The University will most likely hold in-state tuition at or
below the rate of inflation for the next academic year, University
President Mary Sue Coleman said at yesterday’s Board of
Regents meeting. She did not offer concrete plans for out-of-state
tuition, but stressed that the administration will strive for
moderation.

The decision came as a result of Gov. Jennifer Granholm’s
budget proposal during her State of the State Address in January.
Under the proposal, the governor urged universities to keep tuition
at or below the rate of inflation, about 2.4 percent. In return,
Granholm said the universities will receive back 3 percent of the
5-percent budget cut made in December 2003. Since the University of
Michigan’s funding was cut 10 percent earlier last year, its
cumulative cut would be 12 percent.

By opting for Granholm’s proposal, Coleman said the
University will save about $20 million in state funds.

If universities decided to raise tuition above the rate of
inflation, then the state would levy an additional 3-percent
penalty, resulting in an 8 percent budget cut for fiscal year
2004-2005. The cumulative cut over two years would be a more severe
18 percent.

“We support the efforts of the governor and the
Legislature to keep public higher education affordable for Michigan
families,” Coleman said.

The University’s decision is contingent upon what specific
tuition increases the Michigan State Legislature presents. If the
Legislature changes its plans or determines that the state budget
cannot support the costs of this proposal, Coleman said the
University will have to re-evaluate its choice to adhere to the
plan.

Both Michigan State University and Wayne State University
accepted the governor’s request in January and plan to hold
tuition at or below the inflation rate for January.

Since Granholm issued the proposal, the University has
approached the request with caution, evaluating its options. But
the University would save about $20 million this year and every
year indefinitely. To make up that $20 million restoration through
tuition increases, the University would have to increase in-state
tuition by 20 percent, an option that Coleman said was clearly
unfavorable.

But holding tuition at or below the rate of inflation is not a
sustainable model for the long term, Coleman said.

For the future, Coleman said she believes the University should
plan for “more robust and more predictable state support,
moderate tuition increases and a continued emphasis on financial
aid, especially in the form of grants.”

In spite of the state’s restoration of funds, the
University will still need to cut another $20 million from the Ann
Arbor campus budget, in addition to $37 million cut last year.
These cuts could be in campus-wide utilities, health insurance
benefits and other services, Coleman said. The cuts result from a
$40 million increase in costs over the past year. The rebate would
cover $20 million of this deficit.

Although the University typically strives for autonomy from the
state government, Coleman is not concerned that subjecting
University tuition discretion to legislative decision will set an
unfavorable precedent of Lansing dictating policy.“I would
not have done this if I thought that was the case,” she
said.

In response to the decisions, some students were upset that
tuition would be raised at all, even though increases will most
likely be modest.

Out-of-state students, whose tuition does not fall within
Granholm’s proposal, expressed even more resentment toward
the administration.

“I think they should learn how to work with the money they
have and cut some programs that might not be necessary,” said
LSA freshman Chris van’t Hof, who is from Minnesota. “I
think they spend a little too much.”

But some students supported to Coleman’s decision.

“I’m glad that she’s working for the benefit
of the students. Increasing tuition much further could deter
valuable students from coming to Michigan,” LSA junior Dan
King said.

In April, Coleman will unveil new ideas for the University to
keep it on the “cutting edge” of research and academic
services. She added that “we can’t just stop dead in
our tracks” in the face of budget cuts.

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