'U,' peers face tight budgets

President Peter McPherson testified before the Michigan Senate Appropriations Subcommittee on Higher Education on April 20.

"The University's gap in per-student appropriations when compared to the University of Michigan and Wayne State University must be closed," McPherson said.

Significant progress toward closing the gap is necessary to allow continuation of MSU's Tuition Guarantee. Otherwise, it will be necessary for the University to consider higher tuition and fee increases than typically proposed in the past five years.

Previous appropriation developments include the governor's recommended increase of 2 percent and Michigan House action of 7 percent. Senate action is expected in May.

"We're in an uncertain period and one that will unfold over the next few weeks," said Provost Lou Anna K. Simon. "In those weeks, we will get a better understanding of the Senate recommendation, as well as the conference committee recommendation, and have more detailed information from our peer institutions."

MSU planning activities are continuing. Major financial challenges include a faculty compensation increase that is competitive with other Big Ten universities and funding health care costs for all employees.

Health care costs originally projected to increase by 15 percent are now estimated to increase by 19 percent, due to cost escalation during the current year. Currently, total compensation, including health benefits, for MSU faculty ranks fifth in the Big Ten, while average salary ranks 10th.

The University Committee on Faculty Affairs is scheduled to release recommendations next week targeted to constrain health care cost increases while preserving the University's total compensation ranking. MSU also ranks in the middle of the Big Ten for graduate assistant compensation, which includes stipend, health care and tuition support.

Other University concerns include energy costs that were recently reported to have exceeded the current budget by $1 million. Because of escalating utility costs, it is expected that the University will examine ways to reduce consumption, including an energy conservation program to be initiated this fall.

The slowing of the national economy is becoming evident at most Big Ten institutions. Typical estimated state appropriation increases range from 0 to 3 percent. Iowa reportedly is considering a reduction in appropriation support to higher education.

"While the budget picture may not be as green as we would like for the state of Michigan and for MSU, it isn't any greener for our peer institutions," said Simon. "This may be a very difficult year for research universities, the Big Ten and the Association of American Universities."

The May 17 issue of the MSU News Bulletin will include updates on the University's state appropriation, MSU planning and developments at other Big Ten institutions.