Michigan House GOP's higher ed budget includes huge cuts for UM, MSU

LANSING, Mich. — House Republicans unveiled a spending plan Wednesday that would slash state taxpayer support for the University of Michigan and Michigan State University by $300 million annually because of UM and MSU's large out-of-state student enrollment and multibillion-dollar endowment funds.

Under the proposal, the UM-Ann Arbor campus would see a $239 million or 65% reduction in taxpayer support, while MSU would experience a nearly 19% cut in state aid, topping $61 million — net reductions that appear to penalize the state's two largest universities for their out-of-state and international student base.

The House Republican-authored plan calls for UM and MSU's funding to be redistributed to Michigan's other 13 public universities, which predominantly enroll in-state students. Wayne State University would see its annual state aid increase by 28%, or nearly $65 million, while the other 12 universities would get 31% increases in state taxpayer support, according to an analysis of the bill from the nonpartisan House Fiscal Agency.

The House GOP budget plan achieves this massive shift in funding for public universities by imposing $828.1 million in cuts to historical base funding for all universities, a 49% decrease, and then giving the schools a $5,500 scholarship for every enrolled student from Michigan, according to the HFA analysis.

The proposal effectively divides $1.6 billion in base funding for universities into two equal pots: Campus investment funds and scholarship money tied to Michigan students.

MSU and UM, because of the size of their endowments, would lose 50% and 75% of their state-level campus investment funds, respectively, under an endowment-based distribution formula added to the GOP-led House budget.

“They’re the two universities that have the greatest opportunity to increase their endowments, attract more students, get more research dollars,” said state Rep. Ann Bollin, a Brighton Republican who chairs the House Appropriations Committee.

The so-called campus investment funds, according to the HFA analysis, are to be used on expenditures related to technology, infrastructure, equipment, maintenance, and debt reduction.

The proposed state budget cuts come as both UM and MSU are already tightening their budgets to accommodate cuts in federal funding for research.

House Democrats panned the budget proposal and the effects it would have on the state's two flagship universities.

"Seems like they’re letting DC rhetoric stomp on Midwest values," said state Rep. Alabas Farhat, D-Dearborn. "If you are a student or a parent of someone who attends any university in the state of Michigan, you should understand that House Republicans do not care about you. Vote accordingly in the future."

The new funding formula for university dollars distribution that will hobble UM and MSU funding would decrease by 50% funding for institutions with endowments between $1 billion and $5 billion, which would affect Michigan State University; by 65% for universities with endowments between $5 billion and $10 billion; and by 75% for universities with an endowment above $10 billion, which would affect UM-Ann Arbor.

Across the board, the budget shift of about $828 million away from universities would leave them with base funding totaling $855.7 million, before the Michigan student-based scholarship money is applied. Projected decreases to base university funding across the state, according to the analysis, would range from 5.1% for Wayne State to 91.6% for UM-Ann Arbor.

As an example, Oakland University would see its base funding slashed by 51.2% or $37.9 million. But the scholarship funding would give OU $60.8 million, for a net increase of $22.9 million or 31% from the current fiscal year, according to the HFA analysis.

The House GOP budget plan includes a 3% tuition restraint string attached to the campus investment funds, meaning universities that respond to the state cuts by raising tuition by more than 3% would not qualify for funding.

The budget also would pump $1.1 billion in school aid fund dollars toward scholarships for university and community college students, pulling the money away from a pot of money historically dedicated to K-12 students. Another $170.6 million in general fund dollars would be deposited into the scholarship program for scholarships that follow students to private universities and colleges.

Bollin, a graduate of Central Michigan University, said House Republicans are reprioritizing higher education funding in Michigan through endowment-based cuts and the House’s inclusion of the $1.2 billion for $5,500 scholarships for in-state students and $2,750 scholarships for community college students who are residents of Michigan.

“I don’t think we need to gut to cut,” Bollin said. “We just need to reprioritize.”

The overall funding level for higher education increases slightly from the current fiscal year — from about $2.3 billion to $2.4 billion — but about half of that $2.4 billion spending plan would go to scholarships, not the universities directly.

The House Republicans' proposed $456.6 million spending plan for community colleges represents a decrease of about $5.5 million from the prior year.

The House budget also requires universities to submit information on the current university president, to provide lists of the number of out-of-state students by state of origin and of the number of international students by citizenship, and to certify that all students are “lawful residents.” Universities would have to report students who are not lawful residents to the Michigan Department of Lifelong Education, Advancement, and Potential. Lack of compliance would result in 5% of funding being withheld, according to the proposed budget.

The House budget also bars universities from using race-based admissions practices; restricts state funding from being spent on diversity, equity and inclusion programs; and prohibits transgender athletes from participating in women’s sports.

The budget proposal also restricts universities from spending more than 10% of its salary dollars on staff who do not teach, maintain buildings or work in campus law enforcement.

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—Staff Writer Craig Mauger contributed.

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