Carolina Faces 5 Percent Cut in Governor's Budget

UNC System campuses face budget cuts of 5 percent in Gov. Beverly Perdue’s budget proposal, released last week.

For Carolina, this means a cut of about $29 million, one that likely will result in employee layoffs and cutting expenses across campus.

In an e-mail message to the campus community on Thursday, Chancellor Holden Thorp ’86 wrote that he has instructed campus leaders to begin making cuts in programs, operations and staff that would be equivalent to a 5 percent budget cut in preparation for July 1, when the state’s budget goes into effect.

“Given the state’s estimated $3.4 billion budget shortfall, it’s not in the University’s best interest to delay the tough decisions required in making cuts for next fiscal year,” Thorp wrote. “The longer we wait to enact inevitable cuts, the deeper the cuts likely would be.”

Thorp wrote that he has asked campus leaders to reduce expenses before eliminating staff positions but that some layoffs would be inevitable.

Employee cuts likely would come from nonfaculty staff. Thorp wrote that it is unlikely that the University would need to eliminate tenured faculty or tenure-track positions or cancel fixed-term contracts in the middle of their terms.

In an interview, Thorp said UNC must start hiring faculty again as soon as it can. “By far the biggest thing that’s happened is canceling the 50 faculty searches, and we need to start hiring faculty again really, really soon,” he said. “We can’t go through next year with no searches. We just can’t do that. We’re giving up too much ground.”

In a previous message, Thorp had said that at 5 percent permanent reductions in state funding, UNC could lose as many as 120 faculty and teaching positions and 85 nonfaculty staff positions. He added that cuts at that level would mean reducing courses and increasing class sizes.

Previous estimates anticipated that at a 5 percent reduction, the University no longer would offer 282 classes and 436 sections, making it harder for some students to meet graduation requirements. The University also said a 5 percent cut would affect distance education offerings, technology and acquisitions for libraries, funding for outreach programs, travel, supplies, employee training opportunities, security personnel, housekeeping and grounds management.

Funds to support enrollment growth in the UNC System schools – a function of the state’s population growth – were protected in Perdue’s budget, as was need-based financial aid money.

Capital projects at Chapel Hill already are suffering. Three projects are on hold: the Morehead Planetarium and Science Center expansion, the law school’s move to Carolina North and a new building for the psychology department. The addition of luxury suites and other enhancements to the south side of Kenan Stadium has been postponed; that work had been scheduled to start after the end of the 2009 football season. “There has been a lot of talk nationally about how athletics is making adjustments in the economy, and when you pull a $150 million stadium expansion, I think that takes care of our obligation to make changes in athletics,” Thorp said. The $18 million addition of a fifth floor to the Kenan Football Center is proceeding on schedule.

Perdue’s budget includes $10 million needed for Carolina to move ahead with construction of a biomedical imaging research center.

UNC System President Erskine Bowles ’67 has pledged to urge the N.C. General Assembly to keep budget cuts for the universities at no more than 5 percent and to ensure that campuses have full flexibility in determining how to make cuts as the legislative body begins to debate the budget. Bowles also has asked the General Assembly not to enact permanent cuts but to limit them to the duration of the economic slowdown.

“We’re hopeful that cuts to the UNC System ultimately will be minimized,” Thorp wrote. “But even so, we already know that what we at Carolina do – and how we do it – will be significantly affected.”

An Employee Assistance Fund has been set up to provide placement services for employees who are to be let go over the coming months.

Thorp said the University still supports the idea of temporary furloughs, if the General Assembly grants that authority to the UNC System. A five-day furlough of staff in some areas has been mentioned. But Thorp said the short-term savings would not be enough to cover the envisioned budget cuts. He also said that other funds – such as research grants, tuition and fees, and private gifts – are restricted for specific purposes and cannot be used toward the budget deficit.

Some retired faculty have offered to return – without compensation – to the classroom should the University undergo cuts that limit class offerings and increase class sizes. On Feb. 17, the UNC-Chapel Hill Retired Faculty Association passed a resolution that offers teaching, grant writing, student advising and other assistance.

“I think it’s important to point out that the retired faculty feel very strongly about making sure the University maintains its high standards,” said Andrew Dobelstein, president-elect of the association and a former professor at the School of Social Work.

“We have a vested interest, too,” he said. “We helped build this place, and we want to make sure it stays strong.”

It was unclear how the University would deal with the association’s offer.

The association has about 700 members and about 125 very active members, Dobelstein said. If the University accepted the offer from those retired faculty members, the association would survey members to find out who is interested in volunteering and at what capacity. It is likely that most of the volunteers would be active members who are more recent retirees.

The UNC System Board of Governors has approved a value statement regarding how the schools might deal with the economic downturn. It directs universities to consider across-the-board cuts only as a last resort, saying that not every discipline and function has equal value, and that administrators should consider more cuts among less important programs. It also encourages campuses to replace any eliminated on-site courses with online courses and, in doing so, to enhance cooperation among campuses in academic offerings.

“There’s no institution that is served well by making across-the-board cuts,” Thorp said in an interview. “We are not going to make across- the-board cuts. We are going to cut low-performing programs more, we’re going to cut auxiliary services more, we’re going to preserve the research and teaching functions.”

In mid-February, the Board of Governors approved a plan to raise tuition and fees by an average of 3.9 percent for in-state undergraduate students at public universities. The increase goes to the General Assembly as it prepares a state budget for 2009-10.

Bowles asked the BOG to approve smaller increases – one-third less than the requests received from the 16 UNC System campuses.

Carolina wound up with a $160 increase for in-state undergraduates – 4.3 percent – and an increase of $1,150 for nonresidents, or 5.6 percent, as the trustees had approved.

Carolina has hired Bain & Co., a global business consulting firm, to conduct a study to help “identify innovative ways to streamline operations, become more effective, and perhaps achieve additional cost savings.” The study, to be conducted this spring, will be paid for by the UNC-Chapel Hill Foundation through a restricted gift from a Carolina alumnus.

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