How Michigan Universities and Businesses Teamed Up to Save a Faltering State

The country’s most influential partnership to change higher education convinced a conservative Legislature to increase funding for public universities.

The Ann Arbor campus of the University of Michigan
National Journal
June 17, 2014, 6:58 a.m.

Michigan was in bad shape. That much was clear. From 2000 to 2010, the state ac­coun­ted for half of the 2 mil­lion jobs that were lost in the en­tire coun­try. Res­id­ents’ per­son­al in­come fell by 14 per­cent. It was the only state to lose pop­u­la­tion. The re­ces­sion that peaked na­tion­ally in 2008 star­ted early for Michig­anders. By 2006, high-level col­lege ex­ec­ut­ives in oth­er states already were look­ing down their noses at Michigan uni­versit­ies.

“We kept hear­ing, ‘Oh, poor Michigan,’ ” says Michigan State Uni­versity Pres­id­ent Lou Anna Si­mon. “We had to change the dia­logue.”

“If that [nar­rat­ive] star­ted to stick, our abil­ity to at­tract tal­ent and pro­fess­ors and R & D would be di­min­ished,” agrees Cyn­thia Wil­banks, vice pres­id­ent of gov­ern­ment af­fairs at the Uni­versity of Michigan. “We really couldn’t af­ford to lose that in ad­di­tion to what we were los­ing in the state.”

The sheer enorm­ity of Michigan’s eco­nom­ic plight also raised alarm bells among busi­ness lead­ers. A De­troit-based busi­ness roundtable, ori­gin­ally set up to re­vive the flail­ing city, took its or­gan­iz­a­tion statewide in 2009.

“We said to ourselves, ‘We can work De­troit un­til we’re blue in the face, but if the state is go­ing down the tubes, what good does it do?’ ” says Doug Roth­well, pres­id­ent of the group now called Busi­ness Lead­ers for Michigan, whose mem­bers in­clude gi­ants like Whirl­pool, Dom­ino’s Pizza, and Ford.

The real­iz­a­tion that Michigan’s stock was fall­ing fast drove to­geth­er these two typ­ic­ally di­ver­gent com­munit­ies — busi­nesses and uni­versit­ies — in what may be the coun­try’s most in­flu­en­tial part­ner­ship to change high­er edu­ca­tion. Over the last three years, the Michigan Le­gis­lature has in­creased fund­ing for state uni­versit­ies by 6 per­cent, re­vers­ing a steep, dec­ade-long de­cline. What’s more, the uni­versit­ies have agreed to tie their fund­ing to per­form­ance in­dic­at­ors such as the num­ber of gradu­ates they turn out and the num­ber of dis­ad­vant­aged stu­dents they en­roll.

What is re­mark­able about this achieve­ment is that these un­likely part­ners did something that the fed­er­al gov­ern­ment and oth­er states have not man­aged to ac­com­plish. They took a well-ac­cep­ted eco­nom­ic idea — that more col­lege de­grees from a more di­verse pop­u­la­tion cre­ates more growth — and turned it in­to a set of con­crete bench­marks. The plan is out­side of every­one’s com­fort zones. The uni­versit­ies squirmed at be­ing meas­ured. The Le­gis­lature needed cod­dling to agree to in­crease fund­ing. At each step, the part­ners have lever­aged their al­li­ance with each oth­er to coax their re­luct­ant com­rades to go along.

The key play­ers still are shocked that their col­lab­or­a­tion is ac­tu­ally work­ing. They agree that the ex­per­i­ment could have fallen apart at any stage. “It was push­ing a boulder up­hill,” Wil­banks says.

On the high­er-edu­ca­tion side, the trans­form­a­tion star­ted when the state’s three biggest uni­versit­ies — Uni­versity of Michigan, Michigan State, and Wayne State Uni­versity — formed a re­search cor­ridor de­signed to com­pete with oth­er re­search clusters in Cali­for­nia, North Car­o­lina, and Texas. They wanted to com­bat the no­tion in uni­versity circles that Michigan’s high­er-edu­ca­tion sys­tem was on the de­cline.

Michigan had gone from be­ing a top 10 “af­ford­able col­lege state” to be­ing in the bot­tom 10 in high col­lege costs. Tu­ition and fees in the state’s 15 pub­lic col­leges doubled between 2000 and 2010, from roughly $4,000 a year to more than $8,000. Those fee hikes were dir­ectly re­lated to budget cuts over the same peri­od, res­ult­ing in a loss of nearly 20 per­cent of state fund­ing to pub­lic uni­versit­ies.

As part of their ef­forts, the trio of schools joined the newly broadened Busi­ness Lead­ers of Michigan, or BLM, in an at­tempt to bol­ster their cred­ib­il­ity among state law­makers and the pub­lic. BLM is a polit­ic­al force in Michigan. Its mem­ber com­pan­ies make up one-fourth of the state’s eco­nomy. They are re­spons­ible for 320,000 jobs. When they need something, they get a bunch of their pres­id­ents to start mak­ing phone calls to law­makers, who are of­ten sur­prised by their tenacity, ac­cord­ing to Dom­ino’s Pizza Pres­id­ent Patrick Doyle, BLM’s vice chair­man: “After five or six or sev­en, that prompts a phone call to [BLM Pres­id­ent] Doug, say­ing, ‘How many more of these do I have com­ing?’ “

The state uni­versit­ies needed strong al­lies like that, es­pe­cially use­ful be­cause they were out­side of the high­er-edu­ca­tion world. “We needed to break down what were polit­ic­al bar­ri­ers to ad­van­cing high­er edu­ca­tion,” says Michigan State’s Si­mon. “We had to be viewed as an as­set, not a li­ab­il­ity.”

