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Health Care System Helps Ease Budget Cuts

Posted on July 12, 2011

Just as University administrators were trying to catch their breath after the news that state budget cuts would hit Chapel Hill $20 million harder than they’d expected, an angel appeared — an angel bearing $20 million.

The UNC Health Care System, which oversees the UNC medical school and four hospitals, plus clinics and an air transportation system, has moved $15 million from its budget to the Carolina campus, plus $5 million specifically to the medical school — both of which are suffering significant reductions in state appropriations.

The University found out last week that it would be cut by a higher percentage — nearly 18 — than any of the other 16 UNC System campuses. That adds up to $101 million in cuts, not the $81 million that was being planned for.

Provost Bruce Carney cautioned that the health care system money is one-time, and the state cuts are permanent.

But the extra money comes around regularly, too, said Karen McCall, a spokesperson for UNC Health Care.

“UNC Health Care annually transfers [funds] to the School of Medicine for mission, academic and clinical support,” McCall said. “It seemed very appropriate to the health care system that we should reduce the pain,” even as the system’s state share is being cut by 55 percent — to $18 million from $36 million, she said. The system’s other sources of revenue, its operations and investments, did well last year, McCall said.

Carney is working with deans and other campus academic leaders to settle on where UNC’s share of a $414 million loss of funds to the state’s campuses will land.

An across-the-board reduction would have been 15.6 percent, but the state Legislature would not allow the board to treat all campuses the same. Most of the schools that received lower percentages were among those acknowledged to be less able to raise money from other sources, such as private donations and research grants, and the four schools with the smallest enrollments.

A major consideration in Carolina’s 18 percent cut was its ability to raise money from other sources. It is far ahead of all the other campuses in gifts and grants.

The cuts almost certainly will go noticeably into academic programs and likely will take the form of larger classes, fewer sections offered, and fewer adjunct faculty and graduate students available to teach.

Carney said the decision had been made not to close any professional schools. He has asked deans to try not to reduce the number of credit hours taught but said that will depend on the number of adjunct faculty positions that have to be cut.

Need-based financial aid took a hit. Across the system, funding for 2011-12 will be $127,130,754, or $35,158,009 less available for student grants than in 2010-11. It’s not yet known how much Carolina’s funding for aid will be reduced; officials had expected to lose more than $5 million.

“This campus can go on operating on less money, but I have reservations about whether we can give the students what they historically expect,” Carney said in May.

By July 1, the University had absorbed at least $157 million in total state cuts since 2008. Those cuts have spared instructional programs for the most part.

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