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Posted on Wed, Dec 15, 2010 : 6:02 a.m.

Privatize the University of Michigan to save the state money, budget document says

By David Jesse

Listed in the pages of a document outlining different ways for the state of Michigan to make $3 billion in cuts is an item sure to capture attention in Ann Arbor — make the University of Michigan private and save the state millions of dollars.

But here’s the catch: the 27-page document circulating inside Lansing for the last month was simply meant as a jumping off point, budget office officials said. It's not a recommendation for action, either from outgoing Gov. Jennifer Granholm or Governor-elect Rick Snyder, they said.

The item in the document simply says "privatize University of Michigan over 5 years." Unlike some other items, it has nothing listed in the comments/discussion field. 

The document lists all kinds of measures to save cash, including privatizing a prison, requiring local municipalities to provide police protection in lieu of Michigan State Police troopers and eliminating state aid to libraries, just to name a few.


The University of Michigan is a public institution — but should it stay that way?

U-M got more than $300 million in state aid this year.

University officials said they’ve been hearing about the document for several weeks now.

But spokesman Rick Fitzgerald said they haven’t heard it endorsed by any lawmakers in Lansing. And the university has no plans to make a push to drop state money and become a private college.

“For our entire history, we’ve been a public university,” Fitzgerald said. “The university absolutely is making no push to go private.”

The budget document isn’t the first time the idea of making the university private has been mentioned. Fitzgerald noted that every few years, the issue surfaces again. For example, in 2004, the Mackinac Center for Public Policy argued in a position paper that making the university private would be good for both U-M and the state.

Ann Arbor resident Mary Beth Gold, whose son graduated from U-M, said she thinks it should stay public.

“If nothing else, it’s a symbolic thing,” she said. “I think having it be public makes it more a part of the whole state than if it was private, even though I think it’s largely acts like it’s private now.”

David Jesse covers higher education for He can be reached at or at 734-623-2534.



Sat, Dec 18, 2010 : 8:38 a.m.

@Craig Lounsbury - "Back in the "good old days" we didn't retire...we dropped dead. We as a society haven't done much to address that." What we have not addressed is the cost to let people retire and stay healthy and productive in society today. We have also not address the attitude that when you reach a certain age, you should not be working, no matter what you want. Our society needs to rethink a lot of things, or we like the Swedish will end up having to really dig deep and rethink things we all believe are foundations in our society. Social Security, Medicare, Medicad, and many other programs are broken right now, either on the funding side or the cost side or both. We need to have an honest policy debate on what society needs and wants. Then we need to change the laws and fix it. If that means the majority wants lower taxes and less in the way of services, so be it. If it means we raise taxes on people to provide the same or a higher level of services, so be it. All- As to the U of M going private, I can see good reasons to and good reasons not to. As a private school, if they took no federal or state money for anything (a big hit on the budget when you include research money) they could set any kind of diversity program they wanted because they would not be bound by a number of rules they live by now. On the downside, removing the public from their charter would mean that instate and out of state students would probably pay the same tuition - at the same level the out of state students do today. As a private school they would have more leverage with getting people to donate, after all they would not have state money to fall back on, so the need is greater. Overall, I think we are better off with the U of M public, but more transparent in what money comes in and goes out. It would also help if they worked harder to place the technology they developed into the hands of Michigan companies or actively helped start local companies (Yes, there are lots of start up companies that spin out of the U of M, but no active program to create them in an organized fashion) to absorb and use the technology they develop. The tech transfer agreement to China, bypassing the patent protection time that could be an advantage to local companies really bothers me.

Will Warner

Fri, Dec 17, 2010 : 1:53 p.m.

"Wait a minute! Haven't we, the public, been paying for the various Universities all along via our taxes? If so, how do they think they can privatize OUR property?" WE can privatize OUR property if we think it is in OUR interest to do so. Generally speaking, I'm for privatizing everything we can. The incentives that motivate a private entitiy are something I understand and can deal will. I would rather deal with a private business than any department of any level of government any day of the week. It probably deserves some study, but it seems to me that a private UofM would become a Harvard, not an IIT Tech.


Fri, Dec 17, 2010 : 10:23 a.m.

The great universities and colleges around the State of Michigan are about the only thing that kept our economy from being swallowed up the Lake Superior. The people of Michigan have a long history of supporting education. Why would we not want to continue supporting our schools? But, ok, allow the UM to go private. It would make it a lot of things at the U easier, that's for sure.

Craig Lounsbury

Thu, Dec 16, 2010 : 7:31 a.m.

Alan@ "The average retiree now receives benefits for 15-20 years, not the 3-4 years that was common 50 years ago." And that sums up a great many of our "ills". Back in the "good old days" we didn't retire...we dropped dead. We as a society haven't done much to address that.


Thu, Dec 16, 2010 : 5:52 a.m.

Sorry guys, I admit the UM benefits - including the 10% to 5% retirement matching - look good on paper, but you're failing to see the bigger picture. The UM consistently pays its staff less than the private AND government sectors. If you doubt me, you should compare similar jobs between UM, the Ann Arbor VA, and any of the nearby private companies. Receiving a max of 10% matching to a 5% contribution on a salary of peanuts means you MAY retire at the same level as your otherwise-employed peers. These are not 'cushy' benefits. (And it's worth mentioning again, they're not 'cushy' salaries when comparing the market.) Any theoretical savings from privatizing the UM would come from recouping tax money. And BTW, I find the raging debate over this single line-item quite humorous. Would be interested in seeing the entire report.


Thu, Dec 16, 2010 : 12:07 a.m.

Wait a minute! Haven't we, the public, been paying for the various Universities all along via our taxes? If so, how do they think they can privatize OUR property? Aren't we still paying for it by both State & Federal Taxes (the source of the many Grants the U and others use to fund programs)? The U has vast endowments that also fund buildings and other projects, who gets those if the U is privatized and their tax status changes? Hmmmm.


Wed, Dec 15, 2010 : 11:43 p.m.

Kat is right. That is what I was thinking that private schools are not as big. And becoming private does not automatically put a school higher in the rankings. Typically the rankings are based on the quality of the faculty. Privatizing the U would seal its doom. With necessary tuition increase, who would choose UM at 29th on the rankings? If the state wants more control, they should get the state constitution changed to end the election of regents and make them appointments of the governor. In terms of fiscal responsibility, the U is far ahead of most of the public sector. Defined contribution retirement plans are far more affordable than pensions. And as of July 88, employees hired do not get the retirement health care plan that retirees before that date receive. Those benefit packages save the U and the taxpayers a lot of money.


Wed, Dec 15, 2010 : 10:40 p.m.

Alan, Here are some sources: A point-counterpoint:


Wed, Dec 15, 2010 : 10:23 p.m.

Having gone to a private university, I may be able to offer a more well-rounded viewpoint. Yes, some of the students are filthy rich (~50%) and some are poor (the balance). All are admitted based on merit and can only stay based on merit. Having been from the poor end of the spectrum, I can only be glad that between student loans, university grants, work/study programs and private jobs I could graduate from a fine school. And I don't delude myself that I could have gone to Carnegie-Mellon had many others not paid full tuition. I sense hints of class warfare in some comments and this is a by-product of the public university system. At least private schools are honest in that they admit based on academic merit (not residency) and are always brutally honest about their goal to run schools in the black! In the end, it's all just so much talk. U of M is HUGE compared to most private schools (really, check it out). This is a serious consideration and makes privitization a grotesque, nearly impossible undertaking. Be happy that U of M is a top 20 school (ugrad) with plenty of higher ratings in specific areas. It's something positive to hold onto while the rest of the state struggles to right itself.


Wed, Dec 15, 2010 : 9:55 p.m.

