The University of Michigan will enter the new fiscal year July 1 without an approved budget after regents voted 4-4 on June 25 on a measure that included a 1.9 percent tuition increase for Ann Arbor campus students.

The split vote means university administrators must return to the board in July with a new proposal for the consolidated budget, which includes spending plans for the Ann Arbor campus’ general fund, Michigan Medicine, UM-Dearborn, UM-Flint, Athletics, Michigan Housing and a number of supplemental student fees.

Regent Denise Ilitch was among four regents who opposed the budget measure, calling the proposed tuition increase “simply tone deaf” during a time when the global COVID-19 pandemic means a high percentage of a student’s experience will be remote and many university services are less accessible.

Regents Jordan Acker, Paul Brown and Shauna Ryder Diggs joined Ilitch in opposing the measure, while Regents Michael Behm, Mark Bernstein, Ron Weiser and Katherine White voted to approve.

Behm and Bernstein argued that failing to approve a modest tuition increase that effectively would be felt mainly by more affluent students would deprive the university of the resources needed to best support all students, especially those receiving financial aid.

Aside from the 1.9 percent tuition increase, the proposed Ann Arbor general fund budget for the 2020-21 fiscal year included $12.8 million in additional need-based undergraduate financial aid. The 5.6 percent increase in undergraduate financial aid would have meant that most in-state undergraduates receiving need-based grant aid would see no increase in tuition costs in the coming year.

“The tuition increase will be borne by those who can afford to pay it and not carried by those who can least afford to pay for it,” Behm said.

Bernstein agreed, saying it was appropriate for the university to “use a very small tuition increase, as proposed, to keep college affordable for those students who need the most financial help.”

In the budget presentation, Interim Provost Susan Collins spoke about the financial uncertainty caused by the COVID-19 pandemic and the significant steps the university has taken in recent months to contain costs and limit the pandemic’s financial blow.

Those measures include a universitywide salary and hiring freeze, reducing the salaries of campus leaders, postponing some construction projects and providing staff the ability to take voluntary furloughs or reduce their work hours.

Collins cautioned that additional reductions would be necessary if enrollment is lower than expected, the university incurs pandemic-related costs that are higher than anticipated, or the university receives a reduced appropriation when the state passes its fiscal year 2021 budget.

The state of Michigan anticipates a $2.5 billion deficit in FY ’20 and an expected shortfall of $3 billion in FY ’21.

Prior to the vote, President Mark Schlissel urged regents to support the proposal to ensure the university’s continued commitment to excellence and its ability to implement public health best practices on campus.

“The commitment to invest in keeping kids in school and keeping our students and our faculty and staff safe while they carry out the mission of the university in this time of uncertainty is very important,” Schlissel said.

Ryder Diggs said the financial uncertainly caused by the pandemic was an important factor in her decision to vote against the proposal.

“I do not support increasing tuition when families are facing the economic uncertainties of possible recurrent furloughs, unemployment, family illness, and difficulties with small business and household responsibilities,” she said.

“The semester, whatever it looks like, will look very, very different,” Acker said. “I find myself thinking that we could do more to not put the burden on our students this year — to put the burden elsewhere.” 

Brown said that while he was not opposed to the tuition increase on the Ann Arbor campus “for those who are fortunate enough to afford it,” the consolidated budget proposal did not do enough to support the Dearborn and Flint campuses.

Schlissel said a revised budget plan would be presented at the next Board of Regents meeting scheduled for July 16. The university also is exploring what steps may need to be taken to continue operations under the current budget until the July 16 meeting.

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