News Story

Students at Michigan colleges receive varying state support

UM-Ann Arbor gets $13,000 per in-state student; Oakland University gets about $10,000 less

Michigan’s 15 public universities receive, on average, a per-pupil appropriation of $7,141 from state funds for each state resident who enrolls. The amount, however, varies greatly from institution to institution. In the 2019-20 school year, the University of Michigan-Ann Arbor received $13,071 per student from Michigan taxpayers, but Oakland University only received $3,287 per student.

The 15 institutions, members of the Michigan Association of State Universities, receive state funding for their students. There is, however, no formula to determine how much a particular university will receive for each student. The amount is instead decided by lawmakers. Which is to say, it is based on politics.

“Our CEO, Dan Hurley, conveys that each university has a different mission and the Legislature, which makes all appropriations decisions, has recognized that over the years,” Robyn Cline, a spokeswoman for the Michigan Association of State Universities, said in an email to Michigan Capitol Confidential.

The base amount of university appropriations has no formula, but over the years the Legislature has used different formulas or goals to determine how much appropriations should increase each year.

In fiscal year 2012-13, the Legislature used performance funding metrics to determine increases in appropriations.

The formula still exists in statute. But it’s no longer used to determine how much a particular university will receive.

According to the Senate Fiscal Agency, “The performance funding formula has been used only to allocate year-over-year funding increases to Michigan’s 15 public universities. The performance increases for each year have been rolled into each university’s base amount for the subsequent year. The FY 2021-22 budget contains a 1% one-time operations increase for universities, distributed proportionately to each university’s FY 2020-21 base operations amount. This approach did not make use of the performance funding formula.”

The state has different goals each year, which determine funding increases for different universities.

For example, for fiscal year 2021-22, according to the Senate Fiscal Agency, “The stated goal is to ensure each university receives at least $4,500 in ongoing State operations funds” per state resident who attends.

Grand Valley State University, Oakland University, Saginaw Valley State University, University of Michigan-Dearborn and UM-Flint all fell below this threshold. The new budget adjusts appropriations to these institutions to meet the $4,500 goal in the next three years.

Jenna Robinson, president of the James G. Martin Center for Academic Renewal, says not having a formula can lead to problems. Among them is a lack of transparency.

“It is definitely better to have a transparent, predictable formula than for appropriations to be at the discretion of the legislatures,” Robinson told Michigan Capitol Confidential in an email.

The University of Michigan-Ann Arbor may be justified in receiving more state funds because of its reputation and research-first position, Robinson says. But the difference between a $13,071 per-pupil appropriation and a $3,287 per-pupil appropriation seems too big to be explained by faculty salaries or reputation, Robinson says.

“It’s probably a combination of things going on, such as bias from the lawmakers, and more expensive faculty and research,” Robinson says. “Michigan legislators probably just like the University of Michigan at Ann Arbor to a certain extent, and maybe some of them went there.”

Robinson also says that legislators may using a logic she called “past-dependency”: They gave the institution a certain amount in the past, and so they allocate appropriations based on that previous amount.

An effective formula, according to Robinson, would measure the average time to earn a degree, graduation rates, and whether students are able to get a job and pay off student loan debts after college.

“It is good to have funding based on performance, but the devil is in the details,” Robinson says. “You have to reward the right things.”

A formula needs to be based on more than just enrollment. Otherwise, it would give universities an incentive to get students enrolled, without caring whether they succeed or graduate, Robinson says.

If some universities lose students but receive the same — or increased — government funding as in the past, that should narrow the gap of per-pupil appropriations. But this is not the case.

In at least one case, an enrollment decline lead to a university increasing its share of statewide support. In 2008-9, Lake Superior State University had 2,310 state residents enrolled, and it received $5,690 per student, or 87% of the statewide average. By 2019-20, its enrollment had declined to 1,622 in-state students. It received $8,857, or 124% of the average.

The University of Michigan-Ann Arbor’s share of state support had dropped slightly in recent years. Its funding was 202% of the average in 2009 and 183% in 2019.

Wayne State University saw a decline, in both enrollment and its share of average appropriations, going from 149% of the state average to 134%.

According to data from 2019, Northern Michigan University is at 128% of the state average, Western Michigan University at 109%, and Central Michigan University is at 75%. All gained in their share of the state average, up from 103%, 85% and 60%, respectively.

Rep. Ben Frederick, R-Owosso, and Sen. Kim LaSata, R-Niles, who chair the higher education subcommittees in the Michigan Legislature, did not respond to emails and phone calls requesting comment.

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.