UNC-CH Receipts Could Go to Other Universities

UNC-CH administrators say the redirection would be detrimental to the University community, which generates roughly 70 percent of the system's overhead receipts.

"If it is a $7 million cut, we would definitely have to look into making some changes," said Tony Waldrop, UNC-CH vice chancellor for research and graduate studies.

The Senate's version of the budget does not withhold any overhead receipt funds, and the two chambers will have to reach a consensus on the issue in conference meetings that started last week.

Overhead receipts, also known as facilities and administration funds, are included in federal grant money and are intended to cover additional research costs such as maintenance and utilities.

State legislators and universities have been at odds over the funds because the state already pays for many of the items funded by overhead receipts, leaving institutions with additional money.

Initially state representatives recommended taking larger amounts of overhead receipts from UNC-system schools and even redirecting them outside of the system.

Rep. Art Pope, R-Wake, proposed an amendment to the House budget putting 10 percent of the receipts in the state's rainy day fund and its repair and renovation fund.

Several other legislators called for taking even larger amounts from overhead receipts.

But Waldrop said all of the University's $75.1 million in receipts for the current fiscal year will be used for necessary programs and services. Among other things, receipts are used for employees' salaries, construction projects and library funding.

"All of the (overhead receipts) are spent accordingly to fund the research and teaching at the University," he said.

Waldrop also said there are safeguards that prevent wasteful spending including audits by state regulators. University efficiency is evidenced by the fact that the amount of grant money the University is receiving is increasing at a time when many of its peer institutions' funding is decreasing.

"These rates (for grants) are re-evaluated on a yearly basis," Waldrop said. "If we were not spending these funds appropriately and they felt that we didn't have that reasonable infrastructure then that rate would be going down."

But Rep. Mickey Michaux, D-Durham said the House is making a statement by proposing to take away some overhead funds.

"In a way it's a matter of principle because the state has to pay for the utilities and things for the research," Michaux said.

But Michaux conceded that not all of the overhead receipts were wasted.

"If all of what (the universities) used them for were things that weren't worthwhile then we would take all of it," he said. "But we've seen receipts going for gourmet pizza and donations to Chapel Hill Transit."

The state intends to redirect the funds to worthwhile ends, Michaux said. The receipts would fund enrollment growth at seven focus institutions -- Western Carolina University, UNC-Pembroke and the system's five historically black universities.

"It helps the smaller schools to increase their enrollment," Michaux said, pointing to N.C. Central University, which has its largest freshman class ever beginning this school year.

But Senate Majority Leader Tony Rand, D-Cumberland, said senators and UNC-system administrators attempted to persuade House members to allow schools to keep their overhead receipts and will continue to do so in conference committee meetings.

"The Senate views (the issue of overhead receipts) as one of significant importance," he said. "This money is earned by those who are doing the research."

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