Does it matter that the penalty was declined? Michigan declined the penalty but then exercised the option to start the clock on the snap. I certainly could be wrong, but it was my understanding that that option was only for an accepted penalty.
It is an option on any penalty completion, which includes declined penalties. A slight difference from the ZAP-10 family, but understandable - otherwise you would be forced to give the offending team an extra down.
"If the game clock is stopped only to complete a penalty for a foul by the team ahead in the score inside the last two minutes of a half, it will start on the snap, at the option of the offended team."