Formula Budgeting for Higher Education in Michigan.

Abstract

This research examines the State of Michigan's attempts to fund higher education through the formula budgeting method. It is an extensively detailed descriptive analysis of the political process that is involved in the development of a new budgeting process. It was a process that involved the development of at least three different formula model approaches by three different agencies of state government. The intensive nature of the study provides a great deal of evidence which confirms, modifies, or brings into question the current theories about budgeting decision making for higher education. The study also includes a synthesized review of state, higher education, and formula budgeting theory. This study of Michigan formula modeling gives specific attention to issues of accountability, equity, adequacy, politics and how they relate to the budgeting methodology used to fund higher education. The Michigan formula models gave specific attention to such institutional issues as (a) differences in institutional complexity; (b) declining enrollments in some institutions; and (c) the fact that the state system includes an institution of unusually high national reputation and quality. In addition, the study details the difficulties in developing a new budgeting methodology in a state that has neither a routinized method for estimating the needs of higher education nor a central coordinating board for higher education--conditions normally necessary for formula model development and usage. The study clearly indicates that much of the literature on formula modeling holds true in even the most extreme cases. It also found that the main reasons for the failure of the formula approach are the level of the political nature of higher education funding and the advent of poor economic conditions in a state.