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Published in Talent

Higher ed supporters look to reverse downward state funding trends

BY Sunday, February 28, 2021 06:00pm

As state employment forecasts show more than three-quarters of the top 50 high-demand, high-paying jobs in Michigan through 2028 require at least a four-year degree, public financial support for Michigan universities lags many other states.

That’s just one of the points Michigan Association of State Universities CEO Dan Hurley cites in advocating for higher state financial support for the 15 public universities in Michigan that enroll 280,000 students.

Among the others: Michigan ranks 33rd nationally for both the number of residents with college degrees and in household income. Michigan also ranks 35th in state financial aid per college student, and 44th in per capita spending on higher education, which compares to 20th a decade ago.

That last point reflects how budget cuts made when Michigan was mired in the depths of the Great Recession were never fully restored, Hurley said.

When adjusted for inflation, Michigan in the 2018-19 fiscal year appropriated 1.9 percent less for higher education than it did a decade earlier. That compares with an increase of 25.6 percent in total state spending over the same period and leaves higher education as the only major area of the state budget that, when adjusted for inflation, was below 2008-09 funding levels.

“When the economy goes south, higher ed gets cut. That’s not unique here in Michigan. It’s a national phenomenon. But, what has historically happened is that when good times return there is re-investment in higher ed,” Hurley said during recent testimony to state lawmakers who are reviewing Gov. Gretchen Whitmer’s budget proposal for the next fiscal year that starts Oct. 1.

That re-investment occurred following an economic downturn in the 1980s and a “little bit” in the 1990s, Hurley said. “But when that recession hit in the early 2000s, it was cut, cut, cut and it never rebounded. Then the Great Recession hit and we have essentially been on life support (and) flat-lined for the last several years.”

As well, state operating support for universities declined to $5,768 per full-time student in 2021 from $9,760 per student in 2012, according to Hurley. That equates to $16,000 in costs for a four-year college education that’s been shifted to students.

The result of the prolonged state funding trend for higher education has been a funding ratio that has “completely flipped” over four decades, he said.

In 1979, state appropriations covered 70 percent of the operating costs at Michigan’s public universities while tuition and fees covered the remaining 30 percent. Today, tuition and fees pay for 78 percent of the costs and state appropriations pay 22 percent.

Nationally, the ratio averages 51 percent state support and 49 percent by students, Hurley said.

“It’s the longer view that is a much more dire portrait,” he said. “We would really like to see a period of re-investment.”

Whitmer’s budget proposal for the 2022 fiscal year includes a 2 percent one-time, across-the-board increase in operating support for public universities to $1.7 billion. The $30.5 million increase hinges on universities holding annual tuition increases at 4.2 percent or less, or $590 per student.

The budget proposal notes that public universities are “critically important” to reaching the governor’s goal of having at least 60 percent of residents ages of 25 to 64 earn a college degree or professional certificate by 2030.

‘Fiscally conservative’ investment

In making an argument for higher state support for universities, Hurley cited data showing states with the most college graduates are the most prosperous, and that college graduates have greater job security and are less likely to draw on social services or public assistance.

“State investment in public higher education is the most fiscally conservative investment the state can make,” he said.

As lawmakers review Whitmer’s budget proposal, at least one legislator questioned the need for spending more on higher education after the state’s public universities this year recorded a 3.5-percent decline in enrollment, and a 6-percent decrease in freshman enrollment.

“Shouldn’t the money go down if student enrollment goes down?” asked Rep. Steve Johnson, R-Allegan.

Hurley responded that it should not since the enrollment decline is a temporary issue that resulted from the COVID-19 pandemic and that especially affected international students. Universities are working to reverse the enrollment declines, he said.

“I do think this is a near-term phenomenon and enrollment will turn around,” Hurley said.

Universities as well have incurred high costs in responding to the pandemic through testing, screening, compliance, personal protection equipment, and intensive cleaning and retrofitting facilities. That cost from the pandemic has been “minimally” $1 billion for the state’s public universities, Hurley said.

Revenue declines from operations such as book stores, dining, housing, and athletic and event venues also virtually dried up during the pandemic.

“The primary short-term, pandemic-related aspect is the fact that the bottom has absolutely fallen out on the auxiliary side of these university enterprises, which has helped subsidize a lot of the operating revenues that these universities rely on,” Hurley said.

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