In Michigan, the turning point for education funding began with a trick play.
“They saw me coming from a mile away,” said Lou Anna Simon, president of Michigan State University. In recent years in Lansing, lawmaker turnover had resulted in the loss of long-term advocates for higher education funding in the state legislature. In a state where just three in 10 adults had a degree beyond high school, and where some lawmakers did not have a higher education degree, colleges and universities were struggling to be heard.
Simon said legislators took a skeptical view to their funding pleas and criticized universities for always pointing to other schools that were better-funded than Michigan's. “That was their view of us," she said. "That no matter what they did, there was someone else who was better off."
Meanwhile, state funding for higher education steadily slipped, declining to about $1 billion in total cuts over the last decade. But in 2011, that finally changed with an unlikely ally.
“The fact that the pizza guy is coming to them to talk about higher education funding is unexpected,” said Patrick Doyle, the CEO of Domino’s Pizza. The Ann Arbor-based company is one of Michigan’s largest employers and Doyle says the Michigan workforce just isn't producing enough candidates with the technological skills for the online component of his company. “Look, we mean it. There are only a few things in this state we think you should be spending more money on and higher education is one of them.’”
Doyle and Simon are both members of the Business Leaders for Michigan, a group of the state’s highest-ranking executives from Michigan’s largest universities and businesses. Their comments came during a recent sit down with Governing in Washington, D.C. The group in 2009 released its first Michigan Turnaround Plan, a comprehensive proposal for making Michigan a "Top Ten" state for jobs and personal income. The organization’s activities are geared toward achieving the goals outlined in the plan.
The message coming from the coalition now is that higher education doesn’t mean some lofty institution up high on a hill -- it’s a measurable asset to the state just like job growth or population. “It’s a producer of economic impact. It’s part of the overall economy,” said Doug Rothwell, president of the business leaders.
In developing the Turnaround Plan, the group’s leaders acknowledged that they had to know where the state stood in order to make their case that it needed help going further. The plan identified Michigan's strength and areas for expansion, like in its engineering talent and life sciences industry. One of the assets that emerged was the state’s higher education system, not just as a talent producer, but for the economic impact it provides through the research business.
“The way we came at it was, if it’s an asset to grow the economy, how can we help it do better?” said Rothwell. The group analyzed the state’s needs and found a huge gap between the jobs available and the skills in the state’s workforce. Michigan currrently ranks 30th of the 50 states for educated workforce. “So why are they not being filled? In part, it’s because of the [lack of] college affordability,” Rothwell said. The group’s analysis also found a weak connection between businesses and higher education and recommends requiring schools to track graduates' job placements and increase opportunites for students to participate in school-to-work programs.
And in response for an oft-used criticism of higher education -- that tuition hikes weren’t improving matters so why should the state throw more money at the problem? -- the group had a data-driven response at the ready. The fact was that the total financial resources per student had changed little over the last decade. Accounting for inflation, the $11,860 the state provided per student in 2012 was just $200 more than it had been a decade earlier, according to the leadership group. What had changed was the portion of total education cost that students were fronting themselves: from less than half in 2002 to 70 percent by 2012. (Nationally, that ratio has shifted from about 30 percent in 2002 to nearly half in 2012, according to the State Higher Education Executive Officers Association.)
The Michigan group said its approach is designed to not just promote one state sector but all of Michigan’s potential growth areas. After lobbying in 2011 for performance-based funding as a way to increase money for higher education, the endorsement was slow: in 2014, the legislature provided $21.9 million in new appropriations for universities based on performance metrics such as graduation rates and administrative costs, but overall funding remained flat.
But this year, Gov. Rick Snyder’s 2015 budget calls for the biggest higher education funding boost in years. Half of the increase (which totals $80 million out of $1.4 billion in funding) is tied to performance measures. The proposal represents a 6 percent total increase in funding and includes a cap on tuition increases at no more than 3.2 percent to receive full state funding.
Michigan’s funding increase is significant and part of a national trend this year as the economy improves. All but nine states have some kind of funding increase proposed for 2015, many tied to metrics. In total, 25 states have a funding formula in place for either two-year schools, four-year schools or both, that allocate some amount of funding based on performance.
Of course funding with strings attached usually isn’t an educator’s first choice, especially for the larger schools which already garner a big share of the state’s overall funding. Something like an eight or 10 percent increase at Michigan State or the University of Michigan would wipe out much of the state’s entire performance funding budget. For those schools, the reward is financial stability, said Simon: keep improving and funding will keep flowing. For the regional schools with smaller budgets -- and where several million dollars in more funding thanks to improved performance can be a windfall -- the implications are greater.
But the lesson from Michigan is that making a better state requires a team effort.
“In order for all of us to benefit we had to get behind an approach that might not be the approach that I personally would want for my institution, but over time, we all could benefit,” Simon said. “It was hard for us at the beginning. But ultimately it will work for the advantage of state -- so it works better for all of us.”