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The Daily Tar Heel

Board of Governors withholds $1 million because UNC exceeded out-of-state cap

In 1986, the BOG set a limit on the percentage of out-of-state students who could enter each first-year class in most UNC system schools. Any schools that violated the 18 percent cap two years in a row, it said, would be subject to funding cuts.

The UNC class entering in 2014 exceeded the cap by 0.3 percent — 41 students — and the most recent class had 76 students over the limit, exceeding the cap by 1.5 percent.

Steve Farmer, vice provost for enrollment and undergraduate admissions, said over the past 10 years the University has actually been admitting more North Carolinians on average than the cap requires.

“To be able to look at the results as a four-year rolling average or over a five-year period of time instead of just year-to-year might just give all of the schools in the system a cushion against unexpected results,” he said.

Though the board’s Budget and Finance Committee proposed waiving the fine, the full board decided to uphold its 1986 policy in its March 4 meeting. The fine reduced the University’s 2016-17 fiscal year budget by $1,041,017.

Board of Governors member Marty Kotis said he doesn’t view the withheld money as a fine at all.

The out-of-state students admitted beyond the 18 percent cap paid the University roughly $2 million, only $1 million of which the Board of Governors says UNC can’t keep, Kotis said. If these same students had been in-state, he said, there would not have been a fine, but UNC only would have made around $500,000 from their tuition.

“Frankly, I think it probably ought to be a heftier fine, one that you’d feel, not (that) you rob a bank and you have to return half the money. That’s not a fine. That’s just getting to keep a chunk of it,” he said.

In addition, Kotis said the money will be used to help fund financial aid for in-state students in UNC-system schools, so students will still benefit in the long run.

He said the board only decided to obey a policy already in place and wasn’t trying to target UNC directly.

“This wasn’t calculated. We didn’t say, ‘Hey, we’re gonna fine Carolina a million dollars.’ This was just following the formula and what’s already part of the code that already calls for this.”

Waiving the fine isn’t unprecedented, Harry Smith Jr., chairperson of the Budget and Finance Committee, said at the meeting.

“About 50 percent of the time, historically, this board has overridden this policy,” he said in a UNC-TV recording.

Farmer said he respects the Board of Governors’ policy and understands why it exists.

“Our intent always is to follow the policy of the Board of Governors. And it’s also even beyond the policy of the Board of Governors. We want to honor our obligation to the students from North Carolina,” he said.

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