Russ White 0:00
Well, how much do you know about how Michigan funds its public universities and institutions of higher education, and about how much it funds those institutions. David Bertram is Associate Vice President for state relations for Michigan State University. And Jeremy Reuter is director of statewide advocacy. And they're joining me on MSU Today to discuss just that topic. Welcome, gentlemen. Thank you, Russ. Thanks for having us. MSU is a publicly funded University, which means we receive state funds for operations, how much funding do we receive, and what areas out of MSU receive funds in this process?

David Bertram 0:38
First of all, the the, the number changes a little bit every year. So the number I'm giving right now, which is 287 million, is a number that we're getting this year. Now that's just in one line for one purpose, that's general operating dollars from the state of Michigan. And so in addition to that, 287 million ag Mio research gets about 35 million extension 30 million. There are other smaller programs like project green, which is an annual program as well. 5.6 million, that's to do plant based Agriculture Research and those types of supports from the state. And, and there's a number of other programs as well. My docks is, is one that stands out, this is one that provides clinical opportunities for medical students with two medical colleges. And for those medical students, when they do their, their clinical time. This program helps them connect a lot of people think that's paid for by hospitals or paid for by the university, it actually comes through a program, like my docs and other similar programs. There's another small program called the Alliance for animal agriculture, am I triple A, and that is doing some incredible research just in the last three or four years since it started on the animal side of of agriculture. So when you really added up 287 million is the answer for our general operating dollars. But when you add all the other things that that are, like some I just mentioned, it's about 400 million a year, maybe a little under that. And it it's kind of in that range. So that's, that's probably the biggest, the biggest thing, I would just say what areas receive it, it's really all of them as you this is money that goes into our general fund, except for athletics, I would distinguish that no money from the state goes to athletics, I'd also qualify that no money from student tuition goes into athletics as well, that is a completely standalone program. They're self sustaining, and obviously received gifts as well from donors.

Jeremy Reuter 2:59
So what I would add in there is the for the $287 million in general operations, that works out to be about 20% of our operating fund today. And in historically that number was was much higher, but it all even take the point on athletics, for example, the scholarships that students receive and funded by athletics does have a somewhat of a tie back to the university and the fact that those are full tuition rates that you know, athletics has to cover. And so as the cost of tuition raises that as a university, that's an increased cost for the athletics department to have to be able to cover in their operating budget and in their revenue stream. So while there is no direct hours coming from the state going there, there is a correlation in terms of cost of operations for athletics based on what you know, the university's tuition is

David Bertram 3:47
the other thing Russ, I might just add is that the money that comes to universities, not just MSU, but to other public universities in Michigan. That money comes from a number of sources within the state budget, and there is some money in this isn't always fun to talk about. But some of the money does come come from the school aid Fund. The school aid fund is traditionally set up to help k 12 schools. But if we didn't get that funding from the school aid fund, higher ed in general in the state would be would be hurting. Matter of fact, community colleges get all their money from the school aid fund. So what's been a positive for the state in the last couple decades really is that sales tax revenues have done very well. So it's it's been a good source that way for everybody. We were all able to play in the same pool.

Russ White 4:43
We often hear about the need for a more educated workforce to meet the employment needs of today and in the future. So why isn't it more

David Bertram 4:51
well once upon a time it was more it and unfortunately, it's it's not as high is where We believe it should be, you know, Jeremy and I might even provide a different answer to you about what the perfect percentage it is that should come from the state. But what's happened is a real transformation. Over a period of decades really, one of the numbers, I think it's easy for me to remember, back in 1958, or 1985 58% of our funding came from the state of Michigan. And we just talked about Jeremy mentioned 20%. So you can see, we've dropped since 1985, down to 20%. I think probably most people listening can remember 1985. And that doesn't seem like that long ago, it is 35 years ago. But in that timeframe, that's that's how much it's changed, we would be getting a lot more funding right now. If a number of factors didn't happen, the most recent big hit to us was about a decade ago, but 10 years ago. And that is when the previous governor came came in. And there was a budget deficit a significant one for the state, it wasn't just higher ed that took the hit. But we all took a 15% cut. And it has taken us just to get back to where we were 10 years ago, just a couple years ago. And and Matter of fact, Wayne State, I don't think it's quite back where they were. So it's been a series of those things over a period of about 30 years. And from our perspective, we just need to raise the importance of of higher ed funding within the state budget. And that's not just an MSU thing, it's it's everybody.

