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Snyder proposes multimillion dollar cuts in higher education, revenue sharing

February 17, 2011

Gov. Rick Snyder proposed to cut state university funding in 2012 by more than $240 million Thursday morning, a reduction that would cost MSU as much as $61 million in state support.

The recommendation is contained in Snyder’s 2012 budget proposal, the first step in a long process of balancing Michigan’s projected $1.8 billion deficit. The governor did not address the issue of higher education funding specifically during a speech to joint House and Senate committees.

The recommendations would allocate MSU more than $222 million. But along with that proposal came one to put $83 million aside for universities that hold tuition at 7 percent or less.

Should MSU follow that incentive, it would receive an additional $18 million-plus, budget documents show.

John Nixon, Snyder’s budget director, said during remarks to joint Senate and House committees Thursday that the administration examined a five-year average tuition increase at Michigan’s universities to generate the incentive, called a “University Tuition Restraint Incentive” in budget documents.

At 15 percent, Snyder’s proposal is the deepest the universities have seen in years. By comparison, Gov. Jennifer Granholm and lawmakers last year agreed on a 2.8 percent reduction. For MSU, that came out to more than $8 million in cuts.

The silver lining for universities, Nixon said, is Snyder aims for this reduction to be a once-only reduction instead of cuts year after year.

“We’re going to do this reduction and we’re going to be done,” Nixon said.

The governor’s proposal also includes $51.5 million in state financial aid, a number consistent with last year’s appropriation. The recommendations also would merge the Michigan Competitive Scholarship and Tuition Grant into a Pathway to Higher Education grant to be awarded to needy students at public or private universities.

Snyder also is looking to appropriate $43.8 million to the state’s Tuition Incentive Program, or TIP. TIP is offered to high school students covered by Medicaid for at least two year, and is aimed at helping such students pay for college.

State funding for MSU Extention and AgBioResearch — the latter formerly being named the Michigan Agricultural Experiment Station — would be slashed by 15 percent to slightly more than $52 million. Those appropriations, typically separated in past budgets, are lumped together in Snyder’s proposal.

Snyder’s budget also states his intentions of devising a formula to calculate state appropriations to universities beyond 2012. The formula will be decided using input from universities, budget documents say.

Snyder also is looking to eliminate statutory revenue sharing for Michigan’s 500-plus cities, townships, villages and municipalities. Revenue sharing is the process of the state offering a refund in exchange for the ability to collect gas, sales and other taxes.

Of the $300 million allocated last year in statutory revenue sharing, $100 million would be cut. The remaining $200 million would be proportionately doled out to municipalities that share services and meet other criteria to be announced in March.

Cities and other municipalities must receive some revenue sharing under Michigan’s constitution. Snyder is seeking to increase constitutionally mandated revenue sharing by 4 percent.

East Lansing is expected to receive nearly $1.8 million in statutory revenue sharing during the current fiscal year that will end Sept. 30. A 4 percent increase in constitutionally mandated revenue sharing would work out to a $121,000 increase to the slightly more than $3 million East Lansing is expected to receive this year.

But city officials last month said they are wary of further cuts to revenue sharing. The police and fire departments are among those impacted when revenue sharing decreases, officials said.

Thursday’s proposals will be given to the Legislature, which will craft appropriations bills to create the state’s 2012 budget. Lawmakers have freedom to change whatever parts of Snyder’s recommendations they see fit.

Snyder said he wants a budget for the next fiscal year that begins in October by May 31. He also intends to have a two-year budget in place by July 1.

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