I would like to thank the committee and Chair Goschka for the opportunity to
address you today.
Also, I want to join Chancellor Mestas in welcoming you to our campus in
I appreciate the time that you have provided to me for discussions about
higher education in this state over the past year.
There are two messages I want to convey today.
The first is a message of pride and commitment that the University of Michigan
is, has always been, and must remain one of the nation's leading universities
— public or private.
And the second is my deep concern that continued and severe budgetary pressures
will threaten the very core of that excellence.
The University of Michigan and the State of Michigan have been partners
for 187 years. The state made a commitment to creating an outstanding
public research university before anyone even knew what that would
of this early
ambition on the part of the state and our ongoing partnership, the
University of Michigan became one of the top public universities in our country.
But Michigan’s support for its public universities has seriously eroded
over the past thirty years, and even more significantly in the past
three years, as Chancellor Mestas pointed out.
Thirty years ago, the state provided 70 percent of the funding for
instruction at our Ann Arbor campus. Today, we receive less than
30 percent of our
instructional funding from the state. The burden of the cost of
education has dramatically
shifted from state support to student tuition.
During these decades, the University made choices that ensured
it would remain a nationally top-ranked institution.
many stakeholders who have a vested interest in our quality — our
students, our alumni, the business and corporate community,
arts patrons, and the patients at our hospitals — they all have an investment
in the University of Michigan.
Here is the situation we face now: in the past two years, the
Ann Arbor campus has experienced a $43 million cut from
appropriations, along with almost $20 million in one-time
These are real dollars, and their loss means the reduction of
jobs, courses, and services at the University.
In response to the most recent reductions, we have cut our budget
significantly. Last year, we eliminated more than 300 positions,
and, the entire senior
leadership team of executive officers refused any pay increases.
We have reduced services,
increased the size of many classes and have eliminated some course
What are we facing for next year? Because we do not yet know
what the state revenue situation will be, we are modeling a range
The state budget proposal, on one hand, cuts the total appropriation
from 2002 by about $43 million and requires a limitation
on tuition increases. At our campus, tuition now makes up about
so the imposed restraint on that revenue will present a significant
challenge. The alternative to that proposal, though, is $62 million
from the base appropriation over three fiscal years. Of course,
if state revenues erode even further, we might be looking at
At a minimum, our analysis indicates we will need to cut another
$20 million out of the 2005 operating budget of the University.
Our budget planning process is underway now, and we are working
with the campus to review the range of possible revenues and
reductions for next
operations. We expect to complete our budget planning in the
My responsibility is straightforward: I am the steward
academic strength and future well-being of the University of
That future is precisely what I have in mind when I say that
the state budget proposal on the table at this moment can only
as a short-term
to address Michigan’s economic emergency.
It is in no way a sustainable long-term model, if we are to maintain
the University of Michigan as one of the top public universities
in the country.
In the matter
of a very few years we could lose the magnificent asset that
our partnership has taken 187 years to build.
Our student newspaper, the Michigan Daily, editorialized last
week that, for students, the loss of quality is their most serious
and their families are balancing not only the cost of their education
but also the value for those dollars. And I could not agree more.
The state budget proposal has the important goal of protecting
affordability for Michigan residents. My university embraces
that goal and we want
to continue to work with the Governor and the Legislature to
keep the University
affordable. Last year, our tuition increase was the lowest percentage
in the state and was well below the state average. Our overall
the last five years has also been the lowest percentage in the
Our commitment to affordability is also made evident in our pledge
to cover 100% of the demonstrated financial need of all of our
Last year, the University provided more than $96 million
in financial aid to 11,000 Michigan resident students, with
an average award of $8700
per student. The University has more than doubled
its institutional funding
for financial aid over the last 12 years, and has consistently
matched or exceeded tuition increases with additional financial
But we will need to do even more. The commitment to financial
aid will continue to be a guiding principle for the University
In fact, scholarship
support is one of the top priorities for our upcoming capital
We want to make sure that no qualified student is denied a Michigan
education due to financial barriers, and our continued emphasis
on financial aid
will be part of the solution.
But somewhere, at the intersection of all our available options,
our partnership must find a way to continue to provide educational
that are affordable,
accessible, and outstanding.
Our alliance with the state includes the benefits that flow from
the University to our region. One area that has been especially
valuable for the state
is the manner in which our research has improved the state economy.
The federal research funding we attract, and the use of technology
transfer to make our discoveries available to the public,
provide an enormous
for the State of Michigan.
In Fiscal Year 2003, the University of Michigan won $528 million
in federal funding for research expenditures on projects
$200 million more than our annual state appropriation.
At a time when the state is seeking to maximize its ability to
funding, the University of Michigan is helping tremendously.
We have eight faculty members who EACH have been awarded between
$50 million and $87 million in federal funding over the
These are faculty members who, year after year, attract the top
and compete for the federal dollars that create jobs in our offices
and laboratories. These resesarchers would not be successful
if our university
were not strong
overall. By maintaining the distinction of our programs, we are
helping to keep
those faculty members – and their research dollars – in
The impact of our research cascades throughout our
One of our outstanding researchers is Dr. James Baker, who is
Director of our Center for Biologic Nanotechnology. He is also
physician in our
Allergy Division, but he is best known for his research in new
ways of delivering
medical therapy, such as chemotherapy. His collaborative projects
are resulting in new ways to deliver chemotherapy directly to
His work has brought over 30 million research dollars to our
campus, and the impact of his work will benefit patients everywhere.
has also been
to create several new startup companies via technology transfer;
these companies are providing the state with new jobs and lifesaving
In 2003, for the first time, the University of Michigan was ranked
in the top ten universities for patents received. Also in the
new invention disclosures from researchers and 76 new license
Because we must compete nationally in terms of our research,
we seek and employ the best faculty members we can identify.
universities are continually
trying to recruit our top faculty members, so we must not only
hire the best, we must be sure to make this a university that
The state appropriation invested in our academic core makes our
University a fertile environment for this kind of economic activity.
We are committed to working with the Governor and Legislature
to find sustainable models that can achieve our shared goals.
As I noted in my budget message to the Governor earlier this
year, the Michigan Economic Development Agency estimates that
up to 55%
in high tech programs such as engineering, the life sciences,
and information technology who come to school in Michigan, stay
work in Michigan
after graduation. In announcing her executive order last December,
Granholm observed, “Moving
Michigan forward means opening our doors to new businesses and new residents,
and opening our minds to new ideas.” The University of Michigan serves
all of those goals.
I greatly appreciated the Governor’s remarks about higher education
in her State of the State address.
She observed that, “The truth is, our Michigan universities are extraordinary.
They multiply possibilities for us as individuals and for our economy. It’s
their excellence that makes access to their classrooms so vital.”
I look forward to working with you, your colleagues in the Legislature, and
the Governor to find the best ways to provide our students with the best
available education, to support our State, and to keep our research and educational
among the best in the country. Thank you, and I will be happy to take any
questions you may have.