This story has been updated to include additional interviews.
Despite a projected shortfall in Michigan both this fiscal year and next, higher education received a funding increase in Republican Gov. Rick Snyder’s budget announcement Wednesday morning.
In a presentation to the state’s lawmakers, the governor announced the state budget for the 2016 fiscal year as well as revisions to the 2015 fiscal year budget. Those changes are intended to account for a deficit, which was announced at the state’s biannual revenue estimating conference in January. Administration officials have attributed the deficit to an unprecedented number of businesses recently cashing in on tax credits issued over the past several years.
Snyder proposed a 2-percent increase to university funding overall and 1.4-percent increase in community college funding, a move similar to his previous budgets. According to a University press release, the University’s Ann Arbor campus specifically would receive a 1.9 percent increase, the Dearborn campus would receive a 1.7 percent increase and the Flint campus would receive a 2.5 percent increase if the proposal passed.
Nonetheless, the level of state higher education funding remains lower than it was at the start of his tenure, due to a 15-percent cut the governor recommended in 2011.
Even with the unexpected shortfalls, Snyder told reporters at a press conference Wednesday afternoon he was pleased with the budget proposal.
“We should be very proud of the economic outcomes of our state so far and the future of our state looks very bright,” Snyder said.
Last month, the House Fiscal Agency projected a $454.4 million deficit, but State Budget Director John Roberts updated that number in a recent report to $325 million.
The 2016 budget also faced a projected shortfall of $532 million. To address both shortfalls, the governor made cuts to multiple state agencies. Most severely impacted were the State Police, the Department of Corrections and the Department of Community Health, which will see cuts of more than $23 million, $17.8 million and $16.55 million, respectively.
However, for the state’s schools and universities, the news was more positive. During his address, Snyder emphasized the importance of investing in education, along with skilled trades and public safety
“The same time when we’re cutting a number of programs, we’re making investments, investments in critically important things,” Snyder told reporters.
Citing both K-12 schools and higher education institutions, Snyder said maintaining investment in education was one of the administration’s key considerations when making cuts to state agency budgets.
“The way I viewed it is we’re going to protect students,” he said. “We’re not asking for sacrifices from any of those groups.”
Last year, Snyder’s executive budget proposal totaled $52.1 billion and featured a 6.1-percent increase for higher education funding. The 6.1-percent increase was the largest increase to higher education funding since 2001. In 2012, he recommended a 3.1-percent raise; in 2013, a 2.2-percent raise.
“Going back to the increased education budget, I think that’s been validated multiple times that we’ve been investing in education and we continue to invest in education,” Snyder told reporters.
Cynthia Wilbanks, the University’s vice president for government relations, said the University plans to work closely with state officials as the budget proposal progresses through the legislature.
“We certainly appreciate the governor’s recommendation for additional state funding, especially in the constrained budget environment this year,” she wrote in a statement. “This maintains the momentum of increased state investment in higher education.”
Don Grimes, senior research associate for the University’s Institute for Research on Labor, Employment and the Economy, said given the deficit, he was surprised to see the higher education funding increase, along with the proposal to elevate wages for skilled trades students.
“They seemed to have been able to make good use of their revenue that they have been able to find,” Grimes said. “I didn’t expect that large of increase in university appropriations.”
However, Grimes cited the continual need to reform corporate business firms cashing in on tax credits, which was a major contributor to this fiscal year’s budget deficit.
“They shouldn’t be allowed to do that all in one period,” Grimes added. “In other words, they should be forced to get those tax credits spread out over a number of years.”
Similar to budgets from the past three years, the governor’s recommendation also set aside additional funding for universities that meet performance metrics or cap tuition raises at a certain percent. Last year, the cap was 3.2 percent, which the University met by raising tuition 1.6 percent. This year, the cap will be 2.8 percent.
Additionally, the proposal allocated $500,000 for sexual assault prevention on college campuses. Over the past year, two universities in the state — Michigan State University and the University of Michigan — have come under federal investigation for how they address sexual assault reporting.
Snyder didn’t cite specific circumstances prompting the funding during his announcement.
“I believe it’s appropriate to make an investment,” he told lawmakers.
According to budget documents released by Snyder’s office, the $500,000 will be a one-time allocation to “provide a system wide approach to develop comprehensive prevention best practices, assessment strategies, and effective response efforts.”
Education Prof. Betty Overton-Adkins said she was pleased overall that the budget proposal included an increase to higher education funding.
“If Michigan is going to continue to keep pace with the rest of the nation in terms of continuing to provide a very strong program of higher education for its citizens, we certainly need it to have a contingent consideration for increases to our budget,” she said.
Overton-Adkins added that the increase of funding could lead to additional funding from other outside sources.
“When the legislature and governor signaled their support for higher education, it also is a catalyst for other agencies and organizations also to support us,” Overton-Adkins said. “I think in some ways it also helps to attract additional dollars, because we can point to the support that the state provided the institution.”
Along with higher education, K-12 programs and skilled trades programs also received a boost. The governor proposed a 75-percent increase from the amount currently spent on skilled trades programs — from $47.6 million to $83.2 million. He also recommended $25 million in support for a new initiative to increase third-grade reading scores in the state and $75 increase in per-pupil funding for K-12 schools.
After the budget presentation, Lt. Gov. Brian Calley briefly discussed an upcoming ballot proposal, which would increase Michigan’s sales tax to pay for fixes to the state’s roads. The 2016 fiscal year budget doesn’t assume passage of that proposal, Calley said.
Snyder told reporters later in the day that the road legislation, which was signed last year but goes before voters in May, simplifies the use of the fuel tax and the sales tax.
“Fuel taxes go to local government roads,” Snyder said. “It’s a straightforward, comprehensive tax structure … that provides both certainty and adequate resources that can go both to (the) transportation system that our people deserve and the education system is protected in the meantime.”
If passed, the restructuring would impact the way universities are funded. A percentage of a university’s overall state allocations would stem from the general fund instead of the School Aid Fund, which would be restricted to community colleges and K-12 programs under the proposal.