University of Michigan
News for Faculty and Staff

March 30, 2017

U-M budget underscores affordability, multidisciplinary initiatives

June 16, 2016

U-M budget underscores affordability, multidisciplinary initiatives

Topic: Regents

The University of Michigan balances its long-standing commitment to affordability with a focus on providing a world-class education and conducting socially relevant research in the fiscal year 2017 general fund budget approved Thursday by the Board of Regents.

The budget for the Ann Arbor campus includes an in-state, undergraduate tuition increase of 3.9 percent — below the state Legislature's cap of 4.2 percent. It also includes a 10.8 percent increase in undergraduate financial aid so many in-state students with financial need will see an overall increase in the cost of attendance of as little as $114.

Sustained attention to affordability and access, combined with an unwavering commitment to support academic quality and innovation, puts U-M in rare company. U-M is recognized by the U.S. Department of Education as one of 23 universities nationwide — and the only one in in the state — for having demonstrated both high post-graduation earnings, as well as low costs for the lowest-income students.

The $1.94 billion budget, approved on a 5-3 vote, also includes funding for key new initiatives with public impact that are essential to the university remaining a leader in public higher education. New initiatives are funded in part with resources reallocated from lower-priority activities.

"The goal with this spending plan is to put the University of Michigan in an even better position for what a major public research university should be," says President Mark Schlissel. "That is, an institution that discovers new knowledge, helps solve problems across the sciences, engineering, humanities and the professions, and engages students at all levels in these important activities."

The approved FY '17 budget includes support for new efforts in a number of broad areas. These include multidisciplinary initiatives with public impact; diversity, equity and inclusion; additional leveraging of the biological sciences and health system resources in academic efforts; increasingly encouraging and supporting public engagement by the faculty; teaching innovation; and student support services.

The budget also includes support for ongoing work, the costs of which are held down by aggressive cost-containment programs that the university has engaged in for more than a decade. Since FY '04, the university has reduced or avoided recurring general fund expenditures totaling $337 million while another $23 million in cuts and reallocations is included in the budget approved today.

"We are able to fund this important ongoing work by using a fiscally disciplined approach that maintains access and affordability for students," says Provost Martha Pollack, the university's chief academic and chief budget officer. "At the same time, we must continue to make strategic investments in teaching and research to ensure that we fulfill our public mission of providing world-class education and contributing to the common good."

Regent Mark Bernstein, who was elected chair of the board for the coming year, spoke in favor of the budget recommendation, in part because of the strong commitment to student financial aid. And, he says, "We must preserve and protect the great assets of this university.

Not all regents supported the budget. Regents Denise Ilitch, Andrea Fischer Newman and Andrew Richner voted against the budget recommendation. Newman says she cannot applaud cuts in one area to fund increased spending in another. "More financial aid does not solve the underlying problem of rising higher-education costs."

While Ilitch expressed frustration with how much more the state spends on prisoners than on college students, she says U-M must do more to cut costs and operate more efficiently. She suggested the university focus some of its research effort on ways to deliver quality education without relying solely on tuition escalation.

Board Chair Shauna Ryder Diggs supported the budget, which she says reflects the goals and priorities established by regents for the university. "It is important to maintain our excellence," she says.

Undergraduate tuition and required fees for first-year, in-state undergraduates in LSA will be $14,402, an increase of $546 or 3.9 percent.

For many families, the published cost of attendance is not the price they will pay. The budget includes increased financial aid support so the typical in-state student with financial need will see no effective increase in tuition, and the net cost of attendance — including tuition, room and board, books and supplies — may increase by just $114.

This budget extends the university's decades-long commitment to provide all in-state students with a financial aid package that meets their demonstrated financial need, through grants, loans and work-study jobs. About 70 percent of in-state students receive some form of financial aid.

In nine of the last 10 years, the university has approved double-digit percentage increases in financial aid — twice the average rate of tuition increases — so the net cost of attendance has not grown in seven years for most students with financial need.

This year also will be the first for students admitted under the HAIL scholarship program, which offers four years of free tuition to high-achieving, low-income students from throughout Michigan.

Out-of-state undergraduate tuition will increase by 4.4 percent. The budget provides funding to meet the full demonstrated financial need for out-of-state students from families with incomes of up to about $90,000 a year — up from $68,000 a year ago. About 50 percent of out-of-state students receive some form of financial aid.

Tuition for most graduate and professional programs will increase 3.9 percent. A limited number of differential increases also were approved for specific programs.

During the past year, the university community has been engaged in a quest to develop a comprehensive strategic plan with the goal of becoming a more diverse, equitable and inclusive community. The entire campus community has undertaken a bottom-up planning process that includes more than 50 campus units.

The approved budget includes funding to support the strategic diversity, equity and inclusion plans across the Ann Arbor campus. Details of those plans will be announced this fall and will touch virtually every aspect of the university and include all components of the community: faculty, staff and students.

Another area of focus will be sustainability, where the university is in the process of reimagining and restructuring its research and educational programs. Recommendations from a faculty committee are being considered as part of a restructuring of the current School of Natural Resources and Environment. The new model would address global sustainability challenges at the intersection of environment and society through research, teaching and civic engagement.

And the university will make additional investments in the biosciences. FY '17 will be the first year of a long-term plan to add faculty positions in bioscience areas that span a number of schools and colleges.

Building on its renowned health care system, and tightly coupling health care practice with cutting-edge research, the university plans to expand the impact of its current bioscience faculty and to recruit new leaders in a number of specialty areas, positioning them to conduct breakthrough research on the U-M campus.

U-M is recognized nationally as a leader in support for students with disabilities, in sexual assault prevention programs and in providing mental health services for students. This budget includes additional resources to enhance efforts in these areas and to address other compliance priorities.

Overall, the FY '17 general fund budget will increase 5.8 percent to $1.94 billion. It includes a state appropriation of $308.6 million, up 3 percent from last year. The Ann Arbor campus' total FY '17 operating revenue budget, including the U-M Health System, Athletics, University Housing, other auxiliary activities and programs supported by designated gifts and grants, is $7.5 billion.

Gifts and other non-general fund sources are increasingly important to the university's financial health. Philanthropy is an essential component of the university's commitment to academic excellence and access and affordability. The university is in the midst of a $4 billion fundraising campaign, which includes a goal of raising $1 billion for student support.

University Housing rates

Separately, the Board of Regents approved a 3 percent increase in residence hall and apartment room-and-board rates for FY '17. That rate includes 1 percent to partially offset projected operating cost increases and 2 percent to continue funding the program of major renovations of housing facilities.

The cost per student for a double room with a basic meal plan will total $10,872 for the fall and winter terms, an increase of $318. Need-based grant aid will mitigate this increase for students with financial need. Rental rates in Northwood Community Apartments for graduate students and students with families will increase by an average of 1 percent.

University Housing is a self-funded auxiliary unit of Student Life within the university. Since 2006, University Housing has embarked on a program of substantial cost controls, reducing costs by $15.3 million.

Tags: budget