Jeremy Reuter 6:48
And Russ, I would just add a little data context to that. So you know, the cut that David was referring to about a decade ago, the 15%, worked out to be just over $41 million. And at that time, the university that, you know, funding that we received was about 20% of our job general operations fund. And that dropped down to 23%. In So, you know, David mentioned, it took us about a decade to get back to that same funding amount, well, that was not keeping up with the rate of inflation. And so, you know, it took us time to catch back up to the same dollar amount we had at the same time, that overall percentage not keeping up with rate of inflation, actually then decreased what our overall percentage of the budget was. So get a little deeper context 1985. And we just kept up with the rate of inflation. Today, Michigan State University would be funded for over $600 billion. And so when you take that into a budget context of, you know, being around 300 million, our versus 600 million, you can see where that has an impact, you've got to make up those revenue towers somewhere for being able to operate in today's you know, inflation adjusted amount.

Russ White 7:55
Yes, that's why Gone are the days like in the late 70s, when I was getting ready to come here, right could work at the Ford plant in the summer and get just about the whole nut for the year. But how many other publicly funded institutions are there in the state of Michigan? And what percent of the state budget to these universities make up in the budget overall?

David Bertram 8:13
Yeah, that's a good question. And 15 is the answer. There's 15, state public universities, there's a number of private institutions as well, that don't receive the same type of funding that MSU and our counterparts would. So usually, it's it's a, you know, you see State University behind their names University of Michigan, and you know, isn't there without the state behind their name. But those 15 institutions are really across the whole state, matter of fact, three are in the Upper Peninsula, and then spread out to the other, the other 12 throughout the Lower Peninsula. And so the percentage of budget is is a kind of a tough answer, it depends on what part of the state budget you're talking about. The state gets about $35 billion a year. Now, I'm going to take this COVID euro, kind of off the table for a second because I don't want to you know that hopefully, this is an anomaly for us in this period right now, but in a routine year would be about 35 billion. A lot of that is what they call pass through dollars. These are dollars that come from the federal government that essentially a state can't really do anything with but to pass it on to to other entities, local governments, health departments, hospitals, etc. And so when you get down to it, it's about 10 billion of that 35 billion the state gets that's discretionary, and all the 15 public institutions 1.2 5 billion per year and in the cycle we're in right now. So that gives you some perspective, it's probably in the area of about 10%, maybe a little less than That out of the discretionary money, not not the full 35. Otherwise, it's about 3%, which isn't isn't that much could be higher.

Russ White 10:12
Guys, we've been touching on this throughout our conversation. But is there more to say about MSU? funding history and recent trends?

David Bertram 10:19
Well, I think there is I mean, it goes back to the earlier comments for us about a student thinking, what money they need to set aside to go to college. And I don't think Michigan State is unique in this way. I think every, we just talked about the 15 public institutions in Michigan, it's a private institutions as well, Jeremy pointed out, we've not maintained the pace of state funding, with inflation. And so just really in since 2018 19, we've been in kind of that holding pattern of flat funding, well, that's not going to get us anywhere, especially as we've seen in the news in the last few weeks, inflation is up very high now. So this, if we don't get a good bump here in the state budget, which they'll have to get finished, at some point in September, October, one is their new fiscal year, I mean, we may not even be able to have a rate, that's an increase above the rate of inflation. So it goes back to the analogy. And then the point that people who went to school 30 years ago had a much different scenario, you could make a lot of your tuition, not maybe not all of it, but a lion's share of it by working a job. That's not the case today. So you see, you know, you see tuition go up, but you also see the everyone's debt load go up. And that

