Despite reassurances from financial institutions of the University’s healthy credit rating, Provost Paul Courant said at yesterday’s Board of Regents meeting that administrators and department heads are still “planning for the possibility of (budget) cuts up to $55 million” for next year.

Moody and Standard and Poor’s announced the University’s “borrowing rates should be very low due to our financial health,” Regent David Brandon (R-Ann Arbor) said.

Yet the discussion centered around budget cuts, after Gov. Jennifer Granholm’s executive order Wednesday increased state higher education approprations cuts from 2 to 3.5 percent. Moreover, Courant said the University’s budget may be reduced by up to an additional $42.3 million next year. President Mary Sue Coleman said administrators are already planning for potential cuts next year, but still have much work ahead.

“We have to strike the right balance to guarantee the quality that we have always had here, while we minimize the tuition burden for our students and families as much as possible,” Coleman said.

Courant said financial aid programs will not be affected, and maintaining education quality will be the University’s priority.

Administrative units will be asked to reduce their budgets by 6.5 percent and academic units by 6 percent, Courant said.

“Each of our units will share in the cuts, and deans and directors will have flexibility in determining with the central administration how best to absorb the shortfall while still managing our teaching and research functions,” he said.

At the meeting Courant also suggested 12 additional steps administrators can take to cut costs, including eliminating non-essential travel, lengthening equipment replacement cycles, conserving electricity and increasing the enrollment limits of some classes.

Courant added the University will not be able to weather the cuts without laying off some employees.

In addition to cutting costs, the University will have to raise tuition by some amount and seek more alumni donations, Regent Larry Deitch (D-Bingham Farms) said.

At the meeting, recipients of the 2003 Henry Russel Awards, given to junior faculty, were also announced. Dentistry Prof. William Giannobile, Medical Prof. Scott Hollister, microbiology Prof. Denise Kirschner, human genetics Prof. John Moran and chemical engineering Prof. Michael Solomon received honors.

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