An Awkward Public-Private Partnership That's Actually Working

When Michigan business leaders came up with a plan to save their struggling state, it was outside everyone's comfort zone. But the result may transform higher education. 
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Students walk across campus at the University of Michigan, Ann Arbor

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?' "

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Fawn Johnson is a correspondent for National Journal.

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