State budget proposes 2% increase in funding for U-M

Thursday, February 18, 2021 - 7:15pm

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Design by Claire Yang

In an effort to increase access to an affordable, post-secondary education, Gov. Gretchen Whitmer released an executive budget proposal for the fiscal year of 2022 as her next step to expand enrollment.

Proposed on Feb. 11, Whitmer’s budget for the upcoming fiscal year totals $67.1 billion, $1.7 billion of which is allocated toward supporting public universities and student financial aid programs. The proposed budget has yet to enter state legislature and is thus subject to change. 

Of the $1.7 billion allocated to higher education, $1.5 billion will fund university operations in the 2022 fiscal year. For a total increase of $30.5 million from last fiscal year, each of Michigan’s 15 public universities will receive a one-time, 2% increase in funding relative to the previous fiscal year. To qualify for these additional funds, universities must either hold tuition increases below 4.2%, or $590 per student, depending on which is the larger amount

As for the University of Michigan, this 2% increase brings total state funding to $329.5 million for the University’s Ann Arbor campus, $26.9 million for the University’s Dearborn campus and $24.4 million for the University’s Flint campus.

According to Michigan state Rep. Yousef Rabhi, D-Ann Arbor, the 2% increase serves as an effort intended to reverse the lack of access to higher education due to an exponential increase in tuition rates.

“An increase in tuition is directly correlated to the diminishment of state funding towards our state-funded universities,” Rabhi said in an interview with The Michigan Daily. “When state support increases, tuition rates stay steady, or they go down. But as state support has declined over the last 20 years, we’ve seen tuition rates go up dramatically, so there’s an inverse correlation.”

Instead of relying on revenue from out-of-state and international tuition, universities can look to the state for financial support, thus relieving students of financial burdens, Rabhi said. In fall 2019, out-of-state students accounted for 46.7% of the undergraduate population at the University’s Ann Arbor campus, a percentage that has steadily increased over several years prior. As such, Rabhi said the proposed budget’s additional funding helps expand universal access to higher education.

As part of Whitmer’s equity-based campaign to expand access to higher education, the budget proposal is designed to limit entry barriers to educational resources, according to the budget plan. According to her executive budget proposal, Whitmer aims for at least 60% of Michigan residents between the ages of 25 and 64 to have earned a college degree by 2030 to be able to measure up in a competitive and skilled workforce.

Echoing the importance of higher education, Public Policy junior Julianna Collado, who specializes in education policy, pointed to the connection between education level and income.

“When you look at the statistics, there’s a stark difference in how much people earn depending if they have a bachelor’s degree versus a high school diploma,” Collado said. “So I think it’s safe to say higher education plays a huge role in society and determining where people end up in society.”

Kevin Stange, associate professor of public policy at the University, told The Daily Whitmer’s budget proposal reflects her efforts to spur enrollment in public universities and community colleges that have experienced particularly high drops in enrollment due to COVID-19.

“The really big drops we’ve seen during COVID have been at community colleges just across the board, like huge decreases in enrollments,” Stange said. “So I think the governor’s efforts to make sure our community colleges are more affordable and welcoming, particularly for older students, are particularly important now.”

To expand access to higher education, the proposed budget offers an additional $2.5 million in financial support for the Tuition Incentive Program, totaling $65.5 million for the program. Furthermore, the budget proposal has allocated funds for financial aid programs, specifically $42 million for Michigan Tuition Grants and $29.9 million for Michigan Competitive Scholarships.

As for COVID-19 relief, the proposed budget has also allocated $57.3 million of supplemental funds for the current fiscal year. For U-M Ann Arbor, this allotment will come as an additional $12.6 million from the CARES Act. U-M Dearborn and U-M Flint will receive $1 million and $0.92 million, respectively, under the CARES Act, according to the budget proposal. 

Jonathan Hanson, lecturer in statistics for Public Policy at the University, told The Daily this additional aid is a result of higher-than-anticipated government revenue, which is unexpected after a year of financial uncertainty.

“The budget, first of all, is a big relief compared to where a lot of people thought we might be a year ago,” Hanson said. “There was concern that state revenues were just going to plummet, which would mean significant budget cuts and therefore reduce state support for the University. A number of factors fell into place that has produced a situation where there can actually be this 2% funding increase. In the big picture, that’s very positive news.”

The budget also designates $15.9 billion to elementary and secondary schools to increase funding for K-12 spending. With supplemental funding for the current fiscal year, the University gains access to further resources necessary to confront the financial challenges posed by the pandemic, Hanson said.

“There’s money from the federal government to do things with respect to vaccinations and respect to helping schools do what they need to do to support in-person education at the elementary, secondary school level,” Hanson said. “Those are pieces of the state’s budget, some of which is supported by Michigan tax dollars, but other parts are supported by federal aid coming in.”

In April, the University issued a hiring freeze due to economic concerns created by the COVID-19 pandemic. Despite budget deficits at the state level during the early months of the pandemic, state funding for the University has remained stable. The Ann Arbor Public School district has also remained completely virtual for the school year and has drawn recent debate over when the district should begin delivering in-person instruction.

One caveat to the budget proposal is that the funding for public universities will come as a one-time increase, not as a permanent extension to the base budget, Stange said. Without being guaranteed the same level of funding for the following fiscal year, universities will face a level of uncertainty in future budget planning.

“The increase is not going to build into the base funding going forward,” Stange said. “I think it’s because they don't really know what the state budgets are going to be like in the next couple of years. I’m quite worried what happens in the next fiscal year, and I think that’s probably why they just don’t have the confidence that this additional revenue is going to carry forward.”

To Rabhi, the proposal reflects the beginning of legislation intended to increase state funding for public universities.

“I think (the proposal)’s a step in the right direction, but I think there’s a lot more than needs to be done,” Rabhi said. “It is a conversation that we need to be bold enough to have in terms of talking about new revenue. That’s how we build a stronger democracy, frankly, a stronger nation as a whole is when everybody has access to the educational resources that they need, regardless of income, regardless of race, regardless of who that person is or where they come from.”

Daily Staff Reporter Evan DeLorenzo can be reached at evandelo@umich.edu


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