UNC System Won't Feel Fund Freeze

The N.C. constitution states that each fiscal year must end with a balanced budget. But facing an increasing budget deficit, Easley last week released his plan to control it by putting a freeze on new hires, purchases, unnecessary travel and building projects.

But the freeze will have little impact on the UNC-system hirings or construction funded by the bond referendum.

Jeff Davies, UNC General Administration vice president of finance, said the personnel freeze will not apply to teaching positions in the the UNC system.

"We have agreed with the governor and his staff that the UNC system is subject to budget reversions," he said.

Reversions are unspent funding that government agencies must return to the state. The UNC system will be required to pay the state $25 million -- which will equal 1.5 percent of each institution's operating budget. But each school is given the flexibility to decide for itself where the money will come from.

"Our commitment to retaining that flexibility is to assure the governor that student academics stay on tack," Davies said.

He said that although universities can choose to delay renovations, the budget problems will not interfere with the projects funded by the $3.1 billion higher education bond that state voters approved last November.

Even members of the Republican party were mostly supportive of the hiring freeze.

Bill Cobey, chairman of North Carolina's Republican party, said cutting back on personnel is the most obvious way to recover the money because a large fraction of the budget is controlled by these expenses.

"Hiring freezes are the easiest way to recapture lost dollars," Cobey said.

But he also called for Easley to lead by example, citing recent reports of high salaries offered to Easley's aids.

"He's not going to suffer," Cobey said. "But others are going to have bear the brunt of this."

David McCoy, state budget officer for the Office of Budget Management, said the purpose of the recent restrictions is to guide departments to save the required money for reversion in the least painful way possible. The state's public schools also are exempt from the hiring and construction freeze.

"Governor Easley said he doesn't want this to have any impact on the classroom," McCoy said.

He said that pending future economic developments, Easley's freeze should be sufficient to eliminate the state's budget deficit. He added that he expects agencies to comply with Easley's plan.

"To a person, everyone has been enthusiastic about helping us be problem solvers," he said. "At the end of the day we must have a balanced budget."

The State & National Editor can be reached at stntdesk@unc.edu.