Although the state constitution gives the state Board of Education
the responsibility for statewide planning in higher education,
this function does not exist in practice. While this lack of statewide
organization is seen as a blessing by most, there are a few (typically
individuals who work in the state agencies) who see it as a disadvantage.
In interviews with state officials, we were told that without
any statewide agency or leadership to bring the institutions together,
there is no place where discussions about the future of higher
education in the state can occur. There are no formal mechanisms
for providing information to consumers, or for making decisions
about state priorities or targeting resources.
Budget Development
The budget process begins when the Department of Management and
Budget (DMB), the Governor's budget office, solicits annual requests
from colleges and universities concerning their budget needs.
Budget requests include information on current and prior year
FTE positions, faculty salaries, enrollments, tuition and fee
rates, etc. A second part of the budget development request consists
of justifications for changes to the prior year's base.
Historically, the instructions sent out by the DMB asked for information
on program revision requests and facilities openings, two areas
that allowed for institutions to get special-item funding, in
addition to their regular appropriations. Program revision requests
provided an opportunity for institutions to request extra operating
funds. At times these requests were designed to respond to the
special interests of legislators on the committee. This was one
way that the Legislature could appropriate additional money to
the institutions they favored or to the programs they wanted to
reward. Apparently, with the new chair of the Senate Appropriations
Subcommittee, the amount of money awarded through this type of
request has decreased significantly.
A second type of request that institutions could submit was in
the area of "facilities openings." Essentially, if an institution
built a new facility, it was entitled to request funds in the
subsequent year's budget for the operation of that building. Many
institutions, however, began to build faculty requests into that
amount, and eventually the state stopped funding this category.
Now, the philosophy is that if institutional representatives want
a new building, they must figure out how to operate it from their
regular appropriations.
Although the DMB solicits budget requests annually, staff suggested
that the requests do not make much of a difference. "Once we get
the requests," said a budget official, "we proceed to ignore them"
because they are always way too high and out of reach. In 1995-96,
he explained, both the University of Michigan and Michigan State
asked for more than the entire budget for higher education in
the state.
In a process concurrent to the institutions' submission of budget
requests, the Presidents Council works to develop consensus on
key priorities and to present to the state's executive branch
the major points around which there is consensus. For the past
two years, the council has focused on three areas of consensus.
The first is that increases in appropriations should at least
be at the level of inflation. Second, the council calls for a
minimum amount of funding per student (a funding floor) to be
established, with different floors for the three different types
of institutions (general comprehensive, doctoral I and research
I). The third area of consensus calls for a willingness for differential
budget recommendations based on changes in institutional role
and mission.
The DMB begins its budget process by looking at the percentage
revenue growth expected in the state during the coming year. This
growth then determines the level of increase higher education
will receive.
By most accounts, the Governor's executive budget is the key budget
document. After the Governor's budget is introduced in the Legislature,
it serves as the base budget, or point of departure, from which
the Legislature works. The executive budget is "a reflection of
the influence of the Governor," according to one respondent. The
Legislature is very attentive to the Governor's recommendations
because there are teeth behind them; the threat of a veto is taken
seriously.
Each year, the initial legislative work on the budget alternates
between the House and Senate. In 1995, for example, the budget
process began in the House; in 1996, it began in the Senate. As
legislators work on the budget bill, the Presidents Council continues
to push for consensus items, and individual institutions lobby
for their own priorities as well. The executive director and chair
of the Presidents Council make presentations to the Legislature
on overall priorities, and individual presidents and institutional
representatives push for their specific institutional requests.
The process was described to us as "dynamic."
Allocation of Funds
The allocation of funds is based primarily on historical funding
patterns, and on the particular power base in the Legislature
over the past 20 to 30 years. Prior to 1980, the Legislature set
budget levels through a type of formula that used both enrollment
and program data to establish the appropriation an institution
would receive. After the recession of 1980, however, when funding
was cut across the board, this process was dropped and never brought
back.
