WASHINGTON — Michigan is losing $4.2 million in federal higher education funding as a penalty for having cut state support for colleges and universities too much.
The penalty was created by Congress in 2008 as a way to help keep college tuition down by trying to prevent cutbacks in state support.
But to avoid losing the $4.2 million grant to help Michigan's college participation and completion rate, the state would have to restore about $58 million from higher education spending that was cut in 2010.
"While the state is always interested in securing as much federal assistance as possible to bolster our educations efforts, Michigan remains committed to a budget that is structurally balanced for thefuture," said Kurt Weiss, spokesman for the state budget office. "Given the many other priorities in our budget, and given the commitment to structural balance, committing an additional $58 million was not a decision that made sense for Michigan."
Instead, Gov. Rick Snyder wants to spend $2 million of state funds to offset part of the loss of the College Access Challenge Grant award.
Tuition and fees at America's public colleges rose at more than twice the rate of inflation last year. The 8 percent increase occurred at the same time that 41 states cut higher education funding.
But tuition and fees have also gone up in better economic times. The biggest cost increase in the past decade was an 11 percent hike in 2004, according to the nonprofit College Board.
U.S. Education Secretary Arne Duncan has called state budget cuts "perhaps the largest drivers of tuition increase of public colleges over the past decade."
U.S. Education Department officials said the penalty program has been helpful in keeping states from cutting support, though they acknowledge the amount of money at stake is relatively small.
So the Obama administration has been pushing a new approach: making billions of dollars in campus-based student aid contingent on schools keeping costs down.
Many of the details have not been fleshed out, but college access and affordability is one of issues that President Barack Obama has signaled will be a theme of his re-election campaign.
Duncan said his department will work with schools and states to come up with how to measure which states deserve more federal aid and which less. The measurements could include net price, graduation and loan repayment rates and how well schools serve low-income students.
But there's concern among higher education officials about how the program would work.
"Our central concern with the proposal is the likelihood that it will move decision-making in higher education from college campuses to Washington, D.C.," said Molly Corbett Broad, president of the American Council on Education, which represents colleges and universities.
Mark Burnham, Michigan State University's vice president for governmental affairs, said that because public universities rely heavily on state support, Obama's proposal could end up holding public schools accountable for something they can't control. If the state doesn't have the money to fully fund higher education, public schools would have to make up the difference.
Net tuition and fees — the amount left after subtracting schools' aid to students — have increased from 16 percent of public schools' revenue in 1999 to 22 percent in 2009, according to the U.S. Government Accountability Office.
Small incentive
"The university is going to get significantly impacted but it doesn't change the state's financial circumstances," Burnham said of taking federal aid away from schools that raise tuition too much. "I'm not entirely sure that that incentive is going to encourage the states to change their behavior."
Likewise with the College Access Challenge Grant, the $4.2 million loss was not a big enough incentive for the state to come up with an extra $58 million.
The state Legislature will have to approve Snyder's proposal to make up some of the lost federal grant with $2 million in state funds. The Michigan College Access Network, which benefits from the federal grant, also plans to appeal to private donors to fill the gap.
The federal funds have been used for the Lansing Promise, which provides scholarships to Lansing graduates to attend Lansing Community College or Michigan State University. It also has helped pay for college advisers to help high school students plan, apply for and figure out how to pay for college.
