But determining who pays for higher education -- taxpayers or students -- has in recent years become an issue of contention.
With significant jumps in enrollment projected for the next decade, human and physical capital at UNC-system schools are being stretched to the limit even as the state's fiscal situation continues to slide downhill.
In the most recent development in a series of state fiscal woes, Gov. Mike Easley announced last month a $900 million budget shortfall for the 2001-02 fiscal year.
Easley asked most government agencies to revert 3 percent of their funds to the state.
In an attempt to spare education sectors, Easley asked that the UNC system return an additional $21 million -- a cut of only 1.3 percent.
But the recent budget cuts bring the total amount of cuts made to the UNC system this fiscal year to $112 million, prompting university administrators to look elsewhere for funding. One source of that additional funding is tuition.
But revenues from tuition for UNC-Chapel Hill have risen at a much higher rate than state appropriations.
Since 1990, state appropriations for UNC-CH have increased from $252 million to $402 million, about a 60 percent increase.
But during the same period, revenues from tuition at UNC-CH climbed from $46 million to $139 million, about a 200 percent increase.
Similarly, tuition and fees for individual UNC-CH students have increased by 165 percent over the same time period.
N.C. Sen. Howard Lee, D-Orange, co-chairman of the the Senate Appropriations Committee, said students should not be responsible for the entire financial burden of higher education.
"I think it would be a terrible mistake to simply turn to tuition," Lee said. "I don't think we can build a great university system ... purely off of tuition."
But given the state's financial crunch, Lee said he does not expect the trend of tuition hikes to end in the next two to three years.
"We're in more serious trouble than we realize even now," Lee said.
Pointing to the $3.1 billion higher education bond referendum that passed overwhelmingly in 2000, Lee also said taxpayers have already contributed to the well-being of the UNC system and should not have an additional burden placed on them during a poor economic climate.
The bond package -- nearly $500 million of which is allocated to UNC-CH -- will fund capital improvements at all 16 UNC-system schools.
But in spite of the rising costs to students, officials say UNC-CH's tuition is still one of the lowest among peer universities nationwide, leaving some room for tuition increases.
UNC-CH is ranked 10th out of its 11 peer national public universities for in-state tuition rates.
UNC-CH Provost Robert Shelton said the university's low comparative tuition rates can be partially attributed to long-term appropriations from the N.C. General Assembly.
Despite cuts made to many state agencies last summer as a result of the state's budget crunch -- including a $48.3 million cut to the UNC system -- the General Assembly provided $40 million to fund enrollment growth across the UNC system.
"I feel that this last year the legislature treated us (well)," Shelton said.
But he said that in the future UNC-CH will be forced to find a balance among various financial resources, including tuition, state appropriations, private gifts and research grants.
"The state is no longer able to cover the cost of education as it has in the past," he said. "We have to find the right mix of resources."
UNC-CH political science Professor Thad Beyle said the economic fluctuations of the past decade -- from the prosperity of the mid-1990s to recent lows -- have made it difficult for the General Assembly to predict the correct way of managing the state budget.
"It's very hard to try to keep things on an even keel," Beyle said.
He said funding for Medicaid and preschool programs such as Smart Start has caused the legislature's priorities to gradually shift over the last decade.
In the last 15 years, state appropriations allocated to the UNC system have declined from 17.4 percent to 12.6 percent of the total state budget.
Meanwhile, expenditures for elementary and secondary education have dropped only slightly while Medicaid costs have skyrocketed in recent years.
Former UNC-system President Bill Friday said that tax cuts during the mid-1990s have contributed to the lack of funds for the UNC system.
In the mid-1990s, the General Assembly approved $364 million in tax cuts. This fiscal year alone, the state lost $1.4 billion as a result of the cuts.
"The tragedy of this is that (the budget crisis) is self-inflicted," Friday said.
UNC-CH trustee Richard Stevens said that recent economic stagnation in the private sector and Hurricane Floyd relief appropriations also have contributed to the budget crisis.
But Stevens said that in spite of these problems, North Carolina still ranks highest among peer institutions for per student state appropriations.
The General Assembly appropriated $15,543 per student at UNC-CH during the 2000 fiscal year, far more than most peer universities.
The Virginia legislature allocates $7,166 per student at the University of Virginia, and the Michigan legislature allocates $9,125 per student at the University of Michigan-Ann Arbor.
The only peer schools with comparable appropriation levels are the University of California-Berkeley, the University of California-Los Angeles and the University of Florida.
But UNC-CH also relies more heavily on state appropriations than many of its peers, as 29.5 percent of UNC-CH's budget comes from the state, placing it behind only UC-Berkeley and UF.
Stevens said that increasing fund-raising efforts through projects like the new Carolina First campaign will help create a balance of resources to provide a quality education without placing too much financial burden on students.
But UNC-system Association of Student Governments President Andrew Payne took issue with the notion that tuition increases can be part of a balanced approach to funding the UNC system.
Payne said that every time campuses raise tuition they give the legislature an opportunity to not increase appropriations.
He said "As we increase tuition, the General Assembly feels it doesn't have to fulfill its obligation."
The State & National Editor can be reached at stntdesk@unc.edu.