Jeremy Reuter 11:48
that's what makes it really tough. And what I would add on to that is, you know, while we've aimed to keep up with the rate of inflation, that's been a bar and a threshold, we've wanted to, we certainly want to be above and beyond that, and start to recover not only beyond the past decade, but beyond that. So that, you know, we are providing better fiscal opportunity for students when they're coming here and the cost of tuition. But when we look at it in the rest of the budget, historically, here in the state of Michigan, and David talked about the discretionary funds that comes to the state, there's also the state general fund. And if you look at the overall state budget, higher education, he really has been, let's keep up with the rate of inflation, but we're not increasing it. When you look at pretty much every other line item in the state budget over a course of time, they've seen larger increases in comparison to what we've seen in higher education. So we certainly would like to be on par with the rest of the state budget. In the importance in you hit on it earlier, Russ, you know, the graduates from the university here, Michigan State University, we have 276,000 alumni who are living in the state of Michigan, working the state of Michigan, bringing economic returns to the state. And you know, we're part of creating the workforce here in the state. And so investment in not only Michigan State University, but higher education in the state of Michigan is an investment in our state.

David Bertram 13:10
I would I would add that in the last decade, we've been the lowest funded in categories within the state budget. So it's the that percentage we talked about earlier, it just isn't keeping up. And it shows in the dollars, there's a lot of programs in the state that have not received good funding, and are probably making their case to the legislature into the governor. Ours is the strongest case we've been the lowest funded in the last decade. And it but it's this has been a period of downward trend, but the last decade has been very acute.

Russ White 13:48
How does this funding history compared to other education funding in Michigan, or the all overall budget? Is this a higher ed verse k 12 thing,

David Bertram 13:57
you know, we really don't want it to be about higher ed versus k 12, or higher ed versus community colleges, because really, they we all work hand in hand. And quite frankly, we've always said this if, if a student isn't taught Well, at the K 12 level MSU is going to spend a lot of resources and dollars when they arrive, you know, on our campus to get them to where they need to be to graduate to be successful. And as you know, we've had a lot of student success programs in place and we've been ramping up our percentage of students that are graduating, the last thing you want to have is someone spent 1000s of dollars to to not get a degree. So that is part of we're part of the system where we're really part of the system and so are the community colleges. I'm going to just say this, and again, it's not competition, but in the the scale of this K 12 has been funded better and and they did have a nice year this year. The only part of the state budget that's done is the K 12 budget at this point, and they did get they acquired Something that many have been trying to do in the education world for a long time is they filled the gap between the K 12 school districts that were funded at the basement level, and they brought them all up. And that is they now have a ground floor that they're all working from, which is great for K 12. That's going to help us I believe, in the long run in higher ed. But when you look at direct funds, that doesn't help us rate us right now, in higher ed, I will also say this community colleges have been funded, I think, on a similar scale approach, maybe doing a little better than than our four year institutions in the state. But this year, they really got a nice boost out of the Michigan reconnect program, which is a program that allows for free tuition for students that qualify, and it's pretty open qualification. So people who want to come back to to community college can go for free under the Michigan reconnect program. So that's funding that is kind of out of the line item and more programmatic that the community colleges are going to receive not just this year, but for the next few years. So they're kind of in a better position, k 12 is in a better position. And that leaves higher ed, we're still we're still trying to work through it.

Russ White 16:27
Where are we at in the current budget process? And what can you tell us about the current dynamics at play? You mentioned October one is approaching fast David,

David Bertram 16:35
it is October one is the state fiscal year. And so right now, the legislature was close they they have had I'm gonna say had because they had it self imposed for the last two years since July, one deadline to get their budget done. Now, we we just talked about October. One is when their fiscal year begins. But the department's all entities receiving this money, some of them actually start with a July one budget, you're like we do k 12, schools, others, and so not getting that money until October one causes wrinkles for everybody to implement their budgets, especially in a COVID era. So the last couple of years the state has the legislature has tried to get it done by July one. But they've they've they've not done that. So the budget is still not quite finished. As I mentioned a few minutes ago, k 12 budget is completed. That's the only piece of the state budget that is completed at this point. They're going to come back shortly after Labor Day, a couple days after Labor Day is when they're going to get really back into session, the house is in some late August, but they're not going to be tackling the budget until after Labor Day. So those three weeks after Labor Day till the end of September is when this budget will get completed. Otherwise, we'd be headed for a state shutdown after October one. I don't think we really need a state shutdown on top of a pandemic. There's too many services that are needed out there.

