Government and Higher Education

Less state money means colleges and students struggle

Michigan is slow to recover from higher ed cuts in the Great Recession.

September 25, 2015
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LANSING — State funding for higher education has seen a dramatic reduction in the past few decades — and students are feeling the budget squeeze.

Despite increases in the past four years, Michigan spending on higher education is still 4 percent below 2011 when funds were slashed — and still lagging nearly 28 percent behind pre-recession funding, according to the Center on Budget and Policy Priorities, a policy institute based in Washington, D.C.

That amounts to an average $1,631 less per student than in 2008.

“When one looks at the long view of state investment in higher education, it marks a rather dramatic decline,” said Daniel Hurley, CEO of the Presidents Council, State Universities of Michigan, which lobbies on behalf of the 15 state universities.

Representative and Higher Education Appropriations Subcommittee member Jeff Irwin, D-Ann Arbor, said the lack of funding for higher education is irresponsible.

“Higher education used to be a tool used by the public through state government to enhance social mobility, to give people a hand up, to give people an opportunity to develop their skills and contribute more to their community and to their family, and the state government has turned its back on that responsibility,” he said.

Irwin said many of the more recent cuts came as a result of budget deficits during the recession when difficult funding choices had to be made. When state revenue returned to stronger levels, that money wasn’t returned.

Irwin said the 2011 cuts were the result of the Legislature cutting taxes on businesses.

“Everything is more expensive now than it was 10 years ago, yet the state government is spending substantially less money to support colleges and universities,” Irwin said.

“I think it was the wrong priority and I think it’s the sort of wrong priority that’s going to hurt our state for a long time to come.”

Now, after years of cuts, schools are forced to make some difficult decisions, said Kevin Corder, a professor of political science at Western Michigan University.

“As state appropriations have failed to cover the cost, tuition rates have come to fill in the gap,” he said. “Funding is down, tuition is up, and costs rest on the backs of students and their families.”

Hurley said increasing budget efficiency and cutting costs is another way universities can do that. However, he said that can also mean laying off faculty and limiting new programs and research.

But tuition increases are a bigger problem.

“What has happened throughout the country, and certainly here in Michigan, is the gradual state-to-student cost shift, and who pays for public college education,” Hurley said.

“Broadly, for every dollar that states cut from higher education appropriations, about 40 percent of that dollar is made up through internal cost efficiency, and about 60 percent is relayed onto students in the form of higher tuition,” he said.

Michigan isn’t alone: Decreased state funding for higher education has plagued nearly all states, and college costs have nearly doubled because of it during the past decade, according to the Consumer Price Index.

But unlike other states, Michigan hasn’t seen much of a recovery, and its increases have outpaced many other states, according to the Center on Budget and Policy Priorities.

Corder said that funding shift has created a much larger burden on students.

“We’re seeing student loan indebtedness increase year after year as tuition increases year after year,” he said.

The average Michigan undergraduate leaves college with about $29,000 in debt, according to the Institute for College Access and Success, a California nonprofit that works to make higher education more accessible.

Students who graduate with more debt are less likely to become homeowners, and loan payments can have a long-term impact on their standard of living, Corder said.

Michigan also has seen significant cuts to student financial aid, with a 19 percent decrease from 2004 to 2014.

“The college affordability has taken a hit on both fronts — one is reduced operational support to the universities, and then reduced direct need-based grants paid to students,” Hurley said.

Corder said lower levels of financial assistance and rising tuition mean many low-income students take out larger loans to meet rising costs — or skip college altogether.

He said those have two common impacts: “One is people refuse to go to college because it’s too expensive. The other thing is they have higher and higher debt burdens as they complete college because they need to borrow money in order to afford it.”

With tuition quickly rising and less state aid to offset those price tags, the Legislature has implemented tuition caps to slow the rise of tuition at its public universities.

Because the caps are percentage-based, Corder said they can make decisions more difficult for universities that charge lower tuition. So at the University of Michigan, caps might involve more dollars, but at other places with lower tuition, it’s a much smaller dollar amount.

“The fact that they implemented the tuition cap as a percentage is not a good way to try to solve this,” Corder said.

Eastern Michigan University has struggled with the cap due to its historically low tuition rates — the third-lowest in the state, according to Geoff Larcom, EMU’s media communications director.

One example of that came this year when the university chose to exceed the cap with a 7.8 percent tuition hike — a decision Larcom said was precipitated by previous years of small increases and years like 2011, when the university didn’t raise rates at all.

Oakland University also exceeded the cap this year.

“If the next five years look like the past five years, then there is a possibility of additional institutions coming to the same conclusion that those two did this year,” Hurley said.

Rather than capping hikes, Irwin said higher education should be a bigger budget priority.

“We should be shooting to restore college as a tool for social mobility and an instrument of public good, rather than trying to continue to drown it in a bathtub,” he said.

But Corder said that’s easier said than done.

“It’s a squeeze because corrections is a big budget priority, Medicaid is a big budget priority, and higher education competes with those,” he said. “Until health care costs don’t rise as fast, until Medicaid doesn’t increase as fast and corrections doesn’t increase as fast, higher education is just kind of left out there.”

Corder said other options to increase funding, like raising taxes, could be difficult to implement.

“It would require either raising taxes in order to have higher revenue to fund education — and that’s not popular — or taking money from other budget priorities, like corrections, Medicaid and K-12 education, to funnel more money into higher education. And that’s not popular, either.”

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