UNC system budget woes far from over

For the last two years, faculty members and administrators have been bearing the brunt of millions of dollars in budget cuts to the UNC system.
But an additional $70 million cut this year led the system’s leaders to move to “Plan B” — the students.

“This year in order to protect the quality of our academic core, it finally caught up with us,” said UNC-system President Erskine Bowles.
A provision in the N.C. General Assembly’s budget this summer allowed individual campuses to approve supplementary tuition increases up to $750 to offset the decrease in state funding.

Despite the supplementary increase of the full $750 along with hikes that had previously been approved, some campuses including UNC-CH were not able to completely offset the cuts.

In anticipation of such sudden hikes becoming a trend and state funding expected to continue decreasing, members of the UNC-system Board of Governors are in the process of sifting through recommendations to solidify the tuition process.

Changes to the tuition policy, which will be finalized this fall, will determine the basis on which students are charged for tuition, the maximum amount campuses will be allowed to charge students and the allocation of the revenue raised from tuition increases.

Better than expected

Campuses began preparing for the worst in the fall of last year. The House budget originally proposed a $175 million cut to the UNC system, so the final $70 million was a relief for most administrators.

“We have been treated fairly in this session—in fact, better than others,” Bowles said.

But the system’s budget woes are far from over.

The system is dealing with a total of $575 million in cuts in the last three years and has already cut 23 percent in expenses and nearly 900 administrative positions.

With stimulus funds running out at the end of this year, next year could be even worse for universities.

“If we don’t get the federal funds, we’re going to have to look even deeper for cuts,” said Sen. Tony Foriest, co-chairman of the N.C. Senate higher education committee. “The point is the university system is important, but we don’t have unlimited money.”

Tuition low in comparison

In the past three years, the board has focused on keeping tuition as low as possible. Increases for in-state undergraduates have averaged 5.2 percent, 1.2 percent and 2.8 percent, respectively in those years.

The General Assembly’s provision this summer allowed universities to move way beyond those averages.

“The whole budget process is a situation of give and take,” Foriest said. “A lot of people don’t realize it is costing us more to educate students than we are charging.”

Tuition at UNC-CH increased by a total of $950 for in-state students. Originally, only a $200 increase had been approved.
But affordability was still a priority despite those increases, Bowles said.

Even President Barack Obama recognized that priority and praised the UNC system in a speech at the University of Texas at Austin earlier this month.

Bowles said even with the tuition increase this year, all of the UNC-system campuses are still the lowest or second lowest among their peers.
Twenty percent of the revenue raised from the supplemental increases are required to go toward need-based financial aid, said the board’s Chairwoman Hannah Gage.

She also cautioned universities against raising tuition only to increase financial aid.

“In systems with high tuition and high financial aid, the middle class gets hurt,” Gage said.

Review of tuition policy

A group of chancellors, provosts and financial directors reviewed the Four Year Tuition Plan, which was established in 2006, this summer.
The plan was aimed at making tuition more affordable and predictable for students, setting caps on campus-initiated tuition increases and laying out a framework for campuses to use the revenue from the increases.

The board is trying to figure out if the structure of the plan needs to be changed to give universities more flexibility to raise tuition in years of decreased state funding.

“The current plan is not perfect. But I don’t think it’ll be dramatically different,” Gage said.

Contact the State & National Editor at stntdesk@unc.edu.