ANN ARBOR—The University of Michigan will ask for one of the smallest tuition increases during the past 30 years as part of its 1996-97 General Fund budget proposal, to be considered by U-M Regents in their meetings Thursday and Friday (July 18-19).

Under the proposal, the tuition rate for resident, incoming freshmen on the Ann Arbor campus would increase by 3 percent for the coming year. The figure, noted U-M Provost J. Bernard Machen, is within the range of other Michigan public universities, which range from 0.0 percent to 5.9 percent. “I am pleased that we will have one of the lowest tuition increases in the last three decades,” said Machen.

“We have given extensive consideration to the financial burden borne by our students and their parents. The support we received in Lansing—a 4.6 percent increase in our appropriation this year—has had a direct impact on our ability to keep tuition down.” The University received an increase from the state of $13.2 million. However, noted Machen in the written proposal to the Regents, the state appropriation contains some uncertainty because the state budget this year “was built on certain assumptions about actions to be taken at the federal level. We have good reason to believe that the appropriation to the state- supported universities will be protected in the event of a mid- year executive order cut, but there is no guarantee. With this potential problem in mind, we have exercised caution” in making revenue projections. If approved by the Regents on Friday, the Ann Arbor campus’s 1996-97 General Fund budget will be set at $796.7 million, an increase of $26.3 million over the previous year. The budget relies largely on state appropriations and student tuition revenues, and pays for teaching, research, library services, scholarships and fellowships, maintenance and operation of physical properties, among others. A significant factor in the proposed budget will be the implementation of Value Centered Management (VCM), a system under which individual units will have greater control over, and responsibility for, their own revenues and costs.

“At this moment of transition from our previous incremental style of budgeting to VCM…we cannot overlook the reallocation process that has become a traditional part of our budget activity. Year after year, every unit, large and small, must reassess its priorities and make difficult new choices, shifting resources from lower to higher priority use,” Machen wrote in the proposal. “The implementation of VCM will align unit incentives more closely with University goals. We expect that the new responsibilities for both revenues and expenditures will lead to increased efficiency through greater cost control as well as expanded entrepreneurial enterprise.” Furthermore, noted Machen, VCM along with other initiatives which are designed “to enhance quality while containing or even reducing costs, together with the continued pressure to reallocate funds from lower to higher priority uses, will help to assure that the University is making the best use of every dollar it receives. The increase in revenue recommended…comes only after the greatest possible use of existing resources.” By far the largest proportion of the new expenditures will go toward increased financial aid and other forms of student support ($6.9 million) and salary increases for faculty and staff financial aid will allow the University to continue its commitment to meet the demonstrated financial need of all Michigan undergraduates. In addition to incremental funds provided for faculty and staff compensation, each unit will be asked to enhance its own individual compensation program through significant internal reallocation in order to assure a merit salary program on the order of the rate of inflation. Other major areas targeted for increased expenditures include operating costs (utilities, maintenance, etc.) for new buildings coming into use in 1996-97, funds for targeted faculty hiring and library acquisitions.