Michigan Gov. Rick Snyder is asking the state legislature to approve a $61.2 million spending increase for higher education that would return the state to funding levels not seen since 2011.
In his 2017-2018 executive budget, Snyder called for an overall funding increase of 4.3 percent for the state’s public colleges and universities. The bump would restore cuts that were made before Snyder took office, as well as fully restore a 15 percent higher education spending cut he made in his inaugural year.
In addition to the $61.2 million for Michigan’s 15 public universities, the governor’s proposal calls for increased spending on $7.5 million, or 2.4 percent, for community colleges and an increase of $15 million for career and technical education programs.
“Universities that exceed the governor’s tuition cap would lose their performance-based funding.”
For higher education, the funds would be evenly split between across-the-board spending and performance-based funding. Additionally, the governor’s proposed budget would also set a cap on year-over-year tuition increases at 4.8 percent. Universities that exceed the cap would lose the performance funding.
The tuition cap is higher than it was the previous fiscal year when it was set at 3.2 percent – an amount that both Eastern Michigan University and Oakland University exceeded. According to The Detroit Free Press, both universities willingly violated the cap as tuition increases generated revenue far exceeding available state funds.
In the case of Oakland University, the school declined $1.2 million in state incentive money and increased tuition 8.4 percent, creating $12 million in tuition revenue. Eastern Michigan raised tuition by 7.8 percent, forgoing $1 million in state aid and increasing its revenue by $10 million through student contributions.
“I’m always disappointed by these increases, because you know they will impact students,” State Rep. Sam Singh, D-East Lansing, told the Free Press in July 2015. “I’m not surprised though. There isn’t enough resources dedicated by the state to higher education.”
Need for tuition hikes may continue
In contrast to last years budget, Snyder’s new budgetary proposal is being well received by higher education officials, though some skepticism remains as to how the finalized budget will look.
Speaking with the Free Press, Daniel Hurley, CEO of the Michigan Association of State Universities, said the combination of the funding increase and the new tuition cap shows Snyder’s administration is prioritizing higher education reform.
“Some school officials are skeptical the increased funding and tuition cap will remain in the final budget.”
“The increase will collectively restore the significant state funding reductions that took place in 2012 and reflects five consecutive years of state reinvestment in Michigan’s public universities,” Hurley said. “This recommended state funding increase is exactly the prescription needed for Michigan to ensure that its public universities remain affordable and continue serving as the catalyst for creating the workforce that will power the state’s knowledge economy.”
However, other officials have said the need for caution remains. As reported by the Oakland Press News, Oakland University President George Hynd addressed the funding increase in a campus-wide email. Hynd said the university is appreciative of the attention higher education is receiving, but expressed some cynicism as to what will actually be approved, noting the proposal is “ambitious.”
Hynd added the school would work to avoid tuition increases that exceed the proposed cap, but made no guarantees. He noted the cap will likely be lowered before the budget is finalized, but said administrators are aware of the financial strain previous tuition spikes have created for students.
“We’re very sensitive to that,” Hynd said in the email. “We can’t go down that road again in the near future.”
While Oakland and Eastern Michigan were the only two schools that exceeded the previous tuition cap – and be summoned to appear before lawmakers in Lansing to defend their decision – Hynd said several other schools were considering the same move.
Speaking with the Press News, Oakland Vice President of Government and Community Relations Rochelle Black said applying a blanketed cap across all Michigan universities is “a flawed policy.” Black noted some schools, such as Oakland, do not include additional student fees with tuition, which limits their overall funding. The school is also growing, and as colleges expand to include more students and more resources, their funding needs will also change.
“Every institution is different,” Black added.
How Questica can help
Higher education institutions must walk a fine balance between funding and spending. Colleges and universities have many expenses – from pensions for staff, to programs and resources for students to capital projects that improve campus life or the educational experience. Funding for these endeavors often leans heavily on the state and student contributions through tuition. When state funding dwindles, schools must weigh the revenue value of tuition increases against the economic burden this places on students.
As colleges and universities debate tuition hikes, sound budgetary forecasting becomes critical. With Questica, institutions can eliminate cumbersome spreadsheets for a streamlined platform that allows for more efficient communication and increased transparency. With its unique tools designed specifically for higher education – including operating and capital budget platforms, as well as salary/position planning and performance tracking – Questica provides deeper insight into a school’s expenses and spending.
Thanks to unlimited, multi-year forecasting, Questica allows colleges and universities to prepare several hypothetical budgets in anticipation of funding changes or state mandates. Higher education institutions should contact Questica to learn how flexible budgeting software leads to more informed financial planning.