Continuation Budget Proposed

Interim President Mike Roy told the attendees of Wednesday’s (April 21) university forum that he will recommend the NMU Board of Trustees adopt a continuation budget at its next meeting, April 29-30.


“At this time the state budget picture is rather fluid,” said Roy . “My intention is to recommend that we continue to operate under the 2003-04 budget and implement the $3.3 million in reductions previously identified by the Budget Alternatives Committee and President’s Council.”


Roy said the proposal means there would be no recommendation on tuition and fee rates this month, but added that a decision is likely by July 1.


The state has approved a 3 percent restoration of base budget funding for universities that meet two requirements: keep their tuition and fee increase at or below the Detroit Consumer Price Index (CPI) – currently 2.4 percent; and implement no tuition increase after Dec. 1. Those that do not meet the conditions will not qualify for restored funding and will receive an additional 3 percent funding decrease.


Northern’s Board of Trustees approved a $100 mid-year increase (2.1 percent) on Dec. 12, a decision supported by the Associated Students of Northern Michigan University (ASNMU). The bill with the tuition restraint language was signed into law Dec. 29. Roy said he is working to have legislators add an amendment to the higher education bill to change the date of the tuition restraint language to Jan. 1.


Roy said for Northern to be disqualified for the appropriations restoration of $1.4 million and lose an additional $1.4 million in reduced state funding would “actually penalize this institution for being fiscally responsible.”


“Including the mid-year increase, Northern had the third lowest percent and dollar figure tuition increase this year, and we dropped from the fourth to second lowest in the state for overall cost,” said Roy. “I also point out to legislators that we’re the only university in Michigan to provide our full-time students a comprehensive technology program – computer, software, Internet use and support – as part of tuition, and still we remain one of the best values in the state. Our message is that Northern has always been concerned about access and affordability, and that we have used restraint in pricing our tuition and fees. I think we’ve done and outstanding job to keep our costs down and our pricing affordable.”


Northern’s testimony before the House Higher Education Subcommittee is May 12. Roy said that the legislative process is a “long one; we’re about midway through and many things can change along the way.”


Gavin Leach (Finance and Administration) presented three options that will be brought before the board for discussion:


  • Tuition amendment. If state legislators amend the higher education bill changing the date of the tuition restraint language from Dec. 1 to Jan. 1, NMU would meet all of the requirements of the bill and would then qualify for the appropriations restoration ($1.4 million). The recommendation would be for NMU to take the pledge and set the tuition and fee increase at 2.4 percent or $62.50 per semester.
  • Tuition rebate. If Northern rebates the $100 midyear tuition increase and raises tuition and fees by 2.4 percent, it would qualify for the appropriations restoration and students would pay $11.50 more per semester in tuition and fees next year. But doing so would cost the university $733,000 in tuition and fee revenue from the current year – dollars that have already been spent – and $733,000 in base budget (ongoing) tuition and fee revenue that would require additional budget reductions for fiscal year 2005.
  • No amendment, no rebate. If no amendment is added to the bill and the university chooses not to rebate the midyear increase, it would result in Northern losing the appropriation restoration and being penalized with an additional 3 percent funding decrease for a total appropriation impact of $2.8 million. To balance the budget solely with tuition and fee revenues, Northern would need to increase its rates by 9.6 percent or $249/semester.

“We obviously have a favorite scenario,” said Roy. “We’d like to be able to come back to the board and make a recommendation for the first option. I can tell you right now that I do not want to recommend a 9.6 percent tuition increase, which would mean looking at additional budget cuts to deal with the shortfall.”


Leach said expenditures for 2005 are projected to increase by $3 million. That figure includes:


  • 11 new faculty positions to meet Northern’s growing enrollment;
  • increased contractual wage compensation;
  • debt service to cover the start of the renovation of Cohodas to include classroom space and staff offices and replacement of an aging boiler and electrical switch gear in NMU’s heating plant; and
  • anticipated increases in utility, health care, and state-mandated program expenses.


Les Wong, who attended the forum while making his first visit to campus since being selected as president, said, “What has been presented here is a reasonable budget package, and I can help sell this package to the state legislature and the Governor. What I am seeing at Northern Michigan University is very efficient planning.”



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Updated: April 23, 2004