1. FY 2013 General Fund Operating Budget Ann Arbor Campus Board of Regents June 21, 2012

2. FY 2013 Operating Budget Recommendation All Campuses 2

3. FY 2013 General Fund Budget Ann Arbor Campus Based on a five-year integrated academic strategy and financial plan Budget priorities include: Innovation in teaching and research Emphasis on providing graduates with leadership skills for the 21 st century Interdisciplinary approaches to pressing world problems Maintaining academic excellence Ensuring access and affordability Continues our practice of fiscal discipline, aggressive cost containment, and carefully targeted use of philanthropic resources 3

4. Leadership Skills for the 21 st Century 4 Traditional characteristics: - Ability to speak and write clearly - Quantitative reasoning skills - Engagement with the arts and humanities - Broad knowledge of the world - Critical reasoning skills - Deep competence in at least one discipline, but with the ability to work across disciplines Confidence to innovate and take risks Ability to lead small groups and flat organizations Able to work effectively with people from diverse backgrounds and cultures Skilled at life- long learning, and ability to re-invent themselves Command of new information technologies The traditional characteristics of a U-M graduate remain important. In addition, we need to enable graduates to develop skills for success in the 21 st century.

5. 5 Mpala Wildlife Conservancy and Research Center in Kenya Sustainability Field Studies Integrative experiential learning and research project involving both undergraduate and graduate students Students learn how to solve complex sustainability problems U-M undergraduate students are joined by students from University of Nairobi for the field course On the graduate level, master’s students conduct thesis research and embark on a group research project

6. College of Engineering Design Immersion New active learning opportunity piloted last year About 100 new freshmen moved into residence halls early to work on challenging design projects in small teams, under the supervision of a U-M faculty member This program jump-starts students’ undergraduate education by providing a direct experience of engineering as a creative process The program will expand this year to more than 200 students, and is offered to students at no extra charge 6

7. Investments Academic Excellence Key investments will: Recruit and retain outstanding faculty Enhance our students’ academic experience through continued focus on student/faculty ratio and innovative uses of technology to assist learning Plan for the renewal of key academic facilities and save money by avoiding piecemeal renovations and repairs Maintain the value and distinction of the University’s library collection 7

8. Investments Financial Aid The budget recommendation includes an increase of $10.5 million in centrally awarded financial aid for a new allocation of $144.8 million. Centrally awarded undergraduate financial aid totals $100 million, an increase of 10.1% over FY 2012. For the fourth year in a row, typical resident students with financial need will see no increase in the Cost of Attendance (tuition and fees, housing, books and incidentals). Packaged loans will not increase. 8

9. Packaged Loan Burden for Michigan Resident Undergraduates 9 NOTE: 40% of students with need- based grants also receive scholarship assistance, which further reduces their loan burden. Figures are based on sample packages for the median EFC for each income range. Figures adjusted to remove the one-time Economic Hardship Grant awarded in 2010-11.

10. Affordability Over the past decade, our disciplined commitment to cost containment, efficiency of operations, and investments in financial aid have put U-M at the forefront in efforts to maintain access and affordability The Department of Education’s recent report on College Affordability and Transparency shows that U-M’s net price increase was lower than 567 of 650 institutions in the public four-year category Our efforts have allowed U-M to maintain academic excellence and affordability, even during a period of historic reductions in public support 10

11. State Appropriation The budget recommendation incorporates a state appropriation of $273.1 million for the Ann Arbor Campus. This represents an increase of $4.3 million, +1.6% over FY 2012. We appreciate the efforts this year by the State to invest in higher education. However, this year’s increase comes as part of a longer- term trend of reduction in State appropriation. The FY 2013 state appropriation is comparable to FY 1992 in nominal dollars and FY 1964 in real dollars. 11

12. State support per student has declined by more than 50% over the past decade 12 Employment Cost Index (ECI), prepared by U.S. Bureau of Labor Statistics

13. The Changing Mix of General Fund Revenue 13 70% 17% 13% Indirect Cost Recovery and Other Tuition and FeesState Appropriations

14. Cost Containment We are entering the third phase of our cost containment plan with a target of $120 million over the next five years Ongoing savings to date total $235 million in recurring General Fund costs since FY 2004 To invest in academic quality and financial aid and to constrain the amount of tuition increase, the FY 2013 budget recommendation includes ongoing reductions and reallocation totaling over $30 million 14

15. Recommended FY 2013 Tuition Increases for U-M Ann Arbor * The dollar amounts shown represent the increased amount per academic year for the most common lower division general undergraduate rate. A limited number of differential increases are also recommended for specific programs. 15 Undergraduate: Resident2.8%$360/year* Non-Resident3.5%$1,340/year*

16. Recommended FY 2013 Tuition Increases for U-M Ann Arbor * The dollar amounts shown represent the increased amount per academic year for the general Rackham graduate rates. A limited number of differential increases are also recommended for specific graduate programs. 16 Graduate: Resident3.0%$574/year* Non-Resident3.0%$1,156/year* Candidate3.0%$308/year*

17. FY 2013 General Fund Budget Recommendation Ann Arbor Campus 17

18. Conclusion The proposed budget will maintain academic excellence and affordability, even during a period of historic reductions in public support This is possible because of our disciplined commitment to cost containment, efficiency of operations, and multi-year planning The recommendation calls for a significant level of cost reduction and reallocation: All new initiatives will be funded through reallocation Highest priority areas of investment are financial aid and educational innovations that strengthen our students’ learning experience For the fourth year in a row, the typical Michigan resident student with financial need will see no increase in costs—and in fact, loan burden will go down 18

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21. Academic Year Tuition & Mandatory Fees for a First-Year Undergraduate at Select Public Universities Comparison of Rates for In-State Students 21 *U-M rates are proposed

22. Academic Year Tuition & Mandatory Fees for a First-Year Undergraduate at Michigan Public Universities Comparison of Rates for In-State Students 22 *U-M rates are proposed

23. Academic Year Tuition & Mandatory Fees for a First-Year Undergraduate at Select Private Universities 23 *U-M rates are proposed