Michigan's university leaders urge hike in tuition cap

Chad Livengood and Kim Kozlowski
The Detroit News

Lansing — Four years after a 15 percent state funding cut, some leaders of Michigan's 15 public universities are pushing back at caps on tuition and other measures lawmakers and Gov. Rick Snyder have used to slowly reverse prior reductions.

Michigan State University President Lou Anna Simon

Wayne State University President M. Roy Wilson has emerged as the chief critic of the funding model Snyder and the Legislature have used for three consecutive years to award more money to universities with higher graduation rates and large concentrations of undergraduate students getting degrees in science and math.

Under the "performance funding" formula, Wayne State doesn't get points with lawmakers for having a higher concentration of graduate students in the fields of medicine and law than the other 14 schools. The Detroit university receives no points for its low 34 percent graduation rate.

Wayne State consequently stands to get a 0.6 percent increase of about $1 million next year, while six smaller universities — Central, Eastern, Western, Ferris State, Grand Valley State and Oakland — will receive more money under Snyder's proposed $28 million increase for which the universities compete.

"The metric system needs to be improved so there's not a systematic bias against Wayne State ... and right now there is," Wilson said in an interview.

Other university presidents support changing the funding formula and creating a higher tuition cap than the 2.8 percent hike under Snyder's proposed $1.34 billion budget for universities. Ten university presidents and chancellors, but not Wilson, testified Tuesday before a joint House and Senate appropriations subcommittee.

Western Michigan University President John Dunn noted a 2.8 percent tuition increase generates different amounts of money at each university. He asked lawmakers to give the schools more room or "bandwidth" than the 2.8 percent cap, perhaps even a range of percentage increases.

"How about a little room for those who have ... restrained themselves, but are really starting to feel a little strain?" Dunn asked during the hearing. "Should the same cap apply to everybody, every institution?"

Dunn told lawmakers the Kalamazoo school likely would not raise its $11,273 average tuition more than 4 percent if lawmakers eliminated the cap.

University of Michigan President Mark Schlissel said after testifying that most universities would appreciate a higher tuition cap.

"We are all committed to try to keep tuition as modest as possible to promote accessibility to public higher education," Schlissel told The Detroit News. "And it's a balancing (act) to maintain accessibility to quality higher education. We want to have the best faculty and the best facilities. ... Having the flexibility beyond what the governor proposed would be welcomed, but we're not sure yet whether it's essential to us."

After testifying, Michigan State University President Lou Anna Simon said her school would continue to find ways to make its budget work with the tuition cap. But she has a hard time explaining to students and trustees how the Legislature last year awarded a 6 percent aid increase with a 3.2 percent tuition cap, while this year's proposed funding hike is 2 percent with a 2.8 percent tuition limit.

"It just doesn't make a lot of sense. We've lost ground in per-student funding when compared to Michigan and Wayne State, even though they'll complain about their numbers," Simon said. "Our per-student numbers are lower. What sense does that make?"

Legislators divided on cap

The proposed 2.8 percent tuition cap for next school year is identical to the average tuition and fee increases among the 15 universities last year, according to the non-partisan House Fiscal Agency.

"The tuition cap is attempting to accomplish a political goal and the universities are attempting to achieve an educational goal," state Rep. Jeff Irwin, D-Ann Arbor.

Rep. Mike McCready, R-Bloomfield Hills, seemed open to eliminating the tuition cap.

"I'd like to learn more about why we have a cap in place and if it's really necessary," said McCready, chairman of the House higher education appropriations subcommittee. "Usually in a free market, we let the market find their own rates."

But Rep. Laura Cox, R-Livonia, said the 2.8 percent cap is a "reasonable" expectation for more state aid.

McCready said the funding formula needs to be revisited. "One size doesn't fit all," he said.

The performance formula gives universities more funding based on their graduation rates, total degrees awarded, research and development expenses, number of low-income students receiving Pell grants and administrative costs not exceeding 20 percent of spending.

Under the formula, aid increases vary from 0.6 percent for Wayne State to 4 percent for Grand Valley State University.

"Wayne State is getting hurt by the formula in two different ways that I don't think make a lot of sense," Irwin said.

Seven of the 15 universities would see their state funding exceed the 2011 fiscal year level before Snyder's first-year cut to help alleviate a $1.5 billion structural budget deficit. Northern Michigan University is among those schools.

"We believe the formula is working, it's giving us a predictable way to plan and look ahead, instead of wondering year-to-year where we're going to be," said Fritz Erickson, president of NMU, which would get a 2.1 percent increase.

But Glenn Mroz, president of Michigan Technological University, asked lawmakers to consider removing payments to the state's educator pension system from the administrative costs category. He said Michigan Tech is penalized under that category because of its $3 million annual payment to the Michigan Public School Employees Retirement System.

"This is a cost that we can't control at all," Mroz said.

Oakland University President George Hynd plans to ask Gov. Rick Snyder if the school can exceed its 2.8 percent tuition cap.

Cap limits investment

Oakland University is concerned about the 2.8 percent tuition cap because it limits the university's ability to expand programs that improve student performance, President George Hynd said.

Hynd plans to ask Snyder if Oakland can exceed the cap, still get the incentive money and use the extra tuition revenue to invest in programs that advise students, identify those who are struggling and offer tutoring.

Those initiatives have led to Oakland increasing its 70 percent retention rate of freshmen to 78 percent.

"If we had the opportunity to exceed the tuition cap, we might be able to invest more resources in things that would actually speed up students' progress toward a degree, lower their debt and retain them," Hynd said.

If the Legislature adopts Snyder's plan, Wilson said, Wayne State will have to make $10 million to $15 million in spending cuts and forgo new initiatives aimed at boosting its graduation rate among a more transient student population.

"We just can't do this year after year," Wilson said.