The University of Michigan, an encyclopedic survey ... Wilfred B. Shaw, editor.
University of Michigan.

State Appropriations for General Operations

In 1940 state appropriations for general operations were made biennially, and biennial appropriation periods continued through 1945-47. Top limits were put on these appropriations: $4,804,000 annually for the 1941-43 and 1943-45 bienniums, and $5,867,451 annually for the 1945-47 biennium. An additional appropriation in the amount of $1,250,000 was authorized for current operations in the 1946-47 year.

Also, during the war years, additional appropriations for "state and national defense" were made: $200,000 in 1942-43, $520,000 in 1943-44, and $133,333 in 1944-45.

Beginning in 1947-48 appropriations were made annually from state general funds. For the next ten years, these increased regularly as shown in the following table: Page  17

Year Annual Appropriation Increase Percent
1947-48 $ 8,670,000 21.8
1948-49 9,750,000 12.5
1949-50 11,436,315 17.3
1950-51 13,156,822 15.0
1951-52 14,845,000 12.8
1952-53 16,936,650 14.1
1953-54 18,796,000 11.0
1954-55 21,052,996 12.0
1955-56 24,383,030 15.8
1956-57 27,500,000 12.8
1957-58 30,250,000 10.0
1958-59 30,000,000 (00.8)

Economic conditions deteriorated in Michigan during 1957-58. This economic situation resulted in a reduction in state appropriations for operations in 1958-59, compared with the previous year, which caused the adoption of an austerity budget. Also in 1958-59, beginning in December, the state's cash position was so low that monthly payments of authorized state appropriations were suspended for several months. This resulted in the University borrowing from banks to meet payrolls. It was also necessary to defer vendor payments, reduce inventory levels, and take other measures to conserve cash. These suspensions were made up by the end of the year.

Since 1958-59 state appropriations for operations each year have never fallen below the previous year's level and have usually provided increases, albeit at levels insufficient to maintain the former ratios of General Fund support. Increases in student fee revenues have been the sources for making a minimal budget possible in recent years. State appropriations since 1958-59 are reported as follows: Page  18

Year Annual Appropriation Increase Percent
1959-60 $ 33,367,275 11.2
1960-61 35,228,953 5.6
1961-62 35,376,647 .4
1962-63 36,667,157 3.6
1963-64 38,225,255 4.2
1964-65 44,086,139 15.3
1965-66 51,255,266 16.3
1966-67 58,094,886 13.3
1967-68 59,160,998 1.8
1968-69 63,272,392 6.9
1969-70 67,317,141 6.4
1970-71 72,632,463 7.9
1971-72 76,573,280 5.4
1972-73 87,680,000 14.5
1973-74 97,778,100 11.5
1974-75 106,603,005 9.0
1975-76 109,848,476 3.0
1976-77 112,495,597 2.4

Another financial crisis of sorts in state funds occurred in 1976. The state's solution for this was a change in its fiscal year. Appropriations were authorized for a short 3-month fiscal period, July 1 to September 30, 1976, with no increase in the monthly payment levels from the 1975-76 fiscal year. The fiscal period of October 1 to September 30 was adopted by the state in 1976-77. The University has not changed its July to June fiscal year.

The legislative fiscal agencies adopted a concept of formula-funding of higher education in 1975. They invited representatives from higher education and the Governor's Office to form a task force with them to develop a procedure for formula-funding. The task force made its first report in 1976. It became known as an "Investment Needs Model" at this time because it was apparent the resulting figures were much larger than could be actually funded by the state. The Governor's Office of Management and Budget utilized parts of the formula report along with some concepts of its own in making its recommended budget for 1977-78. The legislature used its own interpretation of the formula report for the actual 1977-78 appropriations. The formula is extremely complex and will need considerable change and refinement before Page  19it becomes an acceptable funding mechanism for all concerned.