Michigan universities take hit in budget deal
Lansing — Funding for public university operations will remain below 2011 levels next year under a revised budget framework agreed to by Gov. Rick Snyder, who had hoped to fully reverse major cuts during his first year in office.
Reduced state revenue projections are forcing leaders to trim spending plans by $460 million this year and next. The tentative deal reached this week would shave roughly $20 million from the governor’s original proposal to increase university funding $61.2 million in 2017.
Snyder and the Republican-led Legislature cut university funding 15 percent, or $213.1 million, in 2012 to help plug a projected budget deficit. They have approved increases each year since, but the roughly $40 million bump for next year would keep aggregate university funding below 2011 levels.
“They’ll be a little short,” said Senate Appropriations Chairman Dave Hildenbrand, R-Lowell. “Hopefully, if revenues stay stable through next year, we’ll take another crack at it to put them back up or maybe above 2011 levels.”
Higher education advocates, including groups such as Business Leaders for Michigan, say strategic investments in public universities are important for developing a talented and innovative workforce, which can lead to higher personal incomes and benefit the larger state economy.
But state budget pressures led to significant higher education funding reductions, beginning in the latter years of former Gov. Jennifer Granholm’s tenure and continuing under Snyder.
“Why we wouldn’t have tried to resolve this situation earlier is beyond me,” said state Rep. Sam Singh, D-East Lansing, who sits on the House Appropriations Committee. “You take a look at what other states are doing to stay competitive with higher education, and we’re not meeting the needs for our institutions themselves, let alone the students.”
Snyder spokeswoman Anna Heaton noted the budget deal still increases higher education aid next year, and she said the governor “remains committed” to full restoration in another budget year.
Even restoring 2011 funding levels would not account for inflation, said Dan Hurley, CEO of the Michigan Association of State Universities. An inflation-adjusted restoration would require an additional $137 million by the state, he said.
The university community appreciates the potential funding increase even though it is not as large as the governor originally proposed, Hurley said.
But there is concern the final deal — which is incomplete — also may scale back the state’s tuition restraint cap from the proposed 4.8 percent, limiting the ability of universities to generate revenue.
That’s problematic, Hurley said, because the association estimates that new employee overtime rules required by the Obama administration could cost Michigan universities a combined $60 million next year.
“They are going to need the flexibility on the tuition side, especially given that collectively four out of every five dollars comes from student tuition, and not state appropriations,” he said. “To hamstring universities is not helpful.”
Because the state awards some university operation funding based on performance measurements, several public institutions are receiving more than they did in 2011. But several schools — including large research institutes such as the University of Michigan, Michigan State and Wayne State — continue to receive less state funding than they did when Snyder took office, Singh said.
“I think there’s other places we could have cut within the government,” he said. “It’s been very clear from the beginning that this administration has not had a plan or a vision for investing in higher education, or students that are at these institutions.”
University funding is one of several spending targets that Snyder and legislative leaders agreed to scale back this week because of lower-than-expected Corporate Income Tax collections and sluggish sales tax revenue.
Snyder’s proposal for a $165 million statewide infrastructure fund is being scaled back to $5 million. The state health and corrections department budgets will also see reduced increases, Hildenbrand said, but some details have not yet been finalized.