February 13, 2014

Senate Appropriations Higher Education Subcommittee

February 13, 2014

Testimony of Lou Anna K. Simon
President, Michigan State University

Welcome to Michigan State University.

We are the nation’s pioneer land-grant university.

  • When Congress passed the Morrill Act 150 years ago establishing the national land-grant concept, MSU was already up and running thanks to our state legislature and governor.
  • Since that time, MSU has had as our mission two key directives: first, to make a world-class education accessible to all, regardless of socioeconomic status, and second, to bring the latest in science into practice across the state.

The land-grant university concept was revolutionary for its time.

  • We take that mission seriously.
  • We remain committed to the land-grant mission of delivering our expertise to the people of Michigan, and well beyond, as we transform into a world-grant mission, extending the MSU footprint across the globe.
  • Today, MSU has become a leading-edge, world-class research institution with superb undergraduate and graduate education programs.

MSU today is a world-class research university committed to Michigan.

  • MSU is engaged in a relentless pursuit of excellence in the classroom as well as in the research laboratory.
  • Our students and Michigan’s employers demand high quality.
  • That requires everyone at MSU—students, staff, faculty, and administration—to perform with passion at a very high level.
  • We take pride in our football team’s Rose Bowl win.
  • But we also have “Rose Bowls” of excellence across the university, with world-class faculty, technology, and ideas earning recognition every day.

We want to thank Governor Snyder for recognizing the importance of the MSU mission, and of higher education generally, for the state.

  • His proposal to reinvest in higher education by increasing higher education funding by 6.1 percent is much appreciated.
  • It is in line with Business Leaders for Michigan’s support for additional investment in higher education.
  • After more than a decade of disinvestment in higher education, we fully support Governor Snyder’s budget request as proposed. It is a significant step in the right direction for the state of Michigan.

Arrayed around the room, you will see a number of posters, which attempt to depict some of the key issues facing higher education today and how MSU is handling those issues.

But before I begin, I think it would be helpful if we took a moment to dispel some of the myths that surround higher education these days.

The first of which is that higher education is spending out of control—that we are fat and not a good value. The second is that our students graduate with massive debt. Third, that our students aren’t getting relevant degrees. Fourth, that our students aren’t finding work once they do graduate. And fifth, that additional state investments in higher education will not improve the state economy. As we go through this presentation, I hope to address each of these points.

At MSU, we have long taken our duty to provide value to our students as a core part of our mission as a land-grant university. As the chart below shows, if you compare the total appropriation per student plus tuition per student in 2001 and in 2012, what you see is that the significant disinvestment in state funding has required a dramatic increase in undergraduate tuition. In fact, after inflation, the costs of higher education in the state went up by only $217 dollars (1.8 percent) over 12 years, and at MSU, that increase was only $65. Clearly, the shift away from higher education funding by the state was the key element in the increase in tuition costs for students.

Revenue constant after inflation reflects reduced appropriations: Chart showing the total appropriation per student plus tuition per student in 2001 and in 2012, which shows a significant disinvestment in state funding has required a dramatic increase in undergraduate tuition.

Revenues constant after inflation (reflects reduced appropriations) $65 Variance: Chart showing revenues constant after inflation reflecting reduced apppropriates for MSU with a $65 variance between 2001-02 and 2012-13.

Of course, we recognize that this shift occurred as a function of the reduced budget the state had as we went through a decade plus of terrible economic news. But this is why the governor’s call to reinvest in higher education is so crucial now that the state of Michigan is finally back on stable financial footing.

It should also be noted that we have previously documented to this subcommittee the fact that MSU has cut $110 million in annual budget, eliminated or modified 40 academic programs, eliminated postretirement health care, capped employee health care expenses at 5 percent, and have extremely little legacy pension debt compared to other entities in the state. (MSU went to defined contribution in 1973).