@YpsiLivin You're right, it would be painful, but eventually the system as is will become unsustainable. Some more pessimistic than I would argue that it already has. I tend to view problems over a lifetime and eventually the cost of maintaining the current system will vastly overshadow the obvious shorter term cost of fixing it. Of this I'm mathematically certain. I think the question is whether or not anyone will be brave enough to make some very unpopular decisions to prevent an eventual disaster 10, 20, or 30 years down the road. Politics is not an area that I'm knowledgeable about. By the way, you seem familiar with the numbers. Do you have any links to data regarding this problem? I'm now curious.

5c0++ H4d13y

Wed, Dec 15, 2010 : 9:43 p.m.

The state will continue to fund the university at some level because they would never give up what little political control they have over U of Michigan. End of story.


Wed, Dec 15, 2010 : 9:20 p.m.

Alan, I still don't think that changing new hires over to a defined contribution plan will work, as long as the state is using the current pension contributions to fund current beneficiaries. In addition to repaying the pension fund the money that it "borrowed", the state would also have to be willing to finance the pension fund's entire liability on its own dime until the last pensioner/beneficiary pair was dead. I don't see how to make that happen. The state retirement plan, as it operates now, bears a strong resemblance to a Ponzi scheme. Simple math says that the system can't work, but state law says it can't fail.


Wed, Dec 15, 2010 : 7:28 p.m.

@ YpsiLivin Everything you said is true, I should clarify my comment. I would never suggest that one could convert from a defined benefit plan to an employee contribution plan overnight. The process would probably take 20-30 years, but many large groups have undergone the transition. Anyone employed today (or currently retired) must receive the benefit they were promised. The problem of covering the pension deficit will not go away, but conversion will lessen the severity of the deficit. I am a P&C actuary, not a pension actuary, but the problem is straightforward. The average retiree now receives benefits for 15-20 years, not the 3-4 years that was common 50 years ago. The university's 2-1 match, which is equivalent to increasing every employee's pay by 10% is much cheaper than the amount that must be paid in over the course of employment to fund an annuity at 1/2-2/3 of the employees pay rate for 15-20 years (and life expectancy will probably continue to increase). The big bonus is that there is no obligation or uncertainty after the employee retires. Thus, no deficits or pyramid schemes where current employees fund retirees. You are correct in your assertion that the conversion will not solve the problem today, but by changing the plan for new hires the severity of the problem will be reduced in time, and eventually eliminated. Sorry if this seems off topic, I had to clarify. I still stand by the rest of my comment.


Wed, Dec 15, 2010 : 6:33 p.m.

Mr Dearing, How is privatizing prisons NOT on topic? Here is the paragraph: "The document lists all kinds of measures to save cash, including privatizing a prison, requiring local municipalities to provide police protection in lieu of Michigan State Police troopers and eliminating state aid to libraries, just to name a few." I guess that was just a throw away paragraph? Privatizing prisons matters AS MUCH if not more than the U. It is precisely on topic to what the story reads. I guess we now have to ask you what we are allowed to talk about now?

C. S. Gass

Wed, Dec 15, 2010 : 5:17 p.m.

I am all for privatization. Private enterprise is almost always more efficient than the public sector. It will never happen though because you have a knee jerk bunch in Michigan who can out-scream anyone. What is their mantra? "Corporations are Evil". This is what they will yell and the rest of the state will listen and be afraid and drop the idea. And we'll still pay for Uof M and MSU to be run by incompetents.


Wed, Dec 15, 2010 : 4:44 p.m.

Just exactly what have the Engler tax cuts done for this state? Well, for one, it has raised the tuition of all the public universities to the levels that they are now. Imagine, thirty years ago someone proposing to privatize the UM, with tuition at $250 per semester, we would have laughed. Now with the loss of state support and tuition at $10K per semester it becomes a real possibility. The lower income people in Michigan cannot afford to send their kids here. Why not make it private? How many jobs have those tax cuts created in this state since they were enacted? How many jobs are we losing now that we have nearly reached rock bottom. There is no money to create jobs, there is no money to run our public schools and universities, there is no money to fix our roads, there is no money for police and fire, and prisons. Lets cut another $3B this year and see what we have left of our state. Sorry, as Dandy Don once sang on Monday Night Football, "turn out the lights the party's over!"


Wed, Dec 15, 2010 : 4:11 p.m.

Let's privatize the US government also while we are at it.

Elaine F. Owsley

Wed, Dec 15, 2010 : 4:06 p.m.

It could have been mentioned in jest. No point in getting all riled up when that's all there really is to the story - something was mentioned. The sky is not yet falling, Chicken Little!!

Michael Cohen

Wed, Dec 15, 2010 : 4:02 p.m.

My guess is that the suggestion at the State level is not really about whether the UM should be private or public, but rather about finding a way to reduce the annual State contribution to $0. But the two do not have to go together. For example, the State could change to a program of loaning qualified students money for UM (and other research university) expenses, and then forgive those loans through the State income tax when the graduates work in Michigan. Other countries like Australia already do this. Instead of educating our brightest Michigan students at State expense and then having them leave, we could educate the country's brightest students and have them stay here to grow the Michigan economy.


Wed, Dec 15, 2010 : 3:42 p.m.

Mr. Ghost; Are you going to bed or not????? If so; GOOD NIGHT!


Wed, Dec 15, 2010 : 3:28 p.m.

For all those who complain about the University not paying tax, how about the money that having the University contributes to Ann Arbor through employment, purchasing, students, etc.

Jake C

Wed, Dec 15, 2010 : 3:18 p.m.

@Bacon Bits: But since Michigan always has more applicants than admitted students, wouldn't we suddenly have 26,000 undergrad students paying $40,000 each, instead of 50% in-state students paying $14,000 and 50% out-of-state paying $40,000 (or whatever the percentage is) resulting in so much more cash for the school while saving many for the state at the same time! And since these students would presumably be coming from rich families in order to afford the tuition they would also have lots more money to spend at local businesses, making the entire Ann Arbor economy so much better! I'm mostly being sarcastic, but I'm sure many of the 30% of people who voted "Yes" on this poll believe this to be true.


Wed, Dec 15, 2010 : 3:14 p.m.

Public Education made America and Michigan what it is. Privatising education is simply STUPID and retrograde. Too many reasons to begin to enumerate!

Bacon Bits

Wed, Dec 15, 2010 : 2:58 p.m.

One thing that is clear... a lot of posters need to brush up on the differences between a private and for-profit universities. They are not the same thing. If U-M privatized, they would remain non-profit and continue to not pay property taxes. Just like Harvard, Princeton,... Michigan would save $300M from this plan. But in state tuition would rise from $14,000 to over $40,000 overnight. In the end, the state of Michigan would lose greatly if this were to happen.


Wed, Dec 15, 2010 : 2:53 p.m.

@ mun, you're being obtuse! A private school can't just 'jack up' tuition as a business model and still remain competitive!

Jake C

Wed, Dec 15, 2010 : 2:41 p.m.

@debling: "I would like to challenge the U of M to reduce costs of attending the school 5% a year for the next 5 years so that in 10 years the cost will be 1/2 that it is today. " Sorry, math does not work that way. @engGeek1998: I don't understnad why everyone keeps saying only rich people can send their kids to U of M! You have 18 years to plan and save for a college education for your children! Not considering any interest you could have made over the years, for kids attending today, it only required saving $450 per month from when the child was born to have the full tuition + room and board in hand before the child starts at U of M. "Non-rich" people are easily spending $450 per month on new car payments, fabulous vacations, smart phones, boats... It is a matter of how you set your priorities." Not sure where to even start on this comment. Poor people are spending $450 *each month* on smart phones? Boats? $450 per month on vacations? What state do you live in? Hope you never have more than one child, let alone three... or are the 13% of Michigan unemployed poor people with 2-3 kids spending $900 or $1350 on boats and new cars too?


Wed, Dec 15, 2010 : 2:39 p.m.

