding has been less than in the past,” Kahn said. “If you’re talking 10 years, about 70 percent would have come from the state and 30 percent from tuition. Now it’s the reverse.”

How to cut the pie

Deciding how much each university gets is a process that has evolved based on history, said state Sen. Tom George, R-Texas Township, who is the vice chairman of the Senate Appropriations Subcommittee on Higher Education.

“We look at what (the universities) got last year and then we increase or decrease it by the same percent,” he said. “I’m not necessarily saying that’s good or fair, but that’s what happens. It goes back over decades to look, it would reflect their research status, it may reflect political pull at varying times in history — it’s not a specific formula.”

The number of degrees conferred or the number of students isn’t a set indicator of what each university gets either, George said.

He said there have been debates about creating a formula but it’s never been adopted since the way it’s weighted could lead to bias.

One possible solution George sees lies outside of the realm of higher education — health care.

“If you look at the budget, the pie has stayed about the same size but the university gets less,” he said. “There’s less because money is going to health care — there might be more for higher education if people took better care of themselves.”

Some relief might come in the form of federal stimulus funds.

In order to receive the money, the state wasn’t able to give the universities less than what they received in 2006, according to the state Senate Fiscal Agency.

Kahn said because of the stimulus requirements, there wasn’t much they could trim off the higher education budget.

“There are requirements that are part of the stimulus dollar appropriations and those preclude substantial changes from prior years,” Kahn said. “This year’s budget decisions were conditioned on prior years’ budget considerations more than ever because of finding so few areas so find savings.”

The stimulus funding is supposed to backfill what was cut from higher education, but the money ran out as it has to fund K-12 education, community colleges and universities, according to the state Senate Fiscal Agency.

Dave Byelich, director of MSU’s Office of Planning and Budgets, said the stimulus funding is meant to go toward facilities or to stabilize tuition. He said if MSU receives stimulus money, it would be used to offset the tuition rate change for resident undergraduates in 2009-10.

Stimulus funding only would affect the 2009-10 budget.

“We based the appropriations assumption on our best thought about a recurring basis, because the stimulus is only one time,” Byelich said.

State of higher education

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MSU plans on receiving about $283.9 million in state appropriations for 2009-10 — 3.1 percent less than 2008-09 levels at about $293 million, according to MSU’s budget development overview. State appropriations for 2009-10 have not been finalized.

Byelich said the number doesn’t include potential federal stimulus dollars.

“Right now, both the House and the Senate and the governor have suggested a 3 percent reduction and to allocate relatively corresponding stimulus money — that’s what we had premised our budget upon,” he said.

U-M is planning to receive about $316.6 million from the state, also about 3.1 percent less than it received in 2008-09, according to data from U-M.

Western Michigan University is set to receive about $109.6 million, about a 3.1 percent decrease, according to the WMU estimated beginning board budget.

Michigan currently ranks 50th in the country for higher education funding, MSU Trustee Dianne Byrum said.

“This fact has placed an extreme burden on the university to continue to serve our students and make sure that MSU remains a good value for a high quality education,” she said in the e-mail.

Michael Boulus, executive director of the Presidents Council, State Universities of Michigan, said although virtually every area of the state budget has been slashed, higher education seems to have been hit particularly hard.

“It’s the culture of the economy as a whole and there’s only so much money to go around and we tend to be a more vulnerable target,” Boulus said. “The trend over the last five years — (Michigan) is the worst state in the nation in terms of state support for higher education. We’re dead last; there’s a race to the bottom and we’ve won that race.”

Boulus said he doesn’t see the situation getting better any time soon.

“(Universities are) making reductions in the budget and those have been compounding over the last few years — we’re expecting things to get worse so they’re planning two to three years ahead of what they need to,” he said.

George said the reduction in state appropriations to the 15 public universities in Michigan was a function of less revenue coming into the state.

“We have a couple choices — we can raise taxes or we can make cuts and in 2007 we mostly raised taxes to make up the shortfall we faced then,” he said. “But this time with the economy doing worse and having already (raised taxes), in the Senate most of my colleagues are of the mind we really can’t or shouldn’t raise taxes again so that leaves us with cuts.”

Kahn said in comparison to other budgets, higher education received less of a hit.

“The maintenance of effort requirement cuts the higher education budget less than most other budgets,” Kahn said. “There are two other budgets with less cuts to them — education and the other is the Department of Community Health, because it too is associated with federal stimulus dollars.”

Cutting back

In order to deal with less state funding, MSU is working on cutting 20 percent of its operating budget during the next two to three years as well as increasing tuition, Byrum said.

Tuition is set to increase 10.1 percent during the next two years for in-state undergraduate MSU students.

U-M also has increased tuition about 5.6 percent and planned on cutting $36.5 million during the next three years, according to information from U-M.

WMU increased tuition 5.7 percent and is implementing an about $5 million budget reduction, Michael Meister, director of University Budgets at WMU, said.

“It is very challenging,” he said.

“What we are experiencing here is a contraction in state appropriation support that is more significant than anything I have seen in my career at Michigan State.”


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