Feature: How Michigan State is Shaping the Future

Facing up to the faltering economy and declining state support, MSU is trying to realign itself to the new economic realities in the most efficient and effective manner. Input from alumni is welcome.

Just five years ago, as MSU celebrated its Sesquicentennial, everything seemed like smooth sailing.  No big waves were impeding the journey.  

Indeed, five years ago, the campus was responding enthusiastically to president Lou Ann K. Simon’s “Boldness By Design” mandate, new collaborations were forming in the new bio-medical physical sciences complex, and the horizon looked breathtaking—a new telescope venture opened in Chile, plans for expanding medical education were unveiled, and MSU verged on the cusp of a breakthrough in the study of rare isotopes.  Alumni and friends showed their confidence, helping MSU’s capital campaign surpass $1 billion for the first time in history.

But there were undercurrents flowing. A national economic downturn neared depression proportions, especially in Michigan (see Charles Ballard’s “The Economic Future of Michigan,” Summer 2007), where the support for higher education has plunged in four of the past five years. In 2008-09, MSU’s state appropriation was only 31.8 percent of the general fund, down from 51.5 percent a decade ago. There is no clear indication that the state’s budget situation will reverse anytime soon and MSU cannot simply raise tuition to make up for its general fund shortage, estimated at around 4-6 percent a year. 

Can MSU sustain its momentum the face of these new fiscal realities?  The answer is yes.

Indeed, MSU successes are continuing in a big way—the $550 million Facility for Rare Isotope Beams (FRIB), a $25 million National Science Foundation BEACON Center for the study of evolution, a partnership with IBM that will bring new jobs to Michigan, and exciting plans for a new addition to the Plant and Soil Sciences Building and for a new world-class art museum.

These achievements have occurred even as the new fiscal realities present a major challenge.  Indeed, the manner in which MSU has faced the problem has received accolades from media observers.  A comprehensive, open process has been established where input from all stakeholders—including alumni—is welcome.  “Shaping The Future,” as the effort is christened, seeks to realign the university’s assets on all fronts so that it can perform better and more efficiently in this new environment.  And in the process, MSU wants to ensure  to better serve future needs, always keeping in mind the time-honored goals of access along with quality education, research and outreach.

“Shaping the Future is positioning the university to be competitive in the 21^st century world even when our resources are so constrained,” explains President Simon in some recent comments on the challenges and opportunities the university faces. “We need to maintain a terrific undergraduate experience and ensure that graduate and undergraduate education emphasize interdisciplinary learning. We work to instill in our students the land-grant spirit so that they are change agents after they graduate, entrepreneurial in their thinking. We produce students who are immediately ready to be successful in the job market. Whether you are a family, university, government, or multinational company, you have to deal with financial realities, but at the same time we have to create value both now and in the future.

“We’ve taken both the expected and usual measures to managing costs—go through expenditures, consolidate services, look at purchasing—to taking steps that are much more in the news, like working toward changes to health care benefits (while still ensuring quality health care that includes prevention) and looking at post-retirement benefits, both of which will achieve downstream savings. We’ve pursued being green, not just because it’s the right thing to do but because it also saves money. Lessening our electricity usage has extended the life of our power plant, something that will cost tens of millions of dollars to replace. We’ve reviewed programs and proposed a number for elimination so that we leave room to invest in those that are critically important to MSU’s future and to supporting competitiveness. We’re taking a look at the way we serve students in the residence halls.

“What’s important is that we are taking a look at everything, not simply from a cost cutting or containment standpoint, but more importantly from the perspective of how all of the changes we make accumulate to benefit the university, our students, and our stakeholders, to ensure excellence and value in the future. It’s kind of a punctuated evolution.”

This comprehensive approach has been well documented in the Web site shapingthefuture.msu.edu.  Alumni are welcome to read all the steps taken, including a statement of the principles guiding decisions, and also to offer their advice (just click on the “Your Input” link).

As President Simon has stated, MSU is leaving no stone unturned in this comprehensive re-alignment process.  It is affecting everything from the residential housing system to energy usage on campus, from the curricula offered by academic units to health care for students and employees.  University Advancement, which is charged with expanding private support, has been re-structured to operate more efficiently while seeking greater alumni engagement. 

“The fiscal realities we confront demand bold thinking,” explains Robert Groves, vice president for university advancement.  “MSU has undertaken a process that will permanently remove 15 to 20 percent from our general fund budget over the next several years. Quite simply, we will reduce our budgets dramatically in some areas as we build a new model to meet a reduced level of state funding. Our goal is to do this while maintaining or improving the quality (alumni and friends) have come to expect from MSU.”  

MSU is no stranger to challenging times. In the early 1980s, MSU had to weather a substantial budget reduction, where many programs were re-organized or downsized, often over vocal objections. Previously, those in charge of the university had to weather assorted crises. Even the university’s very founding was accompanied by factional disputes over control of the institution. 

The current global economic crisis has emerged against a recent backdrop of relative prosperity in Michigan, both in its economy and in its support for higher education. In fact, between 1940 and 1970 the economy boomed as the state population increased by nearly 70 percent while annual per capita income hovered at about 10 percent above the national average.  However, the recent decline of manufacturing—particularly the automobile industry—has exacerbated the current problem.

MSU’s work to reshape the future has drawn favorable praise from columnists around the state.  In September, Daniel Howes, columnist for the Detroit News, wrote a column titled “MSU Sets Example in How to Lead.”

“Michigan State is approaching the most serious financial crisis in decades in a refreshingly different way—comprehensively, collaboratively, publicly and head-on,” he wrote.