@Marvin: As an EMU alum, I chose to go to EMU versus UM for their public relations degree, as UM doesn't have one (its either Communications or Business Marketing). Also, to point out, when I went to college, almost 7 years ago, most students from EMU come from Ohio because they can pay in-state tuition if they go to EMU. Also, where do you get the fact that most families who go to EMU are lower income families? I think that is quite absurd.


Wed, Dec 15, 2010 : 2:34 p.m.

With regard to retirement benefits at the U: The medical center has a different benefit structure than the academic campus does, so medical center employees get different benefits. Alan said: Axe the whole state pension system and convert to an employee funded system like that used at U of M and MSU. I suppose that's one way to do it, but here are the hitches: First, the pension system as we speak is under-funded to the tune of about $15 billion. If you want to convert the pension system to a 401(k) or 403(b) today, the state would have to come up with that $15B today, too. At least some portion of that underfunding comes from the fact that the State Legislature "borrowed" pension funds that it never replaced. If the state wants to get out of the pension business, it's going to have to put back what it took from the cookie jar. Second, the contributions made to the state pension today go to pay the expenses of the current retirees. (Same is true with pension-paid health care.) If you convert the defined benefit plan to a defined contribution plan, you'll be undercutting not only the current retirees who - in many cases CANNOT go back to work - but also the workers who are paying into the system now. Quit thinking that getting rid of the pension fund is going to save anyone anything. If converting the pension plan to something else were so easy, it would have been done long ago.

John Q

Wed, Dec 15, 2010 : 2:33 p.m.

You can Google up the document that lists every University employee, their pay and the source of their pay. The majority of employees are not funded with state dollars. "TruBlue, Let's hear a UM budget official say that general fund contains no state taxpayer dollars and that no one is paid with general fund dollars. I can't wait." No one has said that. Your claim that state dollars pay employee salaries and benefits is wrong for the majority of University employees. Repeating it over and over again doesn't make your claim any less wrong.


Wed, Dec 15, 2010 : 2:11 p.m.

@rusty shackelford The big three (Wayne U of M & MSU) are if you will "greater" among equals It would be easer to close or cut funding to Grand Valley for example then one of the big three.


Wed, Dec 15, 2010 : 2:01 p.m.

@Cash It's public info. Why don't you research it and let us all know? I already know the answer :)


Wed, Dec 15, 2010 : 1:58 p.m.

Bingo! Have UM operate like any other business instead of a evangalistic church on steriods that is able to spend and grow without bounds due to its privleged economic provisions. Any incentive model whether it be for church, government, educational, business, etc. should be fully analyzed and played out to possible extremes as to determine defects and flaws BEFORE implementation to avoid possible abuse, manipulation and eventual catastrophe. Due to a number of reasons the UM cannot possibly be allowed to grow without bounds and BECOME Ann Arbor yet it has somehow been able to consume upwards of 2/3 of it. If you allow any non-profit organization to amass wealth, grow and operate like a business but without the city, state and federal costs typically associated there will be significant shortfalls as the organizations grow, especially if they continue to be subsidized. These radical models don't play nice with others and must be kept in check. The economic model afforded to these organizations may work as a leg up for a finite period of time (we can all agree that higher education and local charity is a good thing) but there needs to be a trigger when proper (even variable) dues should be paid to help support the city, state and federal systems that allowed them to exist, grow and propser under the these conditions in the first place. The model that public education, at all levels, operates under should be reviewed for efficency, performance and adjusted periodically. In that same breath the tax free status that religious instututions have enjoyed and prospered under should also be evaluated as I find that I too must unwillingly support and subsidize these organizations in my realized higher taxes. Rip the bandaid off already. Limit or eliminate special subsidies and programs that favor one institution over another irregardless of value, fairness or performance and PRIVATIZE IT ALL. May the highest efficiency and value organizations win.


Wed, Dec 15, 2010 : 1:54 p.m.

TruBlue, Let's hear a UM budget official say that general fund contains no state taxpayer dollars and that no one is paid with general fund dollars. I can't wait.


Wed, Dec 15, 2010 : 1:50 p.m.

From further above:  "... What attack on education by G.E. Snyder?... This discussion arises from a document that G.E. Snyder had NOTHING to do with. The article does not list the authors, but it was not prepared by G.E. Snyder or his staff...." Snyder may well have nothing to do with the 27-page document in question. If so, that's a very good thing and leaves open the possibility that he will — in comparison the the document's unnamed authors — display a much more rational and humane outlook than that once he becomes governor. However, he should now do the responsible thing by providing a public response to the contents of this document. He should acknowledge the idea of formally privatizing U-M and express a direct opinion on that. He should also offer specific opinions about the document's other proposed cuts and privatization schemes. As governor-elect, he needs in this instance to step up and demonstrate real leadership. Playing his hand close to the vest will merely show a calculating politician looking to protect his public image. Keep in mind that Snyder needs to come up with ways to pay for his so-called reform plan for the business tax, which would quite arbitrarily eliminate roughly $1.5 billion in revenue for the state government. Also, as pointed out in discussion threads prior to the fall general election, Snyder's plan would also re-introduce great volatility to annual revenue generation, which the current business tax is specifically tailored to reduce greatly.


Wed, Dec 15, 2010 : 1:49 p.m.

The University of Michigan, a public institution, long ago stopped serving the public. It's primary purpose is no longer to provide affordable education to the taxpayers of Michigan but rather to serve the interests of the administration, staff and research professionals. Tuition rates and fees are so high that they are beyond the ranges of most young adults considering investing in an educational program. Many must resort to taking large loans to finance their education which is ridiculas at a public University. If the University of Michigan cannot reduce the cost of education to a point where the average Joe can do a 4 year degree with occasional work over the school year and summer jobs and graduate without student loans, then it may as well become private. It no longer serves the primary mission of the University. I would like to challenge the U of M to reduce costs of attending the school 5% a year for the next 5 years so that in 10 years the cost will be 1/2 that it is today. Then, I will continue support it as a public educational system.


Wed, Dec 15, 2010 : 1:40 p.m.

Most UM employees are not paid through state money. Athletic dept: self funded Medical: self funded Depts with research funding such as Biochemistry, LSI, MHRI, etc paid all staff from research grants that come from corporations or NIH, CDC, etc. Even the janitors are paid thru these grants. The depts. take 50% overhead to cover these costs. Research staff are paid directly from the grants. No grant no job. That's what happened to my wife 6 months ago. Tenured faculty are paid thru a combination of grants and endowments(no state funding). In short the state funds are used to cover operations expenses and not salaries.


Wed, Dec 15, 2010 : 1:39 p.m.

U-M as a private school=double and triple the tuition. Let's ask the students how they feel about that.

Bertha Venation

Wed, Dec 15, 2010 : 1:16 p.m.

While I do appreciate what U/M has done for the local economy, I wish there could be a way for some of us lower income folks to more equitably contribute, rather than pay extremely high taxes that not everyone can afford. With all the money U/M has (notice the new flower beds every 2 weeks in the Spring, for example)it seems to me their funds could be much better appropriated.

Rork Kuick

Wed, Dec 15, 2010 : 12:57 p.m.

I very much like having Regents elected by the voters run the big colleges in Michigan. The old-timers were trying to do the people of this state a favor, fantasizing that investing in our kid's education might be a good idea. I just wish economic times were better, and we could talk about paying for the college education for most of our kids, thinking of them as a shared and valuable resource. I want this state to be famous for having the best educated citizens in the US, and not for the glory of it, but because it is instrumental to our future economic wellbeing, and yeah, better educated voters might be nice too, since this is a democracy. PS: UM puts in double what I do, (for up to the first 5%), so if I contribute 5% they cough up twice that much, as others have tried to say. Maybe for some worker's (negotiated contracts) that is different, but that's what it is for run-of-the-mill employees.