Michigan-Centric, MSU make an impact across Michigan: A map of Michigan shows where in the state MSU makes an impact through teaching locations, research stations, medical campuses, and partner hospitals. A chart shows 78 percent of MSU's students are in-state undergraduates compared to the 64 percent estimate across the Big Ten average. MSU forgoes $85 million in nonresident tuition support due to higher enrollment of in-state students.

MSU has a presence in every county in our state through our medical schools, research stations, partner hospitals, and MSU Extension.

  • As you can see, we have teaching locations, research stations, medical campuses, and partner hospitals in virtually all of the important population centers in the state, helping meet the needs of the community while we meet the needs of students.

We also take seriously our mission of educating the children of Michigan.

  • While we are proud that we are one of the nation’s top-10 institutions in attracting foreign students, who want a quality institution.
  • MSU has maintained a level of in-state enrollment that is well above the Big Ten average. MSU is presently about 78 percent in-state, the same level as in the 1960s, while the rest of the Big Ten averages around 64 percent.
  • By doing both, we are able to help Governor Snyder meet his goal of bringing to Michigan the best and brightest from around the world, while also bringing a world-class education to the best and brightest of Michigan.

It should also be pointed out that the majority of our graduate students in engineering and medicine and many other disciplines stay in Michigan.

Relentless pursuit of excellence and value: MSU ranks among nation's top 30 public institutions, according to U.S. News & World Report, including having 29 academic programs rank in the top 20 nationally. MSU is a Top 100 World University, according to Shanghai Jiao Tong University Survery, Times Higher Education. Chart shows MSU graduation rate of 77 percent outpeforms U.S. News & World Report predicted rate of 63 percent by 14 percent; second in the Big Ten.

When you think of MSU, we want you to think of excellence and value. Our students demand high value, while the employers of Michigan demand high-quality graduates. To that end:

  • MSU is a top-100 university in the world.
  • We have 29 programs listed among the top 20 in the U.S. News & World Report rankings.

And we are also a top performer in graduating students.

  • 77 percent of our undergraduate students graduate within six years, which is the national standard for comparing outcomes.
  • There are formulas that predict, based largely on socioeconomic status, the graduation rates of incoming students, and we outperform the U.S. News & World Report expected graduation rate by 14 percentage points.
  • That ranks second in the Big Ten for expected vs. real performance

High Performance: For energy, lowest unit cost among participating AAU public land-grant universities. For health care insurance, MSU five-year annual costs increased at 1 percent, compare to national average of 5.6 percent. MSU appropriations per student lag public Carnegie peers by approximately $3,700 per student, equates to roughly $166 million loss to the institution.

We also are high performers in operational efficiency. When compared to participating AAU major research land-grant universities:

  • MSU has the lowest energy costs.
  • We have the most efficient grounds operations.
  • And we have the most efficient maintenance staffing.
  • Significantly, MSU has managed to keep our employee health care costs capped at 5 percent, and our actual health care costs have been even lower.

That efficiency has enabled us to maintain our high quality despite getting $3,700 less per student from state appropriations compared to our national peers.

  • Just for comparison, if we were receiving the average of our peers, we would be getting $166 million more in state support each year which would be the equivalent of a 20 percent reduction in tuition for our students.

Middle class-Pell intensive: MSU maintains student/family income distribution during difficult times. The chart shows the number of families and income distribution represented in 2013 inflation-adjusted dollars. MSU has increased the number of low-income students admitted this year compared to its five-year average.

So we’ve talked a little about our commitment to pursuing excellence, our efficiency, and the fact that our state support is well behind our peers. We have managed to address all of these realities and still keep a focus on our students and their families, who are our top priority.

As you can see, we have actually increased the number of low-income students admitted to MSU this year compared to our five-year average. Access to opportunity is vital.