Russ White 18:10
We read off in about a declining demographic of college age students in Michigan really around the country, I think in most areas, can the state continue to support all of the 15 public universities you mentioned

David Bertram 18:23
that the state actually is, is doing pretty well right now. This is seems counterintuitive, with businesses struggling and especially small businesses in certain sectors of the economy that are struggling. One of the things that happened about two years ago it was pre pandemic, but it wasn't well known is the way the state of Michigan collects its sales and use tax. internet sales were never really taxed. They were kind of a voluntary tax where when you bought something online, you could pay the tax on an honor system, well, there just wasn't too many people paying it. And so when this now went into place, it is been a robust sales and use tax collection for the state. So what the state has done it really during this time when people are at home more and doing more online shopping instead of retail shopping and in the stores. Their collections have actually blossom because that it wouldn't have been collected necessarily before. Matter of fact, last year, the the projections were above what they were expecting this year alone just in this calendar year. Here. It they're already 1.5 billion above what they were projecting to receive in state revenues. So the dollars are there. And I'm not even talking about federal dollars that will come in dude. To COVID relief. So the American recovery plan and in those types of programs are that's additional, I'm just talking about the state revenue, the revenue is up. So the dollars are there, I think it's a matter of getting a commitment from the state to higher ed. And the legislature for that matter. And, and just to go back for a minute on the state budget piece on, you know, where we stand right now on how much we might get for next fiscal year, which starts October one is, is a still a guessing game, the house has got us flat, the Senate have adopted a 2% increase for higher ed, which we know now will won't likely keep keep with the rate of inflation. And the Senate was trying to put in play a higher increase than the 2%. So the negotiations are still going on there. So we really don't know quite where higher ed will land at this minute.

Russ White 21:00
Well, and David, what are some of the current budget proposals for the upcoming fiscal year?

David Bertram 21:06
Well, looking at it, and that's really it, we were looking at, you know, potentially a 2%, I would hope that's the bottom line, you know, there is a chance that we could just get flat funding. I will say there is some, but expressed concern that MSU has vaccinations put in place. And so there are some within the legislature that are looking at the institutions, which by the way, there are out of the 15 public institutions, six of them have vaccination requirements in order to work or attend class at those institutions. And so we're being scrutinized a little bit, we hope that there is no punitive language or poor funding, you know, reductions that get put into place due to that. So there's a lot of talk about that right now is we're probably two to three weeks away from the state really in earnest getting down to it, it would I mean, down to it as finishing their budget deal. But that's in play as well. So you know, what I would I be thrilled with 2% increase, no, but that might be about where we land.

Jeremy Reuter 22:24
And there is one more wrinkle here, Russ and David probably will want to add on to this, we've talked a lot about percentage increases, you know, percentage of our overall general operations budget, the house this year did come out with a proposal. Typically, the higher education funding, it's a 2%, increase the three, whatever the percent increase, and then it goes through a formula to distribute across the 15 public universities. And so the house has actually proposed for that formula to be revised a bit. And in their terms are radical new proposal for funding. And that would have an impact and all 15 universities getting a different funding amount, based on whatever percentage would be in place. Now, that's still going through the negotiation process across the chambers. And we'll see if that ends up in the final budget. But there is that other radical proposal, if you will, out there as a possibility of redistribution of funding across the state. And I know David might want to add to that, but that is also in play.

David Bertram 23:26
Yeah, that's a good point, Jeremy, and it is radical. The House and Senate are in very different places. Even though they're both under republican control. The house came up with a purse student approach, which you find in K 12. It's not really done anywhere else in the country in that manner. We've tried to explain to the legislature the house, that each institution is very different. It's not fair to compare Michigan State who is a land you know, we're a land grant institution, with heavy research one level one research institution in comparison with Saginaw Valley, or a Ferris State even or, you know, any of the other public 15, Wayne State, Michigan, and Michigan State are three research tier one institutions. So our Carnegie peers, I know this gets deep into classification, but that's how our higher ed formula works in the state and has for about 11 or 12 years now. We kind of compete in this group, but there's about five different classes of Carnegie classes and each of those 15 public institutions fit into our we're in the toughest class to compete with. So it's, the formula doesn't necessarily favor research institutions. So the large, three institutions don't necessarily get favored under the formula but to be quite honest that formula we have is so much better than what the house is trying to do. The house proposal would call for significant cuts to U of M. Wayne State. In the third year Michigan State. If phase this this proposal in over three years, and by the third year, we would actually be losing money from our base not as much as University of Michigan or Wayne State would. There are other institutions of Oakland, for example, would have the biggest wind fall into this proposal, they would increase by 30%. So it's a very strange approach, basing it on just on students and you know, well, X amount would go with each student in there, again, it goes back to each institution being different having a different mission, having a different presence, a different infrastructure. So we would really rather stick to the current formula rather than the house version of the budget.

