The University’s budget is massive, to say the least. With totals of more than $5.2 billion in operating revenues and expenses at the University’s three campuses, including the University of Michigan Health System and the Athletic Department, it’s easy to see why developing the University’s budget is almost a year-long process.

Despite the budget’s enormity and vast importance for life at the University, very little about its formulation is known to many members of the University community. Over the past two months, through several interviews, University President Mary Sue Coleman, Provost Teresa Sullivan and Phil Hanlon, vice provost for academic and budgetary affairs, have offered insight onto this rarely discussed process.

The University’s budget planning begins in the fall of the previous academic year. Upon direction from the Office of the Provost, the dean of each of the University’s schools and vice presidents of each executive office begin formulating budget recommendations for their respective units.

In an interview last month, Coleman said deans and vice presidents are directed each year to look for ways to cut costs.

“We understand that we’re going to have to take between 1 and 2 percent out,” she said. “We’re just going to have to cut.”

Coleman said the cuts proposed must impact the quality of education at the University as little as possible, so as not to harm the experience students receive on campus.

In an interview last month, Sullivan said in addition to the cuts, deans and vice presidents are asked to reallocate an additional 1 to 2 percent from low priorities to higher priorities — to put emphasis on each unit’s bigger goals. Once this has been done and the proposals are completed, the budget recommendations are then reviewed in budget conferences with the provost.

In that March interview, Sullivan said this year’s budget conferences began in January and were expected to finish near the end of March. She explained that the budget conferences provide an opportunity for deans and vice presidents to present their budgets and justify the amount of money they’re requesting.

Last week at Coleman’s monthly fireside chat — an event to which a group of students are invited to meet with the president and to ask questions and share concerns about the University — Royster Harper, vice president for student affairs, told students about her experience with the budget conference this year.

“We went into our budget meeting, and we had squirreled away a little money, and so the issue on the table when we got there was ‘What are you going to do with all this money?’” she said. “We had squirreled it away for specific things that we knew we were going to have to replace or some equipment, so we had our little list.”

Harper said because the budget she had presented looked too large, she was forced to go back and outline more specifically what the money would be used for, so the provost could review the budget more carefully.

“When she saw the budget, it was big at the bottom,” she said. “So we had to go back, make our list and show her exactly why we didn’t have what looked like a lot of money.”

Sullivan said after budget conferences are finished, she joins her budget team in reviewing the list of priorities from each school or office to determine what may be feasible for the following year. At the same time, Sullivan said her budget team will review ways to control expenses through cost containment.

“If we can contain costs, that makes a big difference in the budget,” she said, adding that the University has eliminated $135 million in expenses over the past six years because of cost containment.

The approximately $135 million in savings has been due to measures like changing how the University orders and distributes supplies, increasing energy efficiency at several campus buildings and alternative strategies for managing employee health care benefits.