Financial Report 2005

Letter from the President

This year marked several important milestones for the University of Michigan—milestones that signal future strength and impact. I am pleased to report significant progress on major initiatives, along with new projects that will sustain and enhance Michigan’s academic leadership in the years ahead.

Going Where the Science Goes

The University’s research strength is the backbone of its academic quality. This year we generated $778 million in research expenditures, making Michigan one of the largest academic research universities in the country. The life sciences represent more than half of all research funding at the University. Coupled with our own significant investments in facilities and in the recruitment and retention of faculty in areas from medicine to engineering, Michigan now has an internationally recognized and thriving life sciences effort.

In the past year, we have announced several new initiatives aimed at the life sciences:

• Brehm Center for Type I Diabetes Research: Made possible by a remarkable $44 million gift from William and Delores (Dee) Brehm, this comprehensive center will accelerate the search for a cure for this debilitating disease.
• The Michigan Nanotechnology Institute for Medicine and Biological Sciences, with Director Dr. James R. Baker, Jr.: Nanotechnology offers amazing promise at the molecular level, for everything from drug therapies to nasal nanovaccines.
• The U-M Center for Stem Cell Biology, under the direction of Dr. Sean Morrison: Housed in the Life Sciences Institute, this exciting new initiative will bring together many disciplines, using stem cell science to answer questions of fundamental human biology—such as how specific tissues are formed and how cells communicate with one another.

Enhancing the Student Experience

This year we have focused tremendous time and attention on projects that will enhance the student residential life experience. We have unveiled plans for major building and renovation of student residential space so it connects more seamlessly to our students’ learning environment and enhances the overall quality of contemporary student life. We want the student experience to be vibrant and interconnected in all its facets.

The centerpiece of our plans will be the North Quad Residential and Academic Complex, an innovative facility we announced in October 2004 that will blend residential and academic space in a unique format that has the potential to be a model for living and learning communities nationwide. The North Quad Complex will feature a suite-style residence hall integrated with a technology-rich, multi-media learning environment—including studio, performance, and teaching spaces that can be used by classes and more informally by students and faculty outside of a structured class environment.

Leading a University that is Engaged and Accessible

My vision for the University’s future includes a deep commitment to two important values: engagement with the world around us and accessibility to University knowledge and resources. In the past year, Michigan has taken bold steps to bring those values to life:

• Thinking globally, acting locally: Today’s public university has a commitment that is both local and global, and we are reaching out to communities around the corner and around the world. In April, we announced the establishment of a new U-M Detroit Center in downtown Detroit. It will serve as a home to the dozens of programs and collaborations the University has within the city, and will generate more opportunities to meet community need in the years ahead. And in May, I led a campus delegation to China, meeting with university leaders and municipal officials in Shanghai and Beijing to forge new relationships for mutual benefit. Our faculty pursue scholarship with fewer geographic boundaries than ever before, and our students need to know how to work and live in a global marketplace.
• Working with Google to bring the corpus of printed knowledge into the digital age: The University’s groundbreaking agreement with Google is one of this year’s most exciting and visible projects. Over the next several years, Google will digitize the bound print volumes of the U-Mcollection—a herculean task once thought nearly impossible. Part of the University’s core mission has always been to extend the domain of knowledge, and with this agreement we will have the opportunity to fulfill that mission on a scale never before imagined.
• Sparking technology transfer and economic development: In the past several years, we have focused significant effort to dramatically increase our technology transfer activities. Our efforts are paying off. This year the U-M recorded six new business startups, 86 new license agreements, and 287 new invention disclosures. Also this year we worked with the state and regional business community to launch SPARK, a public–private partnership targeting technology-based economic development in Washtenaw County. We hope we can double the number of technology companies and triple the number of regional technology jobs in the next decade by leveraging our collective efforts.
• Ensuring greater accessibility for students through increased financial aid: In February we announced a new financial aid program called M-PACT. The program will commit an additional $3 million per year to need-based aid so we can reduce loans and increase grants for 2,900 undergraduate students from the state of Michigan. To support the program, we have launched a major fundraising initiative to raise at least $60 million in endowment to sustain the effort over time.

Building a Strong Future with Philanthropy

Since our first days as a university, we have relied upon private support to take that extra step in teaching and research. Today, with the continuing decline in state appropriations, donor support is fundamental to our excellence. We will always be indebted to the taxpayers of Michigan, and we will always work on their behalf. Philanthropy, however, gives us the competitive edge that is essential to recruit and retain the finest students and faculty, and to build classrooms and labs that allow our faculty to work at their highest potential.

I am pleased to report that this year marked the best annual fundraising totals in the history of the institution. Many of the new initiatives I have highlighted in this letter have private support at their root. And, as we mark significant progress on our $2.5 billion fundraising campaign we call “The Michigan Difference,” we are seeing our hopes for the future become reality.

Our vision for this great public university in the 21st century has academic excellence at its core—forged in a community that is highly collaborative, engaged with the world around it, and accessible to all who can gain from the knowledge we create. That is the very definition of The Michigan Difference.

I am grateful to all who contribute to the University’s vibrancy and progress.

Mary Sue Coleman
President

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