Wed, Dec 15, 2010 : 12:55 p.m.

I have no problem with Michigan employees salaries or their benefits (which are pretty good). My problem is the University is sitting on a huge endowment yet still asks the State for additional money at the expense of State Universities. F For example, U of M recently asked for 360 million dollars for renovating a building. The State gave it to U of M, but altered it's budget to deny requested money from other Universities like Washtenaw and EMU which only wanted a total of 33 million. Further, it pays it's President a huge sum of money, and has an excess of upper management positions. A public University should have pay caps for upper management. There are plenty of qualitfied people who'd step in and do Coleman's job for much less. Unfortunately, Universities got into this trap where they think it is prestigious to pay their President more then others.


Wed, Dec 15, 2010 : 12:51 p.m.

There seem to be a lot of comments unsupported by fact. First, there is no pension for U of M employees and the health care costs paid are lower than those paid by most companies. The purpose of any state education system is to provide affordable access to education for the residents of the state. A quick estimate shows this to be the case here. U of M has approximately 25,000 undergrads. 2/3 are state residents who pay approximately $20,000 less annually than non-residents. This is a deficit to the university of approximately $300,000,000, the amount the state pays. The same is true at every state university in Michigan. Claims of disproportionate funding are simply not true when considering the true purpose of state aid. I think the true question is whether or not there is a benefit to any state in seeing that the brightest students remain for their education and possibly beyond. I would say yes. My own daughter chose U of M over Duke and Columbia because she really wanted to stay here and it is affordable. If only the brightest students leave then we will be in a very sorry state down the road. I think it would be useful to discuss the redundancy of the state university system and whether or not it really serves a useful purpose. There are fifteen public colleges and universities in Michigan. Why? There is broad overlap. More importantly to me, we are supporting the education of students who don't leave high school with the skills to succeed in higher education. We subsidize the education of students at Ferris, Saginaw Valley, Wayne State, U of M Flint, etc. These are students with a C average and ACT scores of 20. Retention and graduation rates are abysmal, as low as 30%, and many graduates have degrees in vocational fields. This training could be provided much more cost effectively at a community college. I have over 15 years of experience in higher education in Michigan (I have never worked for U of M) and I have always been amazed at the number of students who are not able to do college level work. The future of the state depends on the education and retention of its brightest young people. U of M is one of the finest universities in the world and always ranks right at the top in its dedication to educating undergraduates. To deprive our own children of the opportunity for a world class education would surely be the final blow to this state. Turn off the lights when you leave. P.S. I downloaded the document and I was shocked at some of the things the state spends money on. I could find most of the 3 billion myself. Axe the whole state pension system and convert to an employee funded system like that used at U of M and MSU. The state spends 300 million annually subsidizing life insurance for employees. Eliminate that. I pay 60 cents per thousand annually on a 30 year term policy. Employees can pay that. Quit giving politicians full benefits when they serve one term. Have Rick call me.

rusty shackelford

Wed, Dec 15, 2010 : 12:39 p.m.

Think, actually funding for all public state universities is mandated in the MI constitution (Article 8)


Wed, Dec 15, 2010 : 12:38 p.m.

WEll a couple of problems. U of M Wayne State and MSU are all schools that require a constitutional amendment to cut free from the state. While I agree that having 14 or so State supported schools is a lot, maybe we should look at consolidation of the smaller schools and see if there is a savings there... One admission office instead of 3 for example.

rusty shackelford

Wed, Dec 15, 2010 : 12:37 p.m.

So Dearing says discussion of privatization in general in an article about state privatization is verboten, but it's cool for a bunch of misinformed people to go on and on about exactly what percentage of salary UMICH pays to its employees in which type of private retirement account and for how long (an item that merits literally no mention in the story). Gotta love's arbitrary non-standards, as always. Thanks, TD, for allowing what could have been a useful discussion about government privatization to become bogged down in useless and irrelevant details.


Wed, Dec 15, 2010 : 12:36 p.m.

Thanks, Ghost. And I think you are correct in the Michigan becoming a DeVry vs. a MIT (or the like) question. Although I am no expert on the implications of the university becoming privatized, I believe there is little chance of it hurting the university in such a way. My concern centers on how such a change would be received locally. Would a privatized UofM have to accept local, Michigan-born applicants? My concern is that the university would become the Duke of the Big Ten, a university enrolled primarily with the rich and wealthy along with those on scholarship, mostly from other parts of the country and world, that has little connection with the local community. From my experience, there already exists a sizeable amount of people in the local community that have an inferiority complex for the university. My worry is this would further alienate those people and others. Please don't misunderstand me, as I believe one of Michigan's many strengths is its national and international respect and connection, however I fear privatization will lead to the university losing some of its local respect and connection.


Wed, Dec 15, 2010 : 12:32 p.m.

Fact check: The top ten PRIVATE University and Colleges. Safe to say that none of these suffer and enjoy greater academic freedoms than their state governed counterparts. Just saying... Top ten private Universities and Colleges in the USA: 1. Princeton University, Princeton 2. Yale University, New Haven 3. California Institute of Technology, Pasadena 4. Rice University, Houston 5. Duke University, Durham 6. Harvard University, Cambridge 7. University of Pennsylvania, Philadelphia 8. Columbia University, New York 9. Brown University, Providence 10. Dartmouth College, Hanover To all fear-mongers, please get a grip!!!


Wed, Dec 15, 2010 : 12:28 p.m.

"rm" makes a number of the useful clarifications here. I would add just a couple more items. Re: Cash's concern about retirement benefits, another thing to keep in mind is that -- whether you think of those funds going to retirement or something else -- the state's contribution is reflected in its ~$300 million (and ever decreasing) annual allotment. Wherever that money goes in the UM budget, that is what the state gives each year. No more. And, as others have said, there are not future obligations that would be paid out of anything other than this annual expenditure. So the "savings" to the state government is the same no matter where you think the money goes. (The retirement benefits would not go away for employees, if privatized, as the university would likely keep paying it and have more money to do so than before.) In response to an earlier question, privatization would not necessarily lead to a name change. There are a number of universities with state names that are private (e.g., University of Pennsylvania). And a quick correction: The matching for retirement from UM is not 1:1. If you contribute the full 5%, UM matches 2:1 (10%).


Wed, Dec 15, 2010 : 12:17 p.m.

@Craig Lounsbury (Re: 10% matching contribution). UM matches employee contribution (after 1 full year of employment) up to 10%, so if you only contribute 5% UM only matches 5%. At least on the hospital side, this helps make up of the lower salaries we receive compared to private sector jobs (I've wokred at Henry Ford Health and UM, the pay was much better at Henry Ford).

Lemmy Caution

Wed, Dec 15, 2010 : 12:14 p.m.

Wow, this discussion is important (even as a diagnostic moment) but often so disheartening. Some people think commenting on important topics is the equivalent of ranting. Folks need to be better informed about the difference between for-private higher education and non-profit higher education. And about the precise nature of Mich's contributions to UM. And the precise costs to UM, so to speak, in charging preferentially low tuition for in-staters (affirmative action of a sort?). Why not have a few good references that we can all use to clarify these matters so we can debate priorities with good info in hand. For the sake of argument, of course if voters were to decide to amend and revise the state constitution to eliminate public funding of higher ed institutions, UM would become a private non-profit (like the Ivies), NOT a for-profit institution like privatized prisons, privatized police forces and soldiers, or for-profit colleges. UM's tax liability would not magically become like that of for-profit institutions. Oh, one imagines the libertarians continuing, we should eliminate the tax benefits of all not-profit institutions starting with churches and religious schools. It would be interesting to observe the debate between the libertarians who believe the "free market" is the magical answer (as if the "invisible hand" were purely beneficent and humanitarian) to all of society's concerns and the social conservatives who worry more about social cohesion (which the non-human "free market" is most responsible for sundering) and social order and are very keenly attached to non-profits and tax-exempt orgs like churches and related groups. I think these two factions need to have a proper debate among themselves. Instead, however, certain members prefer to vent, sometimes incoherently, at those of us (perhaps the new silent majority) who strongly believe in public education, who believe that education is the greatest key to upward social mobility, who believe that therefore one funciton of good government is to provide a hand-up in life so that we can have something close to equal opportunities to share in the American Dream, who worry about the costs to our social order and well-being of massive social inequality thanks to neoliberal privatization and the strange marriage these past 30-40 years of upscale libertarians and upscale and downscale social conservatives. Whoops, something about this venue DOES tend to rantiness, like a moth to a flame. We're all burning now.


