House Appropriations Subcommittee on Higher Education

The Honorable Joan Bauer, Chair
May 3, 2010
Dr. Wong's Response to House questions

Dear Rep. Bauer and Subcommittee Members,

Thank you for this opportunity to share Northern Michigan University's responses to the subcommittee's questions. Given today's economic turmoil and our continuing need to serve our students, the challenges to higher education are difficult ones. At Northern, access to an affordable, high-quality university education is our mantra and it guides many of the difficult decisions we have been making for eight years now.

What follows are the responses to your four questions. If you need further information on any particular point, please do not hesitate to contact me.

Question 1: What are your plans for changes in tuition and fee rates for academic year 2010-11?

Northern Michigan University continues to be the second-most affordable public university among the 15 public universities in Michigan.

Forty-four percent of NMU's general fund budget comes from the State of Michigan. However, in the context of the total operational budget of the university, state appropriations provide just under 27 percent. With that in mind, it is unlikely that the NMU Board of Trustees - which sets tuition and fees at Northern, as the governing boards do at each of Michigan's public universities - will make any tuition rate decisions without knowing NMU's state appropriation figure. State appropriation makes up a third to two-fifths of our funding. More and more, public higher education is tuition dependent as state support wanes. The decisions to be made by the Legislature and Governor will determine how the NMU Board of Trustees addresses tuition-setting decisions for 2010-11. 

It is important for legislators to realize that NMU holds its ranking as second-most affordable tuition even with providing students one of the most comprehensive technology packages (including a notebook computer) in the nation. Statistically, NMU has one of the most productive faculty, staffs and administrations in Michigan. We are a lean university that has dealt with eight consecutive years of flat or decreased state appropriations by vigorously reducing, eliminating and reallocating resources in every corner of our campus - all while doing our best to protect the quality of the NMU academic experience. As a university community, we have worked exceptionally hard to keep our costs low and our quality high for our students.

Question 2: How will the Governor's proposed modification to the Tuition Incentive Program (TIP) impact your university?

If the TIP "Phase II" portion is removed, thereby removing assistance for students in the third and fourth year of a four-year degree program, 63 students at NMU would lose $49,500 based on FY10 data.  Based on our FY10 data, there are approximately 300 students who receive TIP funds. If the state moves from paying the "lower division tuition" at the university to paying the "average community college in-district per credit tuition rate," this would result in a reduction in student aid of upward of $1.5 million for NMU students, depending on the rate the state determines is average. 

Question 3: How does your university impact economic development in your community, region and/or state?

Economic studies suggest that NMU contributes an additional $4-$5 dollars in local economic activity for every $1 in general fund support. In the area of jobs and economic development, we have formed the Center of Resources for Enterprises (CORE) to match expertise at NMU with entrepreneurs and businesses/organization seeking to start, strengthen or grow their operations. We also offer an Entrepreneurial Academy for students and the public.

NMU expects to significantly drive the U.P. economy to prosperity by:

• providing data and services to local units of government throughout the Upper Peninsula and the region. The public sector provides over one third of the jobs in the U.P. and is an important part of our region's economy. We will continue to provide training, public management resource development, assistance with innovation development, public-to-public partnership development and other services needed by the local government sector of our economy.

• Developing e-government expertise, creating GIS-based analysis for local governments, transferring technology and providing economic education and entrepreneurial training.

• Serving as a central data depository for all research on the economy and business climate in the U.P. and associated regions.
  
  
• Supporting the extensive rural network of Upper Peninsula communities by assisting in private sector economic development.
  
  
• Assisting sustainability efforts U.P. wide. The Upper Peninsula contains natural resources that are essential to the economic vitality of the state and nation. These include minerals, iron, nickel, timber, fisheries and water.  These natural resources must be preserved and developed responsibly.  NMU anticipates playing an even greater role in sustainability efforts regarding U.P. natural resources in the future.
  
