Auditor: Eastern Michigan University too reliant on tuition revenue
AnnArbor.com file photo
Eastern Michigan University relies too heavily on tuition and fees, according to Vicki VanDenBerg, the university’s contracted audit manager.
In fiscal 2011, the Ypsilanti-based university received 75 percent of its $221.4 million operating revenue from tuition and fees.
That’s more than $166 million.
And it's 15 percent more than the average ratio at Mid-American Conference schools in 2010, which was 60 percent. “You can see the heavy, heavy reliance on tuition and fees,” said VanDenBerg, a principal of the audit and accounting firm Plante Moran.
VanDenBerg presented the results of a fiscal 2011 audit to the EMU Board of Regents at a finance committee meeting on Tuesday afternoon.
According to VanDenBerg, credit rating agencies prefer “less reliance on any one type of revenue”— such as tuition.
“They would encourage all universities to really start thinking about not having any one revenue source become more than 50 percent of your revenue,” VanDenBerg said.
EMU’s current Moody’s credit rating is A1, which is characterized by the agency as an upper-medium-grade rating. The average Moody’s credit rating for a MAC university is AA1, which is three levels above EMU’s rating.
VanDenBerg also told the regents that EMU receives less state appropriations than most MAC universities.
EMU received $76 million in state appropriations in 2011 and $78 million in 2010. However the average amount of appropriations for MAC universities in 2010 was $98 million— a full $20 million higher than EMU’s 2010 level.
“Those universities had a much higher state appropriations revenue than you did,” VanDenBerg said. “You get less and less of that each year especially in 2012 you’ll see a significant decrease in that area.”
The regents also discussed EMU's $4.6 million budget shortfall.
Kellie Woodhouse covers higher education for AnnArbor.com. Reach her at email@example.com or 734-623-4602 and follow her on twitter.
Thu, Oct 20, 2011 : 6:13 p.m.
Full disclosure: I work as director of media relations at Eastern Michigan University. Before that, I worked as a sports editor, reporter and local columnist for The Ann Arbor News for 25 years until it closed in July of 2009. I covered higher education from 2000-2009, four years on the U-M beat and then four years covering EMU.
Wed, Oct 19, 2011 : 6:25 p.m.
Burger King relies on customers for more than 50% of its income---how can it survive?
Wed, Oct 19, 2011 : 3:14 p.m.
This story's discussion of Eastern's tuition and relatively low state appropriation actually highlights the University's determined effort to support Michigan students and their families. Over the past three years, Eastern's overall increase in tuition averaged just 2.5 percent -- $20 more per credit hour than three years ago -- the lowest increase of any university in Michigan. During the same three-year period, state funding support to Eastern has declined by $14 million, from $78.6 million three years ago to $64.6 million this year, representing an 18-percent decrease in funding. Thus the percentage of tuition in your general fund revenues increases dramatically, even though you held the line on costs to students. As President Sue Martin noted in her report to the EMU Board of Regents Tuesday, Eastern's efforts to be responsive to the needs of the people of our state, despite the drastic funding cutbacks, are being strongly recognized by government leaders in Lansing.
Wed, Oct 19, 2011 : 11:55 p.m.
Geoff, I'm all for the intent behind the the altruistic goals of the university - which is to help families afford an education. But, if by doing so it severely compromises the university's financial viability then maybe it is not the best approach (on a longer term) for the students it originally intended to help.
Wed, Oct 19, 2011 : 11:21 p.m.
Isn't it interesting how EMU's Executive Director of Media Relations -- who makes $85,800 a year -- never reveals his title here?
Wed, Oct 19, 2011 : 7:25 p.m.
This assumes that tuition increases in other universities is justified. Tuition rates are going up at around twice inflation. <a href="http://www.finaid.org/savings/tuition-inflation.phtml" rel='nofollow'>http://www.finaid.org/savings/tuition-inflation.phtml</a> <a href="http://www.bloomberg.com/news/2011-06-24/u-s-college-tuition-rises-4-6-beating-inflation-correct-.html" rel='nofollow'>http://www.bloomberg.com/news/2011-06-24/u-s-college-tuition-rises-4-6-beating-inflation-correct-.html</a>
Wed, Oct 19, 2011 : 2:44 p.m.
"EMU receives less state appropriations than most MAC universities" The primary justification for EMU's President's mansion/house was to have space to entertain big wigs, schmooze politicians and solicit donations. We can see how well that worked. President Martin needs to quit rappelling down buildings and start influencing people in Lansing.
Wed, Oct 19, 2011 : 1:54 p.m.
@Fat Bill. You are SOOOO right.
Tue, Oct 18, 2011 : 10:48 p.m.
Always living in the shadow of Big Blue... Schools like Eastern have a far more profound effect on actual Michigan residents than the U-M; Eastern turns out your teachers, your cops, your public administrators, and your day-to-day business persons; these folks are less likely to leave the state. Putting additional public funds toward these unglamorous institutions seems like a reasonable return on investment...
Tue, Oct 18, 2011 : 11:20 p.m.
WHAT!?!?!? Using public money for the benefit of the PUBLIC? Socialism, sir! Socialism! (Problem is, if I don't label this as snark, a fair number of folks won't think it is. Could'a sworn I lived in a sane world, once.)