1977-01-26; Central Michigan Life

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n
Volume 58 No. 48
Mt. Pleasant, Mich, 48859
Wednesday, January 26,1977
Milliken presents state budget
■../.
'Mil recommended for *23.5 million
byJIMREINDL
LIFE Ass't. News Editor
LANSING-CMU is slated to
| receive a $23.5 million state
! appropriation as outlined in Gov.
| William G. Milliken's proposed
11977-78 state budget, Michigan's
budget director announced
Monday.
Central's proposed 1977-78
state appropriation is up
$1,889,667 (8.7 per cent) more
than this year's $21.6 million
appropriation. The recommendation is subject to the state
! legislature's approval.
Because the state is operating
on a 15-month fiscal year, ending
in October, Central will receive
three-fourths or $17,677,145.25
of the appropriation, if ap'
proved, from October through
next June. The state still will
owe CMU $5.4 million from fiscal
year 1976-77 when Central's
next fiscal year begins July 1.
Gerald H. Miller, director of
the Department of Management
and Budget, presented
Milliken's proposed budget
"ceiling" of $3,653 billion, which
includes $656,704j856 to state
higher education. This
represents! overall, a $57.9
million increase more than this
year, and includes $45.8 million
to four-year colleges and
universities.
> Arthur Ellis, CMU vice
president for public affairs,
responded with mixed reactions
to the news from Lansing.
• "While we've gained money, if
we want to look at what our
neighbor got we can make
ourselves unhappy," Ellis said in
a presentation on the recommendation Tuesday (see chart
this page.) Ellis spoke before a
sparse crowd in the University
Center Auditorium.
In November, Ellis said he
expected higher education to
receive no more than a 5 per
-cent raise—it received approximately a 6 per cent increase—and said CMU would
need at least a $2.9 million increase for 1977-78 to avoid a
'   deficit.
"We  still   have   a  potential
budget gap existing for the next
Increases compared
Recommended appropriations to state colleges and
universities were released Monday from Gov, William G.
Milliken's office. -The following' chart itemizes' the*-recommendations, 1976-77 appropriations to the institutions, the -
recommended increases and the percentage of change from the
1976-77 figures and the governor's recommended figures. The
proposed appropriations must go before the legislature.
Institution       Appropriation  Recommendation   Dollar    Percent
 1976-77 1977-78 change   change
CMU
EMU
Ferris
Grand Valley
Lake Superior
MSU
Michigan Tech
NMU
Oakland
Saginaw Valley
UofM
Wayne State
WMU
$21,679,900
25,479,800
15,261,300
9,709,300
4,112,300
107,147,200
14,895,400
14,781,400
14,235,500
4,605,400
123,810,400
73,299,800
34,622,500
$23,569,527
. 27,089,488
16,705,942
10,319,504
4,720,561
117,126,371
15,826,240
16,129,036
15,127.038
4,889,109
135,449,283
' 83,856,748
38,538,933
$1,889,627
1,609,688
1,444,642
610,204
608,261
9,979,171
930,840
1,347,636
891,538
' 283,709
11,638,883
10,556,948
3,916,433
8.7
6.3
9.4
6.3
14.9
9.3
6.3
9.1
6.3
6.1
9.4
14.4
11.3
year," Ellis said. However, he
said he believes it will be a
manageable gap that "rational"
people can deal with in a '
"rational"way.
Administrators have not
discussed ways to deal with the
gap, he added.
"Politically, there is a lot of
trouble before this (recommendation) will fly," Ellis said.
The governor's recommendation for higher education
is based on an "average cost"
formula funding model as opposed to the formula the
legislature is developing, which
is enrollment driven.
The legislative model
recommends CMU receive
$39,646,851 for fiscal year 1977-
78.
"What we have is two parallel
formulas," Ellis said. "Our task
now is to put one foot on the
back of each horse," and jump
off which ever goes lame.
