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Tech Senate hears financial update

November 29, 2012
By STEPHEN ANDERSON - DMG writer ( , The Daily Mining Gazette

HOUGHTON - Michigan Technological University switched to Blue Cross Blue Shield for its health insurance vendor in the face of rising health care costs, but according to Michael Mullins, health care is not the primary cause of concern in the university budget.

Mullins, chair of the University Senate Finance Committee, gave a presentation to the Senate Wednesday night, outlining several financial red flags and several possible solutions.

"Health care is not what's causing us to bust our budget. It's not what's driving Michigan Tech into a financial bind," he said during his presentation. "We actually may see a net decrease for next year."

Article Photos

Stephen Anderson/Daily Mining Gazette
Michigan Technological University Senate Finance Committee Chair Mike Mullins delivers a presentation giving an overview of Michigan Tech’s financial situation during Wednesday’s Senate meeting in the Electrical Energy Resource Center.

According to BCBS, medical benefit claims paid by Tech are projected to fall from almost $16 million to $14,500,000. Claims, adjusted for the Consumer Price Index, have grown 25 percent since 2006, but only 5 percent since 2008, and "the vast majority of the actual increases to health care have been paid by you and I," Mullins said. "The university has not been absorbing this."

Mullins noted that total compensation and benefits per instructor have fallen 1 percent in actual dollars since 2006, while unrestricted current fund expenditures increased 41 percent (23 percent CPI adjusted) over the same period.

"To say the reason our budget shortfall this year is because we have unexpected $1 million or $1.5 million in health care benefits when we have expenditures which increased $58 million over the same period is ludicrous," he said.

He also raised serious concerns about the rapid rate of increase in undergraduate tuition, matched by an equally concerning slow rate of increase in graduate tuition.

According to Tech's audited financial statement, undergraduate in-state tuition went up 3.9 percent this year (advertised as the lowest tuition increase in eight years, but only 0.1 percent under the cap set by the state for universities to receive tuition restraint funding). If extrapolated at an average rate of increase over the past five years, tuition would be $29,500 by 2023-24, and according to the National Center for Educational Statistics, Michigan Tech's $15,024 annual net price to undergraduate students is the highest in Michigan among public universities.

On the other side of the coin, Tech's $774 non-resident cost per credit for graduate students is much less than the $1,100/credit average at peer institutions.

"One of the ironic things ... is that our current graduate tuition and fees for two semesters is less than our in-state undergraduates and it's far less than our out-of-state undergraduates. In fact we are kind of the low-cost provider in the United States for out-of-state graduation education," Mullins said. "To me this signals a danger warning when we talk about plans in 2035 that we're going to go to 3,000 graduate students who we're grossly, in my opinion, undercharging. I don't think there's a financial argument you can make that that's a smart thing to do business-wise."

According to the university's "Vision for 2035: A Premier Technological University of International Stature," Michigan Tech wants to have 1,000 Ph.D. and 2,000 master's students by that year.

"If we charge the comparable rate of our peers, $1,100 per credit for non-resident students, you'd raise about $5 million for Michigan Tech," Mullins noted.

He also said the university has added 1 million square feet in new buildings over the past 20 years without adding more students and only adding about 3 percent more faculty and 5 to 6 percent more staff. Some new buildings will theoretically be paid off by their own revenue streams (Hillside Place residence facility through rent, Great Lakes Research Center through research revenues).

The university's total debt has also increased at a rate of $7 million per year, and debt outstanding as of June 30 is $84 million, with combined principal and interest of $144 million.

In Mullins' slideshow, which can be found at the Senate website (, he pointed out "lots of options, but no easy solutions" to fix the situation, including further undergraduate tuition increases, reduction in undergraduate tuition discounting, matching market prices for graduate education, adjusting employee compensation, restricting new debt and/or refinancing current debt and re-evaluating academic programs.

In addition to Mullins' presentation on the Senate website, the university's "Budget and Performance Transparency Reporting" can be found on the bottom right of Tech's homepage at

In other business Wednesday, the Senate:

introduced a tobacco-free campus referendum, which will allow all Senate constituents to vote to 1) maintain the current Senate policy: No smoking in campus buildings, 2) extend the current Senate policy to disallow all tobacco use in buildings and within a certain distance from buildings (e.g., 50 feet) or 3) further extend the policy by banning tobacco use on all Michigan Tech property: A tobacco-free campus.

"If the combination of one and two wins out, that means people don't want a tobacco-free campus, and if three wins out it'll be pretty obvious that that's what's wanted," Senate president William Bulleit said.

unanimously approved a proposal for an undergraduate certificate in Chinese Language and Area Study.

unanimously approved changing the "Clinical Laboratory Science" bachelor's degree name to "Medical Laboratory Science."

unanimously approved a mid-term grade reporting proposal that would move reporting back from week six to week seven now that the last day to drop a course has been moved from week eight to week 10.

introduced a proposal for a spin-off from the "B.S. in Management" to a "B.S. in Management with a Concentration in Supply Chain and Operations Management."



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