By Shoham Geva, Daily Staff Reporter
Published February 5, 2014
On Wednesday, Michigan Gov. Rick Snyder (R) announced his executive budget proposal for the 2015 fiscal year in a presentation to a joint session of the Senate and House Appropriations Committees.
The budget, which totals $52.1 billion, includes significant increases in several areas such as K-12 education, as well as proposals for tax relief and assistance for Detroit during bankruptcy its proceedings.
Public universities were recommended to receive a substantial 6.1-percent funding increase amounting to $80.3 million, which represents both the largest increase in higher education funding since 2001 and a structural reversal from the 15-percent decrease in education funding Snyder proposed in 2011 during his first year as governor.
State Rep. Jeff Irwin (D–Ann Arbor) said the increase in education funding, along with proposed tax relief measures, represented some of the major differences between the governor’s latest budget proposal and those from previous years.
“You can tell it’s an election year with how different this budget is from the previous budgets I’ve had the opportunity to vote on,” Irwin said. “We’re actually seeing education get the money; we’re actually seeing tax relief being targeted more broadly rather than just at wealthy individuals.”
During his announcement, the governor linked this year’s increase in higher education funding to Michigan’s improved financial situation, calling the initial cut in 2011 one of the tough choices that had to be made in light of budget deficits.
In response to questions from state representatives after the announcement, State Budget Director John Nixon said the governor’s office didn’t necessarily see the decrease in education funding — among other areas — as a permanent decision, and wants to work on bringing them back up.
“We’d like to at least get them to back to the level where we were before the governor took office,” Nixon said.
The proposed increase comes with one main condition: Universities receiving increased state funds must keep tuition increases at or below 3.2 percent. Along with performance measures, tuition caps have become fairly common stipulations for higher education funding in the state in recent years.
Last summer, the University’s Board of Regents approved the lowest tuition increase in 29 years: 1.1 percent for in-state students and 3.2 percent for out-of-state students.
In the fall of 2012, the University received an additional $1.1 million from the state for keeping tuition increases below 4 percent.
In a statement released Wednesday, Cynthia Wilbanks, vice president for government relations, characterized the increase in funding as great news for higher education accessibility and affordability.
“State investment in higher education is a smart investment in the future of Michigan,” Wilbanks wrote. “Of course, we also have to do our part in higher education. That includes continuing to trim costs, finding more efficient ways to operate and seeking the support of donors.
She added that in the past 10 years, the University has cut ongoing costs by $256 million and is committed to cutting another $120 million in the next five years.
In addition to pursuing cost-containment strategies, University President Mary Sue Coleman has frequently lobbied state legislators to restore funding to institutions of higher education.
Mike Boulus, executive director of the Presidents Council, State Universities of Michigan, said the increase — though it didn’t restore funding to where it was in either 2001 or 2011 — was nonetheless an important step in restoring state support.
“This has to be looked at as a strategic reinvestment in higher ed,” Boulus said. “It’s going to take more than one year to restore higher ed funding to levels they once were. We understand that.”
K-12 education and the city of Detroit also received significant boosts in funding. In K-12 education, an area in which the governor has recently been facing heavy Democratic criticism because of previous funding cuts — the extent of which are disputed — Snyder proposed a 2.8-percent funding increase toward per-pupil allocations and retirement funding. For Detroit, the governor proposed a $350 million investment over 20 years to ease pension issues with the city’s bankruptcy settlement.
A $103 million tax relief initiative for lower- and middle-class families was also proposed, while $120 million was allocated to Michigan’s Budget Stabilization or “Rainy Day” fund.
Donald Grimes, senior research specialist for the University’s Center for Labor Market Research, said in an e-mail statement that maintaining rainy day funds is especially important for states and municipalities.
“Since states and local governments are limited in their ability to borrow money, when they suffer a recession they must have sufficient ‘savings’, the rainy day fund, to sustain operations during a period of increased demand for social services,” Grimes wrote. “Neither Michigan nor most other states had nearly enough ‘savings’ during the most recent recession.”
Irwin said overall, he was glad to see causes like universities and early childhood education in Wednesday's budget proposal, but he added that there are many aspects of economic recovery that the governor’s budget didn’t address.
The governor has focused much of the last month on building his reelection campaign around the state’s recovery, calling Michigan a “comeback state.”
“The governor is doing some good things with this budget,” Irwin said. “But I think it’s a little frustrating to hear all the happy talk about the Michigan economy when we still have so many families that are struggling, we still have high unemployment, and we still have schools that are packed with too many kids and colleges and universities that are at historic low levels of funding, even after this increase.”
The budget will not be official until each appropriations measure it contains is passed by the legislature, which typically takes several months.