U-M Regents approve budget shaped by COVID-19 challenges

June 29, 2020
Contact: Don Jordan dcjordan@umich.edu

Summer Aerials: Central Campus - Burton Tower, Rackham, North Quad, Hatcher, Shapiro, UGLI, West Hall. Image credit: Michigan PhotographyThe University of Michigan’s Board of Regents approved a budget during a special session June 29 that includes a 1.9% tuition increase and $12.8 million in additional need-based financial aid for undergraduates on the Ann Arbor campus.

The Ann Arbor general fund budget, including its 5.6% increase in undergraduate financial aid, will cover the entire cost of the tuition increase for in-state students receiving need-based aid, said President Mark Schlissel, adding that the financial aid office is ready to adjust or grant new aid to families whose circumstances have changed because of the ongoing COVID-19 pandemic.

The university will also tap into its reserves to meet the need if it exceeds the budgeted amount, Schlissel said.

“We are committed to do our very best to make sure that the COVID-19 pandemic does not result in a lost generation of students who were unable to continue or complete their Michigan educations because of the circumstances we all find ourselves in,” Schlissel said.

University leaders said the general fund budget for the 2020-21 fiscal year reaffirms the school’s long-standing goals of academic excellence and affordability amid financial uncertainty caused by the global pandemic.

The vote came during a special session held four days after the budget proposal failed when regents split 4-4. The general fund budget is part of an approved universitywide consolidated budget package that also included spending plans for Michigan Medicine, UM-Dearborn, UM-Flint, Athletics, Michigan Housing and a number of supplemental student fees.

The university budget includes the use of more than $400 million from the university’s endowment, Schlissel said. The distributions from the endowment have increased every year, for more than a decade.

During Monday’s meeting, Schlissel also announced he would double an amount he promised during Thursday’s regents meeting for a fund available to support student recruitment, retention and graduation at UM-Dearborn and UM-Flint, from $10 million to $20 million. A number of regents remarked last week that they would like to see greater resources allocated for the two campuses.

“I appreciate the many voices who have advocated for greater investments to promote increased enrollment and greater student success at our regional campuses,” Schlissel said. “I’ll be working closely with the chancellors to determine how best to target this funding since they know their campuses the best.”

The $2.3 billion general fund budget that starts July 1 is based on the new tuition rate, $102 million in cost containment and an estimated state appropriation of $325.5 million—the same amount as this year. Tuition for the most common lower-division rate will increase by $290, for an annual rate of $15,520 for in-state students and by $966, for an annual rate of $51,838 for nonresident students. A 5.6% increase in undergraduate financial aid will cover the entire cost of the tuition increase for in-state students receiving need-based aid.

Most graduate programs will also see a 1.9% tuition increase.

In a presentation to regents last week, Interim Provost Susan Collins said the budget supports the vital work being done across campus to meet the “unique circumstances” of the pandemic.

That includes investments in instructional technology as the university offers courses in a variety of formats, including fully remote, and adapts co-curricular, community-building and other student engagement opportunities to best align with public health guidelines.

“Across campus, members of the U-M community have invested significant time and effort in planning how to safely and effectively meet the challenges of the 2021 fiscal year,” said Collins, adding that those plans have drawn widely from the research and expertise of U-M faculty.

“Our combined efforts will enable us to offer meaningful experiences for all our students while caring for the health and safety needs of our community, as well,” she said.

The budget presentation also highlighted the significant steps the university has taken in recent months to contain costs and limit the pandemic’s financial blow. Those measures include a universitywide salary and hiring freeze, reducing the salaries of campus leaders, postponing some construction projects and providing staff the ability to take voluntary furloughs or reduce their work hours.

Collins cautioned that additional reductions would be necessary if enrollment is lower than expected, the university incurs pandemic-related costs that are higher than anticipated, or the university receives a reduced state funding appropriation when the state passes its FY2021 budget.

The state of Michigan anticipates a $2.5 billion deficit in FY2020 and an expected shortfall of $3 billion in the 2021 fiscal year.

Despite the uncertainty, the university’s general fund budget carves out planned investments in a number of key areas, including funding for increased safety and health measures.

“The budget supports a public-health informed academic year enabling in-person engagements for our students, as well as needed financial aid support for Michigan families in this extremely challenging time,” Collins said. “With our combined stewardship, U-M can continue to deliver a quality educational experience and pursue the groundbreaking research and discovery upon which the state, nation and world depend.”

Last week, Schlissel announced that the university would launch the fall semester Aug. 31 with a blend of in-person and remote classes, an adjusted academic calendar and an emphasis on public health measures.

Regents also approved a temporary $50-per-term COVID-19 fee. Revenue from the fee will assist in covering the costs of testing and other health and safety-related services associated with the pandemic.

Students also will see a 1.9% increase in the University Health Service Fee to $202.39 per student per semester.

University Housing rate increases to cover operating, public health costs

Regents also approved a 1.9% increase for residence hall room and board rates for FY2021. The increase will meet rises in day-to-day operating costs while also supporting investments in public health measures to reduce transmission of COVID-19.

Contracts with an adjusted length will be offered in light of changes to the academic calendar. On-campus classes will end at Thanksgiving in the fall to minimize student travel home and back to campus. Winter semester will start later in January.

Need-based grant aid will mitigate this increase for students with financial need. University Housing is a self-funded auxiliary unit of Student Life within the university.