Testimony to the Senate Subcommittee on Higher Education Appropriations

April 29, 2005

President Mary Sue Coleman

I want to thank Chair Goschka and each of you for the chance to be here today. I know you, along with your colleagues, once again face an enormous budget challenge. This year’s challenges will be just as difficult as the ones we faced last year, and the year before that…but the consequences are becoming more acute.

Before we begin, I also want to thank the governor and the legislature for the recent capital outlay funding you have made available—in our case, we will make much needed improvements to our Student Activities Building and to research and academic space; and we appreciate the commitment even during such challenging times for the general fund budget.

It’s a busy and exciting time on the University of Michigan campus this week—We are celebrating graduate commencement exercises this afternoon for our students receiving master’s and doctoral degrees, and tomorrow we’ll join graduating seniors and their families at Michigan Stadium for undergraduate commencement. We will confer more than 7,600 degrees, and expect over 20,000 people to attend the ceremonies.

If you’ve seen commencement at the Stadium before I think you’ll agree that it is a pretty remarkable event! In the midst of beach balls and cheers, we celebrate everything our students have accomplished during their time at Michigan—their tremendous academic achievements, their contributions to our communities, and their personal growth.

I was interested in the questions Chair Goschka asked of us in his letter last week. They focused in part on our university’s mission and outcomes—especially fitting at this time of graduation, when our students experience a tangible product of public higher education in this state: their diplomas. And your questions are exactly the questions to be considered at this time, because the funding decisions you make now are going to affect the delivery of public higher education for years to come.

I can define the University’s mission in three words—education, research, and service. We are a research-intensive university, built over the past 187 years, that brings new knowledge into the classroom and pushes it out into the world as we partner with the business community, government and our regional communities. I want to give you some current information and some context with which to think about the outcomes that result from pursuing our mission.

Let’s start with a Michigan education. Our first and highest priority is academic quality. It is the cornerstone of our compact with our students and our alumni. I could give you all sorts of rankings data that describe academic quality—for instance, just last fall the Wall Street Journal ranked our business school education #1 in the country. And if you look across the breadth of our academic programs, you will find less than a handful of niversities, public or private, that have a wider range of disciplines ranked within the top 10 in their respective fields.

Although we’re often skeptical of some of the criteria used in consumer magazine rankings, I was very interested in how the Wall Street Journal conducted its evaluation. The universities were ranked by corporate recruiters who see the most direct outcomes of our students’ educational experience—their skills, how grounded they are in academics, and their ability to work in cross-cultural and cross-disciplinary teams.

As we have struggled through these deep cuts in appropriations over the past several years, I have repeated one guiding principle: we cannot compromise that academic quality, because we know educational excellence is critical to our graduation rates, our placement rates and, most importantly, to our students’ career success. Michigan’s six-year graduation rate is among the highest of any public university at nearly 87 percent; and more than 94 percent of our graduating seniors move on to graduate school or to their first job within nine months of commencement.

One of your questions focused on future professions and fields of study that will be important for our state’s economy, and that tomorrow’s employers will need. Certainly we see an enormous need in engineering, technology and in the sciences, especially the life sciences. The United States is not producing enough scientists and engineers right now to replace just those who will retire within this decade, to say nothing of the increasing demands brought on by global competition and the pressing need for innovation.

But I also have great concern about the need for our state to increase the overall percentage of citizens with four-year degrees in wide-ranging fields of study. As the Cherry Commission showed us, only about 22 percent of Michigan adults have a bachelor’s degree—that’s below the national average and well below states that are prospering.

We are focusing tremendous effort to enhance our students’ living and learning experience, to make it more technology rich and relevant to today’s world, no matter what their field of study. Today’s students operate in a digital, global, 24/7 environment—and so does today’s business. Everything is technologically sophisticated, and connected. New York Times columnist Tom Friedman describes it as “the world flattening out.”

We believe students’ living and learning environments need to be just as integrated and seamless as the world around us. Right now we’re in the planning stages for a whole new kind of complex that blends a 500-room residence hall with technology-rich academic space, including components such as “video walls” where students in different geographic locations can see and talk with one another as they participate in the same class. We want to make sure Michigan students are well-prepared for a 21st century world.

And just one more point about the students’ educational experience: it must be affordable, and accessible.

Financial aid is a key component of affordability. We have to reach out to students with financial need because our state and our country cannot afford to leave one talented student behind if the only barrier is a financial one. For at least 30 years, it has been the University of Michigan’s policy to meet the full demonstrated financial need of every in-state, undergraduate student. That means that we offer these students a combination of grants, loans and work study that equals their full costs of attendance—covering not only the cost of tuition but also room and board, and other expenses as well. The neediest in-state students receive grants of more than $10,500, making the grant amount alone greater than the cost of tuition. To fulfill our longstanding policy, we have increased the University’s own financial aid budget at an equal or greater rate than tuition every year.