\ Ellis said he expects Central
'will get "a lot of advice" during
state appropriation hearings on
what CMU should do with its
money.   '
"We're going to have to be
responsible in how we spend it
around (this) landscape to get
the legislature to maintain a
"hands-off attitude," he said.
The governor's model has a
built in two-year lag to protect
institutions with declining
enrollments. "There is ' no
question, where the thinking is in.
Lansings" Ellis said, referring to
the recent trend toward a
decline in enrollment at
Michigan schools. This trend has
not yet surfaced at CMU
although administrators are are
expecting it.
The governor's recommended
increase for Central represents
$203,908      for      increased
enrollments and $1,685,719' for
implementing his formula
funding model and "economic
factors."
Following the briefing, Fred
Whins, chief of the education
section in the budget department, said all state colleges and
universities were "guaranteed"
a 6.7 per cent increase in state
appropriations which he termed,
"the best they've been treated
in a long time."
The governor's higher
education recommendation also
reflects a statewide increase of 6
per cent in student fee revenues.
Former union employees of the recently closed Vic's Shop Rite, 705 S. Mission St, picketed the store.
Tuesday to protest new management's decision not to rehire many former union workers. Rick
Woodrack, new manager of the store, which now is called Rick's, said, "I ran an ad for applications in a
local paper and had quite a response—in excess of 150 applied. We ended up hiring 25." Three were
former Vic's employees. Dick Myfcrs, business agent for the union, said Woodrack should have anticipated problems by not asking previous employees to return to work {LIFE photoby Kirk Deatrick).
TOTAL
$463,640,200    $509,350,780   $45,707,580
Central's budget deficit
'appears to be easing'
i   byJIMREINDL
LIFE Ass't. News Editor
CMU's current budget picture
looks like a dark cloud with a
silver lining.
While the state again is
delaying checks to Michigan
colleges and universities, the
projected $300,000 CMU 1976-77
budget deficit appears to be
easing, Jerry Tubbs, vice
president for business and
finance, said Tuesday.
President Harold Abel also
said Tuesday he expects to have
a balanced budget by June 30 to
comply with the state, mandate
requiring balanced budgets by
Governor seeks deficit end
Plan offers 'rainy day' fund
byJIMREINDL
LIFE Ass't NewsEditor
LANSING - Michigan will be
on "The Road to Recovery and
Stability," in 1977-78 according
to the title Gov. William G.
Milliken has given his proposed
state budget totalling $3,653
billion.
To insure the state stays on
that road, budget officials have
built in a stabilization fund and
"cash balance restoration fund,"
Gerald H. Miller, Department of
Management and Budget
director, announced in a briefing
Monday.
Miller said both funds are
"high priority" items and added
the governor hopes the
legislature will enact them by
April 1 in order to keep state
appropriations to his proposed
level.
Miller said the April 1
deadline has not been discussed
with.legislative leaders, but he
added they have indicated their
support for such funds.
' The idea of a budget
stabilization fund has been
Kicked around the legislature
and executive office for some
time. Milliken's main argument
for establishing the fund is the
state's cyclical economy*
*, The idea behind the fund is to
put away money in good fiscal
years for "rainy days," when the
state faces a budget crunch.
Establishing a cash-balance
restoration fund is an attempt to
deal with the state's cash flow
problems, insuring there is
money to pay the state's bills
without deficit spending.
Currently a lack of available
cash has delayed state payments
to colleges, universities and K to
12 school systems. (See related
story, this pa^ge).
"Once the cash balance
problem is solved, all the money
would go into the budget
stabilization fund," Miller said.
Specifically, the fund would
work by establishing the state's
yearly real economic growth
level at 4 per cent, with. 6 per
cent added for inflation. The
inflation figure is subject to
yearly changes.
Thus* 10 per cent, or $128.8
million, of the state's estimated
1977-78 revenues, totalling
approximately $3,782 billion,
' will be deposited in the
stabilization fund and the
restoration fund.
