Testimony to the House and Senate Higher Education Appropriation Subcommittees
March 2, 2011
Good morning. Thank you for the opportunity to tell you about the work under way at the University of Michigan and all that we are doing to advance our great state.
I want to begin by thanking you for your support of higher education in Michigan. We all know that strong universities are essential to our state’s future in the national and global economies.
Many of you are new to this committee, and new to the Legislature, and I welcome the opportunity to tell you about the University of Michigan. You have asked a number of questions that I will touch on as I describe our commitment to affordability and accessibility, our support of Michigan’s economic transformation, and our longstanding dedication to controlling costs.
These fundamental principles – affordability, economic development and cost containment – shape our work as we continually strive to be a great investment for Michigan residents. We are committed to Michigan families, Michigan businesses and Michigan communities.
Each of Michigan’s 15 public universities plays a unique role and fills a specific and important niche. Together, we comprise a broad set of institutions that can be responsive to the state’s diverse needs. Having been affiliated with public higher education in five other states, I can say Michigan’s universities are the envy of other states because of our scope and scale.
My experience across the country also includes confronting different funding mechanisms, and I can say with confidence that there is no funding model that adequately captures the complex mission of the University of Michigan.
What does work is strengthening higher education because, as Governor Snyder has said, “world-class universities are one of our biggest assets.” Higher education, with all of its contributions to society, is how Michigan will reclaim its prominence.
We know a University of Michigan education makes a difference. Our survey data of graduates tell us alumni are extremely satisfied with their education and that U-M prepared them well for their careers.
By extremely satisfied, I mean more than 85 percent of alumni give U-M high marks. Whether they graduated recently or a dozen years ago, alumni say their undergraduate experience helped improve their intellectual skills, particularly critical thinking, acquiring new skills on their own, the ability to judge the value of information, and applying knowledge from their academic major.
These are the skills required for success in the 21st century economy.
U-M alumni also report high rates of employment, in the fields for which they trained, with more living and working in Michigan than in any other state. To further underscore their satisfaction, more than 100,000 alumni support the University every year with their financial resources. This documented satisfaction is what drives demand for a U-M education. This past year, we received some 32,000 applications for 6,000 openings in the freshman class. It’s clear that U-M is the first choice among an increasing number of applicants and their families, who recognize that Michigan is a great value, and a uniquely wise investment in their future. This demand is equally strong for students seeking graduate and professional degrees. The bottom line is that our model is strong, academically and fiscally.
The University of Michigan prepares students to contribute to the state, nation, and world, including in the arts, education, business, health professions, engineering, and other high-tech fields that will lead the way in Michigan’s new economy.
Consider the breadth of activities at a research-intensive institution like ours. In addition to the excellent programs we offer our 27,000 undergraduates and 15,000 graduate students, our scope encompasses such diverse activities as:
- Economic development, including the creation of dozens of new businesses for the Michigan economy.
- A research enterprise that is the largest of all public universities in the nation. In fact, we attract more than $1 billion in federal and other research dollars to our state. Last year, research dollars coming in to U-M grew 12 percent, to $1.14 billion. I can think of few other institutions in the state that saw a 12 percent increase in activity.
- Professional education, including a top-rated medical school and dental school.
- A comprehensive academic medical center that provides care to patients throughout the state. It is a state asset that draws more than 1 million patients a year from every county.
- A critical mass of respected faculty, clinical researchers, and state-of-the-art laboratories.
- Expansive library holdings and museum collections.
- A physical plant sufficient to support all of this activity, and more.
Our work is impressive and extensive. If we did not provide this expanse of education, research and patient care, state legislators should be concerned. However, given our mission, these activities, while expensive, are entirely appropriate to the University’s size and strengths. They enhance the educational experience of our students and, ultimately, benefit the people of Michigan.
Michigan residents have supported the University of Michigan for nearly 200 years, which is a remarkable partnership. Throughout the decades, citizens have given us their resources and, more importantly, their trust. Your predecessors in the Legislature laid a foundation of support that has served our state well for nearly two centuries.
This is not the first time our state has faced difficult economic times. We can all point to challenging eras of dwindling resources. And yet generation after generation, our state’s leaders and citizens have supported the University of Michigan.
In fact, we have persevered in tough times. During the Depression, the University saw the rise of three landmark facilities: the Law Quad, the Rackham Graduate Building, and Burton Memorial Tower. During the recession of the 1980s, we opened University Hospital. Today, those buildings define U-M.
The University of Michigan is a treasured public asset, and my job as president is to ensure its future for the next 200 years. I will not allow its value to diminish under my leadership.
