Oakland University freezes tuition, taps reserve funds

Oakland University trustees voted Monday to freeze tuition for the upcoming school year and will use $5.867 million in reserve funds to help close a projected $6.9 million deficit.

Officials at the Rochester-based university said they are projecting enrollment to be down this fall by 7.1% due to the coronavirus pandemic, the economy and other factors.

That enrollment loss translates into a $10.1 million drop in revenue.

Before COVID-19, OU officials had projected 18,325 students would be enrolled this fall. Revised estimates have that number at 17,325 for a "best case" and 16,700 for a "worst case" officials said Monday.

OU officials are also bracing for a $1.3 million reduction in state appropriations, an $11 million decrease in general fund revenues this year and other losses. Federal CARES Act money cannot be used to plug budget deficits, OU officials said.

John W. Beaghan, OU's vice president for finance and administration and board treasurer, said if the university had increased tuition, it would have covered the deficit.

Instead, OU will use the money from its non-general fund reserves and $1.076 million from work-share compensation savings.

The university is cutting $7.548 million in 2020-21 costs through salary, travel and overtime reductions. On Monday, the board also approved a $270 million budget for the 2020-21 school year.

OU president Ora Hirsch Pescovitz said the university recommended against tuition increases as the school prepares to bring students back to campus and focuses on safety and health.

"Health and safety are our highest priority and it's critical we provide our students with an excellent education experience ... to learn to grow and to contribute," Pescovitz said.

OU's tuition for 2019-20 for an in-state freshman was $13,462.50.

Amanda Wewer, an OU student who attended Monday's virtual meeting, told the trustees and university cabinet that its relatively low net price allows many students to attend the school.

"The affordability of Oakland and the availability of scholarships is a very big driver for students to come there," Wewer said.

Many OU students struggle because the school doesn't get enough state funding, especially compared with other Michigan universities, OU officials say, which limits what the school can provide in grants and scholarships.

To combat this, Pescovitz created the "Strive for 45" campaign, pledging to appeal to state legislators, the governor and the business, civic and philanthropic communities to raise the minimum state funding to $4,500 per student.

The “funding floor” is the minimum amount the state provides per student, and in the 2018-19 fiscal year, OU received $3,069, the lowest of the state's 15 public universities, it said.

In contrast, Wayne State University in Detroit receives the highest rate of government funding with $8,999 per student.

OU is among five universities that receive less than $4,500: Grand Valley State, the University of Michigan-Flint, UM-Dearborn and Saginaw Valley. 

Pescovitz said 100% of OU's floor funding goes to students via financial aid and scholarships and the school is not looking to lower tuition.

Wayne State, whose tuition is $11,700 for in-state students, is foregoing tuition increases for the coming academic year.

Michigan State University's Board of Trustees voted in May to freeze tuition plus room and board, and Central Michigan University decided in April to keep its current tuition rates in place for 2020-21.

jchambers@detroitnews.com