Wed, Dec 15, 2010 : 12:14 p.m.

Something to consider, I grew up in Oregon and in the 1970s(?), in an effort to save state money, the University of Oregon privatized its medical school and hospital (the medical and hospital were renamed Oregon Health and Science University (OHSU)). It worked well in the begining but today the tution to attended OHSU vastly exceeds the cost of the public universities. Also the hospital lost immunity from non-wilful negligent malpractice (please note "non-wilful"). The result was an increase of tort cases when patients didn't get the "perfect" results they "were promised". Most of the cases were dismissed but the extra legal fees did add up enough that OHSU had to close a free dental clinic about five years ago. I say keep UM (and MSU, WMU, EMU, CMU, etc.) public.


Wed, Dec 15, 2010 : 12:07 p.m.

@Cash UM employees, including the largest group that works for the hospital, don't receive State pension plans. We have 403(b) plans, which is very similar to a 401(k) plan.


Wed, Dec 15, 2010 : 12:06 p.m.

Two financial details possibly relevant here: The UofM annual budget is roughly $5 billion. The State of Michigan's contribution of $300 million is about six percent (6%) of that budget (and that's been shrinking). The rest comes from other sources, including (from memory) something above $1 billion in research funding from outside sources, plus tuition, contributions, medical bills paid by individuals and outside insurers, etc. The University's contribution to employees' 401(k)'s etc. --10% of UofM employees' salary, generally -- is a present contribution, probably most usefully thought of as part of current compensation. It creates no future pension obligation payable by the state, or by anyone else, into the future. That makes much of the rhetoric here wholly beside the point. What each UofM employee has in his/her retirement plans is the total of (a) employee contributions, usually a mandatory 5% of salary, (b) the University's double-match (i.e., 10%), and (c) whatever investment earnings have accumulated over time. That's it! - no future state obligation whatever. Someone may complain that the 10% contribution is somehow paid by the state, to which one might answer (1) it's essentially compensation, in that UofM public university salaries are I believe generally lower than private university salaries, and UofM salaries are competitive in part because of this matching payment -- making the match pretty clearly part of compensation -- and (2) in any event only about 6% is paid by the state, as with everything else in the UofM budget. It's not the long-tail future obligation some are mistaking it for.


Wed, Dec 15, 2010 : 12:04 p.m.

Duke, Harvard. A Standard for U of M. If we only get $300m from the State that could be made up in inflated salary Is Mary Coleman really worth the big money she is paid? There is a ton of trimming to do in the U. It would also be nice to collect some property tax in Ann Arbor. It may also force some people to actually earn their wages


Wed, Dec 15, 2010 : 11:59 a.m.

Quoting Frederick Douglass  [1857]: "Find out just what the people will submit to and you have found out the exact amount of injustice and wrong which will be imposed upon them...." Let's call the 27-page source document for what it is:  pathological. It's probably a 'trial balloon' to see which abusive proposals the residents of Michigan might be foolish enough to either accept or at least tolerate. It's a safe bet that the absolute last thing the unnamed authors want is a sensible, progressive overhaul of Michigan's taxation system. Their implied claims of fiscal prudence amount to a lack of social ethics and a toadying to privilege. Privatizing our local Big U will complete the school's return to being an institution where only the well-off can reasonably hope to attend, as during the era of robber barons. By sharp contrast, just forty years ago tuition was historically cheap, financial aid plentiful, and many smart high schoolers from lower middle class families gained admittance and could well afford to attend. Privatization will likely make that but a memory, once and for all. Each of the other cost-cutting "ideas" for the state's troubled budget would generate destructive consequences in its own special way, as others have earlier commented. Taken collectively, they offer a means, or road map, for Michigan's well-off to continue dodging payment of a more responsible and fairer share of state taxes, along with allowing corporations to avoid having to relinquish special subsidies. It's being proposed, instead, that the middle class and the poor make big sacrifices for the benefit of the more privileged. Further, our federal government refuses to any longer tax the wealthy appropriately. It also provides subsidies for big business interests, while squandering up to $700 billion a year on the military. One direct result is that much less in the way of federal funding becomes available for return to the 50 states and to urban areas. This adds to deficits at the state and local levels, and emboldens the corporate right to initiate privatization campaigns.


Wed, Dec 15, 2010 : 11:53 a.m.

Clayfeet, It's state/taxpayer money supporting it. We pay the UM share. We pay the UM share of all the health care plans for retirees. Call me whatever you want. It doesn't change the fact that taxpayers support UM salaries and benes.....general fund! Taxpayers still pay!! If state taxpayer money does not help to support the retirement plans, the salaries, the benefits....then let's privatize it because it must already BE private.


Wed, Dec 15, 2010 : 11:45 a.m.

This is another case of how the socialist agenda of the liberals continues to ruin this country. 300 MILLION DOLLARS, of taxpayers money, was wasted last year that will never be made up. Our taxes and cost of living continue to rise, yet our elected officials continue to support socialism. I say privatize the UofM and create more, much needed, jobs and make a profit! Another proud graduate of the AM radio PhD program.


Wed, Dec 15, 2010 : 11:30 a.m.

Privatize and get rid of affirmative, the states legal form of racisism. If you want a higher education, pay for it yourself without my tax money. This is another case of how the socialist agenda of the liberals continues to ruin this country. 300 MILLION DOLLARS, of taxpayers money, was wasted last year that will never be made up. Our taxes and cost of living continue to rise, yet our elected officials continue to support socialism. I say privatize the UofM and create more, much needed, jobs and make a profit!

Marvin Gerber

Wed, Dec 15, 2010 : 11:27 a.m.

The UM gets more tax payer dollars than those universities that mostly in state students attend. Why should we support a school where a disproportionate number of out-state students attend. for example, EMU is short changed though most of its students come from Michigan and are from families in lower income brackets. marvin gerber


Wed, Dec 15, 2010 : 11:01 a.m.

@JerryStone1971 - What attack on education by G.E. Snyder? Can you point me at a speech? Can you point me at a white paper? Can you show me something on his website? This discussion arises from a document that G.E. Snyder had NOTHING to do with. The article does not list the authors, but it was not prepared by G.E. Snyder or his staff. As far as I read in the various speeches, white papers and other public documents from G.E. Snyder - education is an important cornerstone of what he wants to have happen in Michigan. I have seen discussions of public employee pensions and wages as needing review and that everyone needs to sit down together and discuss the issue. I do not think that working to keep the wages and benefits within the ability of the state to pay for all public employees to be an "attack on education". It may be an attack on organized unions, but even his opponent indicated that there needed to be a (his words) "Come to Jesus" on the cost of state employees. Please provide links to your point on G.E. Snyder attacking education. I for one would be very disappointed if he was attacking education. I think he feels (my opinion) that the education system is in need of reform and that we should be expecting more of both schools and parents. This is MY interpretation of what I have heard him say.


Wed, Dec 15, 2010 : 10:55 a.m.

Ghost - Ohio U is a public university. that is besides the point. You are spot on with your perspective. Although your point of... no longer will be required to admit students from the State of Michigan when it would rather admit better qualified students from around the world... needs to be completed. It should continue with 'or any kid with a rich mommy and daddy who would be willing to fork over around 40K a year'.

