Economic downturn forces adjustment

The economy took a critical blow this year, and UNC-Chapel Hill along with the rest of the UNC-system schools and Orange County are scrambling to adapt.

The UNC system faced budget cuts with more lean times to come, as the systemwide Board of Governors requested the smallest-ever increase in funds from the N.C. General Assembly.

Meanwhile, local governments are looking for ways to cut spending because of projections of decreased revenues from sales and other taxes.

Students weigh options

Many students are looking into obtaining higher degrees and possibly securing more stable jobs in the face of substantial job losses as a result of the economy.

UNC-Chapel Hill saw an almost 10 percent increase in graduate school applications from 2007 to this year.

Tabatha Turner, senior associate director for scholarships and student aid, said that graduate school is a wise plan of action.

“It makes sense that until the economy gets better we continue to see graduate school as a positive option for people whose jobs have been terminated because of the economy,” Turner said.

Private loans for students are also becoming harder to receive, and there is more pressure for students to pay back that money sooner.

UNC officials have said they don’t expect the University to cut financial aid support or change its long-standing policy of need-blind admissions, as some smaller schools are doing.

Still things might get tougher for some families next year, as the Board of Trustees has recommended the maximum tuition increase, 6.5 percent, for in-state undergraduates allowed by law. It’s recommending a less hefty 5.6 percent increase of $1,150 for out-of-state undergraduates.

The UNC-system’s Board of Governors, which has final say over tuition rates, should make a decision in February.

Funding from the state

These proposed hikes come alongside an unprecedentedly low budget increase request to the N.C. General Assembly.

“It is a budget that is lean, focused and fully prioritized,” said Rob Nelson, UNC-system vice president for finance.

The request names campus safety, financial aid and faculty recruitment and retention as top priorities.

The board sends a recommended budget to the legislature every other year. UNC-system schools get funding from the legislature, tuition and private donations.

The Board of Governors is asking the state legislature for an increase of $168 million in the next two years — a 5.8 percent increase for 2009-10 and a 4.3 percent for 2010-11. The previous three requests asked for an average increase of 12.5 percent.

The modest requested increase for the next two years comes on top of budget cuts this fall.

Gov. Mike Easley has asked state agencies, including public universities, to cut 5 percent of their annual budgets.

UNC-Chapel Hill responded by asking individual departments to oversee cuts, possibly creating struggles to maintain faculty-student ratios and forcing departments to look for creative ways to save money.

Local governments cutting

And government officials throughout the county are also having to think on their feet in the face of decreasing available funds.

Chapel Hill Town Council members expressed frustration with the uncertainty of state funding used for maintenance and public safety.

Town Manager Roger Stancil ordered a 5 percent budget cut for 2008. With half of the fiscal year already past, council members will have to make a 10 percent cut from scheduled spending between now and June, council member Bill Strom said.

These budget cuts will lead to the suspension of town projects, such as the expansion of the Chapel Hill Public Library, approved by the council in 2003 to expand the library from 28,000 square feet to 73,000 square feet.

The town has agreed on preliminary designs and conducted an analysis of the increased funding need to construct and operate the new library. But without knowing exactly how much money they will have to work with, council members are unsure of how to proceed, Strom said.

Assistant County Manager Gwen Harvey said the county has not yet had to postpone any large capital projects, but officials are evaluating agenda items for their timeliness and importance, she said.

“As with many local governments, we are in the stage of watchful waiting, being careful to conserve resources while we wait for the end of this episode,” Harvey said.

The state budget shortfall also will affect N.C. public schools — the state’s 115 districts are being asked to return $117 million in previously allotted funds.

Ruby Pittman, executive director of the Chapel Hill-Carrboro City Schools Budget & Finance Office, said the school system will try to manage the reduction without layoffs by freezing vacancies in noncritical positions and limiting travel.

“We do need to conserve funds to brace ourselves for the state budget cut,” Pittman said.

Despite the lack of real evidence that the economy will rebound in the near future, Strom said he remains optimistic.

“I think we are in uncharted waters,” Strom said.

“But I believe in American ingenuity and I hope there is a common sense of purpose that we all find to work our way out of this.”



Contact the University Editor at udesk@unc.edu.