Breaking down the budget

By Colleen Miller

Every year, Oakland University’s board of trustees must approve the general fund budget. In order to balance that budget, tuition almost always increases.

The 2009-10 fiscal year budget is no exception. Vice President of Finance and Administration John Beaghan presented a budget containing an 11 percent undergraduate tuition increase at the July 24 meeting, but the board couldn’t reach a consensus.

Five days later, the board met in front of a packed auditorium in Elliott Hall to revisit the budget. After hearing from several students, the board passed the budget with an amendment lowering the increase to 9 percent, and with a resolution to revisit the budget mid-semester if needed.

The highest undergraduate percentage increase in the state, along with a 3 percent graduate tuition increase, is making up for a nearly 30 percent increase in financial aid, a decrease in state appropriations, and a projected enrollment increase.

Increased expenses include adding to the library collections, wireless upgrades, and the salary of a project manager to oversee the build of the Human Health Building. Despite three unions still negotiating contracts, the budget does not leave room for any salary increases.

State Funding

Much of the increase was caused by a decrease in state appropriations. In a slide shown to the board, a graph illustrates how state funding has practically flip flopped since 1972 when 71 percent of the budget was from the state, 26 percent from tuition.

In 2009, almost three quarters of the budget is tuition.

“If you give us an extra $5,000 per student from the state, I bet you we could probably do without a tuition increase,” Beaghan said.

OU Vice President of Government Relations Rochelle Black said that, while the state appropriations does not appropriate on a per student basis, she wishes they would.

Black said the current procedure for funding discriminates against rapidly growing universities.

“If you were to look at a chart that showed per student funding amount, the schools that have had the greatest enrollment increase over the last five to 10 years are the ones that are lagging at the bottom,” Black said.

Black also indicated that if tuition were to consistently rise to compensate for decreasing state appropriations, the fiscal consequences could be significant.

Financial Aid

The 29 percent increase in financial aid accounts for half of the tuition increase. This includes the guarantee to incoming freshmen that they will not have to pay for more than their expected family contribution (as determined by FAFSA).

Take away any scholarships and grants from the cost of tuition and the EFC and that is what the university will spot all incoming freshmen. Except the university is getting that money by raising tuition.

“That freshmen guarantee is only one part of our financial aid strategy. Several years ago we used to give freshmen only one time financial aid. Now those financial aid packages stay with you as long as you maintain your GPA,” Beaghan said. According to another slide shown to the board, 55 percent of OU students receive some sort of financial aid.

“The other 45 percent are paying full load and that’s because they didn’t have a need calculated or they didn’t get any merit money,” Beaghan said. “We looked at what our students express as what they want, it tends to be aid. And where do you get aid, where do you get anything on this campus … well, appropriations and tuition. So the only way to provide the aid, the 20 or 30 percent increase in financial aid, yeah that’s built into the tuition rates.”

Beaghan said there’s all sorts of “cost sharing” from what a student’s major is to what opportunities and resources they take advantage of on campus.

“To a certain extent, everybody’s paying for somebody else. For instance, it costs a whole lot more to educate a nursing student and an engineering student than it does a journalism student … We don’t have that kind of differential tuition here … You’re all paying for the complete experience here no matter how much experience you’re getting.”


Many have called into question the recent executive raises at a time when the budget calls for salary freezes across the board and a tuition increase at a higher percentage than any other university in the state.

“The way we built the budget is nobody gets a raise even though we have three contracts yet to finish bargaining,” Beaghan said.

In July 2008, the board approved a 40 percent raise for President Gary Russi. This raise was given a year prior to the July 1, 2009 salary freeze, but only weeks before a 6.29 percent undergraduate tuition increase and 5 percent graduate tuition increase for the 2008-09 school year.

Other executives also received raises in April 2008.

Beaghan said the raises and the salary freeze are unrelated, but that tuition is definitely related to salary increases and freezes.

“Seventy percent of our general fund budget is compensation, salaries and benefits.”

Because the board didn’t approve the full 11 percent suggested, possible employee cuts may need to be made. About 11 positions were cited as a way to make up for part of the increase.

“We’re going to have to go scrub the budget now and come up with the two percent,” Beaghan said. “I think if one of two things happens we’ll be back discussing budget again in the middle of the year, potentially another tuition increase: if the state does a further reduction beyond what we projected or if enrollment doesn’t come in at what we projected — that could also be a budget challenge for us.”

By the numbers: What the tuition increase means

9 percent undergraduate tuition increase

4 percent increase in expenses (may change)

1 percent projected enrollment increase

3 percent increase is graduate tuition

3 percent decrease in state funding

0 percent increase in all salaries

29 percent increase in financial aid