Feat of Clay

Wed, Dec 15, 2010 : 10:50 a.m.

Cash is being disingenuous now. The original objection is that "state retirement and state retirement benefits for life for future UM employees. That is HUGE." In point of fact, while U-M does offer a retirement plan for its employees, it is neither a "state retirement" plan (i.e. MSPRS) nor is it a "benefits for life." IF an employee chooses to VOLUNTARILY make his or her own contributions to the plan, managed by one of two outside private firms, then the University will also make a contribution. The state has no commitment to pay U-M retirees a pension "for life". What a U-M retiree gets depends on his or her decisions to participate in this optional plan. It is a wonderful benefit that encourages responsibility and fiscal planning, helps to retain employees, AND, I would wager, protects Michigan taxpayers (present and future) from U-M retirees facing the kind of poverty that would make them a drain on the state's & nation's social services. IMO it would be foolish to argue that U-M should offer no incentive for employees to plan for retirement. I suspect we, the taxpayers, would bear a pretty big burden when it comes to higher turnover in employees and also in retirees who have too little income for their non-working years. It also bears acknowledging that "taxpayers" pay only a proportion of any GF dollars spent on salaries and benefits.


Wed, Dec 15, 2010 : 10:49 a.m.

It's interesting to me that the comments here are similar to the people who bash the benefits of public school teachers... Only this time, they can't blame a union! These people - public education employees - made a choice, a trade-off. They chose a good salary and good benefits. But they gave up the possibility of triple digit bonuses, stock options, car stipends, and trips to the company villa in Italy. These were CHOICES. Everyone had these choices. Do not be jealous of the choice you didn't make. I have my BA and MA from the University of Michigan. It is, without doubt, the best public institution in the country. It PROVES that public education works. It is the last glimmer of hope we have that shows you don't have to pay hundreds of thousands of dollars at a private Ivy League school to receive a world-class education. I voted for Rick Snyder. But if he continues attacking public education (at the secondary and post-secondary level), I will never vote for his party again.


Wed, Dec 15, 2010 : 10:49 a.m.

Craig, just wanted to add to the explanation of what source pays for the retirement plan. The source that pays the salary is also charged for all fringe benefits, including the 10% match. State funds are only a small portion of how salaries are paid at UM. A large portion goes on research grants from federal and non-federal sources.


Wed, Dec 15, 2010 : 10:44 a.m.

@Ed's Ghost: You have an interesting perspective, given that you went to a state university when you were alive.


Wed, Dec 15, 2010 : 10:27 a.m.

ERMG: The University of Phoenix would be a better example nowadays.


Wed, Dec 15, 2010 : 10:25 a.m.

Alan Benard: "Privatization of institutions such as these is nothing more than legitimized theft from the people of the State of Michigan. Theft of opportunity for future generations, theft of treasure, and the subversion of democracy in education." I'm sure you already know this but the republican take over of the state will lead to all sorts of pilfering of the public sphere. That is how they do it- put a system under extreme pressure (thanks to Goldman Sachs, JP Morgan Chase, the Heritage Foundation and Brookings Institution, etc.), then come in with a host of "remedies" which always include privatization of any public assets. Public schools, public water and electric systems, roads, parks, hospitals, etc. The IMF and World Bank do this on a global scale and it is a model that can be scaled down to whatever is necessary. It must be resisted even when (especially when) it looks to be advantageous up front. It isn't advantageous for anyone but the raiders. Michigan is well on its way to becoming the ala carte state.


Wed, Dec 15, 2010 : 10:23 a.m.

'Cash', with whom i often agree, is way off base here....TIAA/CREF and Fidelity,the main retirement pension plans at the Um,are private 401 k type instruments, with a small percentage of UM contribution,that ends on retirement. CREF is essentially invested in the stock market; TIAA in less volatile instruments. What a persons retirement income looks like is entirely dependent on how they have individually chosen, throughout their career, to allocate funds between CREF and TIAA....and there can and have been big winners, losers and modest 'play it safers' among people who retire with the same rank and general salary. They are the same retirement plans as in many universities, public and private, and indeed other educational institutions. EMU, however, does have a state funded retirement program, with voluntary TIAA/Cref participation

Craig Lounsbury

Wed, Dec 15, 2010 : 10:22 a.m.

YpsiLivin@ I realize the "University" gets funding from a variety of sources. But the "University" is us...we collectively own it. So if I make a donation to the "University" I am making it to the people who own the University.


Wed, Dec 15, 2010 : 10:05 a.m.

Should the school privatize, would it still be correct to call it the University of Michigan?


Wed, Dec 15, 2010 : 10 a.m.

I have yet to see where "privatizing" has solved anything. It is a sellout to avoid the responsibilities of a governing body to adequately support needed services. Privatizing enriches "one person" at the expense of the others that are providing the services. In the end it generally costs that governing body more and tend hides accountability. As noted above, we should be looking for ways to bring everyone up rather than trying bring us down. "Craig" and "Rusty" appear to have correct perspective. I hope others will "get it" also.


Wed, Dec 15, 2010 : 9:53 a.m.

Just one note - Michigan has an endowment of 5 billion that could be used to offset the lack of public funding.

Alan Benard

Wed, Dec 15, 2010 : 9:50 a.m.

Privatization of institutions such as these is nothing more than legitimized theft from the people of the State of Michigan. Theft of opportunity for future generations, theft of treasure, and the subversion of democracy in education.


Wed, Dec 15, 2010 : 9:48 a.m.

I wonder how many people on this comment thread are either U-M employees, live in a household with a UM employee, knows a UM employee, etc? U-M employs over 20,000 people (Medical and Campus) alone. It's one of the largest employers in Ann Arbor, besides Thomson and the City. I wonder if they make U-M private, if all of the employees will stay or if the outside U-M companies will stay? U-M generates a lot of income for other businesses, not just its own. Think about it...


Wed, Dec 15, 2010 : 9:46 a.m.

$300 million sounds like a lot but it is only a small part of the University's 5.2 billion dollar budget. You can't say that taxpayer dollars are providing all of the benefits to U of M employees. Retirees don't have a defined benefit plan like legislators. They have a defined contribution plan that they can invest in various places. When they retire, they can buy annuities or use the methods the rest of us use to manage our retirement. Unlike many unionized private sector hourly workers, U of M employees also contribute heavily to their health and dental insurance.

Ted Annis

Wed, Dec 15, 2010 : 9:42 a.m.

Folks, Interesting discussion. Thanks. I believe that UoM would prosper even more if it were private. As an Ann Arbor taxpayer, I would love for the UoM to pay its fair share in property taxes so that we no longer subsidize one of the world's richest institutions.


Wed, Dec 15, 2010 : 9:42 a.m.

I have yet to see where "privatizing" has solved anything. It is a sellout to avoid the responsibilities of a governing body to adequately support needed services. Privatizing enriches "one person" at the expense of the others that are providing the services. In the end it generally costs that governing body more and tend hides accountability. As noted above, we should be looking for ways to bring everyone up rather than trying bring us down. "Craig" and "Rusty" appear to have correct perspective. I hope others will "get it" also.


Wed, Dec 15, 2010 : 9:39 a.m.

While we argue about average working class people's pay and benefits and whether they are bankrupting us, we ignore the 1% of the people who control 85% of the economy who comparatively pay far less of their "earnings" in taxes that average working class folks. The wealthy love it when we bash each other while they smile all the way to the bank. Talk of UM privatization? Just another distraction.


Wed, Dec 15, 2010 : 9:35 a.m.

