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Is President Obama Correct That State Budget Cuts Are the ‘Largest Factor’ in Tuition Increases At Public Colleges?

In a speech delivered last Friday at the University of Michigan, President Obama said that the “largest factor” in tuition increases at colleges and universities is state budget cuts in higher education. But overall operating expenses at U-M and most Michigan public universities have risen substantially in recent years, regardless of state funding.

In his talk, President Obama focused on preparing students for the 21st century economy and discussed what universities and government could do to meet coming challenges. During the speech, he said, "I was talking to your president (U-M President Mary Sue Coleman), and this is true all across the country, states have to do their part by making higher education a higher priority in their budgets . . . We know that these state budget cuts have been the largest factor in tuition increases at public colleges over the past decade. So we're challenging states: Take responsibility as well on this issue."

In December, Coleman wrote a letter to the president that said, “There is no stronger trigger for rising costs at public universities and colleges than declining state support.” She also claimed that “The University of Michigan and our state’s 14 other public institutions have been ground zero for funding cuts.”

While the state is scheduled to give U-M and its two satellite campuses about $54 million less this fiscal year than 2010-2011, a 15 percent cut, Coleman’s claims were examined in a previous Capitol Confidential article. Although state appropriations have been reduced this year, overall spending at U-M has increased. According to the University of Michigan budget, the college’s operating expenses increased 24 percent, from $4.25 billion to $5.28 billion, between 2006 and 2010. At the same time, student tuition and fees and scholarship allowances increased 28 percent, from $675 million in 2006 to $863 million in 2010. 

James Hohman, a fiscal policy expert at the Mackinac Center for Public Policy, pointed out that there are many other reasons for the tuition increase at U-M. For example, Michigan’s average compensation for full-time faculty increased from $122,943 per full-time position in 2005-2006 to $141,753 in 2009-2010, a 15 percent increase over four years.

The Mackinac Center reported in 2010 that the number of administrators and service staff at Michigan’s 15 state universities increased 15 percent while their average compensation grew 13 percent between 2005 and 2009. The University of Michigan-Flint campus now has more full-time administrators (278) than full-time faculty (275).

"The president would have better luck at lowering tuition by encouraging government universities to cut back on growing administration and rising employment costs," said Hohman. "Asking for more taxpayer money only masks this problem."

U-M spokesman Rick Fitzgerald responded to claims about the universities higher tuition and staff compensation here.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.