News: CJ Exclusives

Public Higher Ed Survives Budget Ordeal With Little Change

UNC, community college leaders were prepared for lean budget cycle

The wild swings in North Carolina’s higher education budget may have come to a halt. Last year, the University of North Carolina system absorbed roughly $400 million in cuts — a few years before that, higher ed was getting annual increases of 5 percent and more.

This year’s higher education budget essentially is unchanged from last year, with the UNC system receiving a slight 0.9 percent increase and the community college system getting an additional 0.5 percent.

The main reason there was so little change in the higher education budget was because the legislature rejected its longstanding policy of raising taxes in order to increase spending. In the final tally, the total General Fund budget was $20.2 billion, 1.2 percent higher than the $19.94 billion that had been anticipated for 2012-13.

Additionally, when higher tax revenues than expected came in, whatever additional money could be found was used both to fill a huge hole in the K-12 budget due to a loss of temporary federal funding and to patch a shortfall in Medicaid.

Both higher education systems expressed little disappointment or surprise; all parties involved in the process knew these facts coming in. There was some jockeying before the legislative session opened: The UNC system requested $216 million raise in its state appropriations — a healthy 8.5 percent. Instead, it only got $24.6 million more than last year’s $2.54 billion, but UNC system president Thomas Ross issued a statement suggesting that largely he was satisfied.

The community college system got an additional $5 million. “We appreciate the General Assembly’s leadership in working closely with us to support our System’s priorities,” read a statement by the community college system. “They continue to recognize the value of North Carolina’s Community Colleges.”

Two big requests by UNC that largely went unfulfilled were enrollment funding and financial aid. The system’s original enrollment request was for $17.5 million, but it received only $1.4 million. This was because the legislature made its appropriation based on the projected net increase in enrollment, rather than just counting anticipated increases in enrollment and not the decreases. (Additions to the UNC enrollment appropriation are made according to next-year projections).

This is a far cry from previous years. Even during last year’s budget crunch, UNC received $46.8 million in anticipation of rising enrollment. Yet, overall system enrollment was down: By the most accepted measure, Full-Time Equivalent students (which includes part-time students by combining their credits to equal the credits of one full-time student), the system lost 761 students in the fall of 2011 from the previous year. Despite these losses, none of that $46.8 million was given back to the state.

The community college system’s funding is based on actual attendance figures; this year, it had $12.1 million taken away after enrollment fell considerably for 2011-12.

The other big request by the UNC system was for an additional $88.6 million for financial aid. The actual appropriations for next year will be $141 million, $18.6 million more than originally budgeted.

North Carolina’s private colleges got additional money for financial aid, $281,517 recurring and $4.5 million for next year only. Proponents of these measures claim they reduce overall state spending on higher education by encouraging students to attend private colleges; since private schools receive much less government funding than public schools do, the state’s overall burden is reduced. However, critics say that this “quick fix” to offset rising tuition costs interferes with private schools’ independence, which may not be best for higher education in the long run, and also could contribute to rising tuition.

UNC-TV had most of its annual $10.6 million in appropriations restored, after having them threatened. Last year, its state funding was made year–to-year instead of automatic and placed under review. This year, $9.1 million again was made automatic.

The UNC Health Care system dodged a bullet. The House eliminated the last of its $18 million annual appropriation. Instead, its final cut was only a $3 million to the UNC School of Medicine for medical education. UNC Health Care’s relationship to the state has been controversial, with private competitors claiming that its state agency status and subsidies give UNC an unfair advantage in the fight for customers.

The budget restores $9.2 million from last year’s UNC management flexibility reduction, which can be used however the university system sees fit. The legislature also provided roughly $11.4 million to enable UNC schools to operate newly constructed buildings, such as N.C. State University’s new library on its Centennial Campus.

The community colleges received a one-time $5 million appropriation to prepare long-term unemployed North Carolina residents with job training and training in “employability skills.”

Jay Schalin is director of state policy analysis for the John W. Pope Center for Higher Education Policy.