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Due to the state's projected budget shortfall of more than $1 billion for the 2002-03 fiscal year, members of the N.C. General Assembly also have discussed the possibility of retaining F&A funds from UNC-system schools.

Often known as overhead receipts, F&A funds are recovered from the federal government to cover the University's incidental costs associated with funded research. They are used to pay for employee salaries, building projects, undergraduate research, library databases and research compliance at UNC-CH.

The state's dismal budget situation prompted Gov. Mike Easley in March to request that each of the 16 UNC-system campuses submit budget cut scenarios of up to 4 percent by April 1 to the office of UNC-system President Molly Broad.

Easley has asked that the legislature to not cut funding to the UNC-system beyond that point.

If a 4 percent cut is implemented, UNC-CH could eliminate about 100 filled staff positions and about 80 filled faculty positions.

Broad said she expects Easley's recommendation for the 2002-03 budget to preserve access to education at UNC-system schools for all students.

"We appreciate the difficult challenges facing policy-makers at state level, and certainly Governor Easley understands that long-term health and vitality is linked very much to quality of education at all levels," she said. "We have, through a deliberate and cooperative approach with (the governor), achieved a commitment from him."

Tony Waldrop, UNC-CH vice chancellor for research and graduate studies, said cuts to any one of the areas that F&A funds support would have a "devastating" effect, threatening building projects and reducing UNC-CH's ability to recruit faculty.

UNC-CH Chancellor James Moeser said he is dedicated to ensuring that F&A funds are not put at jeopardy. "We're going to work every member of the legislature hard because that's going to be a big issue for us," he said.

When the state was facing a budget crisis in 1991, Waldrop said, representatives decided to retain almost 50 percent of the University's F&A funds.

System officials emphasized that they are working hard to ensure the impact of budget cuts is minimal.

Jeff Davies, UNC-system vice president for finance, stressed that the budget cuts are notable because they come on top of other reductions made over the course of the last year.

Ben Ruffin, chairman of the UNC-system Board of Governors, said board members are actively communicating with state legislators about cuts and how they will impact education. "One of the reasons we have been prosperous in North Carolina is because we have a good education system," he said. "To not (train workers) is to put the state in harm's way."

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