On March 2, 2011, U-M president Mary Sue Coleman provided testimony to the House and Senate Higher Education Appropriation Subcommittees about the state economy, budget cuts, and the university’s role in both. Below is an excerpt from that testimony. If you’d like to read the full testimony, you can find it here. Also available is The Michigan Model: financial strategy and cost control web page.

We all know that strong universities are essential to our state’s future in the national and global economies.At the University of Michigan, we are committed to Michigan families, Michigan businesses and Michigan communities.Higher education, with all of its contributions to society, is how Michigan will reclaim its prominence.We know a University of Michigan education makes a difference. Our survey data of graduates tell us alumni are extremely satisfied with their education and that U-M prepared them well for their careers.By extremely satisfied, I mean more than 85 percent of alumni give U-M high marks. Whether they graduated recently or a dozen years ago, alumni say their undergraduate experience helped improve their intellectual skills, particularly critical thinking, acquiring new skills on their own, the ability to judge the value of information, and applying knowledge from their academic major. These are the skills required for success in the 21st century economy.U-M alumni also report high rates of employment, in the fields for which they trained, with more living and working in Michigan than in any other state.To further underscore their satisfaction, more than 100,000 alumni support the University every year with their financial resources.This documented satisfaction is what drives demand for a U-M education. This past year, we received some 32,000 applications for 6,000 openings in the freshman class. It’s clear that U-M is the first choice among an increasing number of applicants and their families, who recognize that Michigan is a great value, and a uniquely wise investment in their future. This demand is equally strong for students seeking graduate and professional degrees.The bottom line is that our model is strong, academically and fiscally.Our work is impressive and extensive. If we did not provide this expanse of education, research and patient care, state legislators should be concerned. However, given our mission, these activities, while expensive, are entirely appropriate to the University’s size and strengths. They enhance the educational experience of our students and, ultimately, benefit the people of Michigan.

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Michigan residents have supported the University of Michigan for nearly 200 years, which is a remarkable partnership. Throughout the decades, citizens have given us their resources and, more importantly, their trust. Your predecessors in the Legislature laid a foundation of support that has served our state well for nearly two centuries.This is not the first time our state has faced difficult economic times. We can all point to challenging eras of dwindling resources. And yet generation after generation, our state’s leaders and citizens have supported the University of Michigan. The University of Michigan is a treasured public asset, and my job as president is to ensure its future for the next 200 years. I will not allow its value to diminish under my leadership.Every day, we honor the public’s longstanding investment by attracting talented students and faculty to Michigan, as well as watching the bottom line to ensure that taxpayers receive a strong return on their dollars. We have developed what has become known throughout American higher education as the Michigan Model. We have shown great discipline in our fiscal practices, resulting in a relative stability that has softened the economic blows being felt elsewhere in higher education. And we always place the academic mission above anything else.Facing diminished state support, we have been confronting the realities of the state’s economy for a number of years. We have not stood still. Over a six-year period ending in 2009, we reduced our general fund spending by $135 million. We have been doing everything, from reducing how many flowers we plant and re-negotiating contracts with suppliers, to streamlining information technology practices and making tough choices about retirement benefits.We are on a more intensive track to reallocate another $100 million by 2012, and our progress is good. We will not stop then, because there is more work to do. We know that we must identify another $120 million in savings by 2017.

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Let me state very clearly: When we look to reduce costs, it is always with an eye on our academic mission. We do everything possible to protect the academic excellence of the institution, because it is the very foundation of the university and what attracts our students and faculty. Our academic excellence is what makes us a strong, respected and popular institution for students, faculty and staff.When a student applies to the University of Michigan, I venture to say that most, if not all, do so because this is their school of choice. They know what we offer, from academics to athletics to an unparalleled level of student engagement.We also offer them generous financial aid.This commitment has resulted in historic levels of financial aid in our annual budgets. These extraordinary amounts of support mean that a typical Michigan resident undergraduate student, with a family income of less than $80,000, pays less today than in 2004.

I want to repeat that: Pays less to attend U-M than in previous years. We are a better bargain today than when I first came to the University in 2002.

The University of Michigan’s academic excellence also rests with our faculty, through their teaching, research, and public service.Because exceptional faculty are the lifeblood of the University, we work extremely hard to recruit and retain the best scholars. I always tell people that if you think college football is an arms race, it is nothing compared with the national – and global – competition for great professors. There’s no Heisman Trophy or BCS title game for great professors, but the competition to retain the best scholars for our students is constant and relentless.The last thing we want is to lose talented people. We have already seen too many leave our state.And so we are very thoughtful about salaries and rewarding people. The Michigan Model that I referred to earlier works because it invests in people. That includes providing competitive salaries. As legislators, you face tremendous challenges in determining the state’s budget. As a university, we are ready to partner with you in meeting those challenges and guaranteeing a strong future for our state, especially our young people.Even before the governor presented his budget, we acknowledged the likelihood that state support for higher education would again face a decline. I will not tell you that a 20 percent reduction in state support will be anywhere close to easy. It is not.If the budget is enacted, the fiscal year 2012 appropriation would be almost $100 million less than in 2002 and the same amount we received nearly two decades ago.However, as a university we are ready to answer the governor’s call for a shared sacrifice. I am emphatic about the contributions we must make as we work together to advance our state. If I can leave you with one message, it is my steadfast commitment to sustaining the academic excellence of the University of Michigan. It is a responsibility I share with the regents of the University, and I am determined to guarantee our excellence for future generations.