How has funding for higher education changed over the past five decades? What are the University of Michigan’s main sources of income? What are its major categories of expenditures?
Those questions and many more are addressed in an 18-minute video discussion of the university’s budgeting process, presented by Al Franzblau, vice provost for academic and budgetary affairs.
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Franzblau, who leads the budget team in the Office of the Provost, starts the presentation with a little history lesson, outlining the gradual shift, over several decades, from a higher-education budget model funded primarily by state government to a model that relies mostly on private dollars to fund operations.
In the 1960s, Franzblau says, 80 percent of U-M’s general fund budget was provided by the state. Today, state appropriations make up just 16 percent of that budget. The $1.8 billion general fund budget pays for the core academic mission of the university.
The university’s overall combined budget totals $6.6 billion with half of that dedicated to the U-M Health System. The Health System, Athletics, Housing and Parking are auxiliary units that largely generate their own operating income and are separate from the general fund budget.
Franzblau details the university’s budgeting process, which starts in November and continues through the following June when the Board of Regents considers the provost’s budget recommendation for the next fiscal year (July 1-June 30).
General fund income comes from three main sources: State appropriations, tuition revenue and indirect cost recovery on sponsored research.
Expenditures, Franzblau explains, are dominated by the university’s academic units, which account for 67 percent of expenditures. Other major categories of spending are administrative service units, financial aid and a category called university items, which includes utilities and other fixed costs.
One of the fastest growing categories of the general fund budget continues to be financial aid, which offsets the cost of attendance for students with financial need. Financial aid has been growing at more than 10 percent a year for more than a decade.
