NMU Faculty and Staff,

This is a brief update to make faculty and staff aware of the State Legislature's higher education funding bill and the upcoming NMU Board of Trustees meeting to discuss tuition and fees on Friday, June 17.

There are some measurable differences in the higher education funding bill than what was proposed earlier in the year. These changes were driven by the Revenue Estimating Conference's May report of significantly lower state revenues being anticipated for fiscal year 2017. Subsequently, the Legislature had to cut $446 million from the 2017 state appropriations bill, which resulted in a $21.2 million decrease in funding for higher education. In February, the Governor had proposed a 4.3% increase in higher education funding ($61.2 million), which would have resulted in a 2.9% increase for Northern ($1.76 million). Now the increase by the Legislature is 2.9% to higher education ($40 million) and 2.6% to NMU ($1.17 million). The Legislature also lowered the tuition restraint cap from 4.8 to 4.2%. The combination of these two factors negatively impacts NMU by about $1 million.

Beyond lowered state appropriations, there are three other factors pressuring our budget for next year and helping to create a shortfall of $3 to $4 million: 1) continued enrollment decrease; 2) higher utility costs; and 3) state and federal mandates that increase labor costs. It's too early to precisely project enrollment for the upcoming year, but predictive factors such as orientation and housing deposits suggest we may be down in the 6% range. This is due to the combination of our recent large graduating classes combined with the past few years' smaller incoming classes and the ski slope-like decrease in the high school graduate demographics (nationally, regionally, statewide and certainly in the U.P.). While we are doing a lot to encourage enrollment growth, these outside forces have considerable impact on our ability to increase enrollment. Unfortunately, the demographics will not improve for several years. However, I'm very pleased of the work being done by so many across campus regarding enrollment efforts. We are making some progress.

The drastic change in utility costs is due mostly to the 30% increase to Marquette Board of Light and Power customers being charged to help build the new energy center. We expect this increase will cost Northern an additional $700,000 to $1 million per year.

The non-contractual labor cost increases are the state-mandated minimum wage hike and the change to the federal Fair Labor Standard Act's (FLSA) overtime law, which combined could cost Northern as much as $300,000 in the 2017 fiscal year.

These are all things that come into play as the NMU Board of Trustees prepares to discuss the 2016-17 budget and tuition and fee rates.The rate decision is a big one and will impact university decision-making and strategic initiatives for the upcoming year and long term. We have been doing a lot of research this past year on different tuition and fee models used by other universities in the state and the region. Interestingly, because Northern has historically been so affordable, none of the tuition restructuring proposals would cause us to move higher than fourth-lowest iamong Michigan's 15 public universities. Northern has been second-most affordable in the state for nearly 20 years and is the most affordable after accounting for NMU financial aid.

In our recently adopted university strategic plan, the campus is challenged to have "the vision and courage to lead transformational change" – something that is difficult to do in budget-stressed periods. However, I believe that both the board and the administration will bring some strategic ideas to the tuition and fees discussion. To learn more, you are welcome to attend the board meeting, which starts at 9:30 a.m. in the Explorer Rooms of the University, or read the Campus Connect story that will recap the meeting.

After tuition has been set, the Strategic Planning and Budgeting Advisory Committee will meet for an in-depth study on the budget situation. I will look to this group, which has broad cross-campus representation, as well as others, to help consider possible actions.

The budget situation will also need to be a factor of consideration in the unit strategic plans – those for individual divisions, colleges, schools, departments, offices and centers – our next step in overall campus strategic planning. As we move into unit strategic planning, I hope you will remember that in all challenges lies opportunity. The budget deficit and ongoing battle to improve enrollment are challenges. However, in the past year I've seen a lot of outstanding transformational thinking and the implementation of some intriguing initiatives that have potential to positively impact the health, vitality and longevity of our university. I don't lose sight of that, nor should you.

Fritz Erickson, President