Office of the Provost

Budget Presentation to the Board of Regents

The University of Michigan -- Ann Arbor
FY2014 General Fund Operating Budget Recommendation

Executive Summary

June 20, 2013

The FY 2014 General Fund budget recommendation is based on a multi-year integrated academic strategy and financial plan, which is designed to be responsive to the evolving context of higher education. The budget proposal prioritizes activities that emphasize the development of the skills that our students will need to succeed in the 21st century and protects the quality of the academic experience at the University of Michigan-Ann Arbor. At the same time, the budget proposal furthers our commitment to student access through an unprecedented investment in financial aid. We are able to achieve these goals through the continued practice of fiscal discipline and aggressive cost containment: the recommended budget includes $24 million in reductions and reallocations for FY 2014.

The budget proposal includes the lowest in-state undergraduate tuition rate increase in nearly 30 years. Specifically, the recommended rate increases are $148 per year (1.1%) for in-state undergraduates and $1,270 per year (3.2%) for out-of-state undergraduates. Most graduate and professional rates are increasing by just 1.8%, and a limited number of differentials are also recommended for specific programs.

The budget recommendation also includes a historic investment in student financial aid. There will be no increase in the cost to attend U-M for the typical undergraduate student who has financial need, and for many in-state undergraduate students with need, the cost will decrease significantly, resulting in lower packaged loan amounts. We are also expanding the commitment we made last year to begin to meet the full demonstrated financial need of low-income out-of-state undergraduate students.

The quality of our educational programs is paramount, and our budget includes investments in important academic initiatives that provide our students with a world-class experience. As has been our practice for a number of years, we will fund these initiatives through reallocation from lower priority activities. We will also protect the quality of our faculty, which is one of the most important factors in the success of our academic enterprise.

Achieving our goals of excellence and access continues to challenge us all. State support per student has declined by nearly 50% in real dollars over the past decade, and today our state appropriation constitutes just 16% of our General Fund budget and less than 9% of our overall academic operating budget. This year’s budget recommendation assumes a 2.2% increase in the state appropriation based on the Legislature’s Conference Committee recommendation, and while we appreciate this modest increase, the overall financial situation remains challenged. Despite this, the University of Michigan-Ann Arbor remains on a stable financial path largely because of our disciplined approach to financial management, which emphasizes multi-year planning, on-going cost containment and reallocating resources toward our highest priorities.

Over the past decade our cost containment efforts have resulted in nearly $265 million in recurring reductions and reallocation, and we are committed to identifying additional efficiencies as well new revenue streams. We remain one of the world’s most highly regarded institutions of higher education, and we will continue to provide an outstanding education to our students, with a focus on the skills and capabilities they need to be the next generation of leaders. We also will continue to invest heavily in financial aid to ensure access to U-M to qualified students.

The accompanying Budget Narrative and associated Table 1 outline the General Fund budget recommendation for FY 2014 in greater detail. The proposed student tuition and fee rate detail is also included.

We respectfully request approval of the proposed FY2014 General Fund budget.

Footnote

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

Attachments

FY2014 General Fund Operating Budget Narrative
Table 1: General Fund Budget Proposal