Russ White 25:57
How can Spartans or higher education supporters be engaged in the budget process, and keep up with what's taking place?

Jeremy Reuter 26:05
So I would jump in first here and talk about that budget reduction we talked in, in 2010, we actually launched a program in response called Spartan advocate, and it's supported by a second program, my Spartan impact, but really, at the end of the day, when we asked for for Spartans out there to do is promote their experience at Michigan State University, what it meant to them, and how it helped them to get to where they're at. And I think the other port point that's important to hit on is, as you mentioned, Russ, when you were getting ready to go here, the cost of tuition, then versus today, and know that over the course of time, the funding for the university has impacted what the cost of of tuition is for students. So my own experience when I graduated here is not the same as when the students who are here today and what they're experiencing, and it all comes back to all the pieces that we were talking about, with the budget and what comes into this state. And so, we ask that Spartans out there join to be a Spartan advocate. And what we do is we simplified the things that we've talked about throughout this podcast, and put it into very easy pieces to read, we'll send an update email to our Spartan advocates, we keep our website updated. I'll share that website here in a moment. And, you know, if there's an opportunity to engage and communicate with the legislature, we'll make that easy for them as well. But ultimately, we want Spartans to communicate their experience. And then on that my Spartan impact website, which is my Spartan impact.msu.edu, and it's EMI, not m y. When you get there, you'll find all kinds of information about our economic returns here in the state of Michigan, we estimate that to be about 5.8 billion, and that's produced from the 276,000 alumni across the state and all 83 counties MSU Extension, which is in all 83 counties. It's from our research base. It's essentially what we've helped to create here in the state of Michigan through our students, but also through our faculty and staff, which we also have an 82 out of 83 counties. And when you visit that website, you'll find a piece there that across the top that says Spartan advocate, you go to that tab, you can sign up to be an advocate, we'll send those updates to the budget process. And we try and minimize how many emails go out and simplify it the best that we can which case you can always find more information on the website and deepen and jump in as deep as you want into the budget process as you'd like. And we then will set up the advocacy process when it's needed, and make that process as simple as possible as well.

David Bertram 28:47
It is it is a great source of data. And Jeremy maintains a lot of this, that goes into it. One of the things I'll add is, while this is a huge source for our Spartan advocates and our Spartan friends out there, across the state in the country in the world, quite frankly, it also serves as a great tool for legislators to understand the impact. So those decision makers we've been talking about, you know, they can see the same data and look at it from their district and see how much of an impact and issue its employees, its investment, making the state of Michigan, of course, being a land grant institution, we have that statewide mission. And so it just works perfectly with that.

Russ White 29:31
And can you share some examples of advocacy work in the past, so listeners know what to expect when asked to engage?

