The Detroit News is highlighting ideas from various groups to promote discussion on reform, restructuring government and the economy.
Change way public universities are funded
Idea 5: Convert the allocation formula for state funding of public universities to a per-pupil foundation grant where money follows the student, like Michigan's K-12 system. Also equalize state spending so this per-pupil grant is the same for all universities. The per-pupil grant would be about $6,500, regardless of which school the student selected. Finally, separate state funding for university research into a separate budget line item and cut it at least 5 percent.
Why: State funding is allocated to universities on the basis of irrational and arbitrary formulas. The result is a bizarre system where per-pupil funding ranges from a low of around $3,500 at Saginaw Valley State University to more than $13,000 at the University of Michigan-Ann Arbor. If a fixed quantity of state money accompanied each Michigan resident student who was attracted to a university, it would sharpen the incentives for each school to increase value, contain costs and reduce tuition.
Benefit: Precise determinations of savings from better incentives are impossible, but 5 percent seems reasonable. This would generate annual savings of around $88 million.
How: Change state law and cut university appropriations 5 percent and distribute the balance to schools on the basis of how many Michigan resident students attend in a given year. The change would have to be phased in over a few years to allow the universities to make adjustments.
Obstacles: There would be winner and loser schools, and the losers (like U-M) would scream bloody murder. Legislators with losing universities in their districts would oppose the change. A well-funded network of alumni and promoters exists to spread anecdotes and other arguments regarding the supposed value of universities as drivers of "economic development" and other benefits.
Source: Mackinac Center for Public Policy
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