The Michigan House Appropriations Committee released a proposal on Monday to change how the state allocates funding to public colleges and universities. The proposed legislation would assign operational funding increases to universities based on student population instead of six performance metrics. This would effectively redistribute money from the University of Michigan’s Ann Arbor campus and other institutions that previously received large performance increases to universities that received lower increases but have comparable student body sizes, including the University of Michigan’s Flint and Dearborn campuses.
The Republican-led House Appropriations Committee released the draft as part of the ongoing budget negotiation process that began Feb. 11 when Gov. Gretchen Whitmer first presented her budget proposal for fiscal year 2022 to the state legislature. Legislators must send their finalized budget for Whitmer to sign by July 1, as the new fiscal year starts Oct. 1.
The proposal would alter the distribution formula for state appropriations, which currently determines annual increases to funding at public universities based on a number of performance metrics including research expenditures, six-year graduation rates and total degree completions. Under the new House proposal, the funding each university receives would instead be determined by the size of the student body, with each student earning their university an average of $6,299.
If passed, the University of Michigan-Ann Arbor would receive 12.2% less state funding — about a $40 million decrease — in fiscal year 2022. Meanwhile, some institutions that have traditionally received less state money in the past, including the University of Michigan-Flint and the University of Michigan-Dearborn, would receive a 10% increase — about $2.5 million for each campus.
The Appropriations Committee capped increases in funding at 10% for each university. A May 4 version of the bill released by the Appropriations Subcommittee on Higher Education and Community Colleges did not include the cap, and universities received funding increases as high as 33%. The recent proposal would take any increases larger than 10% and reallocate those funds to universities who saw smaller increases or even decreases in the subcommittee proposal. If that proposal had passed, the Ann Arbor campus would have lost over 13% of its 2020-21 funding.
Whitmer’s proposed budget called for the state to increase higher education funding by over $29 million. Each university would be given a one-time 2% increase over its FY2020-21 funding. The House proposal would remove the one-time increase, funding only the mandatory increase in funding for the state’s Michigan Indian Tuition Waiver program, which waives tuition for eligible Native American students.
Funding based on student enrollment, also known as formula funding, has been criticized in the past for incentivizing high enrollment rates rather than encouraging high-quality education.
University President Mark Schlissel wrote in a letter to House Appropriations Chair Thomas Albert, R-Lowell, that if passed, the proposal would hurt the University’s ability to provide quality education to lower-income Michiganders through financial aid programs such as the Go Blue Guarantee.
“Michigan ranks below the national average in postsecondary degree attainment and 33rd in median household income,” Schlissel wrote. “This is not coincidental. The data have shown consistently that workers with higher levels of education earn higher wages, yet Michigan ranks 44th in per-capita support for higher education.”
Albert was not immediately available for comment at the time of publication.
State Rep. Felicia Brabec, D-Ann Arbor, is the minority vice chair of the subcommittee. She said while she had reservations about the existing model, she found the new proposal unconscionable.
“I’ve spoken with some of our other colleges (besides the University of Michigan),” Brabec said. “Even if they get a bump or see an increase, they worry about the continuation of (formula) funding as being problematic for the sustainability of their institutions.”
Brabec is also concerned that pegging funding to enrollment ignores the impact of colleges and universities to their communities beyond their core educational missions.
“All of the schools that I have had the opportunity to talk about — community colleges and universities — are also all giving back to their communities,” Brabec said. “They’re either doing job creation, or mentoring or directly providing services to the community.”
Public universities have supported communities in several ways during the pandemic. In 2015 University of Michigan professors started LynxDx, the company who ultimately supplied COVID-19 tests to the U-M community this year. Michigan Technological University opened a lab to process tests from regional healthcare providers in addition to its own students and employees.
Since 2001, state support for the University of Michigan-Ann Arbor has grown slower than the rising costs of higher education. Adjusting for inflation, last year’s state funding is equivalent to the amount of money the state appropriated to the University in 1965. As a result, tuition has come to account for a larger share of the University’s budget; in 2021, tuition represented 74% of the general fund, up from 51% 20 years prior.
Besides aiming to change the higher education funding model, the House proposal removes restrictions on tuition and fee increases. In contrast, Whitmer’s budget proposal stipulates that additional funding is contingent upon limiting tuition and fee increases beyond $590 or 4.2%.
The higher education budget bill has to be approved by the House Appropriations Committee before it is sent to the Senate. The Senate Appropriations Committee introduced a bill that recommended removing Whitmer’s suggested operations increase but did not include significant changes from the FY 2021 appropriation values.
Summer News Editor Dominic Coletti can be reached at dcoletti@umich.edu.