LANSING – Governor Rick Snyder proposed a major overhaul of the capital outlay process and recommended a 3-percent increase to public universities operations. Snyder said the 18 projects in the pipeline, split between universities and community colleges, are recommended to still go ahead, at a cost of $613 million.

He said his proposed new system would align spending decisions with how they would support the state’s economic development goals. Each project will be objectively scored by the Senate and House fiscal agencies and the State Budget Office, with the results published on the budget office’s website. Universities will have to submit schematics of the plan as part of the process.

Rather than three separate steps, the projects would be approved by the Legislature in a single action that will authorize construction and the state building authority lease.

Rep. Bob Genetski II (R-Saugatuck), who chairs the higher education budget in the House, said he is excited about the changes.

“In the past the capital outlay process has been heavily influenced by the status of lobbyists more so than logic,” he said. “I like what I’ve heard so far.”

Sen. Tonya Schuitmaker (R-Lawton), chair of the Senate higher education budget, said the idea is worth considering, especially if it takes the politics out of the equation.

The state currently spends ongoing funding of $1.36 billion on higher education, of which $1.26 billion is general funds. In the 2012-13 fiscal year, Mr. Snyder proposes to fund universities at $1.39 billion, with $1.3 billion coming from the general fund. That’s a 2.8 percent increase in ongoing funding (3.1 percent increase general fund). Funding for student grants and financial aid is $98.2 million.

This percent change reflects the difference in what the administration considers ongoing funding from the 2011-12 fiscal year to ongoing funding for the 2012-13 fiscal year. Some funding items in both years were considered one-time. The administration did not provide sufficient data in its budget book to make an accurate comparison of total funding from 2011-12 to 2012-13.

After handing universities a 15 percent cut last year, Snyder stayed true to his word of not cutting again and instead is proposing a 3 percent budget increase. But the money will again be tied to tuition restraint as well as several other new metrics. And the range of increases will vary widely based on how much money each school gets for meeting the metrics during the past three years.

The budget provides for $36.2 million more for the state’s 15 public universities that meet four equally weighted measures. Universities must keep tuition increases below 4 percent – considerably tighter than last year’s 7.1 percent threshold – and will be awarded based on the growth in the number of undergraduate degree completions and how many of those degrees were in the fields of science, technology, engineering, mathematics and health.

“We want to further reward schools that produce more degrees in those critical skills areas,” Lt. Governor Brian Calley said.

Schuitmaker said the idea of picking which degrees are the most important will allow the universities to receive more funding and will be the subject of a healthy debate this year.

On the one hand, a student with a degree in an area where there are no jobs doesn’t do the student any good, she said, but a student with a liberal arts degree can tend to be more creative.

“I think we are going to have many discussions around those two schools of thought,” she said. “I think both have merit.”

The fourth metric will consider how many Pell Grant recipients the university has.

In 2014, it would be based on the most recent data, and rather than the number of Pell Grant recipients, the universities would be rewarded based on the number of Pell Grant recipients who graduate.

Mike Boulus, executive director of the Presidents Council, State Universities of Michigan, said universities continue to believe decisions on tuition, which accounts for about 80 percent of their budgets, should be under the control of the university boards.

The additional funds are welcome, especially after a decade of disinvestments, he said.

“It’s good to see some additional revenue, but it’s a long road back to restoration,” Boulus said.

He said it is too soon to tell if universities will go after the additional funds, or if their calculations will show them doing better by forgoing it and raising tuition more than 4 percent.

Rep. Joan Bauer (D-Lansing) said she is not sure how universities will be able to keep tuition increases below 4 percent given all the cuts they have faced in the past from the state.

“I think it’s going to be difficult,” she said.

Genetski said some universities struggled to keep tuition increases below 7.1 percent last year, because they were also taking a 15 percent budget cut. This year, none of them are losing any money.

“I would expect them all to be very excited to comply with a 4 percent maximum increase,” he said.

In a statement, David Hecker, president of the American Federation of Teachers-Michigan, said rather than base funding on performance, Mr. Snyder should restore the money cut from higher education last year.

“Michigan has failed to adequately fund our colleges and universities, which makes affording college more difficult for families and students,” he said. “We share the goal of seeing more students succeed in the classroom and support accountability for all stakeholders, but placing additional requirements on already-strained universities is not the way to help students.”

Budget Director John Nixon said higher education is a key component to what the state wants to do and is helpful with economic development.

He said last year’s 15 percent cut was unfortunate, but that this budget takes a balanced approach.

“Do we wish we could have done more? Absolutely,” Nixon said.

Karen Holcomb-Merrill, Michigan League for Human Services, policy director said Mr. Snyder’s budget did have some welcome news.

“We are really pleased to see that he has included increasing the number of Pell Grant students who graduate as a condition of higher education institutions receiving an increase,” she said in a statement.

Edward Blews, president of the Association of Independent Colleges and Universities of Michigan, said he is grateful to the governor for not trying to eliminate the Tuition Grant program, which has been attempted numerous times in the past.

He said the program is critical to needy students and independent colleges.

“It saves the taxpayers a ton of money,” he said.

But he said he was mystified that the budget cuts the program by $1 million.

“(That) just doesn’t make any sense at all,” he said. “We’ll be urging the Legislature to not only restore that million, but also to provide an increase for our needy students comparable to the increase for the rest of higher education.”

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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