Members of the Michigan House toyed with a better policy to fund universities but backed off. Their proposal would have replaced roughly half of the state’s payments to universities with student scholarships. Doing this would have made the state’s higher education funding fairer and less arbitrary.

The University of Michigan received $425 million in direct payments from the state government last year, more than any other university. This wasn’t the result of a rational or even understandable formula. The University of Michigan got this amount not because it enrolls the most state residents — that would be Michigan State University. It got the most because state funding is based on what schools got last year and the year before that. And what they got in the past was based on little more than politics.

It’s a mistake to fund schools based on what they looked like in the past instead of what they are doing now. State universities have changed a lot over the past 10 years.

Michigan State and the University of Michigan have kept the same number of students they’ve had for a long time, but enrollment at other state universities has fallen. MSU, U-M and Michigan Technological University are the only three universities to (barely) see an increase in headcount. But the headcount at the other 12 universities is down by 27% on average. At Eastern Michigan University and Central Michigan University, it’s down 40%.

Major changes in enrollment have not led to major changes in funding, however. Michigan State received $250 million in 2014 and $319 million in 2024, a 28% increase. Central Michigan University received $73 million in 2014 but $95 million in 2024 for a 30% increase, despite enrolling 40% fewer state residents. Its large drop in enrollment did not matter to its state funding.

It would be better if lawmakers instead funded schools based on how many residents they enroll. Students would get the same support if they attended Saginaw Valley State University, which charges the lowest tuition, as they would if they attended Michigan Tech, which charges the highest tuition. This approach would replace political favoritism and set a new standard for funding higher education in Michigan.

The House Higher Education Committee was right to recommend moving in that direction. It said the state should shift away from arbitrary amounts of funding and toward per-student allocations. The committee’s recommended budget would have cut $828 million from the university-based appropriations and increased scholarships for state residents by $955 million.

Funding students rather than institutions would remove political bias and create a formula that makes sense. The schools already compete for students, and funding students at the same per-student level regardless of their university makes the competition fairer.

Moving from arbitrary payments to state universities to ones based on enrollment would be an improvement. It is good to see that some lawmakers wanted to make the switch even if their idea did not survive budget negotiations.

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