Board of Governors committee discusses COVID-19 aid funding for UNC System schools

Members of the Board of Governors' Committee on Budget and Finance gathered virtually Tuesday to discuss topics including funding allocations of the 2020 COVID-19 Recovery Act and the report on the UNC System Debt Capacity Study.

Clinton Carter, senior vice president of finance and administration and chief financial officer of the UNC System, said the N.C. General Assembly appropriated the UNC System $44.4 million for costs associated with the COVID-19 pandemic.

According to the meeting agenda, these funds were provided in order to cover the cost of remote coursework and exams, facility sanitation before reopening campuses and expenses for student and faculty assistance, such as counseling services and IT support.

The allocation of this money was determined by reports of each university’s out-of-pocket expenses as well as their expected expenses for the COVID-19 pandemic, Carter said. 

Carter said the estimated expenses of institutions within the UNC System exceeded what the state legislature provided.

“The total expenditures, just out of pocket, not counting lost revenue, were just over $126 million,” Carter said.

Carter said of the total $44.4 million appropriation, about $20 million was allocated to cover 100 percent of the out-of-pocket expenses incurred by the universities. The remaining amount is being allocated to cover some of the universities' estimated costs through December 2020. 

The amount of money that any single university could receive was capped at $4.5 million, Carter said. The three universities that reached this cap were UNC-Chapel Hill, UNC-Charlotte and N.C. State University. 

“I think this was done very fairly, very equitably, and it was done without bias,” said Temple Sloan, chairperson of the committee, after the allocation of the 2020 COVID-19 Recovery Act was approved.

The committee also reviewed the annual UNC System Debt Capacity Study for the 2019 fiscal year.

Carter said although the study has been outsourced in years past, it was completed internally for the first time this year in an effort to save money. 

“Essentially, what this debt capacity study does is it takes a look at all of our universities and their current outstanding debt, and it asks the big question: how much more could the universities borrow?” Carter said. “Given no changes to the underlying financial condition, what could they afford?”

Carter said 15 of the 16 universities in the UNC System increased or maintained their capacity to borrow in the last year.

He said UNC-Chapel Hill’s debt capacity, or its ability to borrow, is the largest of all the universities in the UNC System at $1.1 billion. 

This study was conducted before the onset of COVID-19, so there were some downgrades in a few UNC System schools' credit ratings, Carter said.

However, according to the report on the study presented at the meeting, the majority of schools maintained their credit ratings.

The committee also approved the sale of special obligation bonds and a property lease for N.C. State University and capital improvements at Appalachian State University.

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