This establishes the "budget
wiling*' of $3,653 billion.
Milliken has proposed $96.6
million of the $128.8 million be
deposited  in  the  restoration
fund and $32.2 million be placed
in the stabilization fund for 1977-
78.
In addition, he has recommended an estimated $6 million
surplus for fiscal year 1976-77
also be placed in the
stabilization fund.
Two items, among others,
have had a major influence in
turning a projected $99 million
deficit for fiscal year 1976-77
into the $6 million surplus.
' A $28,3 million surplus for
fiscal year ,1975-76 reduced the
deficit, and a favorable ruling by
the Michigan Supreme Court on
a Building Authority would net
the state $36.6 million more.
Overall, Milliken has
recommended spending levels
7-5 per cent higher than Miller's
estimate of this year's levels.
The governor's proposed budget
now goes to the Democratic-
controlled legislature and is
subject to its alteration. Milliken
has set June 30 as a target date
for the budget's passage.
State officials have termed
this fiscal year, ending Sept. 30,
a "transitional" one between the
"severely constrained" fiscal
years 1974-75 and 1975-76, and
fiscal year 1977-78.
Michijgan's econdmy continues
to improve, Miller said, with,
state revenues projected to
grow by 12 per cent. He said the
budget features "real program
growth."
This, and the fact problems
with the state's Single Business
(See "Stabilization" page 10)
state agencies at fiscal year
ends. ,
State Treasurer Allison
Green last week announced
Michigan's cash flow problems
again forced him to delay nearly
$160 million in state payments
to schools, colleges and local
governments for February.
He said checks would be split,
with the second half payment
possibly delayed until June or
•Tuly.
Abel said the Michigan
Council of College Presidents
intends to send a letter of
protest to Green to ask him to
"use his borrowing power, not
purs."
Delays in sending state checks
could end-provided Green can
use his "authority to borrow as
approved by the legislature last
year - if the state can present a
balanced budget.
However, a balanced budget
hinges on the Michigan Supreme
Court's decision on a state
Building Authority; an unfavorable decision could cost
Michigan money.
The latest delay of CMU's
monthly $1.7 million state check,
"doesn't change anything I said
before," Tubbs said.
He said the University
already has lost interest income
totalling between $20,000 and
$25,000 because of the delay in
January's check. The state still
would have to miss two months
in a row, Tubbs said, before it
severely would affect Central.
"Even if they do the rest of
them half on time and half at the
end of the month, we'll be
alright," he said.
After   staff   meetings   last
week, the budget picture has
(See "Checks" page 5)
University intervention
forces phone rate cut
by PAM KLEIN
LIFE News Editor
CMU's intervention in a
General Telephone Company
rate hike request of $10.2 million
has resulted in a $2,3 million
annual rate reduction for the
company. ,
The Michigan Public Service
Commission (MPSC) Monday
said the company must reduce
its income by $2,378 annually,
meaning a savings to all one
party residential and business
extention customers of approximately $6 per year. The
new rates become effective
today.
, University Attorney J. David
Kerr said he was pleased by the
outcome of the case, which does
not reduce Central's telephone
costs but prevents an expected
$50,000 per year increase for the
University.
"We're especially pleased
(with the decision)," .Kerr said.
"Not having that $50,000 increase is helpful with the other
problems we face."
He added jnany University
people participated in the intervention case by testifying
before the MPSC.
James Moor,- assistant
professor of economics, was the
University's witness on the
amount of money General
Telephone should receive as a
return on its investments, while
Leonard Plachta, professor of
accounting, testified on the
company's accounting and
management practices.
Kerr  added  Thomas  Repp,
University operations analyst,
(See "Rate cut—"page 8)
Inside:
—City schedules strike
meeting—page 3
— Tenant groups seek
handbook, truth
laws—page 5
— Chip cagers host Northern Illinois—page 13
•wmi
■KM