The House and Senate Approve Modest Increases for Universities and Community Colleges for FY 2015

Full report in PDF

Because Michigan does not have a state agency that exercises financing or policy authority over its universities and community colleges, the Legislature makes direct appropriations to those institutions through the Higher Education and Community Colleges budgets. Michigan’s three financial aid grant programs are funded through the Higher Education budget even though community college students may also apply for and receive those grants.

Community Colleges

Governor’s Budget:

  • Appropriates a 3% ($8.9 million) increase in total funding for community college operations, which is distributed among the 28 Michigan community colleges according to the following metrics: proportional increase from FY 2013-14 funding (50%), weighted completions (17.5%), student contact hours (10%), administrative costs (7.5%) and local strategic value (15%). (Colleges receive the local strategic value portion if they meet four out of five listed best practices in each of the following areas: a) economic development and business/industry partnerships, b) educational partnerships, and c) community services.)
  • As in previous recent years, the majority of overall funding in the governor’s budget for community colleges comes from the School Aid Fund ($197.6 million, an amount equal to the current School Aid Fund appropriation) and the rest comes from the General Fund ($173.9 million, a 26% increase over the current General Fund appropriation).
  • Includes, for the first time, a tuition restraint prerequisite (similar to the one for universities) that conditions receipt of metric funding on limiting FY 2014-15 tuition and fee increases for resident students to 3.2%.

Senate:

  • Concurs with the governor on the increase in operational and performance funding.
  • Appropriates more money from the General Fund ($323.9 million) than the governor, and less from the School Aid Fund ($47.6 million).
  • Does not include the governor’s recommended tuition restraint provision.

House:

  • Concurs with the governor on the increase in operational and performance funding.
  • Concurs with the governor on the amount of funding from the General Fund ($173.9 million) and from the School Aid Fund ($197.6 million).
  • Does not include the governor’s tuition restraint provision.
  • The House Appropriations Committee included boilerplate, supported by the League, and a $100 placeholder to develop a program by which students could obtain a GED at a community college free of charge if committing to enroll in an academic or vocational program. The state would reimburse community colleges for eligible costs associated with providing the GED programs or testing. The boilerplate language and placeholder were removed on the House floor.

Universities

Governor’s Budget:

  • Increases the total appropriation for university operations by $76.9 million (6.1%) over the current fiscal year. As in previous recent years, this increase is in the form of performance funding, though the formula has been modified so that half of the increase goes proportionally to universities to make up for funding lost in 2012.
  • Includes a new performance metric that rewards institutions based on the number of students receiving Pell Grants, a positive change that attempts to encourage universities to become more accessible to low-income students.
  • Continues the practice begun two years ago of requiring universities to limit tuition increases to 3.2% or less in order to receive any performance funding. This is the first budget that applies the same requirement to community colleges as well, even though community college tuition increases have been much smaller than those of universities over the past decade. This “tuition restraint” prerequisite for receiving performance funding helps to keep postsecondary education affordable for low-income students.

Senate:

  • Concurs with the governor in increasing the total appropriation for university operations by $76.9 million (6.1%) over the current fiscal year.
  • Concurs with the governor’s performance funding and tuition restraint changes.

House:

  • Increases university operations funding by $70.4 million (5.6%) over the current fiscal year.
  • Concurs with the governor’s performance funding and tuition restraint changes.

Financial Aid

Governor’s Budget:

  • Increases the Tuition Incentive Program by $1.5 million over the current fiscal year, for a total of $48.5 million. The increase is entirely from the General Fund, but $43.8 million (90%) of total funding for TIP is from the state’s TANF funds.
  • Provides total funding for all financial aid grant programs of $103.1 million, some of which comes from the federal Temporary Assistance for Needy Families allocation.
  • Does not increase the Michigan Tuition Grant program, but adds a requirement that independent colleges submit data, including student performance data (Tuition Grant students enrolled in remedial education and/or completing degrees, Pell Grant students completing degrees), to the P-20 system in order to participate in the Tuition Grant program—a change supported by the League.

House:

  • Increases the Tuition Incentive Program by $1.5 million over current year, and the Michigan Tuition Grant by $1.8 million over the current year.
  • Includes the governor’s P-20 data reporting requirement for participation in the Tuition Grant program.

Senate:

  • Increases the Tuition Incentive Program by $1.5 million over current year.
  • Does not increase the Michigan Tuition Grant or include the governor’s P-20 requirement for participation in the Tuition Grant program.