Every day, we honor the public’s longstanding investment by attracting talented students and faculty to Michigan, as well as watching the bottom line to ensure that taxpayers receive a strong return on their dollars.
We have developed what has become known throughout American higher education as the Michigan Model. We have shown great discipline in our fiscal practices, resulting in a relative stability that has softened the economic blows being felt elsewhere in higher education.
And we always place the academic mission above anything else.
In all of our cost-containment efforts, we aim to protect our core missions of teaching and research, as well as remain competitive for the best faculty, staff, and students. And we remain accessible to qualified students, regardless of their background.
Facing diminished state support, we have been confronting the realities of the state’s economy for a number of years. We have not stood still.
Over a six-year period ending in 2009, we reduced our general fund spending by $135 million. We have been doing everything, from reducing how many flowers we plant and re-negotiating contracts with suppliers, to streamlining information technology practices and making tough choices about retirement benefits.
We are on a more intensive track to reallocate another $100 million by 2012, and our progress is good.
We will not stop then, because there is more work to do. We know that we must identify another $120 million in savings by 2017.
Our cost-cutting ranges from reducing energy consumption by 14 percent last year and avoiding $5.2 million in costs annually, to saving nearly six times that amount – more than $30 million – because of changes to our health benefits programs. And there are many, many more examples.
Let me state very clearly: When we look to reduce costs, it is always with an eye on our academic mission. We do everything possible to protect the academic excellence of the institution, because it is the very foundation of the university and what attracts our students and faculty.
Academic excellence means talented faculty and graduates for our state, technologies and innovation for business, industry and health care, and solutions for our neighborhoods and cities.
We offer the opportunity to explore, to pursue interests and ideas that fuel a passion for learning about the world. It may not be immediately obvious how that experience informs a student’s first job opportunity, but it is nonetheless important to support their intellectual curiosity.
Again, going back to our survey data, 97 percent of our graduates – 97 percent – place tremendous value in challenging themselves intellectually. It is a value we stress each and every day at U-M.
Our academic excellence is what makes us a strong, respected and popular institution for students, faculty and staff.
Every year, our applications increase. Students and their families see U-M as a value for their dollar. They are able to receive the best in education and the best in quality. They want what we have to offer.
When a student applies to the University of Michigan, I venture to say that most, if not all, do so because this is their school of choice. They know what we offer, from academics to athletics to an unparalleled level of student engagement.
We also offer them generous financial aid.
For the new members of the committee, I want to share our longstanding financial aid policy. We are committed to supporting academically qualified Michigan students, and their access to a quality education, regardless of family income.
This commitment has resulted in historic levels of financial aid in our annual budgets. These extraordinary amounts of support mean that a typical Michigan resident undergraduate student, with a family income of less than $80,000, pays less today than in 2004.
I want to repeat that: Pays less to attend U-M than in previous years. We are a better bargain today than when I first came to the University in 2002.
Providing this kind of support opens the doors to students from all backgrounds, and allows them to find their passion and their careers. We are particularly proud of our strong retention and graduation rates, which are well above state and national norms. I continually hear from alumni throughout the state and nation that their Michigan education has been crucial to their success. There is no question it requires commitment to succeed. Students who apply and are admitted to the University of Michigan tend to have ambitious aspirations. And the University makes significant investments to support students as they move toward their degrees. This includes excellent advising and mentoring, and strong financial aid. We never want concerns about finances to be a distraction for qualified Michigan residents working toward their diplomas.
That is why I asked our alumni and friends to support scholarships during our last capital campaign. Their response was tremendous: More than $519 million for students, including need-based aid and graduate fellowships.
Helping students succeed applies just as strongly to transfer students as it does those who enroll as freshmen. Again, U-M is a popular choice, and more than 1,200 students are admitted as transfers.
Two important transfer programs come to mind. The first is an outreach initiative that has U-M working with all 28 of Michigan’s public community colleges to increase the number of transfer students, particularly those from moderate and low-income backgrounds. We publish an extensive directory of courses that have been evaluated for transfer from the community colleges to the U-M, and know this is an important tool for students to plan their path to a degree.
The second transfer program is the Louis Stokes Alliance for Minority Participation, or as we know it, L-SAMP. L-SAMP is designed to double the number of minority students earning bachelor’s degrees in the fields where we most need graduates: math, science, technology and engineering. For the past five years, U-M has collaborated with Wayne State, Western Michigan, and Michigan State, and we have seen a 28 percent increase in graduates from one year to the next, year after year. Building on this success, just last month we announced an expansion of L-SAMP that will see our universities partnering with nine community colleges across the state. Again, with increased transfer students enrolling on our campuses, the result will be more talented graduates for our state.
