1 Negotiating in Challenging Times: The State of Michigan Howard Bunsis Professor of Accounting: Eastern Michigan University National AAUP: Vice Chair Collective Bargaining Congress National AAUP: Secretary-Treasurer State AAUP: Treasurer Michigan Conference AAUP Local AAUP: Treasurer Eastern Michigan AAUP

2 Regional Unemployment Rates Source: Bureau of Labor Statistics. 4/17/09 Budget Challenges in Michigan

3 State Unemployment Rates Source: Bureau of Labor Statistics. 4/17/09 Budget Challenges in Michigan

4 National and Michigan Unemployment Rates: 1976 to 2009 Budget Challenges in Michigan

5 State Budget Deficits Source: Center on Budget and Policy Priorities: March 13, 2009 Budget Challenges in Michigan

6 Legislative Strategies and Political Climate

7 Michigan Ranking in Funding for Higher Education Michigan Ranks 38 th out of 50 States in per capita higher education spending 49 th out of 50 in percent change in higher ed spending from 2004 to th out of 50 in percent change from 1999 to 2009 Source: Grapevine Project at Illinois State University (published Feb 2009) based on Appropriations of State Tax Funds for Operating Expenses of Higher Education in the 50 States Legislative Strategies and Political Climate

8 Tuition Affordability Average tuition at 4-year public universities Michigan: 7 th highest in the country at $9,079 –U.S. Average: $6,537 –High: Vermont: $11,341 –Midwest average (12 states excluding Michigan): $6,921 –Low: Wyoming: $3,621 At Eastern Michigan, tuition is approximately $34,000 for 30 credit hours/year for four years It costs $34,000 to house one prisoner for one year Source: College Board, October 2008; Lansing Journal, 1/ Legislative Strategies and Political Climate

9 Percent of Adults With > Bachelor’s Degree (Source: U.S. Census Bureau, 2007) Legislative Strategies and Political Climate

10 Conclusions on State of Michigan Spending for Higher Education Legislative Strategies and Political Climate

11 Specific Metric to Consider: Change in Instructional Costs Source: Michigan Higher Education Institutional Data Inventory (HEIDI) April Impact on the Bargaining Process

12 Management Perspective GM, Chrysler, Ford Unemployment rate in Michigan What does this mean? –Reduced hiring or hiring freezes –Wage freezes or cuts –Significant increases in health care costs borne by faculty and other unionized employees GM, Chrysler, Ford The State is broke We are broke GM, Chrysler, Ford Impact on the Bargaining Process

13 More Reliance on Tuition Impact on the Bargaining Process

14 Union Perspective Faculty salaries are only 20-25% of total expenses at most universities. If benefits are included, you get to just over 30%. Tuition is going up – but not because of faculty salaries. –They are increasing because of higher administrative costs, and of a shifting of priorities by administrators –Rock climbing and sports We are not GM, Chrysler, or Ford Examine the financial statements of universities, using precise metrics to judge their financial strength Bond ratings remain strong Impact on the Bargaining Process

15 The State Appropriation is Flat Impact on the Bargaining Process

16 More Perspective If Michigan is going to turn around, it must invest in human capital, and invest in education. We share this goal with administration Every administrator will say they respect faculty and appreciate their concerns. However, words are not always supported by actions. Look at the numbers: –Percent of overall spending devoted to academics –Increased cost-shifting in health care above overall health care cost increases –Decline in hiring Impact on the Bargaining Process