Tuition hike of 6.5 percent will not fill budget gap, task force says

University officials said Tuesday that a 6.5 percent increase in tuition wouldn’t come close to covering a $20 million gap in UNC’s budget.

The tuition and fee advisory task force met to discuss its plan for raising tuition and consider additional revenue options to cover the funding gap.

Last year, the University received a $20 million one-time gift from UNC Health Care. But without that contribution in the 2012 budget, administrators will fall short of meeting the more than $100 million state funding cut, Executive Vice Chancellor and Provost Bruce Carney said.

“The University is in financially serious trouble,” he said. “I worry about the future.”

A 6.5 percent cap on tuition increases set by the Board of Governors limits UNC’s options, but tuition could be much higher if the board eliminates the cap in the near future, Carney said.

He said UNC’s peer public universities raised tuition an average of $1,200 for in-state students in the past year — much higher than UNC’s $313 increase.

“It gives you a perspective of what the 6.5 percent cap does or does not do for us,” he said.

This year, tuition hikes made $15 million in revenue, he said.

But the net gross of the tuition hikes’ revenue only amounted to $8 million because of the University’s allocation of a large percent of the revenue to financial aid, he said.

An additional 6.5 percent increase for the next school year would generate $16.2 million but would yield a net revenue of only $8.5 million, Carney said.

The committee cannot plan to raise tuition above the 6.5 percent cap until the board makes a decision to alter it, which could happen in February, but it will submit its plan for a tuition increase within the boundaries to Chancellor Holden Thorp in November.

If the cap is raised, however, the University would increase its commitment to financial aid accordingly, said Shirley Ort, associate provost and director of scholarships and student aid.

“With higher tuition, we would keep the same quality, and higher family incomes will require need-based aid.”

Sallie Shuping-Russell, chairwoman of the audit and finance committee of the Board of Trustees, said the University should consider taking more students from out of state and consider family income for admissions.

“I don’t care how need-blind we are now; pretty soon it’s going to be worth nothing,” Shuping-Russell said.

The committee will consider all options in its next two meetings, Carney said.

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