“Li­ab­il­ity” was ex­actly how a lot of busi­ness types and state le­gis­lat­ors saw the uni­versit­ies. “The pub­lic in Michigan his­tor­ic­ally has placed a pretty low value on high­er edu­ca­tion,” says Doyle. For a long time, he says, Michigan kids have gradu­ated from high school and gone straight to the fact­ory floor and made “a pretty good liv­ing.” The auto in­dustry’s de­mise hasn’t altered the pub­lic’s view of that tra­ject­ory, even if the eco­nom­ics show oth­er­wise.

In fact, Doyle says the reas­on that BLM re­cruited the uni­versit­ies to be mem­bers was be­cause an in­de­pend­ent ana­lys­is it com­mis­sioned showed high­er edu­ca­tion to be a crit­ic­al eco­nom­ic driver for the state. That sur­prised him. Michigan is a blue-col­lar state. His busi­ness is pizza. “I knew noth­ing about it oth­er than the ob­vi­ous, which is feed­ing high­er edu­ca­tion for many, many years,” he jokes.

The uni­versit­ies had to con­vince ex­ec­ut­ives like Doyle that they wer­en’t spend­ing stu­dent tu­ition dol­lars willy-nilly. They demon­strated, for ex­ample, that their em­ploy­ees paid up­wards of 30 per­cent of their health care premi­ums and con­trib­uted to their own re­tire­ment funds. They don’t have cushy pen­sion plans. “We were burdened with old per­cep­tions,” Doyle says. “I didn’t un­der­stand that the tu­ition in­creases were com­pletely a factor of fund­ing cuts, dol­lar for dol­lar.”

The uni­versit­ies already were im­ple­ment­ing sys­tem-wide cost-cut­ting prac­tices and eval­u­at­ing their pro­gress with out­side ac­count­ants, but BLM in­sisted that they make those ef­forts more trans­par­ent. The three Uni­versity Re­search Cor­ridor schools cre­ated web­sites and pub­lic re­ports. Then, us­ing their mem­ber­ship in BLM, they ca­joled the state’s oth­er 12 uni­versit­ies to do the same thing.

To con­vince a skep­tic­al pub­lic, BLM’s mem­bers put their mar­ket­ing skills to work. They con­duc­ted pub­lic-opin­ion polling and then craf­ted pub­lic-ser­vice an­nounce­ments around their find­ings to coun­ter­act neg­at­ive at­ti­tudes to­ward the state schools. They held town halls and con­tac­ted every ed­it­or­i­al board in the state.

And when it came time to con­vince the Le­gis­lature to in­crease the budget for state uni­versit­ies, BLM turned to stu­dents. They set up kiosks out­side cam­pus din­ing halls with cell phones and com­puters primed with law­makers’ email ad­dresses and phone num­bers so stu­dents could con­tact their le­gis­lat­ors. Some­times they gave away free cof­fee.

Every­one agrees these out­reach ef­forts would have been for naught if the uni­versit­ies hadn’t agreed to be meas­ured and make their fund­ing con­tin­gent on their scores. The Le­gis­lature wasn’t just go­ing to give the money away. Through pain­ful ne­go­ti­ations and a lot of data ana­lys­is, the three re­search-cor­ridor uni­versit­ies and their busi­ness part­ners came up with an eval­u­ation sys­tem based on six met­rics — crit­ic­al-skill de­grees, re­search and de­vel­op­ment, their six-year gradu­ation rate, total de­grees awar­ded, in­sti­tu­tion­al sup­port from donors, and the num­ber of Pell grant stu­dents. It awards each school full points for each met­ric in which they are in the top quin­tile of com­par­able uni­versit­ies around the coun­try, a lofty bench­mark.

Three years in­to a 10-year pro­ject, evid­ence of a turn­around is in sight. Pub­lic opin­ion of the uni­versity sys­tem has im­proved by 25 per­cent, ac­cord­ing to BLM. All of the state’s ed­it­or­i­al boards sup­port them. They got 80 per­cent of the money they wanted for the schools this year. Doyle says his goal is to have the state uni­versity sys­tem fun­ded at $2 bil­lion an­nu­ally by 2019.

It will take longer for the eco­nom­ic im­pacts of the scheme to be ap­par­ent, but BLM is in it for the long haul. The sys­tem they came up with, much like the cars and ap­pli­ances that Michigan is fam­ous for pro­du­cing, is built to last. It should en­dure through mul­tiple le­gis­lat­ive ses­sions and gubernat­ori­al ad­min­is­tra­tions, through eco­nom­ic up­turns and down­turns, and hope­fully through sev­er­al gen­er­a­tions of stu­dents. Pres­id­ent Obama, who has made col­lege com­ple­tion his own cru­sade, would be proud.

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