“There’s a lot more to the job than winning football games”: Three Lessons from the Dave Brandon Firing

1) Student Protest Gets Results. Even diehard sports fans had been complaining for years about rising ticket prices, low attendance, and losing records before a negligent coaching decision to put QB Shane Morris back in the game against Minnesota despite a concussion captured media attention and became a national scandal. Much of this attention was directed at Brady Hoke. But it was only when hundreds of angry students rallied on the Diag and outside President Schlissel’s house on September 30 that the message actually hit home. Notably, they aimed higher than Hoke and called instead for Brandon’s ouster. A month later, he was gone.

2) But the Real Problems Run Much Deeper. It’s great that the campus came together to oppose the mismanagement and corporatization of Brandon’s leadership, but it begs the question why the same attention wasn’t paid to the issue of sexual assault and institutional cover-ups within Michigan Athletics and on campus more generally. After Brendon Gibbons, who would later become the football team’s starting kicker, raped a woman in 2009 and his teammate tried to scare the survivor into keeping quiet, the Athletics department all but covered it up for four years—until his football eligibility had nearly expired. Then they expelled him. Although the rape didn’t take place during Brandon’s tenure, he nevertheless kept things quiet for nearly three years. Students organized among themselves and carried out actions in protest—one of the demos was even covered in the national news—but it didn’t “catch” among the student body. In the end, it’s not surprising that confronting patriarchy may not be as easy to get on board with as wearing a donor-funded #FIREDAVEBRANDON t-shirt, but that just shows how much work still has to be done.

3) Michigan Athletics and the Hydra of Financialization. The problem that the Hydra posed to Hercules was that you could not simply cut off one of its heads because another would grow in its place. The same thing is happening here. In fact, we could say that Brandon is but the second, not the first, in a succession of hydra heads promoting financialization. While Brandon presided over the rededication of the Big House following the completion of the stadium’s $226 million renovation and expansion in 2010, this project was set in motion 30 months before he stepped into office. On October 31, 2014, the next head was called forth. University President Mark Schlissel appointed James Hackett as a temporary replacement to the former Domino’s CEO-turned-Athletic Director. Hackett, CEO of Steelcase — the world’s largest office furniture manufacturer — brings a similar background in business and finance to the position that made Brandon the ideal candidate. Together, Hackett and Schlissel are looking for a new candidate to fill not so much a power vacuum, but a pre-determined role in the financialized research university.

As Stephen Ross said in a recent Wall Street Journal interview, “There’s a lot more to the job than winning football games.” To be successful, the new Athletic Director will have to, in Brandon’s words, “raise revenue, deploy capital, manage costs, market to a broad group of stakeholders…” And raising revenue and deploying capital are two things that Michigan Athletics certainly excels at. In 2009, Michigan maintained its status as one of six athletic programs with a budget surplus for the fifth consecutive year. This did not coincide with any cuts in spending; in fact, spending in 2009 increased by $5.5 million from the previous year. Since then, Athletics has seen an explosion of construction projects, turning South Campus into a modern Olympia. “Domino’s Pizza is a $7.5 billion company doing business in 72 countries, and the most capital I ever spent in one year was $40 million,” Brandon told the New York Times, while in his four years at Michigan he spent over $300 million on capital projects.

Can this growth, however, necessarily be seen as a good thing? One of the things we’ve found in our research on construction bonds and university debt is that the administration has a vested interest in weaning itself off of state funding in favor of privately funded bonds because this allows it greater flexibility in how it spends its money. This shift, however, comes at a cost. To attract private funding, the University, like any business playing the game of Wall Street, needs a good credit score. Wealthy students who can pay higher tuition is a great way to ensure a good credit score, but how do you attract wealthy students? One way would be to pump private bonds into athletics to construct state-of-the-art facilities for student use and pleasure, while at the same time bolstering an industry that profits off the unpaid labor of student athletes (In this way, the financialization of Michigan Athletics contributes to the ongoing restructuring of the university in general—making it less and less affordable, accessible, and diverse.

So who will be the next Athletic Director? It’s a question as ridiculous as asking who will be the next head of the hydra.

Unpacking the Myths of Financial Aid

This is part of an ongoing series of printable pamphlets designed to explain how money flows through public research universities in general and the University of Michigan in particular. The pamphlets are intended to clarify arguments and push back against pervasive and seemingly “common sense” narratives about the crisis of public higher education that impede, rather than advance, meaningful political action. We hope tactics and strategies will emerge from these counter-narratives—after all, we can’t fight what we don’t understand. Download the printable version of this pamphlet here and see the Resources page for the entire series.

Like many public research universities around the country, the University of Michigan has raised tuition significantly over the past two decades. But administrators argue that in the end tuition hikes don’t make it harder for low-income students to attend.[1] Through financial aid, they claim, the high tuition paid by wealthier students who can afford it is used to offset tuition for lower income students. The argument is that the “high tuition/high aid” model works like a kind of progressive taxation, so paradoxically what those who criticize the university’s high tuition are in fact advocating is punishing the poor.

