This article originally appeared in The Detroit News October 25, 2024. 

This Saturday’s Michigan State-University of Michigan football game pits residents against each other. Because everyone knows a fan of the other side, the rivalry is more chivalrous than others. We’re going to have to live with the fans of the opposition, so we can at least be neighborly.

But people should be good to their opponents for another reason. As a Michigan resident, you own both schools.

The universities are state institutions owned by the people and operated for their benefit. And we’re all going to vote for their governing boards a couple weeks after the game.

As part of public ownership, even die-hard Spartans are going to be forced to contribute to the University of Michigan, and vice versa. Lawmakers tax residents and give both the schools hundreds of millions of dollars.

But how much each school gets is the subject of debate each year. A large number of voters bleed green and white, and many others maize and blue, so there should be pressure not to favor one university over another.

Yet when you look at taxpayer support, state officials absolutely love the University of Michigan. Not so much Michigan State.

The latest budget gives the University of Michigan $11,695 per full-year resident student. That’s the highest funding per-student among state universities. The statewide average is $8,451.

Michigan State, on the other hand, gets slightly above the state average at $8,475.

That’s averaging taxpayer support to the number of residents each university educates. Lawmakers don’t give out money to state universities based on how many Michigan students go there, however. They give it based on politics.

Still, the University of Michigan comes out ahead no matter how you slice it. It gets $424.7 million from the most recent budget, around $106 per Michigan household. MSU gets $326.8 million, or $82 per household. The 13 other state universities split $932.3 million, or $233 per household.

The Legislature debates taxpayer payments to universities each year. Universities ask for more money and legislators decide whether to give it to them. There are some factors that determine how much legislators authorize.

The big one is the state’s fiscal trends. Lawmakers don’t have money to give to universities without taxing it from residents first. The money largely comes from the state income and sales taxes, so the state has more money to give universities when residents earn more and buy more.

What is not a big factor is the university’s performance. It doesn’t matter whether they’re charging students more in tuition, whether students get degrees and good-paying jobs after graduation, whether they master ancient Greek, contribute to the academic literature, make scientific discoveries or achieve any other academic outcome.

Even the popularity of a school to residents doesn’t translate into more funding.

This is unfair, it provides no accountability for good outcomes, and it has been a waste of money.

There is a better way. Thirteen states use enrollment-based formulas to determine how much taxpayer money state universities get. States can encourage the schools to give out more quality degrees at lower costs.

Changing from a funding system based on politics to one that encourages better outcomes will require political will from elected officials.

Lawmakers often take baby steps to more equitable funding. Sometimes they use state funding to encourage lower tuition increases. A new scholarship program funds students directly and in equal amounts rather than through the state’s inequitable university appropriations.

Let me suggest another small change. People care about football. Set aside state funds into a separate investment account then pay it out to the next state university to win a national championship.

Sound silly? It is. But contrast it with the arbitrary current policy, which only encourages the universities to lobby lawmakers for more funding. Residents don’t care about the levels of lobbying done by universities. But they care about national football championships. It would be a policy that encourages something people want.

The state rivalry shows that people want fair competition between schools. A funding formula that incentivizes the things residents want from the universities would be better than what lawmakers do now.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.