Craig, Your argument would be stronger if the UM got ALL of its money from the State of Michigan. In reality, the University has a variety of funding sources, of which the State is just one comparatively small one. The University gets money from tuition, research, intellectual properties, the hospital/medical center, the athletic department, its endowment... the list goes on. The University gets the vast majority of its funding from sources other than the State of Michigan. Look at how much the State gives the University in comparison to its total revenue, and then ask where the University gets the retirement money. You'll find that the State is a minor player in the University's overall revenue picture, which also means that the state won't save much by cutting it loose. I think making the UM a private institution is a poor idea, but please, be very realistic about exactly how much the state contributes to the UM's care and feeding. Also, for those who think (mistakenly) that privatizing the university will magically put all of the university's property back on the tax rolls, think again. If the university were to go private, it would do so as a private, non-profit organization and would retain most - if not all - of the tax exemptions it currently enjoys, since non-profit organizations don't pay federal or state taxes on income, or property taxes on the property they own.


Wed, Dec 15, 2010 : 9:35 a.m.

Three things - 1. I am a former UM employee - all my benefits retirement benefits were from money I contributed to my 401K / 403b plans, that the University (Medical Center) matched. This is a defined contribution that UM is not on the hook for going forward. 2. Regarding the UM contributions to health care retirement plans, anyone who's been hired in the past 20 years (since 1988), who has to be vested and work for UM until they retire to collect, gets ZERO support for supplemental health insurance. None. To the extent it exists for ex-hires from before '88, it's going away. 3. My biggest question is, if UM privatizes, wouldn't it lose its property tax exemption on its real estate? And if so, wouldn't that either increase Ann Arbor /Washtenaw County property tax receipts and/or reduce everyone else's property taxes?


Wed, Dec 15, 2010 : 9:33 a.m.

I don't understnad why everyone keeps saying only rich people can send their kids to U of M! You have 18 years to plan and save for a college education for your children! Not considering any interest you could have made over the years, for kids attending today, it only required saving $450 per month from when the child was born to have the full tuition + room and board in hand before the child starts at U of M. "Non-rich" people are easily spending $450 per month on new car payments, fabulous vacations, smart phones, boats... It is a matter of how you set your priorities. BTW, if anyone thinks U of M is way more expensive than MSU, think again. I am currently making payments to both schools, and it is really pretty much the same.


Wed, Dec 15, 2010 : 9:31 a.m.

...or the UM could create a privatized (spinoff) College for interdisciplinary degrees and see what happens. But to privatize the WHOLE institute. Hail no.


Wed, Dec 15, 2010 : 9:27 a.m.

If the UM is privatized then all their land becomes private (read: taxable) Not sure if this anon group took this into consideration.


Wed, Dec 15, 2010 : 9:19 a.m.

Craig Lounsbury, A major part of retirement cost is health insurance including dental.If you look at the link I provided you will find taxpayers pay for these benefits for some and contribute to these benefits for others. While others may not consider that significant, I do. Not many retirees from the private sector will ever see that kind of benefit. To find the full retirement costs, you must dig down deeply.


Wed, Dec 15, 2010 : 9:15 a.m.

Ed's Ghost, The privatizers of today are a very different crowd from the ones who founded Harvard, Columbia, Yale, etc. "Private" now also means "for-profit." I do not think you can predict how the power of federally guaranteed student loans would play on the minds of the people who would be put in charge of this process. It is kept in check now only because there is no requirement that the U turn a profit. When that changes, the situation becomes more fluid.


Wed, Dec 15, 2010 : 9:15 a.m.

@timjbd - Or Princeton, Harvard, MIT, and Stanford? Depending on the corporate status of the UofM if it goes private, it may not have to pay any property taxes. I dislike the idea of a private UofM, but I would like a better accounting of how money is earned and spent at the university. Somehow we need to keep the tuition within reach of working families that do not qualify for low income tuition grants. Like it or not, the UofM is rapidly leaving the middle class behind and becoming an institution for the rich or poor.


Wed, Dec 15, 2010 : 9:15 a.m.

Ghost: I agree with most of what you say - academically, going private would most likely boost UM's ranking, because we would be freed from odious state interference, like Prop 2 (both of them), and Regents' concerns about their re-election. Financially, UM would be able to hold its own; in fact right now the in-state tuition break costs UM every year about 100M more than all state appropriations for the University. It would, however, be a significant blow to less affluent Michigan students and their parents. One correction, however: Even if UM went private, they would not pay taxes as long as they remain non-profit, like most top-ranked private universities (Harvard, Stanford, MIT, Caltech etc.) So no help for A2 coffers there.


Wed, Dec 15, 2010 : 9:11 a.m.

Excellent idea. This university is sitting on 7 billion dollars in cash. They don't need taxpayer support. As for saying that if you privatize then only rich folks will be able to attend, that is rubbish. Only upper middle income and rich folks can afford to send their children to this university anyway as it stands now.


Wed, Dec 15, 2010 : 9:10 a.m.

I agree with the statement of looking elsewhere. For example, a excessive amount of resources are spent on highly specialized and obscure PhD degrees that result in publications that only other highly specialized PhD candidates will ever reference. State institutions need research, but the balance needs to shift back towards educating the people of our state affordably. The mantra of educating Michigan for future high tech jobs is not obtainable for most when considering U of M. Some of the complaints about privatization are about admissions exclusivity. Well, U of M is already there private or not.

Craig Lounsbury

Wed, Dec 15, 2010 : 9:09 a.m.

Matt Cooper@ "Yes, that is the plan, however, none of that money is state money, and when I retire frome the U of M, I will not get a pension (or 401k) from the state." Where does the University 10% come from? I contend that since we the people own the University its all "state money" because we own the institution. Even private donations with an "earmark" are in essence donations to "the state". I understand you won't get a check from the state when you retire. But if 2 out of every 3 dollars in your plan are there either directly or indirectly (through investment growth) from the University that we all own then I think neither Cash nor Stan are accurate. Again I'm not bashing the plan I'm trying to understand the discrepancy between post #2(Cash) and post #3 (stan)


Wed, Dec 15, 2010 : 9:08 a.m.

Let's privatize the legislature instead.

Paul Crosby

Wed, Dec 15, 2010 : 9:02 a.m.

Let the University become private and also revoke their tax exempt status. It is about time that they pay their fair share of taxes to the city of Ann Arbor. Let the University act like any large private business and reduce their costs to provide a service(education). Let the University starting using the billions of dollars in endowment funds to reduce costs to their students. I would like to see their quality Operating system. The University only cares about grants funding not their undergrad students.


Wed, Dec 15, 2010 : 8:56 a.m.

No taxpayer money contributed to UM retirements? No taxpayer money paid toward UM retiree medical, dental etc benefits? Right.


Wed, Dec 15, 2010 : 8:56 a.m.

for the people making the privatized prison reference, many of the prisons across the country are already privately owned. It has had detrimental effects on society. The people who own these prisons push for harder criminal penalties, not for the sake of safety but to increase their profit margin. A perfect example of this is the failed "3-strikes" policy. People are locked up for life for non-violent crimes, which is a gold mine for the people who make money off of incarcerating the population. Don't let the "anti-tax" rhetoric fool you, privatization is nothing more than a ruse for the rich to make even more money.


Wed, Dec 15, 2010 : 8:54 a.m.


Wed, Dec 15, 2010 : 8:49 a.m.

Great! Bring it on! The new "owners" should pay the state full market value for he University and all related assets, including intellectual properties, branding, patents, etc. Can you imagine what would do for the state's coffers?! Then recognize the U as a "for-prifit" institution, tax it, and make it pay its own way for public services. I can't wait for my taxes to go down! Ain't gonna happen folks...

rusty shackelford

Wed, Dec 15, 2010 : 8:48 a.m.

This is actually not much to worry about, though the result would be catastrophic. "Privatizing" the U would require amending the state constitution (Article VIII, sections 4 and 5). Amending the constitution to abolish our public universities (which is what privatization amounts to) would be virtually impossible. Let's look elsewhere.