Class Composition Pie Charts

Unfortunately, the administration’s theory has some serious problems. It is true that the poorest students at U-M receive excellent financial aid packages made up primarily of grants instead of loans or work-study, which means they aren’t forced into debt or exploited to pay tuition. However, the number of students who meet these qualifications is steadily decreasing in both absolute terms and relative to the entire student body. Looking at the class composition of the student body, we can see some major changes over the past 15 years. Between 1997 and 2010, the percentage of the student body whose family income is under $75,000 a year dropped from 38.5% to 26.5% (a decrease of 12%), while the percentage whose family income is over $200,000 a year rose from 14.8% to 27.6% (an increase of 12.8%).[2] The growth in the richest sector of students was so significant that they actually added an extra income category to the list—instead of the maximum being $200,000 and above, they bumped it up to $250,000 and added another in between. The latest data only confirm this trend. As of 2014, a full 31% of admitted students have a family income of $200,000 and above.[3] These changes in the socioeconomic status of the student body have also intensified the ongoing exclusion of underrepresented minority students on campus. The implication is that even as the university brings in more tuition money—and therefore, according to the “high tuition/high aid” model, more aid—the number of students who actually need this aid is shrinking significantly.

decline in grants

This problem is further compounded by another aspect of financial aid management. Public universities around the country are dedicating ever greater portions of their financial aid resources to “merit” aid, rather than “need-based” aid. In other words, less and less financial aid is going to low income students who truly need it. A recent exposé published by ProPublica tracks the decline in grants to low-income students between 1996-2012, and as the following graph shows this trend continued even through the financial crisis of 2008, which hit lower income brackets hardest.[4] Likewise, a recent report from the New America Foundation specifically highlights the University of Michigan’s record on financial aid as “disappointing.” Even as the percentage of students with financial need is decreasing, U-M is dedicating more and more money to financial aid. In 2010-2011, the university gave “merit” scholarships averaging $6,000 per student to 46% of its freshman class.[5]

Why would the university award aid in this way? Couldn’t it just adjust the ratio of merit aid to need-based aid? Unfortunately, the “high tuition/high aid” model only “works” when it’s organized like this. That’s because, for many university administrators, financial aid is not so much a form of charity as it is an instrument for maximizing tuition revenue. If that seems hard to believe, consider a recent article published in Forbes magazine about a new trend in the field of higher education finances: “financial aid leveraging.”[6] While in the past university executives thought of financial aid strictly as an expense, as public universities search for new sources of revenue they have begun to see it as a way of boosting not only the university’s prestige but also its tuition revenue. According to this new decision calculus, for example, they might choose to give “four well-heeled applicants with high SAT scores a 10% discount from its $50,000 tuition—rather than give one high-achieving, lower-income applicant the $20,000 scholarship she needs. The award of an extra $5,000 to rich kids might provide an ego boost that moves the needle—and bring in four students sure to pay the remaining $45,000 each year. That same $20,000 generated an additional $150,000 in relatively stable net tuition revenue.” Nicholas Hillman, a professor of education at the University of Wisconsin, put it this way in a 2012 article published in the academic journal Research in Higher Education: “By enticing students and their associated tuition dollars to enroll, colleges can strategically leverage aid to maximize (or at least enhance) the amount of net tuition revenue generated per aided student.”[7]

By following this model, the financial managers at the University of Michigan have decided to leverage financial aid dollars to craft a student body made up of increasingly wealthy and white students while at the same time bringing in as much unrestricted revenue as possible. From their perspective, the “high tuition/high aid” model is a complete success. For those of us who do not want to see another public university transformed into a privatized, profit-seeking institution, however, it has failed. In the corporate university, financial aid has become just another tool of privatization and exclusion.

1. The administration has put together a slick new website focused on challenging the “myths and misconceptions” of financial aid. Unfortunately, it leaves out the information we present here. Also see University of Michigan Public Affairs, “Understanding Tuition,” June 2014.
2. See CIRP’s “University of Michigan Student Profile Ten-Year Comparison” for 1997-2007 and 2000-2010 for the data used in this analysis.
3. For the most recent data, see SUM, “How Different is the Public University of Michigan from the For-Profit University of Phoenix? Ask Tim Slottow,” April 6, 2014.
4. Marian Wang, “Public Universities Ramp Up Aid for the Wealthy, Leaving the Poor Behind,” ProPublica, September 11, 2013.
5. Stephen Burd, “Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind,” May 2013, p. 24.
6. Maggie McGrath, “The Invisible Force Behind College Admissions,” Forbes, July 30, 2014.
7. Nicholas W. Hillman, “Tuition Discounting for Revenue Management,” Research in Higher Education 53 (2012), p. 264.

Download the pamphlet for printing: Unpacking the Myths of Financial Aid PDF

Civility and Racism at the University of Michigan

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University administrators have recently become obsessed with “civility,” using the buzzword as everything from clumsy justifications for an unethical firing of a tenured professor to a form of censorship used to restrain student activism. In the last few weeks, we’ve seen earnest statements issued by top executives at the University of Illinois at Urbana-Champaign, Berkeley, Penn State, Ohio University, and our very own University of Michigan. We’ll get to our beloved President Schlissel in a second but first, let’s rewind.