Equitable treatment in the budget process in Michigan has come
to mean that each institution will receive the same percentage
increase, regardless of their base budget. A university president
describes the political process in Michigan as one that maintains
the status quo to ensure each institution's share of funding.
Across-the-board increases lock in the base funding for institutions.
Essentially, institutions receive lump-sum funding; there is intent
language in the legislation, but it is not binding. One political
staff member suggested that legislators like this mode of operation,
for it absolves them of responsibility for tasks they would rather
not perform, like monitoring the performance of institutions.
There are exceptions to the across-the-board treatment of institutions
in Michigan. The first category of exceptions are those that the
Presidents Council agrees upon. In the past few years, for example,
the council has begun to argue for a minimum floor of funding
per student, and for differential funding based on changes in
institutional mission. Under this approach, all institutions do
not necessarily enjoy the same rate of increase. In 1994-95, Grand
Valley State University received a 19 percent increase in its
budget in response to its large enrollment growth during recent
years, and in response to the widely accepted belief that its
funding had not kept pace with this growth; most other institutions
that year received a 5 percent budget increase. The institutional
presidents were united on this proposal, arguing that there were
inequities in funding that needed to be addressed.
Fiscal Year 1996 Budget Process
The fiscal year 1996 budget process provides a second example
of an exception to across-the-board increases in Michigan. In
this budget process, the generally accepted practice of institutions
presenting a united front on budgetary matters was challenged,
leaving some presidents, state officials and other observers suggesting
that the Presidents Council had become ineffective.
In spring 1995, the Governor's budget recommendation called for
an increase in appropriations to Michigan State University (MSU)
of $10 million for technology initiatives, significantly more
than the increase for any other institution in the state. While
the budget proposal called for larger than average increases for
two other institutions-Grand Valley State (GVSU) and Western Michigan
University (WMU)-these had been suggested by the Presidents Council
because of growing enrollments at GVSU and a change in mission
at WMU. The additional appropriation for MSU was seen by many,
however, as a purely political move, the result of political favoritism.
Many presidents said that the MSU president had lobbied against
general across-the-board increases for all institutions.
There were several explanations for why this special increase
happened. Some argued that the Governor favored the increase because
MSU is his alma mater and its president is a personal friend.
The president of MSU, however, attributed the increase to the
Legislature's perception that MSU is accomplishing important state
priorities, including establishing a tuition guarantee, holding
tuition increases down, increasing emphasis on undergraduate education,
and beginning to address issues of cost. Another view is that
the MSU president was picking up messages from the Legislature
and refocusing his institution in order to stay ahead of the Legislature
in terms of accountability issues. The president was then rewarded
for his actions. One legislator provided still another justification
for the increase in funding to MSU: over the years, he said, the
gap in appropriations between the University of Michigan and MSU
had grown too wide. This was simply an attempt to close that gap.
Regardless of the rationale, the large increase in appropriations for MSU did not sit well with many of the presidents at other four-year institutions. They were particularly angry that the MSU president lobbied lawmakers to reject across-the-board increases in favor of extra money for his institution. The presidents argued that the actions of the MSU president established a clear break in the common mode of operation in Michigan, where presidents are collegial and fight for increases for all universities-not just their own institution. A university president argued that the Presidents Council was "effectively neutered" that year by these actions. It is interesting to note that during the fiscal year 1997 budget process, the state went back to essentially across the board increases; there was no apparent favoritism to any institution, and the standard mode of operation appeared to return.
Community College Budget
The community colleges are funded by a formula that is driven
largely by enrollment increases. The formula, developed by the
House Appropriations Committee, was implemented in 1984. The formula
determines the gross amount needed by each institution to operate
its programs. The state then subtracts the level of funding that
each institution is projected to raise through local taxes and
tuition revenue. The formula has never been fully funded, we were
told, and non-formula factors such as inflation are often inserted
by the Governor and Legislature. According to one analyst, there
is typically about a two percent increase across the board for
community colleges, and then the other one or two percent is allocated
to institutions based on the formulas. In the 1997 budget process,
the Governor called for a five percent increase to community colleges,
with one-half of the increase based on across-the-board increases
to cover inflation and the rest based on the formula process.