Matt Cooper

Wed, Dec 15, 2010 : 8:46 a.m.

@craig: Yes, that is the plan, however, none of that money is state money, and when I retire frome the U of M, I will not get a pension (or 401k) from the state. I can't state this for a fact because I am not that familiar with how the U spends it's money, but I would have a hard time believeing that the funds the U gets from the state is used to cover retirement bennies.


Wed, Dec 15, 2010 : 8:44 a.m. Check some of the health care benefits for retirees. If anyone thinks taxpayers aren't paying this, you're wrong.


Wed, Dec 15, 2010 : 8:36 a.m.

"Privatized pike in a public lake." I like that...: "You see, such disadvantaged students are desirable for the for-profit colleges because they qualify for federal grants and loans, which are largely responsible for the prosperity of the predators, the more bodies the colleges can 'ranch' the more money they make. When the students default and go back to alcoholism, drugs abuse, lock-down programs, mental institutions, prisons or the streets, you the taxpayer pay the government 97 percent of the loan, for you are covering the bet the students will graduate and pay their loan obligations, a bet not even Las Vegas would touch" And: "When public social institutions like colleges and universities collapse and when veterans return with GI Bills and no public institutions to attend, this is all good news for the predatory colleges, their owners and shareholders. For, as public colleges turn away students in droves due to financial collapse, it means more and more students will flock to the for-profit college centers in hopes of receiving an education and this, of course, means that like vampires, the schools can get their hands on more public monies - the GI Bill funds, Pell Grants, Title IV funds - all this while public institutions starve. Ah, the beauty of privatization, the free market. But it's hardly free as stated earlier, not with the large default rates in the billions that are shouldered by hard-working Americans who are forced to pay them. The only thing that is free is the public funds transferred to private coffers of these predatory institutions that see only an exchange value in education. The proprietary schools are now like privatized pike in a public lake."

rusty shackelford

Wed, Dec 15, 2010 : 8:34 a.m.

Johnnya2, instead of "privatizing prisons" (which sounds, quite literally, like Hell), the state could just decriminalize petty marijuana use. We did that in Ann Arbor 40 years ago, and the city has yet to resemble bedlam.


Wed, Dec 15, 2010 : 8:32 a.m.

Sweet! Maybe University of Michigan will one day be whispered in the same sentence as Strayer, DeVry, ITT Tech, Specs Howard, etc. Institutions with reputations so storied that the government will fully guarantee your prospects thereafter. Quote: "The students who are flocking to these schools are mostly poor and working class and they rely heavily on student loans to cover tuition. According to a College Board analysis of Department of Education data, 60 percent of bachelor's degree recipients at for-profit colleges graduate with $30,000 or more in student loans - one and a half times the percentage of those at traditional private colleges and three times more than those at four-year public colleges and universities. Similarly, those who earn two-year degrees from proprietary schools rack up nearly three times as much debt as those at community colleges, which serve a similar student population. Proprietary school students are also much more likely to take on private student loans, which, unlike their federal counterparts, are not guaranteed by the federal government, offer scant consumer protections, and tend to charge astronomical interest - in some cases as high as 20 percent" (...) *Student Victims as Prey* The for-profit predatory colleges, in their mad dash to suck up as much as they can in Title IV funds, Pell grants, and other government subsidies, thus enriching their investors at the expense of students, prey on and then wolf down the most disadvantaged students they can find. The for-profit predatory colleges sign up as many "borrowers" as they can - even pounding on homeless shelters to recruit bodies, looking for drug addicts they can enroll from recovery programs and all of this with debilitating consequences for borrowers who miss payments and borrowers' families. They set up at welfare offices, hang out at laundromats in low-income neighborhoods, recruit at public housing units, and their "recruiters" patrol the streets of distressed neighborhoods in automobiles or on foot looking for vulnerable working class bodies they can register for government cash."

rusty shackelford

Wed, Dec 15, 2010 : 8:32 a.m.

This would be a travesty. Privatization, in all cases, really just passes the buck to people who often can't afford it. Instead of the "government" (i.e. citizens) paying for something, citizens just pay for it out of pocket. This is actually a useful example because it shows pretty simply how privatization works. Right now, UM tuition for Michigan citizens is between $8k and $9k. "Privatization" would drive tuition up literally 400% or more for the U to keep pace with private universities of comparable quality. Sound like a good idea? A good deal to you? Privatization works the same way every time, this would just be a particularly egregious example. Why don't we all just hire Kelley Services to run the entire state government for us? I'm sure we could save a lot of money, paying the "CEO" (i.e. governor) and everyone else temp wages. We can abolish taxes! Just charge a $40 cover to enter any government building (on top of all other fees, of course).


Wed, Dec 15, 2010 : 8:31 a.m.

1. Privatizing the U is irresponsible and will cause the state to spiral into further oblivion. 2. I love this nugget " requiring local municipalities to provide police protection in lieu of Michigan State Police troopers", which basically is SHIFTING responsibility to local government. 3."privatizing a prison"- a private prison is called kidnapping. Part of the responsibility of the government is to hold prisoners. History of privatization shows an increase in prison related crimes (assaults on officers and other inmates). It also leads to a lower quality of service (increased escapes and recidivism)


Wed, Dec 15, 2010 : 8:28 a.m.

@bornandraised. I agree. could also set up the comments section so that people could respond under a comment rather than having to do the "@soandso" before every post. it'd be a heck of a lot easier to follow conversations on these threads.


Wed, Dec 15, 2010 : 8:17 a.m.

yes, privatize. why not ruin the best public institution in the country by making it so that only the filthy rich can afford to go. If you eliminate public financing you lose way more in scholarships and tuition support for the people this idea is supposedly helping.

Craig Lounsbury

Wed, Dec 15, 2010 : 8:10 a.m.

"UM employees don't get state retirement benefits. We contribute to a defined contributions 403(b) plan. But by all means, don't let that stop you from trying to spread misinformation." In the interest of accuracy, does the University not contribute 10% of your eligible gross income while you contribute 5%? So in essence when you contribute a dollar the University contributes 2 dollars for a total of 3 dollars? Please do not assume I am bashing the plan as a taxpayer..I am not. I'm just trying to understand whats really going on. I found this link below, am I understanding it correctly or is there something I am missing?


Wed, Dec 15, 2010 : 7:58 a.m.

Right on Stan, it's funny how some would rather bring others down then to bring themselves up.


Wed, Dec 15, 2010 : 7:57 a.m.

Whether this is a good idea or not remains to be seen. There is a problem in our culture that STAN points out. There are too many people out there who are stuck on their own view of the world rather than mingle that with correct information. Right now, there are a lot of children of Michigan families that are admitted to all the state universities that would be looking elsewhere if the universities were private (and able to operate on pure merit admissions) and not partially beholden to the state.


Wed, Dec 15, 2010 : 7:33 a.m.

Um, Cash... UM employees don't get state retirement benefits. We contribute to a defined contributions 403(b) plan. But by all means, don't let that stop you from trying to spread misinformation.


Wed, Dec 15, 2010 : 7:24 a.m.

The real savings is not in the annual aid allotment. The real cost savings would be in the beginning of the end of the state retirement and state retirement benefits for life for future UM employees. That is HUGE. This plan should include MSU in my opinion. We cannot afford the cushy retirement plans any longer.

Vivienne Armentrout

Wed, Dec 15, 2010 : 7:12 a.m.

This has profound implications for Ann Arbor aside from the educational implications. Most especially, the UM should give up its constitutionally protected status (if privatized) and become subject to Ann Arbor's laws, perhaps even taxes. I wrote about this over a year ago. See my proposal for a new name:


Wed, Dec 15, 2010 : 7:06 a.m.

It would be nice if the person/persons who drafted this document would put their names to it.