Aid administered by MSU increasing: Pie charts show aid administered by MSU from 2001-02 versus 2012-13. The total assistance in 2001-02 was $242 million versus $625.3 million in 2012-13. MSU funds an increasing proportion of student aid. Pell recipients at MSU in 2011-12 was 9,189 versus 5,168 at Carnegie peers, both public and private.

We do that by working hard to find every dollar possible for scholarship aid.

  • That includes taking dollars we could use for operations and using them instead for student aid.
  • You can see state support for scholarships has shrunk dramatically in the last decade, and MSU has stepped in to cover the gap.

MSU covers shrinking state support gap: Chart shows state support for scholarships has shrunk dramatically in the last decade, and MSU has stepped in to cover the gap.

Our commitment to access is also seen in our admitting students eligible for Pell Grants.

  • We have more than 9,000 Pell Grant students.
  • That’s almost one in every five students on campus.
  • It’s nearly 80 percent more than the average of our Carnegie peers.
  • And it’s approximately equal to all of the Ivy League schools combined.

MSU Student Debt lower that state and national averages: Chart shows proportion of MSU students with debt (46 percent), lower than state (62 percent) and national (71 percent) averages. It also shows average MSU borrowing ($24,890) lower than state ($28,840) and national ($29,400) debt.

Our commitment to efficiency and student aid also lets many of our students graduate without any debt and helps hold down debt for those who do.

  • Less than half of our graduates leave with student loans, well under the state and national averages.
  • Our graduates who do leave with debt end up owing less than the state and national averages.
  • We would argue they are getting a much better than average education.

This isn’t to say that there aren’t MSU students struggling with too much debt or that tuition isn’t higher than we would like. But this does demonstrate that MSU has done more than most other institutions in the country in dealing with these critical issues.

In addition, we have also attempted to address some of these challenges by employing nearly 18,000 in student jobs. You might be surprised to learn that nearly 60 percent of our students work in some capacity as they pursue their degree.

Collective Power moves Michigan economy and workforce forward: MSU's state economic impact exceeds $5.2 billion. Total spending with local businesses exceeds $466 million. Total graduates residing in-state exceeds 232,000. Chart shows MSU students are taing more STEM courses, up 29 percent over ten years.

MSU is also a mighty economic development engine for Michigan.

  • Our economic footprint is significant: a more than $5 billion impact on the state each year.
  • We make $466 million in purchases annually from Michigan companies.
  • We have 232,000 alumni in the state of Michigan alone.

I would be remiss if I didn’t take a moment here to discuss the importance of the University Research Corridor (URC) at this juncture. MSU is proud to partner with the University of Michigan and Wayne State University to form the URC. Collectively, we conduct more than 90 percent of the federally funded research in the state, and our economic impact is more than $16 billion. The URC has become both a platform for collaboration, and a promotional tool for the state and the universities to attract businesses and technological partnerships. MSU is a critical element of the URC, and our partnerships in the URC maximize the impact of our work.

  • I would note that there are a great many calls for universities to produce more STEM graduates.
  • As you will note on the poster, our students are taking more STEM courses. In the last decade, the number of STEM course hours is up nearly 30 percent. However, it is important to note that this shift to STEM comes with a cost. Those classes are more expensive to teach because of the materials and classrooms needed.
  • I would also note that STEM is not the be-all and end-all of degrees. First of all, STEM doesn’t always count agriculture or medicine, and it tends to devalue the other soft skills required in business. So while I applaud efforts to encourage students to seek degrees that matter, we have to be careful not to go so far as to overlook the needs elsewhere.

Collective Power moves Michigan student placement forward: More than 90 percent of MSU graduates are employed or continue education after graduation: employed 60 percent, continuing education 31 percent, not placed 4 percent, and no response 5 percent. Picture of MSU graduates in their caps and gowns. Student satisfaction: 92 percent of seniors rated their educational experience as good or excellent, and 86 percent would choose MSU if they started over.

At the end of the day, we are about our students.

