Why U-M Must Stay a Public Institution
Op-Ed for Crain’s Detroit, October 24, 2005
In her Oct. 3 column, Mary Kramer poses a question I have heard occasionally in my tenure: Should the University of Michigan become a private school?
Some have speculated that, in response to the long-term decline in public funding, it might be in the best interest of the state and the university for U-M to “go private” — including eliminating state funding and charging market tuition prices for all — even as today’s realities force public universities to reshape their funding models, we cannot and should not turn away from public commitment and investment.
Consider just a few potential consequences of privatizing this state resource:
As a private institution, the U-M would likely adopt the business model of its private peers, charging competitive tuition rates for all students regardless of state residency. This year, tuition at our peer universities in the Ivy League averages about $32,000. In comparison, the typical U-M freshman from Michigan will pay $9,200, or less if they receive financial aid.
Affordability for in-state students has always been a core value for U-M as a public institution. We make a commitment to meet the demonstrated financial need for every qualified in-state student with a combination of grants, loans, and work-study. Students from modest means — whether they hail from Detroit, the Upper Peninsula or anywhere in between — have long found a home and a sterling education at Michigan.
In addition, if U-M relied on a private, market-based admissions system, the student body would reflect its application pool without special consideration for residents. For the past several decades, even though the majority of applicants have come from out of state, the majority of our students are residents. The statistic is informative: historically, two-thirds of our applications have been from national and international students, and yet about two-thirds of our enrolled students have been from Michigan.
If in the future the “University of Michigan” describes only the geographic location of the school and not its student body, it may mean far fewer Michigan-educated doctors, dentists, engineers, scientists and teachers who stay to live and work in our state after graduation.
Certainly the state’s investment in U-M’s high-quality public education reaps significant returns that benefit Michigan residents. Coupled with our research, inventions and spinoff companies, the university is a magnet for talent and discovery that will fuel Michigan’s strength in a knowledge economy.
And beneath such tangible metrics there is an essential value we hold quite dear: Public education is a cornerstone of our democracy.
The University of Michigan has its roots in the Northwest Ordinance of 1787, whose authors wrote: “Religion, morality, and knowledge, being necessary to good government and the happiness of mankind, schools and the means of education shall forever be encouraged.”
The University of Michigan belongs to all of us.
But we must address the significant funding issues underlying speculative discussions of privatization. It is a difficult truth that we have had a decades-long decline in public funding as a percentage of the total budget for our public universities. For the U-M, the state appropriation now makes up 13 percent of the total budget, excluding the health system. Far more relevant to undergraduate education and pressures on tuition, state funding now accounts for only 26 percent of the university’s general fund, down from 75 percent in the 1960s.
Public funding is critical to the university’s core teaching activities. For U-M Ann Arbor to replace the state appropriation we will receive this year, we would need an additional $6.5 billion endowment. To put it in context, we hope to raise $800 million in new endowment funds as part of our current fundraising campaign, the largest in the university’s history.
The combination of public and private support is essential for today’s public university to thrive. Philanthropic gifts now provide the margin of excellence for which Michigan has always been known, and we expect that gifts will play an enormous role in advancing Michigan’s academic leadership in years to come. This does not lessen our mission or obligations as a public institution. Indeed, it speaks to our strength when private philanthropists are so strongly motivated to support a great public university.
A recent issue of The Economist noted that the American system of higher education is strong in part because the financial model is built on state support along with the visionary gifts of donors. There are several U.S. public research universities on The Economist’s list of “The 20 Greatest Universities in the World,” including the University of Michigan.
High-quality public higher education offers a remarkable return on the state’s investment. We should be squarely focused on maximizing that asset for the benefit of all.