  
• Directing participants in our student-community service operations (for example, through our nationally recognized Superior Edge Program, www.nmu.edu/superioredge) to engage with communities through internships and volunteering; providing faculty/staff expertise; collaborating with our regional Indigenous tribes; offering workforce training; and delivering economics education to Upper Peninsula schools.
  

• Sharing NMU's expertise in technology. NMU is a technology driver in the Upper Peninsula, especially the central U.P.  We hold one of the few next generation wireless licenses - known as WiMAX - in the country. We have extended high-speed wireless service beyond campus, working with central U.P. cities and townships to create a high-tech community, not just a high-tech campus. Our services cover about 40 square miles, from Harvey into Ishpeming, enabling police, state patrol and fire personnel to have on-site and mobile laptop access, saving these public institutions money while bringing their services to higher safety and security standards.  NMU is also working diligently to bring public schools into the network. One district, we're proud to say, will have high-speed wireless broadband service for the first time. Current FCC rules do not allow us to provide this service to the general public.

• Supporting job training and workforce development programs. In fact, earlier this month NMU was the only Michigan university to receive a U.S. Department of Energy stimulus grant - a $673,000 - award to enhance the university's electrical power technician program, which was developed and is offered in conjunction with the U.P.'s energy companies.

• NMU provides the community college function for this region. Along with one-year certificate and two-year associate degree programs, NMU offers a variety of job-readiness programs for the under- and unemployed. These range from welding, HVAC and airplane maintenance to energy-related jobs.

Last but not least, our most significant challenge regarding economic development is sustaining our creative momentum. The NMU community prides itself on being smart with our money, working with local government and private entities and assisting non-profit providers in these tough times. We recognize our responsibility to the public to sustain its confidence in us as a public institution. 

Question 4: What do you anticipate the impact of the proposed 3.1% reduction to university funding amounts proposed under the Senate's budget would be on student tuition rates and/or university operations?

After eight consecutive years of flat or decreasing state appropriations, the 3.1% Senate proposal will cause several actions. First, it will put additional pressure on the NMU students and families as we will need to raise tuition and fees to make up decreasing support and increasing operational costs. It is a silent tax on these students and families, and they are more and more frustrated by it.  Again, after eight years of lessen state support, there no painless cuts left to make.  At this point, the budget-balancing proposals developed by our faculty, staff and student groups represent major changes in the university's structure, including elimination and suspension of programs, further job loss and continued reduction in services. Since 2003, NMU's general fund budget has undergone $19 million in reduction and reallocation while serving significantly more students, supporting more entrepreneurial work and providing job training in the community.

Increasing reliance on private funds for public higher education is misguided. The data are very clear.  States who invest in higher education to increase the number of citizens holding baccalaureate degrees rank highest on measures of economic stability and economic growth.  Such results enable appropriate taxing structures to fund higher education investments. Educated citizenry are wealth creators, not wealth consumers. In addition to not using up social services or being part of the penal system, graduating students often create wealth and jobs by their flexibility, creativity and business creations.  Michigan ranks in the next-to-last quartile on all measures of levels of education, investment in higher education and a stultifying tax structure. Unless restructuring that enables reinvestment where it counts the most, the brain drain will only get worse. We will export talent to those states already benefiting by Michigan's most productive export: highly educated, talented alums of Michigan's universities.

The increasing reliance on private funds for public higher education also means that the fundamental mission of public higher education erodes. As tuition rises, as costs to operate rise, as financial aid erodes (breaking the Michigan Promise) only those families able to afford will be able to attend. Those already expected to succeed by virtue of grades, financial ability, family status and family educational levels will have a distinct advantage unavailable to students from financially challenged families. Education remains the great social equalizer and it remains the clear resource upon which to build the new economy. Countries across the planet invest in this strategy and are clearly showing a resiliency we would not have expected. It is time for Michigan to correct its course.

Sincerely,

Dr. Les Wong
NMU President