U-M President Praised as 'Rock Star' for Cutting Costs, Real Numbers Tell a Different Story

In a column in which he referred to University of Michigan President Mary Sue Coleman as a "rock star," Center For Michigan founder Phil Power said U-M has cut its general fund budget.

Power, a former Democrat U-M regent, wrote, "Year by year for more than a decade, the university has been gradually, remorselessly tightening its belt. Over the period, the U of M has taken $235 million in costs out of its general fund budget by reducing expenditures between 1.5 percent and 2.25 percent per year."

Technically, the university may have chipped away expenses worth $235 million in some areas. However, under Coleman’s guidance spending increases in other areas have more than made up for those savings, with the U-M general fund budget and spending rising 44 percent, from $1.1 billion in Coleman’s first year in 2002-03 to $1.58 billion budgeted in 2011-12.

Power didn’t respond to an email seeking comment on his claim.

Charles Owens, Michigan president of the National Federation of Independent Business, said he has seen Michigan’s public schools say they have cut their budget despite an overall increase in spending.

"We've seen the same kinds of claims by public schools and lawmakers that are looking for justifications to increase taxes to sustain spending levels," Owens said. "A reduction in a net increase is not a budget cut. It's math that doesn't work in the real world."

Mackinac Center Education Policy Director Michael Van Beek has compared such budgeting practices to a family that cuts its cable bill from $100 to $50 a month and then buys a $1,000 plasma screen TV and claims to have reduced their home entertainment budget by $50. By those accounting practices, Van Beek says even the simplest reductions mean budget cuts no matter how much overall spending increases.

U-M has made significant savings in employees' benefits under Coleman. U-M says it has saved $400 million in employees' benefits costs since 2003. But U-M has spent more in other areas, such as faculty compensation, which rose from $122,943 on average per full-time job in 2005-06 to $141,763 in 2009-10, according to a House Fiscal Agency Report.

U-M says that one-third of all faculty salaries are paid for outside of the general fund by donor gifts, endowment proceeds and research grants, which saves taxpayer dollars.

"Universities spend money hand over fist every year and the University of Michigan is no different," said James Hohman, a fiscal policy analyst for the Mackinac Center. "They may have reduced some of their expenditures. But they are spending more in other areas, year after year."