  • Our self-reported placement rates are excellent.
  • Our surveys of graduating students show more than 90 percent are employed or are going on to further education.
  • More than 90 percent of seniors rank their experience at MSU as good or excellent.
  • Nearly 90 percent said they would do it again.

Graduate Education. It is sometimes easy for people outside the university to look at MSU as strictly an undergraduate institution. But it is absolutely critical to recognize that one of the key elements that makes MSU such a good undergraduate institution is the strong research and graduate education programs that exist on campus. Our graduate students are highly skilled and highly sought after.

We also know from our recent survey of URC alumni that our graduates are twice as likely to start a company than the national average for college graduates and that those graduates come from both STEM and non-STEM disciplines.

Collective Power moves Michigan research portfolio forward: Chart shows an increase in research dollars from $262,413,915 in 2000-01 to $501,538,016 in 2011-12. An 80 percent increase in a little more than a decade. Picture embedded of a male researcher as seen through a long tube at the Cyclotron Center.

We are, of course, a major research university. That’s a huge value added to our students—having access to the world-class researchers, labs, tools, and opportunities that come with bringing all of that excellence together. In fact, there are more than 12,000 undergraduate research experiences annually.

  • MSU attracts nearly a half-billion dollars a year in external grants and awards.
  • An 80 percent increase in a little more than a decade.
  • And in 2012, we had an 11.6 percent increase in expenditures over the prior year, the fastest growth in the Big Ten.
  • Our goal is to double this amount over the next decade.

Meanwhile, our nuclear isotope research program continues to be first in the nation and is a good example of how research brings opportunities to our students and value to our state.

  • MSU started its leadership in rare isotope researcher 50 years ago, when we lit up the first cyclotron on campus.
  • Fifteen years ago, our isotope research leaders recognized the need for a new tool to maintain their leadership for another generation. They invented the idea of the Facility for Rare Isotope Beams and put it in front of the worlds leading scientists, who agreed that it was needed and that MSU would be the place to build it.
    • Now MSU is going to be the site of this $730-million project.
    • We will be bringing federal funds into the state for Michigan jobs and Michigan companies.
    • It will receive $50 million or so each year for operations.
    • It already is spawning new job-creating companies, such as Niowave founded by a MSU researcher.
    • And because of our excellence in tools and faculty, we have the No. 1 nuclear physics graduate program in the nation, beating out MIT a few years ago.

Lastly, I want to address some of the myths about state investment in higher education generally. There are some who believe that more spending does not equal more graduates, does not mean a better economy, and that government involvement in higher education has led to distorted incentives and a poor return.

Let me say that since the times of Abraham Lincoln, this state has recognized that there was a direct link to access to education and improved economic conditions for all, not just the individual. The data is clear that the higher the percentage of the population that has a postsecondary degree, the stronger the economy, the safer the streets, and the better the schools. This is in part because individuals with a bachelor’s degree earn more than someone with only a high school diploma, but also because any post-high school education improves the ability of the individual to care for themselves and their families. But it is more than that. There is a public value to a higher education degree. First of all, it is never a bad thing to be exposed to new knowledge, and while time in a seat is not a guarantee of knowledge attainment, at least at MSU, our students graduate with much more than the latest facts. They graduate with an understanding of how to continue learning, how to think critically, and how to be a better citizen. All of which have a profound impact on the communities in which they live.

Finally, if we go back to the very reason for establishing the land-grant system in the first place, we need to remember that the reason for public support for higher education is to ensure that everyone has an opportunity to get a world-class degree—not just the rich. The investment by the state is the key to allowing the middle class access to the same world-class education the rich have always had access to. As for the return on that investment, I am proud to point to the 232,000 alumni living in Michigan and their accomplishments. Spartans have changed the world, and will continue to be the leaders in the generations to come.

This is what we do at MSU.

  • We pursue excellence.
  • We do it for our students.
  • And we do it in a way that benefits our state.

Thank you. I look forward to your questions.