The University of Michigan’s academic excellence also rests with our faculty, through their teaching, research, and public service.
Because exceptional faculty are the lifeblood of the University, we work extremely hard to recruit and retain the best scholars. I always tell people that if you think college football is an arms race, it is nothing compared with the national – and global – competition for great professors. There’s no Heisman Trophy or BCS title game for great professors, but the competition to retain the best scholars for our students is constant and relentless.
The last thing we want is to lose talented people. We have already seen too many leave our state.
And so we are very thoughtful about salaries and rewarding people. The Michigan Model that I referred to earlier works because it invests in people. That includes providing competitive salaries.
Our university enrolls nearly 3,000 more students than when I arrived in 2002. That’s a little like adding Hope College to our university. We are asking more of our faculty and staff each year, while only adding modestly to the number of positions supported with tuition or tax dollars.
In my own office, the staff is half the size it was nine years ago. We are using more shared services, combining purchasing, and reducing staff. Every single person in the office does more, and you can bet I work hard to retain them.
I am proud that we are able to offer competitive salaries throughout the University. I am not going to punish people for doing a good job. We want the best, and work hard to keep them.
They more than pay us back in their efforts, and that includes their financial support. In our last fundraising campaign, one of every three faculty, staff and retiree made a gift to the University for a total of $165 million. It was an incredible display of support.
I believe I am nearing my time limit, and I want to close by telling you about one of our highest priorities: supporting the economic rebirth of Michigan.
You know we are doing something right when a business columnist in San Francisco – an area that is home to some of the world’s leading high-tech firms – says Michigan is the place to be for innovation, because we know how to make things happen. That includes our campus.
We are seeing an explosive surge in entrepreneurship amongst our students. In fact, the national Entrepreneur of the Year is U-M student Allen Kim, a graduate of Ann Arbor Huron High School. We are teaching more classes than ever in entrepreneurship and innovation. Our students are excited about turning their ideas into new businesses and technologies.
Our faculty are equally enthusiastic. In the last decade, they recorded more than 2,800 discoveries, applied for 1,337 patents, and launched 93 startup businesses. In fact, the U.S. Patent and Trademark Office announced a decision late last year to open its first-ever satellite office outside of Washington in Michigan – a clear acknowledgment of the growth of the innovation economy in our region. We are not alone in this economic commitment to the state. For the past several years, I have testified before this committee along with my colleagues from Michigan State and Wayne State. As the University Research Corridor, our three universities have a $14.8 billion impact on the state.
As legislators, you face tremendous challenges in determining the state’s budget. As a university, we are ready to partner with you in meeting those challenges and guaranteeing a strong future for our state, especially our young people.
Even before the governor presented his budget, we acknowledged the likelihood that state support for higher education would again face a decline. I will not tell you that a 20 percent reduction in state support will be anywhere close to easy. It is not.
If the budget is enacted, the fiscal year 2012 appropriation would be almost $100 million less than in 2002 and the same amount we received nearly two decades ago.
However, as a university we are ready to answer the governor’s call for a shared sacrifice. I am emphatic about the contributions we must make as we work together to advance our state.
Today is the first time many of us have met, and I know I have covered a lot of ground in my comments. If I can leave you with one message, it is my steadfast commitment to sustaining the academic excellence of the University of Michigan. It is a responsibility I share with the regents of the University, and I am determined to guarantee our excellence for future generations.
Our campus community has responded to the current economic climate by saying we will contain costs, we will remain affordable and accessible, and we will protect the academic enterprise to ensure a vibrant tomorrow.
We want that future to include a strong investment in higher education from the state’s leaders. We know times are difficult now. But we are confident the governor will uphold his pledge to support higher education in the future.
Because for our collective future, we need a commitment that says higher education is essential to the wellbeing of Michigan as a prosperous, productive state.
I mentioned the time-honored partnership between the University and the state. As a university, we are just a few years shy of our bicentennial. Our founders had a remarkably bold vision some 200 years ago, that the untamed territory of Michigan have a great public university devoted to education and science. It is a vision that has been realized over and over again by generations of state leaders.
Today, the University of Michigan continues to be a place of bold ideas and actions, and a point of pride for our state. We believe in the power of knowledge, the joy of discovery, and the special compact we embrace to better our state and world.
We look forward to working with you for a stronger University of Michigan for the next 200 years.