Why U-M’s Billions Don’t Answer Every Budget Question

The University of Michigan reports billions of dollars in research activity. Its endowment is among the largest in higher education.

But recent staff and lecturer cuts at the U-M School of Public Health have raised a question many readers may already have about university finances: Why can’t U-M just use some of that money?

The answer comes down to a simple idea. U-M’s money is not all sitting in one flexible checking account.

The university reported $2.16 billion in research expenditures during fiscal year 2025, along with 1,672 research awards, according to U-M’s Office of the Vice President for Research.

But research spending and research awards are not the same thing.

In a written response to The Sun Times News, U-M Public Affairs said research spending is money spent to conduct university research. A research award is funding that covers the cost of conducting that work.

In plain language, a grant awarded for a specific project generally has to be used for that project. It cannot simply be moved to cover an unrelated shortfall elsewhere.

Much of the endowment works the same way.

U-M’s endowment totaled $21.2 billion as of June 30, 2025, according to the university. That number is real, but it does not mean U-M has $21.2 billion available to spend wherever leaders choose.

Public Affairs said the University Endowment Fund is the investment pool for more than 13,500 separately administered endowment and quasi-endowment funds. Spending from those funds is often restricted by donors and can only be used for the purpose for which each fund was created.

U-M’s public endowment materials say true endowments are permanent funds given by donors with the requirement that the principal remain untouched and be invested to support the purposes donors specified.

That means one fund may support scholarships. Another may support a professorship, academic program, research area or school. Even if U-M is financially strong overall, every dollar cannot automatically be shifted to the place with the most immediate need.

The endowment still plays a major role in U-M’s finances. The university says its fiscal year 2025 spending rule allowed $538 million in endowment distributions to support operations, more than the $373.4 million it received in state funding.

But U-M also says the endowment provides a “margin of excellence” and does not replace unrestricted money from state support and tuition.

MLive reported May 4 that the School of Public Health laid off two lecturers, partially laid off two others and eliminated or will no longer fill 15 staff positions amid budget issues.

In response to questions from The Sun Times News, U-M Public Affairs said the school is navigating a challenging environment affecting public health schools at many universities, including enrollment changes and reductions in federal research funding through at least the end of the decade.

That does not mean financial strain is not real. Nor does it mean every budget decision is beyond debate. But it helps explain why large university-wide numbers do not always mean flexible money for a particular program or position.

For readers, the takeaway is that the big numbers are real, but they do not answer every question by themselves.

To understand U-M’s finances, it helps to ask not only how much money exists, but what that money is allowed to be used for.