The University of Michigan will not tap its $6-billion endowment to help make up an estimated $47-million cut it is expected to receive in state aid next year, U-M President Mary Sue Coleman said today.
However, Coleman, speaking outside a state House subcommittee hearing on public university budgets, declined to say whether the university will raise tuition to make up for the cuts. She said that decision was still under consideration.
Coleman was one of four university presidents who spent today before House and state Senate appropriations committees explaining the impact the cuts proposed by Gov. Rick Snyder would have on their institutions.
Oakland University President Gary Russi told a Senate subcommittee that previous budget cuts resulted in higher tuition hikes than he would have liked. “We’ve done a lot with what resources we have,” he said. “It is getting harder to address financial aid.”
The presidents argued against further cuts. “You’re going to make heart-wrenching decisions,” Ferris State University President David Eisler said. The state has made a “decade-long disinvestment in students,” he said.
The governor’s proposed budget would cut 15% from each university’s state appropriation. It would also shift funding from the general fund to the school aid fund.
Snyder has also proposed an incentive pool that would reward universities for holding tuition increases under 7%. That incentive would add back between roughly 5-10% of the 2011-12 appropriation amount based on the university’s average tuition/fee increase over the last five years.
John Nixon, the budget chief, told the House appropriations committee that a larger budget cut was necessary for the universities because of the state’s overall budget crisis, according to Nixon’s spokesman, Kurt Weiss.
The goal is “take the hit now and not just nickel and dime it,” Nixon told the committee.
Coleman reminded legislators that U-M has been through tough economic times before and has grown through them. That growth has helped the university continue to develop its value for students, she said.
“I will not allow its value to diminish under my leadership,” Coleman said. “We’ve shown great discipline in our fiscal management. In all our cost containment measures we protect our core mission – academics and research.
Coleman said U-M has cut more than $130 million in six years by scaling back on expenses ranging from utility costs to planting fewer flowers.
“When we look to reduce costs, it’s always with an eye to our academic mission,” she said. “Students and? families see U-M as a value for their dollar.
U-M’s Board of Regents voted last July to lower the amount of the endowment it pays out to the general operations of the university from 5% of the total endowment to 4.5%.
Coleman said having that endowment, the second-largest of any public university in the U.S., has allowed it to weather a “horrific” investment market.
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