Capital Outlay
Capital Outlay projects are funded through bonds. The Department
of Management and Budget (DMB) asks universities to list their
capital outlay projects (which can include new construction, major
renovation and repair) by the priority in which they would like
them funded. Generally, project negotiations take place between
DMB and the institutions; requests are then submitted to the Capital
Outlay Committee, a joint committee of the House and Senate. Typically,
by the time the requests are considered by the Legislature, universities
are not at odds with one another over their projects.
The general rule of thumb on capital outlay projects is that when money is available, every campus will get one project. Community colleges are required to provide a 50 percent match to state funds for capital outlay, because it is assumed that they can get local tax dollars to cover the match. There is no matching requirement for four-year institutions.
If a program is not endorsed by the council in the review process, that program will not be added to the Legislature's boiler plate language in the appropriations bill. However, this is not always a deterrent. For example, Ferris State established a pharmacy school even though the program was not endorsed through the program review process. The Legislature attempted to control the program and punish the institution for offering it, but to no avail; the program is still in operation. Likewise, GVSU began an engineering program even though it was not initially endorsed by the council.
The 1995-96 appropriations bill includes language that calls on
institutions of higher education to provide information to high
schools on the performance of their graduates once they go on
to college. While some people point to this as an example of better
communication between sectors, others see the idea as somewhat
laughable, and doubt that anything will ever come of it. Legislative
language is not binding, since institutions are constitutionally
autonomous, and therefore institutions cannot be required to do
this kind of reporting.
There are also dual enrollment programs in which high school seniors can enroll in college or university courses for credit, and the state will cover the cost of tuition. The idea behind this program, according to one legislator, is not to graduate students more quickly, but to address the fact that many students waste their senior year in high school.
There is no real statewide effort at transfer, though there are local agreements between individual institutions. The absence of statewide articulation can be traced to the fact that there is no agency responsible for managing such an effort. There is no alternative but to rely on local arrangements.
Most of the information that is collected and used for any sort
of analysis goes into the Higher Education Information Data Inventory
(HEIDI) data base. The data base, which resides in the Department
of Management and Budget, is oriented to expenditures and faculty
compensation data. Several individuals expressed dissatisfaction
with this data. "We cannot use it to measure performance," said
one political staff member. The data base is "woefully inaccurate"
according to another source. It is not kept up well, said another.
One of the more significant problems with the HEIDI data base
is that it is not compatible with the Integrated Postsecondary
Education Data System (IPEDS) data base, which is maintained by
a separate department. As a result, institutions have to report
data to two different systems even though the IPEDS data are rarely
used.
The HEIDI data base is used primarily by the House and Senate
fiscal agencies. According to one of the analysts we spoke with,
the data base is sufficient for the kinds of request they receive
in the fiscal agencies: they rarely receive requests for data
that HEIDI does not provide, such as faculty workload, progress
of minority students, performance of students in remedial education,
etc.
The Department of Education has made several attempts to address
the issue of poor information collection, and has tried on several
occasions to get funding and authorization for studies of minority
participation, remediation, institutional performance, etc. However,
the department's activity has effectively been killed each time
by the Legislature, presumably under pressure from the Presidents
Council. One president mentioned that four-year institutions have
been adamant about keeping any type of information gathering out
of the Department of Education. He noted that when the department
did get a mechanism for information collection in their budget
a few years ago "because we weren't paying attention," the four-year
institutions effectively got this removed the following year.
Institutions prefer to have the Department of Management and Budget
collecting information, this president said, because this is where
the budget decisions are made.
To some, the lack of information means that no one has any idea
how efficiently state funding for higher education is being spent,
or what the state gets for its investment. "The state has no clue
about what universities do," said one political staff member.
Another respondent worried that the state does not know how to
address the needs of certain groups, particularly minorities and
women, because it has not gathered information on participation
of these groups for many years.
Another observer of the Michigan system argued that no one cares that there is no centralized data collected because no one would trust that the data would be accurate or that it would be used rationally or properly.
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