Office of the Provost

Budget Presentation to the Board of Regents

The University of Michigan -- Ann Arbor
FY2011 General Fund Operating Budget Recommendation
Executive Summary

June 17, 2010

The proposed FY2011 General Fund budget for the University of Michigan – Ann Arbor takes our commitment to students and their families to a new level during a particularly difficult financial period.

First, this budget exhibits an unwavering commitment to the quality of the institution both inside and outside of the classroom. This commitment to quality is explicit in our investments in the expansion of our world-class faculty (so as to improve the student educational experience through smaller classes), in new and innovative academic programs and in increased support for research and entrepreneurial programs.

At the same time, the recommended budget propels centrally awarded, need-based financial aid for undergraduate students upward by 10.6%, an increase of over $8.1 million. In addition to this investment, this fall the University is launching an Economic Hardship Program for resident students, reinforcing our commitment to Michigan families during the current difficult economic times. This program will add $500 in grant aid to qualifying resident students’ financial aid packages, directly reducing their loan burden by the same amount.

This substantial investment in financial aid is coupled with the lowest tuition rate increase for resident undergraduates since 1984, despite an assumed decline in our state appropriation. By comparison, in 1984 our state appropriation increased by 11%. The comparison with 1984 makes clear that the proposed 1.5% resident undergraduate rate increase is an even greater accomplishment.

This notable budget, achieved during a period of unprecedented financial uncertainty, results from careful planning, prudent management of resources and a strong commitment to budgetary discipline. Multi-year budget planning and our willingness to make tough decisions regarding priorities has enabled us to prepare for and smooth out the impact of the current financial situation in the state and nation.

Our cost containment efforts have continued unabated and are key to our ability to enhance quality and invest in financial aid while holding increases in cost of attendance to a minimum. Exceptional efforts are being made to reduce costs in the FY2011 budget recommendation. Our budget planning assumes nearly $39 million in reductions, with almost $22 million of that being reallocated to higher priority activities. The majority of these savings come from administrative and support areas such as benefits, IT, space management, facilities maintenance and building services in order to protect the academic experience for our students. These FY2011 cost reductions are on top of the remarkable cost containment efforts of the past seven years, during which we have succeeded in removing nearly $159 million in recurring general fund expenditures through a combination of efforts.

Our disciplined approach to long-term cost containment is a driving force behind the University of Michigan’s ability to invest in innovation in teaching and research. By requiring that all new initiatives be funded through internal reallocation again this year, we can maintain our commitment to quality without increasing costs. This budget includes resources to expand the undergraduate research opportunity program (UROP). Many participants cite UROP as the single most important activity they engaged in during their first two years on campus. The FY2011 budget also invests in the expansion of the Law School’s skills-based curriculum initiative to improve the competitiveness of our students as they search for jobs in a very difficult job market and to better prepare them to contribute in their future roles in the legal profession. And, last year, the University completed the purchase of a major research facility now called the North Campus Research Complex. Plans are in place for the facility to promote interdisciplinary research opportunities, enhance the education of our students and stimulate technology transfer and economic development within the State of Michigan.

The attached Budget Narrative and associated Table 1 outline the General Fund budget recommendation for FY2011 in more detail.

The proposed budget assumes the Senate Subcommittee’s recommendation for our state appropriation of approximately $315 million. If the State enacts a significantly lower appropriation or reduces the University’s appropriation through a mid-year rescission, the University’s ability to maintain quality of its academic programs and investments in the student experience will be put in jeopardy. In that case, the President and Provost may return to the Board of Regents to recommend a mid-year tuition rate increase.

We respectfully request approval of the proposed FY2011 General Fund budget.

Attachments

FY2011 General Fund Operating Budget Narrative
Table 1: General Fund Budget Proposal