ANALYSIS: CMU’s colleges make average of $3,400 off each student

This is the third in a series on Central Michigan University’s operating budget.

By John Irwin

Tuition revenue are projected to outpace expenses at Central Michigan University’s six major colleges by $92 million this academic year.

Excluding the College of Medicine, which operates with a nearly $20 million deficit, CMU’s six other colleges were projected to bring in about $239 million in tuition revenue this academic year, according to the university’s 2014-15 operating budget. Total expenses, including faculty and staff compensation, bonuses and supplies, were projected to total around $147 million, meaning they run on a profit, so to speak, of $92 million.

To put that into perspective, each of CMU’s 27,000 students would each receive $3,400 if that $92 million was equally distributed among them.

That money would reduce annual tuition payments for a full-time student by roughly 30 percent.

The colleges weren’t always set up to be moneymakers for the university.

As the chart below shows, it was only 10 years ago that the colleges basically broke even. Since then, however, CMU has essentially overcharged students by hundreds or thousands of dollars per year.

Figures exclude the College of Medicine and ProfEd, now known as the Global Campus.
Note: Figures exclude the College of Medicine and ProfEd, now known as Global Campus.

To be sure, much of the excess college tuition funds go toward non-revenue programs that directly benefit students, including scholarships and financial aid and library expenses, after they enter the general fund.

That money also goes toward programs the average student will never use or are, at best, indirectly affected by, including athletics, the medical school and charter schools.

So, what gives? Why are CMU students paying $3,400 more than they otherwise would had they just been paying for their education?

The reasons are complex, but chief among them is a steep decline in funding from the state of Michigan.

As previously reported by CMU Insider, state appropriations have been cut in half, roughly, since 2000. As less revenue has come in from the state, the university has responded by raising tuition on students by about 72 percent over that same time span. Much of those tuition increases came while the university instituted its “CMU Promise” program that froze tuition rates for students as they entered college in the mid-2000s. During that time, tuition rates jumped at an average rate of 22 percent per year.

Also not helping matters: CMU’s declining enrollment figures. On-campus enrollment is down 6.7 percent since its peak in 2010, meaning CMU has lost significant revenue in tuition, room and board and other fees.

In short, CMU’s main revenue streams have dried up significantly over the last decade. Faced with a choice between significant cutbacks or higher tuition rates — and more debt — for students, the university’s leaders have (mostly) chosen the latter.

Come back next week for more on CMU’s operating budget.

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