FY 2013 General Fund Operating BudgetAnn Arbor Campus

Board of RegentsJune 21, 2012

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FY 2013 Operating Budget RecommendationAll Campuses

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FY 2013 General Fund BudgetAnn Arbor Campus

Based on a five-year integrated academic strategy and financial plan

Budget priorities include: Innovation in teaching and research

Emphasis on providing graduates with leadership skills for the 21st century

Interdisciplinary approaches to pressing world problems

Maintaining academic excellence Ensuring access and affordability

Continues our practice of fiscal discipline, aggressive cost containment, and carefully targeted use of philanthropic resources

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Leadership Skills for the 21st Century

Traditional characteristics:- Ability to speak and write

clearly- Quantitative reasoning skills

- Engagement with the arts and humanities

- Broad knowledge of the world- Critical reasoning skills

- Deep competence in at least one discipline, but with the

ability to work across disciplines

Confidence to innovate and

take risks

Ability to lead small groups and

flat organizations

Able to work effectively

with people from diverse backgrounds and cultures

Skilled at life-long

learning, and ability to re-

invent themselves

Command of new

information technologies

The traditional characteristics of a U-M graduate remain important.

In addition, we need to enable graduates to develop skills for success in the 21st century.

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Mpala Wildlife Conservancy and Research Center in KenyaSustainability Field Studies• Integrative experiential learning and research project

involving both undergraduate and graduate students• Students learn how to solve complex sustainability problems• U-M undergraduate students are joined by students from

University of Nairobi for the field course • On the graduate level, master’s students conduct thesis

research and embark on a group research project

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College of EngineeringDesign Immersion• New active learning

opportunity piloted last year• About 100 new freshmen

moved into residence halls early to work on challenging design projects in small teams, under the supervision of a U-M faculty member

• This program jump-starts students’ undergraduate education by providing a direct experience of engineering as a creative process

• The program will expand this year to more than 200 students, and is offered to students at no extra charge

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InvestmentsAcademic Excellence

Key investments will:Recruit and retain outstanding facultyEnhance our students’ academic experience

through continued focus on student/faculty ratio and innovative uses of technology to assist learning

Plan for the renewal of key academic facilities and save money by avoiding piecemeal renovations and repairs

Maintain the value and distinction of the University’s library collection

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InvestmentsFinancial Aid

The budget recommendation includes an increase of

$10.5 million in centrally awarded financial aid for a new allocation of $144.8 million.

Centrally awarded undergraduate financial aid totals $100 million, an increase of 10.1% over FY 2012.

For the fourth year in a row, typical resident students with financial need will see no increase in the Cost of Attendance (tuition and fees, housing, books and incidentals). Packaged loans will not increase.

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Packaged Loan Burden for Michigan Resident Undergraduates

NOTE: 40% of students with need-based grants also receive scholarship assistance, which further reduces their loan burden.

Figures are based on sample packages for the median EFC for each income range. Figures adjusted to remove the one-time Economic Hardship Grant awarded in 2010-11.

2009 2010 2011 2012 2013 $-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Family Income Range:

< $20K

$20K - $40K

$40K - $60K

$60K - $100K

Academic Year

Loan Amount in Financial Aid Package

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Affordability

Over the past decade, our disciplined commitment to cost containment, efficiency of operations, and investments in financial aid have put U-M at the forefront in efforts to maintain access and affordability

The Department of Education’s recent report on College Affordability and Transparency shows that U-M’s net price increase was lower than 567 of 650 institutions in the public four-year category

Our efforts have allowed U-M to maintain academic excellence and affordability, even during a period of historic reductions in public support

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State Appropriation

The budget recommendation incorporates a state appropriation of $273.1 million for the Ann Arbor Campus.

This represents an increase of $4.3 million, +1.6% over FY 2012.

We appreciate the efforts this year by the State to invest in higher education.

However, this year’s increase comes as part of a longer-term trend of reduction in State appropriation. The FY 2013 state appropriation is comparable to FY 1992 in nominal dollars and FY 1964 in real dollars.

12State support per student has declined by more than 50% over the past decade

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 $-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$13,262 $12,635

$10,904 $10,194

$9,669 $9,473 $9,062 $8,949 $8,632

$7,880

$6,444 $6,454

State Support per Student2013 Real $ (Adjusted for Inflation using ECI)

2013 R

eal $ p

er

Stu

dent

Employment Cost Index (ECI), prepared by U.S. Bureau of Labor Statistics

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

The Changing Mix of General Fund Revenue

70%

17%

13%

Indirect Cost Recovery and Other

Tuition and FeesState Appropriations

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Cost Containment

We are entering the third phase of our cost containment plan with a target of $120 million over the next five years

Ongoing savings to date total $235 million in recurring General Fund costs since FY 2004

To invest in academic quality and financial aid and to constrain the amount of tuition increase, the FY 2013 budget recommendation includes ongoing reductions and reallocation totaling over $30 million

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Recommended FY 2013 Tuition Increases for U-M Ann Arbor

* The dollar amounts shown represent the increased amount per academic year for the most common lower division general undergraduate rate. A limited number of differential increases are also recommended for specific programs.

Undergraduate:

Resident 2.8% $360/year*

Non-Resident 3.5% $1,340/year*

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Recommended FY 2013 Tuition Increases for U-M Ann Arbor

* The dollar amounts shown represent the increased amount per academic year for the general Rackham graduate rates. A limited number of differential increases are also recommended for specific graduate programs.

Graduate:

Resident 3.0% $574/year*

Non-Resident

3.0% $1,156/year*

Candidate 3.0% $308/year*

FY 2013 General Fund Budget Recommendation Ann Arbor Campus

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Conclusion

The proposed budget will maintain academic excellence and affordability, even during a period of historic reductions in public support

This is possible because of our disciplined commitment to cost containment, efficiency of operations, and multi-year planning The recommendation calls for a significant level of cost

reduction and reallocation: All new initiatives will be funded through reallocation

Highest priority areas of investment are financial aid and educational innovations that strengthen our students’ learning experience

For the fourth year in a row, the typical Michigan resident student with financial need will see no increase in costs—and in fact, loan burden will go down

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END

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Academic Year Tuition & Mandatory Fees for aFirst-Year Undergraduate at Select Public UniversitiesComparison of Rates for In-State Students

*U-M rates are proposed

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Academic Year Tuition & Mandatory Fees for aFirst-Year Undergraduate at Michigan Public UniversitiesComparison of Rates for In-State Students

*U-M rates are proposed

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Academic Year Tuition & Mandatory Fees for a First-Year Undergraduate at Select Private Universities

*U-M rates are proposed