UM Tuition to Increase 2.8%, Budget Up 3.9%

University of Michigan’s tuition for students at its Ann Arbor campus will increase 2.8% in the coming year for in-state first- and second-year (lower division) undergraduates – to $12,994 per year – following approval by the board of regents at their June 21, 2012 meeting. Tuition for out-of-state lower division undergraduates will increase 3.5% per year, to $39,122. Most graduate and professional programs would see tuition increases of 3%. Voting against the tuition increases were three regents: Democrats Denise Ilitch and Larry Deitch, and Republican Andrea Fischer Newman.

A year ago, tuition increased 6.7% for in-state undergraduates at the Ann Arbor campus, and 4.9% for out-of-state undergraduates. At the June 2011 regents meeting, Ilitch and Deitch had cast dissenting votes for those increases, too.

On Thursday, Ilitch spoke against the FY 2013 tuition increases, describing the burden on students as “brutal.” Higher education is increasingly becoming out of range for Michigan residents, and that’s unacceptable, she said. Regent Julia Darlow responded by saying that all the regents are concerned about affordability and accessibility of higher education for low- and middle-income students. But she noted that the net price for a UM education – including all costs, not just tuition – is actually lower now for students from middle-income families than it was in 2004.

The general fund budget for the Ann Arbor campus also includes $144.8 million in student financial aid, an increase of $10.5 million compared to last year. In a media briefing prior to the June 21 meeting, provost Phil Hanlon said this marks the fourth year in a row that a typical student with financial need won’t see an increase in the cost of attending UM, due to increases in financial aid. This year, the financial aid increase reflects additional grants, not loans.

The FY 2013 budget reflects a $4.3 million increase in UM’s state appropriation to $273.1 million – an increase of 1.6% compared to FY 2012. Last year, state funding to UM had been cut 15%. Hanlon noted that while the university is appreciative of this year’s increase, in the past 11 years there has been a drop of $178 million in state aid to UM, adjusted for inflation. He encouraged state legislators to continue their investment in higher education.

Hanlon also highlighted the university’s cost-cutting efforts, pointing to reductions of $235 million in general fund expenses since fiscal 2004. Looking ahead, UM has a five-year goal of cutting another $120 million, he said, which includes more than $30 million of cuts in fiscal 2013. The savings will come in part from consolidating IT operations, cutting about 70 staff positions through a combination of attrition and layoffs, and using the university’s buying clout to get more favorable pricing from vendors.

On the expense side, the budget includes what Hanlon characterized as modest salary increases of 2% for staff and 3% for faculty. He noted that these are not across-the-board increases, but will be made based on merit.

Tuition and fees make up a large portion of the general fund operating budget. For the Ann Arbor campus, a budget of $1.649 billion in FY 2013, which begins July 1, marks a 3.9% increase from FY 2012. Of that $1.649 billion, tuition and fees account for $1.156 billion in revenues. The budget reflects a 6.1% increase in tuition revenue – an increase higher than the tuition hike itself because of changes in enrollment.

Also during the June 21 meeting, regents approved student fees that are unchanged from fiscal 2012: $7.19 per student per term to fund the Michigan Student Assembly; $1.50 per student per term to fund school/college governments; and $8.50 per student per term for Student Legal Services. A $174.40 fee per student per term was approved for the University Health Service, up 1.4% from FY 2012.

Multiple votes were taken on budget-related items, including the overall budget, tuition, fees, housing rates, as well as budgets and tuition rates for the Dearborn and Flint campuses. UM president Mary Sue Coleman chaired the meeting, and there was considerable confusion at the board table about the order of the votes. At points it also was unclear – at least to the media and general public observing the meeting – who cast the dissenting votes. The outcome of the votes was later clarified by Nancy Asin, assistant secretary of the university.

This brief was filed from the Michigan Union Ballroom on the Ann Arbor campus, where regents held their June meeting.