You’ve probably heard about the case of Steven Salaita, a tenured professor at Virginia Tech who was recently offered a tenured position at Univeristy of Illinois, Urbana-Champaign. He accepted the offer, and he and his partner resigned from their old jobs, rented a new apartment, and moved across the country with their kid. Then, about a week before the semester was supposed to start, the Chancellor of UIUC, Phyllis Wise, wrote Salaita an email saying she had decided not to forward the paperwork to the Board of Trustees, which is generally considered an automatic, rubber-stamp step in the process. In effect, the chancellor unilaterally fired (or “un-hired”) him. Apparently, a series of tweets in which Salaita had criticized Israel’s latest attack on Gaza had offended Israel supporters.

Students and faculty around the country have responded with outrage. Internal emails acquired through a FOIA request have revealed that the administration and trustees were targeted by a pro-Israel, anti-Salaita media campaign. Many of these emails used the exact same wording, suggesting not a grassroots campaign but a centrally-organized attack that had distributed specific talking points from on high. There were also emails from major donors, declaring that they would stop giving money to the university if the Salaita hire was confirmed. In other words, the administration of this public university caved under the financial pressure of wealthy donors and acceded to their fundamentally racist demands.

While these emails have made it clear what was going on in the background, Chancellor Wise insists that Salaita was not fired for his criticism of Israeli policy. Rather, she claimed in a message to the university community, it was because of his lack of “civility”:

What we cannot and will not tolerate at the University of Illinois are personal and disrespectful words or actions that demean and abuse either viewpoints themselves or those who express them. We have a particular duty to our students to ensure that they live in a community of scholarship that challenges their assumptions about the world but that also respects their rights as individuals.

As chancellor, it is my responsibility to ensure that all perspectives are welcome and that our discourse, regardless of subject matter or viewpoint, allows new concepts and differing points of view to be discussed in and outside the classroom in a scholarly, civil and productive manner.

As many critics have argued, this statement is completely absurd—do you really want to argue that there is no “viewpoint” that can be demeaned? (Not even, say, institutionalized racism like segregation or racial profiling? More on this below.) Overall, it seems clear that “civility” is being used here as a “discourse of power.” But it’s also important to consider the reason behind this power grab: the UIUC administration is attempting to secure the right to police the speech of campus faculty in order to more effectively capture private funding from donors. We’ve written before about how the increasing reliance on private donations makes the public university less democratic by subjecting it to the whims of rich individuals, and this is a perfect example of that process.

Strangely, since the UIUC administration’s statement on Salaita and “civility,” similar declarations have begun to appear at universities around the country. Most of these statements look more or less like the UIUC one and their timing suggests that administrations around the country see the need to exercise new forms of control on faculty speech, especially when it comes to social media. All these “civility” statements make it seem like administrators are acting in solidarity with each other—and against their faculty.

At the University of Michigan too “civility” has come to serve as a form of censorship. During his inaugural speech delivered on September 5 in the context of the Salaita firing, U-M’s incoming president Mark Schlissel called, much like UIUC Chancellor Wise and others, for a university “where we all become advocates for, and experts in, civil discourse.” But where other administrators have used “civility” as to control faculty speech, Schlissel is trying to control the actions of students, especially student protesters.

Schlissel lists a series of public figures who were scheduled to give commencement addresses at universities over the past year, including Condoleezza Rice (who helped orchestrate the Iraq war), Christine Lagarde (the head of the IMF), and Robert Birgeneau (ex-Berkeley chancellor who sent riot cops to beat student protesters during Occupy Cal). In each case, students used a variety of tactics, from petitions and public letters to interruption, to protest these speeches. Why, they demanded, should we be forced to listen to these people who, through their speech and actions, are responsible for harming people around the world? In his speech, Schlissel emphasizes the inconvenience and discomfort these figures faced in response to the protests but never touches on the serious implications of having these people speak at a public university.

To this Schlissel adds his personal experience as Provost at Brown University, where last year a coalition of students of color and community members interrupted a speech by Ray Kelly, the former police commissioner of New York who institutionalized racial profiling under stop-and-frisk and oversaw a massive surveillance program targeting Muslims. As Doreen St. Felix, one of the organizers of the protest, wrote at the time,

…stop-and-frisk is not just an idea. Racial profiling is not an intellectual puzzle to be spread across the table. Stop-and-frisk is a politically sanctioned system of police brutality, and one of the most conservative institutions in the US—the justice system—deemed it unconstitutional. We are committed to conversations, but until we work to change the inequality embedded in how they currently are carried out, as Brown Professor Tricia Rose urged in the university forum last night, we as a society will not be engaging in true and “free” political speech…

But President Schlissel defends this institutionally-supported racism. Not only should these students not have interrupted NYPD Commissioner Kelly’s speech, he continued, but they should have listened respectfully to his racist hate speech. Schlissel applauds U-M’s response to Ross Barnett as a model for student behavior. Barnett was the governor of Mississippi and an avowed segregationist who opposed civil rights legislation. Despite his staunch racism, he was apparently invited to give a speech here at U-M in 1963. From the institutionalized racism of Jim Crow to the institutionalized racism of mass incarceration and racial profiling today, Schlissel thinks that students should not resist but just sit quietly and listen.