Jeremy Reuter 29:38
Absolutely. So in just even the course of the last six months or so we've engaged in a couple of advocacy advocacy opportunities. When folks are signed up to be advocates, they'll get those updates. And so when the radical house proposal came out, we did ask our advocates to message to their state representative. Many of the concerns that David listed in terms of narrative Each of these 15 institutions operate the same way our missions are different. The number of in State students vary in so express the concerns that we have in regards to that radical proposal and the shifts that that could have in the long term moving forward. And so we send out an email with a link for those folks who go to when they get there, we have talking points ready for them a pre crafted message that we ask them to add their own personal tone, and message to, and then with the click of a button, they're able to send that off. A second one that we did is initially the Senate proposal, when it came out did not match the governor's proposal for increased for higher education. They revised that as they went through the process to match the governor's proposal. And so we asked our advocates to send a message to the Senate, thanking them for increasing their proposal, we certainly want to take advantage of when there's a positive movement are a positive proposal out there to send a very quick and easy thank you message. So again, we send a link, we give the talking points, we ask folks to add on to the message. And then with a click of a button, they're able to send it off. And then the last one, which I think is important, because we've talked a lot about the state budget. But we've engaged more in the last year as well with our congressional delegation. And so there is a national campaign to double the Pell Grant. And so we partnered with the Office of Financial Aid here on campus, and send a message out to students who received the Pell Grant. And what we did is we set up a very easy message for them to be able to send off to their congressional representative supporting increases in the Pell Grant. And so those are folks who are not currently signed up to be advocates. But we saw an opportunity for them to engage with Congress. And so we set up the place the webpage for them to go and have some talking points craft a very personal message on why the Pell Grant helped them as students. And they were able to send that off again, with pretty much a click of a button once they put their personal message in. So we try to make it as simple as possible for folks to engage with their representatives and give them as much information as we can. So that they can make them craft the personal message along with anything that we might provide with them.

David Bertram 32:10
I would add Ross that anybody who is interested, we'd ask them to join us. And the one thing that I will say is this, it's not like a second job, you don't you know, it doesn't take that kind of time commitment.

Jeremy Reuter 32:24
It might be a couple times a year, we would love it to not have to do it. Be nice if we were sending Thank you is only out and those are important to send those messages, but it's a few times a year is what it really amounts to. And we welcome everybody. And we've created some new avenues for this information to not only be emails, David's started recording some videos will certainly use this podcast to share with folks and try and make it as engaging and easy to get the information and quick format as possible. And I mentioned the website before my sparking impact@msu.edu. But to sign up to be an advocate, we also have a shortened link, which is go dot MSU forward slash a dv and that will take you right to the signup sheet.

Russ White 33:10
We've been talking about how and how much Michigan funds it's public universities like our beloved Michigan State University with David Bertram, he's Associate Vice President for state Relations at MSU. And Jeremy ruder, is director of statewide advocacy and gentlemen, is there anything I've got you warmed up anything we haven't touched on or an important message you want to leave or just some final thoughts to leave with our listeners,

David Bertram 33:34
I would just encourage anybody listening, that even if you don't sign up as a Spartan advocate, to engage with your state legislator about higher ed funding and the importance of it and the conversation, we think really needs to flip a little bit there in the past, oh, six, eight years, there's been a trend of people saying, well, do I really need to go to college? Do I need to get a degree, and we really need to change that conversation to be, you need to understand that roughly three quarters of the jobs in that your that are out there are going to require a degree. And while you might have a good paying job for a few years to sustain a career, you do need to have the degree and that hasn't changed. And job providers are still asking for degrees. So it really is in people's best interest to get a degree of the only way to make that affordable is to have the state committed to funding higher education. So it's really that conversation we need to have it needs to be casual. It needs to be in the district at home. They see their legislator in church in the grocery store, walking on the street, you know, the fireworks, whatever it might be. And, you know, those are the types of conversations we need to have not just for MSU but for all our institutions. Michigan.

Jeremy Reuter 35:01
And the only thing I would add to that Russ is, you know, when you're speaking with your representatives and make it as localized as possible, and so not only your personal experience here at Michigan State University, but understand what we're doing in in your backyard across the state, we, between ag bio research, we've got research stations all across the state MSU Extension operates in all 83 counties, really MSU is across the state that is part of our mission in our delivery. And so it goes beyond just your personal experience, potentially here on campus, understand what we're doing in the backyard, and make it as personable as possible because that investment really does go a long way, not only for degree attainment, but for the delivery of extension, our agriculture community across the states, we do play a very wide role and understanding what we what we do as a university here in the state of Michigan is is really important for not only Spartans, but folks who may not affiliate as a Spartan to understand that we are still in your backyard, and we're there and we're helping the community.

Russ White 36:04
Well, David and Jeremy, thank you so much for for sharing this important information with us and again, mi-spartan-impact that's M-I, mI-spartan-impact- dot-msu-dot-edu is a great place to start to get some more information on everything we've talked about. So, appreciate the information and I'm Russ White, this is MSU Today.

Transcribed by https://otter.ai