Message from President Mary Sue Coleman: The Budget Proposed by Governor Granholm

March 6, 2003

Greetings,

As you will have read in Thursday's coverage of Governor Granholm's budget proposal, most agencies and institutions that receive state funding will be facing a budget cut for fiscal year (FY) 2004. Provost Paul Courant and I will keep you informed as the budget discussions progress over the next few months. Today, I would like to make a few points about the Governor's proposal.

First, I want to emphasize that the proposal the Governor presented to the Legislature today represents the first step in the usually lengthy budgeting process in Lansing. The numbers we are hearing today are likely to fluctuate before the final FY 2004 budget is written.

The Governor and Legislature face the problem of a $1.7 billion budget deficit, which the Governor has proposed to address with a combination of cuts totaling $1.1 billion, and new revenue adjustments of about $600 million.

For higher education, the cut in the Governor's current proposal is 6.5%. Combined with this year's earlier cut of 3.5% at the University of Michigan, this creates a total reduction to our FY 2003 allocation of 10%. This totals a $36.4 million cut from the original 2002-03 base budget. In addition, we have approximately $50 million of anticipated operational cost increases, in areas such as financial aid, student support, utilities, benefits, and modest salary increases for our employees, among other items.

I believe that most of you are aware that Provost Courant has been discussing anticipated budget cuts with deans, directors, and other executive officers for a number of months, beginning the intensive planning discussions that are essential for accommodating a reduction in funding.

This proposed 10% total cut represents a significant reduction in our state appropriation, and we will have to make some difficult choices regarding next year's budget.

We are committed to maintaining the excellence of the University of Michigan and the best possible educational experience for our students. Sustaining the high caliber of our academic programs remains our primary focus during this process of budgetary re-evaluation.

We are already limiting expenditures and identifying additional savings in all of our units, by closely examining the costs of our operations. Indeed, for years before my arrival on this campus, the University has been working with considerable success on reducing operational costs.

Let me underscore that this is the starting point for the budget discussions in Lansing. I will be testifying on behalf of the University in about two weeks. We know we will need to do our share during this challenging economic time, but we will ask the state and the Governor to provide support that is essential to the long-term strength of the University.

We are analyzing the details the Governor presented today in her budget proposal, and will continue to provide updates throughout the budgeting process.

Sincerely,
Mary Sue Coleman
President