You read that right. In his inaugural speech, Schlissel specifically defended a segregationist politician’s right to speak in the interest of “civility.” A politician who sought specifically to ban black students from the University of Mississippi. And this at a campus that became a site of dynamic anti-racist activism last year, when the #BBUM campaign and the sit-in at the undergraduate library brought national attention to the racism and microaggressions experienced by black students and other students of color at this university and universities across the country.

What goes completely over Schlissel’s head are the historical and political connotations of “civility.” Whenever white men in positions of power insist on remaining “civil” during a discourse, they are not speaking of objective rationale and a reasoned debate but of a highly censored environment in which their opinions and actions are the only ones deemed legitimate and any deviation is deemed uncivil and therefore inappropriate. They are actively invalidating the struggle and argumentation of the oppressed by implying that speaking out against the dominant system of power is inherently vulgar.

In Schlissel’s world, Salaita’s criticism of Israel’s mass murder of women and children is unacceptable, but granting public spaces for the likes of Ray Kelly and Ross Barnett to spew vitriol and hatred is “encourag[ing] all voices, no matter how discomforting the message.”

As this contrast reveals, the concept of “civility” is often used to marginalize people of color (especially women of color) by labeling them as naturally “irrational,” “threatening,” and even “violent.” Many critics have noted how the Salaita case demonstrates that administrators around the country, from Berkeley to Urbana-Champaign, are perpetuating these exclusionary discourses in order to neutralize any faculty speech that might jeopardize their private revenue streams. But what President Schlissel’s comments add to the “civility” discussion is its application to student protesters, particularly students of color. If Chancellor Wise’s statement about civility limits the promise of academic freedom for faculty, President Schlissel seeks to constrain the political activities of students, particularly students of color. But given the resistance of students on campus last year, we don’t think he’ll succeed.

(Photo by @MPowered)

Adieu, Mary Sue! A Critical Look at the Coleman Legacy

President Mary Sue Coleman officially passed the scepter to her successor Mark Schlissel on July 31st, and members of the U-M community have taken time to reflect, and heap praise, on her tenure as the University’s fearless leader. This official 7-minute video neatly sums up the story of “the amazing progress our university has made during Mary Sue Coleman’s 12 years as president.” SUM takes a less glowing view of her legacy, perhaps unsurprisingly—earlier this year a group of student organizations, including SUM, published an open letter to President-elect Schlissel taking stock of some of the problems 12 years under Coleman have left us. While Mary Sue packs her bags and prepares to return to the board seats she holds at Johnson & Johnson and the Meredith Corporation, we’d like to break down a few of the claims the video makes.

“Mary Sue’s role in entrepreneurship and commercialization cannot be overstated.”

We couldn’t say it better ourselves! According to Coleman’s administration, not only should education be thought of as an investment, rather than a social good, education ought to be business, through well-funded student entrepreneurship initiatives. Many of these initiatives foreground social goals, but even these serve to privilege enterprise over public infrastructure. When the University acquired the North Campus Research Complex from Pfizer in 2009, Coleman gave us her vision of the research university as corporate R&D department. With her vaunted fundraising chops and strong business background, she built an endowment capable of going toe-to-toe with any Wall Street hedge fund.

“Mary Sue has done an enormously wonderful job of transforming the Michigan campus in her 12 years.”

Indeed, former Michigan CFO and current University of Phoenix president Slottow, the construction boom President Coleman has presided over represents the largest increase in University bond debt in its history. It was spent on such projects as the glitzy but unpopular East Quad renovations and the $1000/month, seven-to-a-suite Munger “grad student dorms” presently under construction. Currently, the University owes $1.2 billion, primarily in construction bonds, and has spent an average of over $500 million per year for the last decade. All of that will have to be paid back with future students’ tuition—it’s no coincidence that in-state tuition has gone up 71% during her tenure. When the average student graduates with more than $30,000 in debt, are these projects really about “mak[ing] them most successful”?

“President Mary Sue Coleman has been steadfast around issues of diversity. She’s never lost sight of it, even when it has gotten harder and harder.”

As the shot of Coleman at the steps of the Supreme Court implies, “harder and harder” refers to the University’s successful defense in Grutter v. Bollinger and subsequent state affirmative action ban—don’t blame the administration if the proportion of underrepresented minority students fell steadily until the last two years of Coleman’s presidency, our hands were tied. But it’s not clear if that steadfastness in the courtroom carried over into policies beyond affirmative action—that proportion peaked in 1996 (around 14%), and was already in decline when Prop 2 was enacted in 2006. There are no excuses—the University of Michigan has systemic problems with diversity, and in 12 years it seems they haven’t changed.

“Because of Mary Sue Coleman, we have an organization called Voices of the Staff.”

