Carolina and the rest of the UNC System are going ahead with permanent budget cuts totaling 10 percent of the state’s 2009-10 appropriations for the universities as they wait for the N.C. General Assembly’s decision on the budget.
In a letter to the University community on July 1, Chancellor Holden Thorp ’86 said Carolina is facing a reduction of nearly $60 million. UNC began operating on a 5 percent budget cut in March as a proactive step. Thorp said the campus budget committee would spend the following two weeks “determining exactly how we’ll take the additional 5 percent. Our top priority remains protecting students in the classroom and academics. We still anticipate cuts for research centers and institutes reflecting recent legislative scrutiny, but we expect to have some flexibility in how we take those reductions.”
The University got a glimmer of hopeful news in June when the House passed a draft of the budget that includes an 8.7 percent budget cut for the UNC System. That was down from the 11 percent in reductions – or about $338 million – that the House had been considering across the state’s public campuses.
The 8.7 percent cuts would amount to $263 million. Legislators have been looking for ways to balance the state’s budget shortfall of more than $4 billion.
But the cuts ultimately could go deeper. The state entered the new fiscal year July 1 on a temporary spending bill while the Senate and House negotiate the new budget.
“We do know that the budget picture in Raleigh remains bleak,” Thorp wrote. “Revenue projections haven’t improved during the fourth quarter. Nothing has changed expectations that significant cuts will be necessary for all state agencies in the new fiscal year.”
In April, Carolina issued emergency budget guidelines freezing the use of state funds for personnel, supplies and equipment, travel, and capital repair and renovation projects.
The guidelines permitted spending for classroom-related expenses, such as teaching positions or supplies and equipment directly related to classroom instruction. They also allowed the hiring of public safety officers and the filling of health care positions that provided direct care to patients. State funds could not be used for other new or vacant positions or for salary increases.
So far, the University has avoided eliminating faculty positions.
At the time of the initial cuts, Gov. Beverly Perdue had proposed a 5 percent cut, but that later was believed to be unrealistically low in the face of a steady stream of bad financial news.
The proposed House budget included a revenue plan that would raise tuition $200 or 8 percent – whichever is less – for all UNC System schools. For Carolina, all students would see an increase of $200; the increase would take effect this fall.
The House also would cap 2010-11 enrollment levels to UNC System campuses at current levels.
Despite the economic downturn, enrollment numbers at UNC have not decreased for the upcoming school year. “We have seen no evidence of losing students due to the economy,” Thorp told the UNC trustees in May.
Thorp said Carolina has seen more students apply for financial aid than in past years, though not all students have qualified because financial aid decisions are made based on income and assets; while some students’ families may have experienced a loss in income, they still have assets.
In April, Perdue approved an executive order that established a flexible furlough plan for state employees. University employees saw reductions in pay, taken from employees’ base pay, for May and June. The furlough plan applied to part- and full-time nonfaculty employees, UNC faculty, postdoctoral research associates and temporary employees; student workers were not included.
UNC also eliminated the position of vice chancellor for public service and engagement, held by Michael Smith ’78 (JD), dean of the School of Government; and saved $70,000 by canceling the Tar Heel Bus Tour, a weeklong statewide event that had been organized each year since 1997 for selected new faculty and staff.
Also in April, a consulting company – hired with funds from an anonymous donor to help identify ways to increase efficiency in University operations – presented an interim report after gathering information from 315 employees and students. The study by Bain & Co. found that administrative expenses per student at UNC have grown faster than academic expenses. From 2004 to 2008, the University added more than 1,000 full- and part-time employees, the majority in support roles. Meanwhile, the consultants found the University’s management structure to be inefficient. According to the report, there are as many as nine layers of management from the staff level to the chancellor’s office and 50 percent of managers supervise only one to three employees.
Operational inefficiencies were found in UNC’s finance and human resources systems and in other areas across the University.
Bain is expected to present a final report to the Board of Trustees at its July meeting. The consultants are expected to identify and present opportunities for the University to reduce complex operating systems, increase efficiency and identify possible savings across campus.
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