“There’s something happening in East Lansing,” he added in the column. “It’s responsible, innovative and forward-looking. It sets an example. In the spirit of a public university, it is teaching reality, no matter how contentious cutting the equivalent of 600 full-time positions from a work force of 9,000 will be.”

Similarly, the Grand Rapids Press opined in its editorial:

“Michigan State University President Lou Anna Simon deserves credit for her new initiative to sculpt—that’s her word—the school into the best possible shape, financially and competitively. Her plan assumes a 4 percent budget cut this year and a 6 percent cut next year, and conveys a clear set of efficiency, success and accountability standards. She has kicked off a campus-wide discussion about how to make that happen. More state universities should follow her lead.”

Indeed, cuts have inevitably taken place—the Shaping the Future Web site lists a number of academic areas in which reorganization is being considered.  This has resulted in some public criticism, especially by those associated with specific academic programs that may be cut. But no one has questioned the necessity for making changes. Indeed, many have praised the fairness, openness and transparency of the the process.

Groves prefers to put the focus on what MSU stakeholders can do to make up for the decline in state support.  In a recent letter to donors, Groves concluded:

“Your support of MSU has never been more vital. Though the times ahead may still be challenging for our state and nation, with your help, MSU will continue to advance knowledge and transform lives, at home and across the globe, and remain one of the premiere research universities in the world.”

Among other initiatives, Groves has made an effort to leverage $7 million of a recent anonymous gift to MSU in order to generate $21 million toward scholarship funds (see p.  , “Spartan Scholarship Challenge Building Momentum”). Already many alumni, including alumni regional clubs, have stepped up to the plate to support the scholarship challenge.

Scott Westerman, associate vice president for alumni relations, believes that alumni can help by volunteering their expertise and their input as the process unfolds.

“Alumni know Michigan State as well as any group, if not better,” says Westerman.  “I strongly encourage all alumni and friends to visit our Shaping the Future Web site, to familiarize themselves with the issues, and to help us reset our priorities. Alumni are well attuned to where the university should head to tackle future problems. Every little bit, every idea, could be helpful.”

So far the Shaping the Future process has seen some substantial changes, especially in the area of academics. Provost Kim Wilcox, in concert with deans, department chairs, and the faculty governance process, is working through the process of considering program closures and departmental and program reorganizations.  The Shaping the Future Web site has a listing of proposed academic changes that is kept updated. 

Fred Poston, vice president for finance and operations, is mounting efforts to curtail health care costs and campus energy usage—both major expenditures that are rising at a rate higher than inflation.  Health care costs has risen 149 percent since 1998, while in the last decade, energy costs at MSU have jumped 82 percent. A massive conservation effort has been launched on campus (see cover story, “We’ve Always Been Green!,” Fall 2009). MSU is also figuring out a more cost-effective way to deliver health care to employees and students, one that puts more emphasis on preventive measures.

Many other major initiatives to alleviate the budget crunch have been launched.  The university housing and food division has undergone a major re-organization (see cover story, “Residence Halls—A Key Part of the Total MSU Experience,” Summer 2009).  Efforts are also underway to increase the availability of student scholarships and loans.  Yet another effort is to augment opportunities for student employment. 

On the expenditures side, over the last six years MSU has had reductions of more than $70 million and has made strides in gaining efficiencies while maintaining quality:

• Fifteen undergraduate degree programs, including anatomy and urban affairs, have been discontinued, as have graduate-level programs in audiology and counseling psychology.

• The university has seen more than $19 million in energy savings annually by the use of more-efficient boilers, central controls, and more-innovative operation.

• Other energy savings have been realized through use of alternative fuels in the power plant, reduction of energy use through changes in campus culture, and participation in a pilot program to schedule evening classes and sanctioned events more efficiently.

• Faculty productivity has increased, with credit hours taught per faculty member up 9.3 percent over the last six years and grant dollars per tenure-system faculty member up 63 percent over the last 10 years. MSU administrators also are setting examples by giving back. For example, President Simon did not accept an increase in compensation for 2009.  Moreover, she and Dr. Roy J. Simon are members of MSU’s Wharton Society.

Meanwhile, many MSU deans and vice presidents are giving back their annual salary increases to the student scholarship of their choice (see p. , “Spartan Scholarship Challenge Gaining Momentum”).

Earlier this year, for the first time in history, the MSU Board of Trustees adopted two years’ worth of budget-planning guidelines, thus making it easier for students and families, as well as the university, to plan for perhaps the toughest economic times of this generation.

Although tuition was raised—5.2 percent for 2009–10 and 4.9 percent for 2010–11—setting tuition rates for two years instead of one gives students and their families more time to prepare.

“These are very difficult economic times for all of us—students, families, the state, and MSU,” says Simon. “By taking the step of establishing two years of budget guidelines, we’re doing our best to provide as much information as possible over a longer period of time to allow students and their families, as well as MSU, to navigate uncharted waters.”

And MSU is maintaining its commitment to providing opportunities for qualified students by raising the amount of financial aid available to students. Nationally recognized for its financial aid innovations, the MSU board voted to increase financial aid by 17 percent for this year and 13 percent for 2010–11, bringing the portion of MSU’s general fund dedicated to financial aid to more than $100 million by 2010–11.

Nearly three-quarters of MSU students rely on some form of financial aid to cover some costs. Last fall, MSU began offering the Disabled Veterans Assistance Program, which covers all education-related costs for disabled vets, including tuition, fees, room and board, books, and incidentals.

“It’s difficult to ask our students and their families to pay more,” says Simon, who has noted that if state support had increased at the national rate for 10 years, MSU would possess an additional $132 million in funding, sufficient to reduce tuition by approximately 26 percent. “However, the quality of a student’s education—and the value of an MSU degree—depend on maintaining the momentum that has made MSU one of the top universities in the world.”