Coleman led the University through multiple attacks on workers’ wages and benefits, while administrative pay has ballooned. To quote her earlier this year: “Everybody in this institution is working very hard, and some of my staff who don’t get paid very much are working harder than anybody else.” In addition to suppressing pay, she and the Regents have championed corporate-styled restructurings like this year’s “Administrative Services Transformation”. Under AST, over 300 departmental staff are being forced to reapply for their jobs, now in an off-campus office building. Not only were staff silenced when AST was announced—Coleman’s administration ignored the voices of students and faculty as well. Let’s not mistake easily-disregarded “sounding boards” for real democratic governance at U-M. Coleman was a poor friend to University workers.


This is our favorite idea in the video, that Coleman and the neoliberal vision of the University she presided over are wrapped up in some sort of indelible magic, a magic which perhaps justifies her undemocratic style of governance and exorbitant salary (a cool $1,037,357 including bonuses in 2013, all on top of her corporate income and options). That magic might also might help explain her Reaganesque immunity to criticism on campus. It’s imperative that we hold our new President and the Board of Regents accountable for their policies, or else see Coleman’s model of the corporate university fully supplant Michigan’s public mission. Because as much as we hate to rain on this parade, it’s important to be frank about where the Coleman presidency has led us—an increasingly exclusive and corporatized campus where public education seems like an afterthought. But hey, at least we got free bagels.

*nods to Cube*

The Darker Side of University Endowments

This is part of an ongoing series of printable pamphlets designed to explain how money flows through public research universities in general and the University of Michigan in particular. The pamphlets are intended to clarify arguments and push back against pervasive and seemingly “common sense” narratives about the crisis of public higher education that impede, rather than advance, meaningful political action. We hope tactics and strategies will emerge from these counter-narratives—after all, we can’t fight what we don’t understand. Download the printable version of this pamphlet here and see the Resources page for the entire series.

In November 2013, the University of Michigan launched its new capital campaign, “Victors for Michigan,” which aims to raise $4 billion from private sources primarily to be deposited in the endowment. If successful, it will be the largest in the history of public higher education, topping U-M’s previous campaign which raised $3.2 billion between 2004-2008. On the surface, big donations and a fat endowment seem great. However, the growing importance of the endowment and the university’s dependence on wealthy donors and Wall Street firms are among the factors transforming the contemporary university from a place of learning and knowledge production to something that looks more and more like a corporation—or, in this case, a global hedge fund.

The endowment is a collection of about 7,800 pools of money that are invested around the world.[1] The returns on these investments are then either reinvested or disbursed to different parts of the university, with each individual fund carrying certain restrictions regarding how it can be spent. These restrictions come from the individual donors, who unilaterally dictate that their money be used to fund a particular kind of scientific research, renovate a particular campus building, endow a specific professorship, and so on. A small percentage of the endowment’s returns (4.5%) is applied each year to university operations. Over the past five years, U-M’s $8 billion endowment has contributed an average of less than $300 million a year to operating expenses like professors’ salaries. The administration likes to talk up how 20% of this contribution goes toward financial aid, but $60 million is a drop in the bucket when you consider that tuition adds up to over $1 billion a year (and much of that aid is based on “merit” instead of financial need).

Building and managing this enormous investment portfolio is very expensive. Currently, there are 550 employees who work on what U-M calls “development activities,” including 175 “development officers” who engage directly with potential donors.[2] On top of that, the investment office has 18 employees who are paid a total of $2.7 million annually to oversee the university’s financial assets (in addition to the fees they pay to external fund managers).[3] Yet another expense comes from setting up regional offices around the U.S. and satellite offices in other countries.[4] All of these major expenditures are part of the rapid growth of administration relative to other areas of the university (such as instruction) over the last four decades. Add to that the cost of fancy events, like the “Victors for Michigan” launch party, which cost upwards of $800,000.[5] Donors don’t just hand over their money, so the university has decided it’s willing to spend hundreds of millions of dollars to encourage them to do so.

divest invest

At the University of Michigan, as at other institutions, funds are invested with regard to optimal profitability (even so, the endowment actually lost money in 2001, 2002, 2009, and 2012). As U-M’s chief investment officer recently declared, “We try to be blind to social factors.”[6] This means that the university, and consequently students, are literally profiting off of risky and unethical investments, including the fossil fuel industry, the occupation of Palestine, and real estate speculation around the world.[7] A look at U-M’s “Report of Investments” shows that the university is invested in everything from Mitt Romney’s Bain Capital to the tar sands of Canada (in total, U-M has over $1 billion in fossil fuels).[8] The constant pressure on investment managers to produce adequate returns pushes money into schemes that many members of the university community would actively oppose if they knew. There is no such thing as the Ivory Tower—the university is inseparable from mass layoffs at home and CO2 emissions around the world.

Despite this, the endowment has become a source of pride and sign of stability for institutions like U-M. Much like a corporate CEO announcing quarterly profit margins, the university president now annually releases the latest endowment totals. Today’s university president has turned away from education and increasingly looks like a glorified—and well-remunerated—fundraiser. At the same time, as the university increasingly seeks to attract wealthy alumni and philanthropists it listens to and values their voices and opinions over those of current students and workers. As a result, it not only begins to resemble its corporate sponsors but also feels the need to neutralize disagreement and suppress dissent by those who the donations are supposed to benefit. The endowment makes the university less democratic and less accountable to its community.

