Table 1: Higher Education Revenues

Michigan, 2000 and 2004 in Current U.S. Dollars

Source: U.S. Department of Education, Integrated Postsecondary Education Data System (IPEDS), http://nces.ed.gov/ipedspas accessed March 2007.

In addition to revenues, spending per FTE student tended to rise at the 15 institutions (see Table 2), although by a lesser amount on average. That in itself is striking, since it suggests that, on average, the various institutions were accumulating cash surpluses during this period of budget stringency. To be sure, universities run many operations, including hospitals, dining halls, dormitories, athletic programs and the like on a commercial basis, and perhaps the cash accumulations were in these funds. Nonetheless, rising cash balances are inconsistent with cries of poverty and budgetary deprivation.

Table 2 shows that spending exceeded the inflation rate at the U of M — Ann Arbor, Western Michigan and Eastern Michigan, and stayed approximately constant at Michigan State. Spending did fall in inflation adjusted terms at other institutions, most notably Ferris State. On average, spending per student fell less than 1 percent statewide in an inflation-adjusted sense, and since economists generally believe the Consumer Price Index for All Urban Consumers modestly overstates inflation, it is probably fair to say average real per student expenditures remained constant — neither falling nor rising much during this period. It may be that universities chose to increase their emphasis on research, thereby lowering instructional spending per student; but if so, that is a result of a university decision to reallocate resources, not a paucity of available funds.

[*] FTE is shorthand for Full-Time Equivalent.