UNC system prepares for more budget cuts

Universities in the UNC system should plan on cutting their budgets by at least 10 percent and prepare to face a tough fight against legislators, the system’s President Erskine Bowles said Thursday.

At their monthly meeting, Bowles and members of the UNC-system Board of Governors began drafting their budget request for next year to send to the N.C. General Assembly in November.

They also reviewed the recommendations to update the system’s current tuition policy or Four Year Tuition Plan, which is set to expire at the end of the year.

Budget looks bleak

The state’s budget shortfall this year is expected to be between $3.2 and $3.5 billion, meaning that the UNC system, which makes up 13 percent of the state’s total budget, could be losing millions more in state appropriations.

“That tells me we’re going to be cutting spending around here again,” Bowles said. “It is going to be business as usual.”

In the last three years, the system has cut a total of $575 million, 23 percent in expenses and nearly 900 administrative positions.

And this year, the cuts could get even worse if legislators require all campus’ tuition increases to go toward the state’s general fund instead of staying at the universities.

Clarice Goodyear, a board member, said that from her talks with some state legislators, it seemed like they were “eager” to take the revenue generated from tuition increases back to the state.

In the summer of 2009, the state legislature passed the lesser of an 8 percent, or $200, tuition hike and required that money to go toward the general fund.

The mandate was repealed in this year’s state budget, which helped alleviate the decrease in funding for the UNC system.

Board members say a similar mandate could be possible again this year if legislators are not convinced otherwise.

“We have to keep tuition on campus because if we don’t, we’re going to have an enormous erosion of quality. Prepare yourself to spend time in the legislature,” Bowles said.

He also said the system could face a sharp decline in need-based aid because the state provides $162 million for it.

“The sources of funding we’ve had for need-based aid will be under a lot of pressure,” he said.

Given the circumstances, Bowles said they would not be asking the legislature money for new capital projects.

Instead, they will request funds only for priority items such as East Carolina University’s School of Dental Medicine, N.C. Agricultural and Technical University and UNC-Greensboro’s Joint School of Nanoscience, in which the system has already invested.

The board will also be focusing on renovating already existing buildings rather than building new ones.

Hannah Gage, chairwoman of the board, said an increased emphasis on online and distance-learning programs could help universities deal with the lack of funds.

More than 70,000 students are currently enrolled in online courses, which has helped the system leverage its resources, Bowles said.

Tuition plan may not change

The board also reviewed recommendations to update the system’s Four Year Tuition Plan, which was created in 2006 to make the process more structured and predictable.

The plan has dictated the maximum amount universities can increase tuition and how revenue generated from those increases can be used.

Although a tuition task force recommended increasing the cap on undergraduate residents from 6.5 percent to up to 10 percent in years of decreased state funding, Bowles rejected the recommendation.

“If you take off the cap, its too easy to say, ‘Let’s forget about raising third party money. Let’s just raise tuition,’” Bowles said.

“There will always be exceptions,” he said. “I just don’t want it to be the norm.”

The board also agreed that using the benchmarks set by the original plan — keeping tuition for in-state undergraduates in the bottom quarter of each school’s peer institutions and below the top quarter for out-of-state undergraduates — should be continued.

“Quite frankly, it seems to me that there appears to be a consensus that the Four Year Plan has worked very well,” said Charlie Mercer, chairman of the board’s budget and finance committee.

The board expects to vote on the final version of the plan at its next meeting in November.

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