Higher Education

The Higher Education budget provides operating support to the state’s 15 public universities and also funds student financial aid programs. Over 295,000 students enrolled in state universities last year. Public universities are essential to the governor’s goal of ensuring that at least 60 percent of Michigan residents possess a high-quality degree or other credential by 2025. The governor’s proposed budget for fiscal years 2017 and 2018 recommends total funding of $1.6 billion, of which $1.3 billion is general fund.

Highlights of Governor’s Budget Recommendation

• The Executive Budget invests an additional 4.3 percent, or $61.2 million, in state university operations. This increase brings total operating funds for universities to over $1.4 billion and restores aggregate university funding to fiscal year 2011 levels.

• One-half of the increase in university operations funding is distributed across-the-board and one-half through the current performance formula. This formula provides longterm planning stability to state universities while continuing to emphasize the following performance metrics: weighted undergraduate completions in critical skills areas, research expenditures, 6-year graduation rates, total completions, administrative costs as a percentage of core expenditures, and the percentage of students receiving Pell Grants.

• Universities will be required to limit any tuition increases to 4.8 percent or less in order to receive any new performance funding. This cap represents double the level of expected inflation.

• Included within the proposed operations increase is a combined $1.4 million for Michigan State University AgBioResearch and Extension. This brings total funding for these programs to $61.9 million.

• The governor’s budget continues to recommend a cap on the amount of unfunded accrued liability contributions paid by the seven member universities of the Michigan Public School Employees Retirement System, with the state making payments for amounts over the cap. This requires $730,000 in new funding and total ongoing funds of $5.9 million. The state funding provides member universities with a more predictable cost for their retirement payments, facilitating greater long-term planning. Legislation is needed to authorize the proposed rate cap.

• Total recommended funding for student financial aid is $107.5 million. An additional $2 million funds increased reimbursement costs for the Tuition Incentive Program (TIP), supporting Michigan’s low-income postsecondary students. Beginning in fiscal year 2018,the governor recommends capping TIP reimbursements to any university or college at $8.5 million per year.

• State Building Authority rent payments of $145 million, all general fund, support