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 2016 and 2017 recommends total funding of $1.5 billion, of which $1.2 billion is general fund.
Highlights of Governor’s Budget Recommendation
• The governor’s Executive Budget invests an additional 2 percent, or $28 million, in state university operations, all general fund. This is the largest ongoing general fund investment recommended by the governor for fiscal year 2016. This increase brings total operating funds for universities to nearly $1.4 billion.
• The increase in university operations funding is distributed using a modified version of the existing performance funding formula, providing long-term planning stability to state universities. The metrics used are: 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 2.8 percent or less in order to receive any new performance funding. This cap represents double the level of expected inflation.
• Included within the operations increase, the governor proposes a 2 percent increase, or a combined $1.2 million, for Michigan State University AgBioResearch and Extension, all general fund. This brings total funding for both programs to $60.8 million.
• As was previously done for school districts and community colleges, Governor Snyder proposes instituting a cap on the amount of unfunded accrued liability contributions paid by the seven member universities of the Michigan Public School Employees Retirement System. He proposes that payments be capped at the fiscal year 2012 level, or 25.73 percent of payroll, with the state making payments for amounts over the cap. This requires $2.7 million in new funding and total ongoing funds of $5.2 million. Member universities will now have a predictable cost for their retirement payments, facilitating better long-term planning.
• Total recommended funding for student financial aid is $105 million. In addition to this funding, $6 million in the community colleges budget provides for the restoration of the Independent Part-Time Student Grant for the first time since fiscal year 2009.
• State Building Authority rent payments of $136 million, all general fund, support debt service for recently constructed university building projects.