Michigan’s FY 2024 Higher Education Budget: Momentum in the Making

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Michigan’s FY 2024 Higher Education Budget: Momentum in the Making

In OPtimizing EDucation Higher Ed Finance by Dan Hurley July 14, 2023

The recently passed Fiscal Year 2024 higher education budget reflected a second consecutive spending framework that signals a notable reinvestment in the state’s public postsecondary institutions and the students they serve. It is the most substantive higher education budget of the 21st Century; that may be saying a lot, but it’s also against the backdrop of two+ decades of stagnant or declining state funding of public university operations and financial aid programs. I am hopeful that the FY 2024 budget blueprint reflects an early period of long-term, sustained reinvestment in higher education in Michigan.

The budget included a diverse portfolio of investments, many of which have been advocated for by MASU and Michigan’s public universities during the past many years. Some highlights that will positively impact the public university sector:

Institutional Operating Support: A five percent ongoing increase in operating support to the universities, distributed across-the-board.

Institutional Equity Funding: $21 million to bring all universities up to a minimum of $4,500 per full-time equated students, accelerating a three-year plan down to two, benefiting five universities over the two-year time frame.

Campus Infrastructure Improvement: A major highlight in the budget is the allocation of $79 million for Infrastructure, Technology, Equipment, Maintenance, and Safety (ITEMS funding), to be distributed to the universities on an enrollment-based formula. Restoring these dollars has been a priority of MASU for the past several years, as it has been more than 20 years since ITEMS dollars have been appropriated. New this time around is the permissible use of these dollars for public safety and debt reduction. Of note, however, public universities that receive a capital outlay project planning or construction authorization by December 15 of this year will not be eligible to receive ITEMS funding. This provision suggests that while no capital outlay projects were included in the FY 2024 budget, the prospect of passage of a capital outlay package this fall remains intact.

Pension Program Debt Reduction: The higher education budget included a FY 2023 supplemental appropriation of $200 million toward the unfunded accrued liability for the seven institutions that formerly participated in the Michigan Public School Employees’ Retirement System (MPSERS). The state allocated $300 million in FY 2022 toward the $600+ million in MPSERS debt that existed at that time. The FY 2023 allocation reduces to about $50 million the currently assigned unfunded accrued liability for the affected institutions. The removal of the MPSERS albatross will provide much-needed financial breathing room for the affected institutions.

Continued Build-Out of the Michigan Achievement Scholarship—and New Dollars to Market It: $50 million has been allocated toward the build-out of the new Michigan Achievement Scholarship, as scheduled, bringing funding for the program to $300 million. Another highlight in the budget is the authorization for the state to spend up to $10 million to market the scholarship. Such a well-funded marketing campaign could go a long way in bolstering visibility of the program, and hopefully reverse the long-term trend of declining college enrollments in Michigan. Also included in the budget were significant adjustments to packaging guidance for the scholarship which will drive additional dollars to students, especially those from middle class backgrounds. Further, $10 million in one-time funding is allocated for school districts to improve Free Application for Federal Student Aid (FAFSA) completion rates; an investment that is certain to increase the utilization rate of the scholarship program, and with it, give a boost to student enrollments come fall 2024.

New College Success Fund: $37.8 million has been allocated for a new College Success Fund. This line item will serve two purposes: provide one-time funding for competitiveness grants to higher education institutions to adopt national best practices aimed at boosting retention and completion rates; and create a student wrap-around services program to help support students’ basic needs.

Reduction in Reporting Requirements: The budget also included a much sought-after major reduction in reporting requirements for the state’s public postsecondary institutions. This has been a priority of MASU for several legislative sessions, as we have emphasized the growing cost of complying with state reporting mandates. Several of the reports that were jettisoned were duplicative and contained data that are already publicly available.

The above list reflects just a few of the highlights from the state’s FY 2024 budget. Heading into this year’s state budget cycle MASU had called on state leaders to keep the momentum going on state reinvestment in higher education, building upon what was a robust current fiscal year budget. Our state leaders delivered. And virtually every major constituency will benefit: students, families, communities, and employers among them. So too will our public universities, by being better positioned to create a high-skilled workforce that is critical to boosting the state’s talent pipeline and meeting Michigan’s educational attainment goal of having sixty percent of residents possess a postsecondary degree or certificate by 2030.

Michigan has its challenges, but as it involves the arc of state investment in our public universities and the more than quarter million students they serve, we are experiencing both momentum and even some optimism that this moment isn’t a short-lived period, but rather, one that could mark the beginning of an era of strong long-term reinvestment in our state’s future workforce. If this ends up being the case, it will undoubtedly accelerate Michigan’s path toward greater prosperity in the years ahead.

Daniel Hurley is the Chief Executive Officer of the Michigan Association of State Universities