2001-2002 budget first ever to surpass $1 billion mark

BY ELIZABETH KASSAB
Daily News Editor
Published July 22, 2001

The University Board of Regents approved Friday by a 7-1 vote the 2001-2002 fiscal year budget, which includes a 6.5 percent tuition increase for all undergraduate and most graduate school programs on the Ann Arbor campus for the upcoming academic year.

"It"s the toughest budget year we"ve had in a long time," said Paul Courant, associate provost for academic and budgetary affairs. Tuition has not been raised this much since fiscal year 1995-96 when there was a 6.3 percent hike for in-state undergraduate students and 7.3 percent raise for out-of-state undergraduates. Tuition increases have hovered around 3 percent since then.

The proposed budget is designed to maintain the quality of the University, sustain important initiatives and consolidate the gains of the past few years, Courant said. The budget is set for $1.04 billion, the first time it has surpassed the billion dollar mark.

One reason for this fiscal year"s increase is a low expected increase in the state"s appropriation to the University, a 1.5 percent increase announced last week.

Courant noted an inverse relationship between the state"s higher education appropriation and tuition increases. Tuition raises were low in the years when the state was able to appropriate more funds to the University, and higher tuition raises corresponded with low state appropriations. This year is no different, he said.

But high tuition hikes to make up for low state appropriations puts additional strain on students and their families, said Andrea Fischer Newman, the lone regent to oppose the budget. Parents may lose their jobs or take pay cuts, and increasing tuition stretches their budget even thinner.

"The University needs to understand better the cyclical impact of the economy," she said.

Newman (R-Ann Arbor) said although she is not opposed to tuition increases, there are alternatives the University could explore. Increasing tuition more when the economy is strong and setting some money aside for harder times is one alternative, she said.

Courant said there are necessary expenses that the University cannot avoid.

"The bills don"t go down. We still have to pay them," he said. "With a low state appropriation, tuition is how we do it."

Courant cited soaring energy costs as one main reason the 2001-2002 fiscal year budget is so tight. Conservation efforts are underway, he added.

Various schools and departments are also trying to find ways to cut corners and save money. "A penny saved is a penny they can re-deploy to their highest priorities," Courant said.

Courant also said the upkeep of the University"s programs and initiatives, and an increase in staff benefits pushed the jump in tuition.

Courant highlighted four areas the University has singled out as priorities the Life Sciences Initiative, the undergraduate experience, the scholarly quality of the institution and information technology.

Staying competitive and attracting and retaining a top notch faculty requires the University to offer competitive salaries, Courant said. Tenure and tenure track faculty are projected to receive a 5.3 percent pay raise.

Courant labeled information technology as an "absolutely essential" component of the University and another area where money must be spent to keep up with the market.

Staff benefits, including health insurance, will increase by $7 million according to the proposed budget.

The University is not alone in its significant tuition increase, and the proposed 6.5 percent hike is the lowest tuition increase among Big Ten schools and public universities in Michigan announced thus far.

"We are less dependant on state appropriations and more dependant on tuition," Courant said. "A bad year from the state hurts us, but we can make up for it."

Some state legislators have vowed to find additional sources of funding for higher education. One possible source is a repeal of the state"s tuition tax credit, which would garner most universities another 1.5 percent increase in funding.

If the University were to receive additional state funding, Courant said it was possible that the University would revise its tuition increase.