The ramifications of this corporate takeover of the university are apparent in the recent “gift” from Charles Munger, the Vice Chairman of the investment firm Berkshire Hathaway. In 2013, Munger pledged $100 million to build a new dormitory for graduate students at U-M. But the building will ultimately cost $185 million, which means the university will have to borrow, and thus pay interest using student tuition on, nearly half the price.[9] Nevertheless Munger, as the donor, got to design the building, which will be organized into 7-person luxury suites that will rent for about $1,000 per person per month, placing them far outside of the reach of grad student instructors living off of their stipends. Unsurprisingly, student responses to the plan have ranged from unenthusiastic to livid. Despite student criticisms, the university has pressed on and the dorm is set to open in 2015.

The administration says the endowment is a key part of the university’s finances. This statement is misleading at best. What’s certainly true is that the administration dedicates more and more of the university’s resources to managing these funds, while at the same time increasingly exposing itself to the fluctuations of the global financial markets. The proof is right in front of our eyes—even as U-M has brought in more and bigger donations, tuition has continued to rise faster than the rate of inflation, pricing out working class and underrepresented minority students. If we are serious about making this university public, the administration’s financial model has to change.

1. University of Michigan Public Affairs, “University of Michigan Endowment Q&A,” October 2013.
2. Peter Shahin, “Jerry May: Selling Blue for Green,” The Michigan Daily, November 12, 2013.
3. University of Michigan Salary Search, “Department: Chief Investment Officer,” 2013-2014.
4. Sam Gringlas, “Building Networks, Building the University,” The Michigan Daily, March 17, 2013.
5. “Victors for Michigan Campaign Launch Events Cost At Least $750,000,” The Michigan Daily, November 13, 2013.
6. Kellie Woodhouse, “10 Things You Should Know About University of Michigan’s Multibillion Dollar Endowment,” Ann Arbor News, March 26, 2013.
7. Giacomo Bologna, “Group Wants to Rid Endowment of Investments in Fossil Fuels,” The Michigan Daily, March 27, 2013; SAFE, “Support Divestment, Support Human Rights,” The Michigan Daily, March 16, 2014.
8. University of Michigan, “Report of Investments,” June 30, 2012.
9. Student Union of Michigan, “Why We Should Say No to the Munger Dorm,” The Michigan Daily, October 30, 2013.

Download the pamphlet for printing: The Darker Side of University Endowments PDF

Explaining Tuition Hikes at the University of Michigan

This is part of an ongoing series of printable pamphlets designed to explain how money flows through public research universities in general and the University of Michigan in particular. The pamphlets are intended to clarify arguments and push back against pervasive and seemingly “common sense” narratives about the crisis of public higher education that impede, rather than advance, meaningful political action. We hope tactics and strategies will emerge from these counter-narratives—after all, we can’t fight what we don’t understand. Download the printable version of this pamphlet here and see the Resources page for the entire series.

Why has tuition grown so much and so fast at the University of Michigan? According to the administration, it has to do with “the long-term decline in state funding.”[1] We’re going to show you why this story is at best incomplete and at worst manipulative. It’s true that since the 1970s politicians around the country have cut budgets for many social services, including public higher education. Using the chart on the following page, the administration argues that state funding made up 78% of U-M’s general fund budget in the 1960s, but by 2012 this number had fallen to 17%. The chart suggests that tuition has increased to replace it, and the two streams are about equal.

The administration's story

So what’s missing from the administration’s story?

First, it’s important to recognize that the university’s budget is far more complex than the chart suggests. There’s not just two streams of revenue into the university. The general fund only represents a small piece of the university’s operating activities. As the pie chart on the next page indicates, other significant revenue sources include federal research grants (about $1 billion), distributions from the endowment (about $400 million), and gifts (about $150 million).[2] Why is this important? It shows that, even when we take the state’s budget cuts into account, overall revenue at U-M is actually increasing significantly. Over the last decade, for example, total revenue for operating activities (excluding the health system) has jumped from about $2.2 billion to $3.4 billion per year.[3] During that same period, state funding fell by just $41 million, while the revenue generated by student tuition increased by an astronomical $466 million. Even if state funding had remained constant, there would still be a lot more money floating around in the system, and students are more than making up for the difference.

