By Danielle Raykhinshteyn, Daily Staff Reporter
Published April 17, 2013
As a result of a bill introduced in the Michigan House of Representatives by Rep. Al Pscholka (R–Stevensville) in late March, the University could experience budget cuts of $47 million between the three campuses for the 2013-2014 academic year, raising questions about the future of University funding.
The bill allows for a $31 million increase in the state budget's allocation for higher education. However, any institutions that negotiated union contracts after the right-to-work law went into effect are penalized unless the new contracts amount to at least 10 percent in savings.
Because the University ratified contracts with the Lecturers’ Employee Organization; the Graduate Employees’ Organization; The American Federation of State, County and Municipal employees; the Michigan Nurses Association; and the House Officers Association, it could be faced with possible cuts.
University spokesman Rick Fitzgerald said it’s still too soon to know if the University will actually face cuts or what its actions would be if the cuts do go through.
“That’s only a proposal in the House,” Fitzgerald said. “It’s not been approved by the House yet, and there’s a completely different bill that doesn’t have those kinds of penalties that’s working its way through the Senate.”
Fitzgerald added that the University’s budget isn’t finalized until June, and won’t be sent to the University Board of Regents for approval until after the state budget is agreed upon.
Education Prof. Steve DesJardins said it’s unlikely that the University will raise tuition.
“There’s political pressure to not raise tuition to try to make up the difference,” DesJardins said. “There are really two strategies: They could try to raise revenues in another way or bring in revenues from another source — development or by raising tuition — or they could try to reduce their outlays in some way, or both.”
DesJardins added that another feasible source of revenue for the University could be dipping into its endowment, which is the largest of any public university at $7.7 billion as of June 30, 2012.
However, when faced with similar budget cuts during the 2011-2012 academic year the University decided not to use its endowment money and instead raised in-state tuition by 6.7 percent and out-of-state tuition by 4.9 percent.
Political Science Prof. Mike Traugott said if there are budget cuts, they might not be as extreme as $47 million due to compromises between state Republicans and Democrats.
“There’s some possibility there could be no reduction in the budget, or that in negotiations between the House and the Senate the cuts would be reduced substantially,” Traugott said. “If it turns out the Republicans, especially in the House, have to make a deal with some Democrats, the Democrats will ask for some things in exchange, which could be a reduction in the amount of the penalty or the elimination of it.”
Traugott added that if there are cuts made, he hopes that “individual units would be given some discretion” by the University to best decide how to cut things from their programs.
DesJardins said it is unlikely that the University will cut straight across the board because they haven’t done so in the past.
He said this House bill is just a political move to punish the institutions that acted before right to work went into effect.
“Somebody over in Lansing is ticked off about the fact that it looks like the institutions were operating in bad faith by the fact that they negotiated these contracts,” DesJardins said. “It might not ever go anywhere. Yet, whoever introduced this will be able to say to their constituents, ‘Look, I tried to do something but it didn’t work.’ ”
Traugott agreed that the bill is “a kind of political statement.” He said the contracts were most likely negotiated for economic reasons, not out of spite.
“Some large administration units tried to mitigate the effects of that law by signing relatively long-term contracts,” Traugott said. “If the contract decisions were economically viable, they don’t merit this kind of response.”
In 2006, the University implemented a new irrigation system in order to lower costs, and in an interview with CBS Local Detroit in 2011 about the budget cuts for the 2011-2012 academic year, Vice Provost Martha Pollack said the University would like to continue cutting costs in this environmentally friendly way.
Whatever the cuts may be, the University says it will strive to keep its academic reputation.
“Cost containment has focused on improving the efficiency of delivery of administrative and operational support, while protecting the core academic activities of the university,” the University said in an article on the Record Online.
—Follow Danielle Raykhinshteyn on Twitter at @dannierayh.