But we need to do more. Students are taking on more loans, and those students who are most financially vulnerable continue to be at greater risk. So this year we have announced a major new financial aid program called M-PACT. The program will contribute an additional $3 million each year to financial aid for almost 3,000 students from the state of Michigan, beginning with the Fall 2005 semester.

Depending on financial need, students will receive additional grants of $1,500, $1,000 or $500—and that will be a dollar-for-dollar reductions in loans. With this infusion, our neediest students will receive $12,200 in grants. We are making this possible through fundraising, and it is a wonderful example of how philanthropic gifts help to leverage the investment the state makes in educating Michigan students.

The M-PACT program is for in-state students only, though we hope to continue our efforts to increase financial aid for out-of-state students as well in the years ahead.

In your prepared questions, you referred to the ratio of in-state to out-of-state students and I’d like to address that directly. For the last 10 years, the University and the state have had an understanding that we maintain a ratio of about two-thirds of our undergraduate student population coming from the state of Michigan, and one-third coming from other states and countries. That’s just about where we stand this year, and we’ve maintained that commitment over time.

The University of Michigan’s national standing in academics and research makes us an appealing choice for a wide range of students from around the country, and here’s a fact you might not have heard before: we receive two-thirds of our undergraduate applications from out-of-state students, and one-third of our applications come from in-state students. It is exactly the opposite of our undergraduate student composition, most of which are in-state students. So students who hail from Michigan get far greater access to admission than the sheer number of applications would indicate.

But I also want to say that our out-of-state students enrich our campus environment and our state in many ways. For instance, I am gratified by the number of alumni I meet who came to the state to attend the University of Michigan and now live, work and prosper here. The University acts as a pipeline, drawing a regular flow of students, faculty and highly specialized staff members into the state to contribute to our economy and add to our capacity for innovation.

Now, just briefly, I want to address the two other components of our mission: research and service, which I sometimes refer to as partnerships.

Along with workforce development, our most important contributions to economic development come in the form of research and technology transfer activities. As you know, the University of Michigan has among the highest volumes of research in the country. Last year our University brought in $536 million to the state in federal research money—almost twice that of all other state public universities combined. About half of that funding, by the way, is attributed to research in the life sciences.

Research funding spurs innovation and scientific discovery. And in today’s globally competitive world, university research is the gas that will fuel our economic engine. In Michigan, it is integral to future economic growth. We know that state policymakers recognize the role our universities must play in this process.

In the past several years, we have focused heavily on increasing the technology transfer activities stemming from that research. The University’s tech transfer goal is simply stated: we want to lower the barriers and increase the transfer of new knowledge into the business community—and we want to do it quickly, and consistently. I believe this is central to the mission of a public research university.

2004 was a banner year for us in tech transfer. We recorded 13 new business startups, 73 new license agreements, and 285 new invention disclosures. And we were recently named 7th nationwide in total patents awarded to universities.

We’ve come a long way, but there is much more we want to do.

We are working with the state and the local business community to create a public-private partnership for technology-based economic development. We hope to launch the initiative in the next several weeks. We’ve looked at how other areas have been successful in attracting business, places such as San Diego and the research triangle in North Carolina, and we have created what I think is an excellent game plan. In the next decade, we want to double the number of technology companies and triple the number of technology jobs in and around the Washtenaw County area. We see this as a critical collaboration—among industry, universities and the state—in the years ahead.

This commitment of service to our state and to our regional communities continues to be an important part of the University’s mission. It is a portion of the “return on investment” the state of Michigan receives for its support of public higher education, even though it is not always as easy to categorize or quantify as numbers of degrees conferred, numbers of jobs created or number of research dollars brought in to the state.

Just this week, we put a new roof over our partnerships with the city of Detroit. We announced a new University of Michigan Detroit Center, and our host for today’s meeting, the U-M Dearborn, will be one of the participants in this center. We’ve committed to 10,500 square feet of space in a building owned by the Detroit Symphony Orchestra on Woodward Avenue, so that the dozens of longstanding activities the University sponsors in Detroit can come together and make more outreach possible. We anticipate the activity there will add to the revitalization happening in that part of the city, and I expect that it will enable the University’s students, faculty and programs to be more accessible to our Detroit neighbors.

I want to close today by again thanking you for the opportunity to be here. The commencement exercises on my campus this week do more than just celebrate past achievement—they look forward to the path ahead. Our students are looking out into a world that is more global, more technological and more competitive than ever before. We have an enormous responsibility to prepare them well for that world, and to enhance the ability of the State of Michigan to compete in the global marketplace.