UNC-System funding scrutinized

A recent report found errors in the way the UNC system funds its 15 higher education institutions, which could provide the final push for altering the current funding model.

A portion of the funding for schools is based on enrollment growth or change in student credit hours from the previous year.

But the report, which was conducted by the Program Evaluation Division — a non-partisan unit of the N.C. General Assembly, found the formula to be prone to errors and instead recommended that the system use graduation and retention rates as the basis for the funding.

Enrollment growth funding accounted for $386 million from 2003 to 2009, or 16 percent of the UNC system’s 2008 to 2009 budget, according to the report.

The division also found that six UNC-system schools overestimated their student credit hours by at least 5 percent for the 2008 to 2009 academic year, which means they received more money than they needed.

John Turcotte, director of the division, said schools that were allowed to consistently overestimate enrollment changes like N.C. Agricultural & Technical State University should be held accountable.

He said N.C. A&T has overestimated student credit hours by more than 10 percent in the past.

“That is not acceptable, and it came about because of the way they executed the formula,” he said.

To avoid those errors in the future, Hannah Gage, chairwoman for the UNC-system Board of Governors, said in an e-mail that the board will be discussing changes to the funding model at its meeting in January.

UNC-system President Erskine Bowles is working with chancellors to strengthen a proposal that would tie funding to graduation and retention rates instead of enrollment growth, she said.

“Our new approach is to focus on performance, not growth, and that shift will be reflected in the way that campuses are funded,” she said.

In a written response to the report, Jeff Davies, chief of staff for UNC-system President Erskine Bowles, said although improvements could be made to the enrollment funding model, the projections were as accurate as possible.

“There is always going to be variances from actual performances and projections,” he said in an interview.

“Our next task is to incorporate into the funding model our recognition of retention and graduation improvements,” he said.

In addition to the enrollment requests, the board is considering rewarding high-performing schools money, which would require additional appropriations of about $1 to $2 million from the General Assembly.

Turcotte said the board needs to take a more comprehensive look at urging UNC schools to link performance to enrollment growth funding.

“They are taking some very good initial steps, but they could go a lot farther with that,” he said.

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