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The Daily Tar Heel

University funding model under ?re

State-funded system cracking under pressure

On this day 216 years ago, UNC laid the cornerstone for a model of public education.

Rooted in state support, the University was to become a place where students would learn to apply knowledge to the people of North Carolina, paying back dividends on the state’s investment.

The model spread across the country, building up some of the best public university systems in the country — Arizona, California, Georgia, Michigan and Virginia, among others.

But with tighter budgets and dwindling public support, cracks in the model are showing, leading the way for a growing discussion about the role of the state in higher education.

“The public model is increasingly coming under pressure and being questioned,” said Dwayne Pinkney, UNC’s liaison with the state government. “But here in North Carolina, the model still appears to be strong.”

How long that support lasts, and how long UNC can simultaneously maintain its quality and model, is still an open question. And it largely relies on the willingness of politicians and the state to believe that the University can continue to benefit the state.

“We’re going to defend it as long as the legislature and governor hang in there with us,” said Chancellor Holden Thorp.

A model not broken, but abandoned

Universities have begun to move away from UNC’s model in the past decade, a trend that could be accelerating as states face hard economic realities.

The University of Michigan-Ann Arbor began operating with high tuition and almost independently of its state after declining state revenues compromised its funding.

The University of Virginia started pulling away in 2004. The school, faced with a dire state budget situation, was not willing to compromise its quality and sought other means of support.

A law passed in 2005 gave the school almost complete control over its finances and operations.

It now functions with little state control — a trade-off that means less state support and higher tuition.

State funding makes up only 6.9 percent of its budget. Almost a quarter of UNC’s budget is state appropriations.

Now the University of California-Berkeley, the golden child of public higher education that is consistently the highest-ranked public university in the country, is looking to move away from UNC’s model.

The state of California, facing a budget deficit larger than North Carolina’s entire budget, slashed $637 million from the 10-school University of California system.

“The model isn’t broken, but it’s being abandoned,” said Peter King, spokesman for the University of California system.

The California system hasn’t said it’s going the same way as Virginia, but leaders are looking for new ways to fund higher education.

UC-Berkeley Chancellor Robert Birgeneau recently proposed the option of federal tax dollars going to core expenses at some of the country’s largest research universities.

UC-system President Mark Yudof echoed the importance of public higher education in a speech to California legislators.

“We need to retain our public character,” he said. “I do not want to be a private university. I do not want to privatize the University. That’s not the University of California.”

Showing cracks

N.C. politicians, who in the past have shown strong support for higher education, are only willing to support the UNC system so long as the state’s population does.

The N.C. constitution states that higher education should “as far as practicable, be extended to the people of the State free of expense.”

The public still generally supports the University. The last higher education bond in 2000, which called for $3.1 billion to support growth — the largest education bond in U.S. history at the time — passed in every county.

“Every town and county and hamlet is impacted by the University in some aspect virtually every day,” said N.C. Sen. Richard Stevens, R-Wake, co-chairman of the Senate’s two education committees.

Stevens, previously a member and chairman of the UNC Board of Trustees, said the state legislators generally highly value the University’s contributions and provided accordant support.

But in recent years, the UNC system has seen some bad publicity that could threaten its relationship with the state.

“Some of the things that have happened in the past year make it very obvious that the university system has wasted millions and millions of dollars,” said N.C. Rep. George Cleveland, R-Onslow.

Administrators at N.C. State University — the largest school in the UNC system — orchestrated a faculty position for former Gov. Mike Easley’s wife at an exorbitant salary.

The report by consulting firm Bain & Company, which found that administrative growth at UNC outpaced growth in academic costs, became a rallying cry for those looking to pull money from the system.

Most recently was the revelation that a UNC-Chapel Hill research program designed to work with soldiers squandered $10 million in federal money.

“We’ve had a hard time getting our good news in the press,” Thorp said.

He said moving away from the original model is something the school doesn’t want to do.

UNC would have a high hill to climb if it did. If the state cut its support of the University, it would have to make up the money through some combination of higher tuition, more federal dollars and even more private giving.

Stevens said the University would need the equivalent of a $11.4 billion endowment to sustain itself. UNC’s endowment is currently about $2.36 billion.

But Thorp said the University must maintain its quality and accessibility, even if state support begins to erode.

“We’re going to determine if the model William R. Davie invented is enough to sustain higher education in the future,” Thorp said.

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