The full story

Second, the administration’s story only tells us about the revenue side of the equation, the money coming into the university. It completely leaves out expenditures, where that money is being spent. The administration’s chart would only make sense if expenditures had remained stable over time. But they haven’t. Two non-instructional areas where expenditures have grown significantly are administrative spending and interest payments (also called debt service). A recent AAUP report shows that since 1975, the number of full-time executives at universities across the country has increased by 141% and full-time non-faculty professionals by an astonishing 369%, while the number of tenure-line faculty has grown by just 23%.[4] This same process is happening at U-M—even during the recent financial crisis. From 2005-2010, administrative salaries at U-M increased by 27% while faculty pay increased just 18%.[5] In May 2014, the Institute for Policy Studies released a report titled “The One Percent at State U” which ranked U-M among the top five most unequal public universities, based on “excessive executive pay, highest student debt, and large increases in low-wage and/or contingent faculty labor.”[6]

Another expenditure that goes unmentioned in the administration’’s story is debt service. Since the University started debt-financing building construction in the 1990s, interest payments have become a growing share of its expenses. U-M doesn’t have tens or hundreds of millions of dollars in cash sitting in a vault under the Fleming Building, so when they want to pay for a new building they borrow money at low interest rates by issuing construction bonds. If you look at the documentation from one of these bond sales, which is called a prospectus, you find the University’s own projections of how much interest it is planning to pay out over the years. According to the most recent bond issuance, U-M will pay over $126 million in interest in 2014 alone, and continue to pay over $100 million a year through 2028.[7] (Of course, if the University borrows any more money between now and then that projection will be extended.) What’s even worse is that, as UC Santa Cruz professor Bob Meister has shown, the University achieves these low interest rates by pledging student tuition as collateral and demonstrating its ability to raise tuition at will.[8] That means U-M is making students take on more debt at higher interest rates so its own debt can be paid off at lower rates.

Third, the University actually has a vested interest in weaning itself from the state. Currently there are four main revenue streams into the University: state funding, federal research grants, the endowment, and tuition. The first three come with heavy restrictions. State funding, for example, generally has to be used for educational expenses only and is always subject to the will of fickle politicians. Federal research grants primarily fund specific research projects (including some overhead) and cannot be spent on anything else. The majority of the endowment is tied to specific targets chosen by the donors (an endowed chair, a special scholarship, a new building). Student tuition is unique in that it comes with no restrictions whatsoever, so it can be used for anything—interest payments, executive bonus pay,[9] even venture capital-like “entrepreneurship” initiatives.[10] Naturally, the administration prefers flexible sources of funding so it can spend the money however it wants, without oversight of any kind. As a result, in some ways the administration actually sees state budget cuts as advantageous, because they justify unrestricted tuition hikes, which leads to further budget cuts and so on, in an unending cycle of privatization.

The administration’s story about state defunding is just that—a story. It serves their interests because it absolves them of any responsibility and directs student and worker activism toward the state government instead of the administration itself. The counter-narrative we have presented here identifies the administration as a central protagonist in the privatization of the University. Even if the state were to increase funding to U-M, we can’t trust the administration to use that money as we would want—to lower tuition or hire back the workers they’ve laid off, for example. Through its own decisions, the administration has come to have a vested interest in the status quo.

1. University of Michigan Public Affairs, “Understanding Tuition,” June 2013.
2. University of Michigan, “2013 Financial Report,” p. 9.
3. Based on a comparison between the financial reports from 2013 (see above note) and 2004, which is available here.
4. John W. Curtis and Saranna Thornton, “Losing Focus: The Annual Report on the Economic Status of the Profession, 2013-14,” p. 7.
5. David Jesse, “Database: Compare Salary Increases for Administrators at 15 State Universities,” Detroit Free Press, March 26, 2011.
6. Andrew Erwin and Marjorie Wood, “The One Percent at State U,” May 21, 2014, p. 11.
7. Regents of the University of Michigan, issuance for General Revenue Bonds, Series 2014A and 2014B, February 12, 2014, p. 12.
8. Bob Meister, “They Pledged Your Tuition,” October 11, 2009.
9. Kellie Woodhouse, “University of Michigan Faculty Question Administrator Pay in Letter to the Board of Regents,” Ann Arbor News, April 25, 2014.
10. As Meister writes, “although tuition can be used for the same purposes as state educational funds, it can also be used for other purposes including construction, the collateral for construction bonds, and paying interest on those bonds. None of the latter uses is permissible for state funds.”

Download the pamphlet for printing: Explaining Tuition Hikes PDF

Construction Not Instruction: Bonds and Buildings at the Public University

This is part of an ongoing series of printable pamphlets designed to explain how money flows through public research universities in general and the University of Michigan in particular. The pamphlets are intended to clarify arguments and push back against pervasive and seemingly “common sense” narratives about the crisis of public higher education that impede, rather than advance, meaningful political action. We hope tactics and strategies will emerge from these counter-narratives—after all, we can’t fight what we don’t understand. Download the printable version of this pamphlet here and see the Resources page for the entire series.

Since the 1970s in the United States, there has been a shift from industry to finance as the driving force of the economy. Instead of investment in productive capital, money has been increasingly invested in the financial sector, seeking speculative profits. This money always seeks profitable outlets, namely projects, institutions, or individuals to which it can be lent to generate interest. Before 2007, as the graph on the next page shows, much of this money flowed into the housing and personal credit markets. After the financial crash, however, higher education became an important site of investment for the capital accumulated in finance, primarily in the forms of university construction bonds and student loans. Student debt is now the largest source of personal debt at over $1 trillion.[1] During the same time period, university construction debt has grown exponentially as well.

The transformation of the public university into a site of investment has had devastating consequences. In this pamphlet we will explain how these flows of finance capital affect the university, with a special focus on tuition and the overall demographics of the campus.


