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 2023 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 was estimated as the state government had not finalized its budget for FY 2023 prior to U-M’s budget adoption.


Where the General Fund money goes

UM-Ann Arbor FY 2023 budget


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

NOTE:  The amount of state support was estimated as the state government had not finalized its budget for FY 2023 prior to U-M’s budget adoption.


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% of the General Fund budget in 2023.
  • U-M experienced significant baseline declines in state support in fiscal years 2004-2006, and again in fiscal years 2010 and 2011.
  • Uncertainty around state support has increased in the past several years, with some FY 2020 funding being exchanged for more restrictive federal funds, and one-time and supplemental funds appropriated in FY 2021 and FY 2022 instead of base operating increases.
  • The estimated FY 2023 state operating appropriation of $332.6 million is 3% more than last year’s appropriation. The state appropriation for the Ann Arbor campus peaked at $363.6 million in FY 2003. When compared to the real costs of providing education, the FY 2023 appropriation is equivalent to the level of state support received in 1963 after adjusting for inflation.
  • If U-M’s FY 2003 appropriation had increased at the rate of the Detroit area Consumer Price Index, U-M would receive over $200 million more in state support than the current FY 2023 level.

NOTE:  The amount of state support was estimated as the state government had not finalized its budget for FY 2023 prior to U-M’s budget adoption.


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 65 percent over the past 10 years.
  • For  FY 2023, U-M is facing a $52 million increase in mandatory costs, including compliance, health benefits, utilities, insurance, inflation increases on supplies, services, and equipment; and necessary salary increases for bargained-for employees.
  • 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 the university continues to apply the lessons learned to identify areas where ongoing savings can be achieved. 

The FY 2023 budget was developed to provide a balanced budget in a challenging environment, prioritizing investments in the faculty, staff, and students who jointly pursue and realize the ongoing excellence the university offers. This budget provides the resources needed to maintain and enhance U-M’s excellence while fostering a thriving and healthy environment for all members of the university community.


How U-M is containing costs

Since 2004, U-M has achieved more than $521 million of savings in the General Funds. For comparison, this figure is significantly greater than the entire FY 2023 budget amount for state operating support of $333 million. 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: $147 million.
  • Direct units to annually identify internal cuts in order to reallocate funding toward higher priorities and new initiatives. Recurrent General Fund savings: $251 million.
  • Use philanthropy and endowment distributions to pay for activities otherwise paid for from general funds. Recurrent General Fund savings: $91 million.
  • Develop new alternative revenue sources such as digital learning platforms and professional and continuing education/certification. Recurrent General Fund savings: $32 million.

Keeping U-M affordable: financial aid

  • The university has made a strong institutional 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 (2013-2023) for the undergraduate financial aid budget is 10.4% (compared to 2.6% for in-state tuition, 3.5% for out-of-state tuition, and 2.3% for Detroit CPI).
  • The undergraduate financial aid budget grew by 5% this year, compared to 3.4% and 3.9% percent for resident and non-resident undergraduate tuition, respectively.
  • In 2020-21, nearly $1.2 billion in aid was paid to U-M students, with nearly $472 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).

 

Fiscal Year Budget (in Millions) Change
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%
FY 2022-23 $269.7 5.0%
  • 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 more than 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 $5.2 billion in endowment distributions to support operations.
  • U-M’s endowment is the tenth largest among all universities in the country, and U-M ranks 86th 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