Office of the Provost

Budget Presentation to the Board of Regents

The University of Michigan -- Ann Arbor
FY2013 General Fund Operating Budget Recommendation

Executive Summary

June 21, 2012

University of Michigan graduates must be prepared to thrive in a fast-paced, global society where new challenges are increasingly complex.  This volatility and uncertainty demands leaders who can innovate and act in entrepreneurial ways; who can lead interdisciplinary work-place teams; and who can work effectively with people from diverse backgrounds and cultures.   The FY2013 budget prioritizes activities that emphasize the development of these essential skills and demonstrates our unwavering commitment to continually improve the quality of the academic experience, while also maintaining our commitment to ensuring access to qualified students of all socio-economic backgrounds.

The budget is based on a multi-year, integrated academic strategy and financial plan that includes strategic investments to maintain the academic excellence of the University and ensure that our students graduate prepared to be leaders in the 21st century.  The budget supports these investments through the continued practice of fiscal discipline and aggressive cost containment and includes more than $30 million in reductions and reallocations, and it complements this with the use of philanthropic resources. 

With a 10.1% increase in need-based financial aid for undergraduates, the budget supports access for qualified students of all socio-economic backgrounds.  Today, it costs less for the typical undergraduate student from Michigan from a family with low – moderate income to attend U-M than it did in 2004.  The amount of loans in the financial aid package for this same student is less than in 2004.  This year’s budget plan also includes investments to increase need-based aid for non-resident students.

The University of Michigan - Ann Arbor has one of the nation’s most outstanding set of faculty members, and their quality is a key factor in the success of our academic enterprise.  The recruitment and retention environment for top faculty remains highly competitive.  To maintain our competitive position among peer institutions, this budget includes the resources to support a modest salary program for faculty.  It also protects and slightly expands a program begun several years ago to hire 150 new faculty members, in a deliberate effort to reduce our student-faculty ratio and enable smaller class sizes over time.

Fostering economic development throughout the state is a vital part of the University’s public service mission.  The University is embracing and strengthening important relationships among academia, industry, and government.  Through business engagement, technology transfer, industry partnerships, student internships, entrepreneurship and community assistance, to the extent possible, the University is continuing to put resources toward addressing our region’s economic challenges. 

Achieving our goals of excellence and access has been challenging.  The FY2013 budget is based on a state appropriation that represents a 1.6% increase over last year.  While we are appreciative of this increase, it comes after a decade of significant cuts.  In fact, state support to U-M per student has declined by more than 50% over the past decade, adjusting for inflation.  To manage our constrained financial circumstances, we are committed to continuing our very aggressive cost-containment efforts.   Over the past nine years we have reduced or avoided recurring General Fund expenditures by $235 million, and we are targeting an additional $120 million in savings over the next 5 years.  At the same time, we will make expanded efforts to identify new revenue streams.

The budget recommendation for FY2013 includes a tuition increase of $360 (2.8%) for resident undergraduates and $1,3401 (3.5%) for non-resident undergraduates.  Most graduate and professional rates are increasing by 3.0%, and a limited number of differentials also are recommended for specific programs.

Despite the continuing challenges of the economy, the University of Michigan-Ann Arbor remains on a stable financial path, and continues to be one of the worlds’ most highly regarded universities. This is the result of a disciplined approach to financial management that emphasizes multi-year budget planning, ongoing cost containment and continual reallocation of resources toward our highest priorities.   

The accompanying Budget Narrative and associated Table 1 outline the General Fund budget recommendation for FY2013 in more detail.

We respectfully request approval of the proposed FY2013 General Fund budget.

Footnote

  1. Figures are per academic year for the most common undergraduate lower division rate

Attachments

FY2013 General Fund Operating Budget Narrative
Table 1: General Fund Budget Proposal