General Fund Budget Snapshot

An overview of U-M’s operating budget

U-M’s operating budget has four major sources of funding.

General Fund money come from student tuition and fees, state support and indirect cost of sponsored research. It pays for teaching, student services, facilities and administrative support.

Auxiliary Funds come from self-supporting units that “pay their own way” and receive no taxpayer or tuition support. These include Michigan Medicine, Intercollegiate Athletics, Student Housing and Student Publications.

Expendable Restricted Funds are from providers who designate how their money is spent. Money comes from research grants and contracts, endowment payout and gifts. It pays for scholarships and fellowships; salaries, benefits and research support for some faculty; and research, programs and academic centers.

Designated Funds come from fees charged for and spent on experiential learning, programs, conferences, performance venues, and executive and continuing education.


Where the General Fund money comes from

UM-Ann Arbor FY 2022 budget

General Fund money comes from student tuition and fees, state support and indirect cost recovery on sponsored research activity. It pays for teaching, academic services, academic and research facilities utilities, operations, and maintenance and administrative support.

The General Fund does not pay for intercollegiate athletics, housing or Michigan Medicine.

NOTE: The amount of state support is estimated as the state government has not yet approved its budget for FY 2022.


Where the General Fund money goes

UM-Ann Arbor FY 2022 budget


Please select a slice of the pie for a breakdown of budgeted expenses.

NOTE: The amount of state support is estimated as the state government has not yet approved its budget for FY 2022.


Declining state support drives up tuition

  • In 1960, state support accounted for 78 percent of the UM-Ann Arbor General Fund budget. It has dropped to 13 percent of the General Fund budget in 2022.
  • U-M experienced significant baseline declines in state support in fiscal years 2004-2006, and again in fiscal years 2010 and 2011.
  • The estimated FY 2022 state operating appropriation of $322.9M is less than last year’s budget estimate, and is set at the actual amount received from the state last year, with no expected increase.  This level is nearly the same amount received in FY 2008.  However, when compared to the real costs of providing education, the FY 2022 appropriation is equivalent to the level of state support received in 1965 after adjusting for inflation.
  • If U-M’s FY 2003 appropriation, which just preceded the recent era of large reductions, had increased at the rate of the Detroit area Consumer Price Index, U-M would receive approximately $169 million more in state support than the current FY 2022 level.

NOTE: The amount of state support is estimated as the state government has not yet approved its budget for FY 2022.


Why are costs rising?

  • 64 percent of U-M’s total costs are for labor- to hire and retain outstanding faculty and staff.
  • General Fund health care costs have increased 69 percent over the past 10 years.
  • For  FY 2022, U-M is facing a $20.3M increase in mandatory costs, including compliance, health benefits, utilities, insurance, and necessary salary increases for bargained-for employees and faculty promotions.
  • U-M has long practice in mitigating budget pressures through a focus on cost containment. As part of the annual budget process, units across campus examine their operations each year to identify lower-priority activities, programs, and expenditures they can eliminate, perform more efficiently, or support through alternative funding. Just as importantly, the pandemic pushed U-M to find new ways of doing business, and will apply the lessons learned during the period of constrained spending to identify areas where ongoing savings can be achieved.

The FY 2022 budget was developed to provide a balanced budget as the university emerges from one of the most challenging periods in its history and looks forward to an academic year more like its pre-pandemic operations. This budget provides the resources needed to preserve U-M’s excellence while fostering a supportive, healthy and thriving environment for the U-M community.


How U-M is containing costs

Since 2004, U-M has achieved more than $405 million of savings in the General Funds.  Savings have resulted from U-M’s efforts to:

  • Implement strategic, aggressive campuswide initiatives. U-M has been an early adopter of such efforts such as efficient energy usage, IT rationalization, benefits cost sharing, prescription drug savings, facilities maintenance improvements, and strategic sourcing and procurement. U-M also has centralized transactional administrative work and business processes to gain efficiency. Recurrent General Fund savings: $491 million.
  • Direct units to annually identify internal cuts in order to reallocate funding toward higher priorities and new initiatives. Recurrent General Fund savings: $229 million.
  • Use philanthropy and endowment distributions to pay for activities otherwise paid for from general funds. Recurrent General Fund savings: $85 million.
  • Develop new alternative revenue sources such as digital learning platforms and professional and continuing education/certification. Recurrent General Fund savings: $30 million.

Keeping U-M affordable: financial aid

  • The university has made a strong financial commitment to affordability through its long-standing policy of meeting the full financial need of all undergraduate students from Michigan.
  • The budget for centrally awarded, undergraduate financial aid has grown much more quickly in percentage terms than tuition and has well outpaced inflation.
  • The 10-year average annual growth rate (2012-2022) for the undergraduate financial aid budget is 11.0 percent (compared to 2.5 for in-state tuition, 3.5 percent for out-of-state tuition, and 1.4 percent for Detroit CPI).
  • The undergraduate financial aid budget grew by 6.4 percent this year, compared to 1.4 percent and 1.8 percent for resident and non-resident undergraduate tuition, respectively.
  • In 2019-20, nearly $1.2 billion in aid was paid to U-M students, with nearly $493 million of this aid going to undergraduate students. This includes all types of aid (grants, scholarships, loans and work-study jobs) by all known funding sources (Office of Financial Aid, Rackham, schools/colleges, federal and state programs).
  • We have achieved double-digit percentage increases in the centrally awarded undergraduate financial aid budget in eight of the last 10 years:
Fiscal Year Budget (in Millions) Change
FY 2011-12 $ 90.9 11.6%
FY 2012-13 $ 100.1 10.1%
FY 2013-14 $ 113.8 13.7%
FY 2014-15 $ 133.3 17.2%
FY 2015-16 $ 144.1 8.1%
FY 2016-17 $ 159.7 10.8%
FY 2017-18 $ 176.7 10.6%
FY 2018-19 $ 205.6 16.3%
FY 2019-20 $ 228.6 11.2%
FY 2020-21 $ 241.4 5.6%
FY 2021-22 $ 256.9 6.4%
  • The majority of this aid is need-based.
  • There are several other sources of institutional undergraduate financial aid: non-General Fund aid provided centrally, and school/college aid (both General Fund and non-General Fund).

The U-M endowment


U-M’s endowment is a collection of about 12,000 separate funds. Each fund must be spent as specified by the donor.

  • More than one-fifth of the total endowment is earmarked for student scholarships and fellowships.
  • Approximately one-fifth of the endowment was given for Michigan Medicine and can only be used to support research, patient care or other purposes identified by donors or sponsors.
  • In the past 20 years, U-M’s long-term investment strategy and spending policies generated $5 billion in endowment distributions to support operations.
  • U-M’s endowment is the ninth largest among all universities in the country, and U-M ranks 92nd in endowment per student, much lower than private peer universities, indicating our endowment supports learning for a much larger body of students.

Resources

Budget and cost cutting website

Questions and answers on tuition

Questions and answers on the endowment

Cost of attendance calculator

U-M Annual Report and Financial Statements

Michigan Almanac