System May Need to Give Up Millions

Plans announced Tuesday by Gov. Mike Easley to deal with a $900 million state budget shortfall prompted the estimates.

UNC-Chapel Hill's share of the cuts could reach more than $15 million.

Easley announced Tuesday he would cut funds to most state agencies by an additional 3 percent -- on top of a 4 percent reversion in October. But the governor exempted education agencies from the 3 percent cut, instead requesting that the UNC system return an additional $21.1 million, a budget cut of about 1.5 percent.

"We've asked them to come forward with a significant amount of funds that they contribute without harming classroom instruction," Easley said. "The universities and community colleges have done their part."

In October, UNC-system officials reverted 2.7 percent of their budget, about $43 million, to the state because of dismal revenue projections. In addition to the $21.1 million cut, Easley made the October reversion an official cut.

As a result, the UNC system will lose a total of $64 million from this year's operating budget and $51 million slated to fund construction.

Jeff Davies, UNC-system vice president of finance, said system officials hope to decide by today how to distribute the $21.1 million cut among the 16 campuses, basing their decision partly on overall state funding.

If budget cuts are allotted proportionately, UNC-CH's share would be about $5 million, bringing UNC-CH's total budget cut for the fiscal year to more than $15 million.

Davies said every effort would be made to shield instruction from cuts. "The plan is to continue to try to protect classroom instruction," he said. "It's difficult to revert money at this point in the year."

Based on the October budget reversion, the University likely will have to revert $5 million, said Roger Patterson, UNC-CH associate vice chancellor for finance. "We have not received anything official yet," Patterson said. "Nothing will be decided until we receive the number. Any cut is difficult to absorb, but a non-recurring cut is less difficult."

J.B. Milliken, UNC-system vice president of public affairs, said the $51 million the system will lose from its share of the state's repair and renovation fund would create construction problems.

Easley suspended payments from the fund in January to help meet the state's new $900 million budget shortfall.

Milliken said the statewide repair and renovation fund, which totals about $125 million, pays for key repairs. "The UNC system received the lion's share of that money," he said. "Without it, we'll have to handle the costs out of operating funds."

Milliken said the cut to the system's budget, while not as bad as those to other state agencies, is still significant.

But he added that administrators are thankful for Easley's efforts to ease the impact of the cuts, explaining that the governor has given each UNC-system chancellor the flexibility to determine how to make cuts at his campus.

System officials said the outlook for the next fiscal year likely will remain bleak.

Davies said legislators might further cut funds when the N.C. General Assembly reconvenes in May to deal with the slow economy. "I think the General Assembly is going to have another difficult year."

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