Armed with a PowerPoint presentation before an open forum of about 50 students, University Provost Philip Hanlon and Martha Pollack, the University’s vice provost for academic and budgetary affairs, delved into the details of University financing as part of a newly launched lecture series based on the Occupy movement.
In the presentation, which was part of the University’s “Equity, Justice and Social Change: The Michigan Tradition of Activism and Educational Opportunity” program, Hanlon and Pollack discussed how budgetary priorities range from ensuring student access to financial aid, fostering innovation in research and garnering strong faculty at the University. Specifically, they addressed the role tuition costs play in the budget.
According to Hanlon, tuition and fees constitute 68.7 percent of the University’s revenue, state appropriation constitutes 16.9 percent and indirect cost recovery constitutes 13.8 percent. University schools and colleges receive 57.4 percent of the budget from those areas of revenue. Hanlon used these figures to explain why tuition has increased.
“What drove us to the actual tuition increases was loss in state appropriation and investment in financial aid,” Hanlon said.
Tuition at the University has grown at an annual rate of 5.56 percent due to reductions in state appropriation, investments in financial aid and annual cost increases, Hanlon explained.
To maintain costs, Hanlon said the University has undertaken several initiatives to combat the decrease in state appropriations, which amounts to approximately 10 percent less than the annual appropriations received in 2002.
While Hanlon described a variety of University initiatives, such as eliminating lower priority services and activities, he added that cost-saving mechanisms take time to make an impact.
“All of these initiatives take a long time to execute,” Hanlon said. “So from the day you say, ‘Okay, I want to put a regional chiller serving these five buildings’ until it’s actually constructed in the ground and operating is two to three years.”
Hanlon also addressed President Barack Obama’s shared responsibility framework for public universities, a topic Obama discussed during his speech at Al Glick Field House on Jan. 27. This system relies on a partnership between the federal government, the state government and public universities.
If Obama’s framework is implemented, the relationship could provide more money from the state, according to Hanlon, who is hopeful for an increase in budget that could allow the University to further invest in financial aid and hire more faculty members.
“Universities are all about people,” Hanlon said. “What makes a great university is great faculty, great students and great staff, so the budget priorities are really about trying to get the best people here and help them succeed.”
Currently, the University invests in financial aid through a raise in tuition costs. After the presentation, students participated in a question and answer session, where they specifically addressed this policy.
Hanlon supported the practice, explaining that financial aid is necessary to increase socioeconomic diversity at the University and emphasizing that there is an inherent tradeoff between lowering costs and maintaining academic excellence with both students and faculty.
“At the University of Michigan, the chief academic officer is the chief budget officer, and I think that’s one of the strengths we have here because the combination ensures that academics get the highest priority when the budget is allocated,” Hanlon said.
According to Hanlon, the University competes for faculty with Harvard University; Stanford University; the University of California, Berkley; University of Texas at Austin and the University of Chicago. This competitive environment ultimately leads to higher costs to keep great educators, and recruiting and retaining outstanding faculty is a necessary factor to function as a successful academic institution, Hanlon added.
Both Hanlon and Pollack will be teaching a one-credit UC course in fall 2012 regarding the University’s budget.
This Friday, Hanlon and Pollack will further discuss how the University is funded at 5:15 p.m. in the Kalamazoo Room of the Michigan League, in a discussion open to students.