While students can take out personal loans via student loans or credit cards, universities get their loans through a different financial device known as a bond. A bond can be thought of as a package of smaller loans. Instead of borrowing money from just one bank to raise money for large construction projects, the university issues a bond as many little pieces of debt that institutional investors (like banks, pension funds, and hedge funds) then buy. The university then redeems these bonds at scheduled times in the future, paying back both the principle (the original cost of the bond) as well as a set rate of interest along the way. The large banks that help the university sell the bonds (think Bank of America or Citibank) then make money on the fees they charge the university for this service. The buyers of the bonds make money on the interest that the university agrees to pay them. For most construction bonds, their repurchase is spread out over 30 to 40 years.

As universities take on more and more institutional debt, tuition also tends to rise since after all they have to pay back what they borrow. Tuition is the only revenue stream that the university administration directly controls. The administration cannot count on increased revenue from the state or the endowment and both of these streams of revenue come with certain restrictions. But administrators can raise and spend tuition however they want. That means that they can give themselves raises, build legacy projects, and invest in luxury facilities that have nothing to do with education or research.[2] And rising tuition, of course, means that students must take on more student loans.

Universities have not always used bonds to debt-finance construction—they only started in the late 1980s and early 1990s. Before that, buildings at state schools were primarily paid for with state funds. With state funding, universities paid no interest and no service fees. So why did public universities switch to a more expensive form of financing their construction? One part of the answer is that state funding came with restrictions, so for example the state had control over the design of buildings, reigning in university administrators’ designs for legacy building projects. The utilitarian, concrete Modern Languages Building was built with state funds—and the state had the final say over the architect—while North Quad, with its LCD monitors and vaulted ceilings, was financed with bonds.[3]

Another part of the answer is that switching to expensive Wall Street-based funding has allowed public universities to build more: not just more buildings, but at a more rapid pace. This rampant construction became necessary as public universities switched to a model that relies on attracting wealthy out-of-state students and charging them exorbitant tuition. Because wealthy out-of-state students have many college options, universities have been sucked into a building arms race, building luxury facilities at a stunning rate. Over the last decade, University of Michigan has spent on average more than $500 million each year on new construction.[4] The majority of this construction (despite headlines about recording breaking “gifts” from wealthy donors) has been financed through bonds—money that must be paid back with interest. U-M will pay over $126 million in interest in 2014 alone, and continue to pay over $100 million a year through 2028.[5] More generally, “from 2002 to 2010 . . . [t]he total debt liabilities of public research universities increased by more than 50% to $26,615 per student—and debt service payments went up by more than 86%.”[6] Making these ever-increasing interest payments generally sparks tuition increases, creating a vicious cycle of vanity construction and tuition hikes.

Has this construction spree been necessary? No. These are luxury buildings built to attract “high end” consumers, out-of-state students willing to pay high tuition. Such construction actually makes the public university less accessible for and accountable to working and middle class students because it contributes to continual tuition hikes. Furthermore, the construction boom and the rising tuition on which it depends partially account for the exclusion of underrepresented minorities, since it privileges the whims of wealthy out-of-state students who tend to be white.[7] (This is not to ignore the university’s poor recruitment strategies, the hostile campus climate, and generalized white supremacy). In short, the debt-based growth exemplified by the University of Michigan is a key part of the evisceration of public higher education in favor of a small economic and racial elite.

Unfortunately, there will be no return to an entirely state-funded university. Even if the political will to fund universities did exist, states no longer have the money. The most direct problem, then, is not the state government but the class that has opened the university to capital: the university’s upper administration. Instead of seeing these executives and managers as necessary for the functioning of the university, we see them as obstacles, as the class responsible for its ruin. They are the ones who have tied the university to Wall Street, who have taken on massive debt loads and built an increasingly exclusionary university on the backs of students and workers. The university’s key function is instruction not construction, and students and workers have a lot of experience in such collective knowledge production. It should be left to us. In our vision, the university is democratically run by those who study and work there—the only way to address the misery and exclusion that the administrative elite so ably reproduces.

1. Cory Weinberg, “Federal Student-Loan Debt Crosses $1-Trillion Threshold,” Chronicle of Higher Education, July 17, 2013.
2. Bob Meister, “They Pledged Your Tuition,” October 9, 2011.
3. Howard H. Peckham, The Making of the University of Michigan, 1817-1992 (Ann Arbor: Bentley Historical Library, 1994), p. 303.
4. Kellie Woodhouse, “University of Michigan’s Mary Sue Coleman Named the Ann Arbor News’ 2013 Executive of the Year,” Ann Arbor News, November 1, 2013.
5. Regents of the University of Michigan, issuance for General Revenue Bonds, Series 2014A and 2014B, February 12, 2014, p. 12.
6. Charlie Eaton and Jacob Habinek, “Why America’s Public Universities—Not Just Their Students—Have a Debt Problem,” August 2013.
7. Data on the changing economic and racial composition of the U-M student body are available here.

Download the pamphlet for printing: Construction Not Instruction PDF