I would like to bring you up to date on the difficult state budget situation
and its potential implications for the University of Michigan. As I am
sure you are aware, the state is facing a $920 million budget deficit for
the current year. The Governor and the Legislature will be addressing
this serious issue in the next two weeks as they consider additional reductions
in funding, including more cuts to public higher education.
Recent news reports indicate that the preliminary plans under consideration
call for as much as a 6% reduction in state support to universities as
a mid-year rescission. This would mean another $20 million eliminated
from the appropriation for University of Michigan–Ann Arbor, in addition
to the $36 million reduction already absorbed by the University for fiscal
year 2004, and a $13 million rescission in FY 2003.
The University has cut costs significantly in order to preserve core academic
quality in the face of this monumental revenue loss. The University's
budget includes over $37 million in cost reductions that went into effect
this year. The University Record reported on many of the cuts and actions
undertaken across the campus, and you can read those articles online in the News Coverage section of this site.
I appreciated Provost Courant’s strong leadership along with the thoughtful
planning of our vice presidents, deans and directors as we moved through
that difficult process.
We are continuing the work of reducing expenditures wherever possible,
including consideration of a cost-sharing model for health care premiums
recommended by the faculty-led Committee on Health Care Premium Design.
That restructuring would enable us to save another $6 million in our general
fund and more than $20 million University-wide each year in the cost of
health care benefits.
Higher education took a deeper cut than any other sector of the state budget
last year. There is no doubt that additional reductions in state funding
will challenge our ability to protect our core academic endeavor and our
capacity to serve our students. I am deeply concerned about the impact
of dramatically declining state support, especially the pressure on the
learning environment and tuition levels. Provost Courant and I do not
expect to recommend a mid-year tuition increase in response to any mid-year
cuts, however, because our students and families have not had time to plan
We will do all we can to preserve the quality of our academic experience
throughout this challenging time. Also, we will continue our commitment
to financial aid so that a University of Michigan education is accessible
to all qualified students. I will be working with the provost, our executive
officers and deans as we move through this process. We are focused on
protecting the truly distinctive qualities of this extraordinary institution—its academic breadth and depth, its cultural resources, and the spirit
of discovery that fuels important innovation in the state's economy.
Also, I am working closely with my counterparts at the other 14 public
universities in Michigan as we urge lawmakers to carefully consider two
things: the negative consequences of continued deep cuts to public higher
education as well as the tremendous benefits our state's universities bring
to Michigan's economy. Michigan State University President Peter McPherson
and I will appear on Michigan Public Radio on Tuesday, November 25, to
discuss the higher education funding picture and to take calls from citizens
around the state. The program will air live from 2:00 p.m.–3:00 p.m. on
WUOM as well as other public radio stations around the state.
I will update you as we learn more about the possible mid-year cut as well
as forecasts for fiscal year 2005.
Mary Sue Coleman