There already have been twists and turns in crafting the operating budget for UNC’s 2008-09 school year, even though the process is in the early stages.
The General Assembly convened this month for its short session, in which it considers additions to the two-year state budget adopted in 2007. The three parties to the University of North Carolina’s operating budget — the General Assembly, the governor, and the university system — all seem to be on a different page.
One factor is the diminishing availability of state money. With a recession looming, tax revenues are expected to be leaner than usual. After several years of large increases in university spending, state Sen. Albin Swindell, cochairman of the Joint Legislative Oversight Committee on Education, said, “[T]his is an unusual time for us…it is a tough time.”
The process began on April 22 when university system President Erskine Bowles presented the joint appropriations subcommittee on education with budget priorities totaling $320 million in recurring expenditures plus $21 million in onetime (nonrecurring) costs. Recurring expenditures are typically expected to be an annual expense indefinitely. Nonrecurring expenditures are a one-time expense. To put these numbers in perspective, the university’s 2008 operating budget was $2.6 billion.
Bowles emphasized the system’s need for $11.7 million in recurring and $17.5 million in nonrecurring appropriations for campus safety. He also wanted $153.8 million in recurring expenses for faculty salary raises. Other significant requests were for research, $63.8 million recurring, $4 million nonrecurring; regional and statewide economic development and “competitiveness” training, $22.4 million; and health care, $24 million recurring.
Last year, the state based its university budget allocation for 2008-9 on an expected enrollment increase of 2.2 percent. According to Bowles, actual enrollment increased by 4.2 percent, so he and the governor are requesting an additional $34.7 million to take care of any shortfalls. This article does not discuss capital spending for buildings and infrastructure projects, which is a separate process.
During the meeting of the UNC Board of Governors on May 8, there was a new list, this time of “highest priorities” that totaled $196.5 million in recurring and $17.5 million in nonrecurring expenditures. These were primarily for campus safety and faculty salaries, but there was also was a new $1.25 million request with controversial political implications, for an independent public policy “think tank” on the Chapel Hill campus.
On May 12, Gov. Mike Easley weighed in. In his proposal, higher-education spending would increase by $31.3 million, $21. 8 million recurring and $9.1 million nonrecurring, with numerous cuts. The campus safety proposal was reduced to $5.6 million in recurring and $5.4 million in nonrecurring expenditures. Notably absent were faculty salary increases and almost all economic development and research proposals. Remarkably, the governor’s recommendations included a public policy think tank, also to be on the Chapel Hill campus, but completely different from the one sought by Bowles.
The legislature, however, set a target for total state education 1 percent lower than the governor’s proposal. This was for aggregate amounts, combining the budgets for UNC with public K-12 education and the community colleges.
Then on May 21, the joint appropriations subcommittee submitted its recommendations. At first glance, the UNC system appeared to be the big loser, with only an increase of $4.6 million in recurring appropriations and a sizable loss of $35.9 million in nonrecurring expenditures.
However, Rob Nelson, UNC’s vice president for finance, said that $50 million in nonrecurring appropriations cut from the state’s EARN Scholars Fund merely reflected a shift from the general fund to the Escheat Fund, an accumulation of unclaimed property. The EARN program, $4,000 for low-income students, is actually being expanded to include students at the state’s private colleges this year.
The only items from Bowles’ earliest budget requests to survive on the joint appropriations committee’s list of high-priority recommendation were for campus safety, cut from $29.2 million to $12.8 million; planning a dental school at East Carolina University, reduced from $2 million to $1 million; indigent care at ECU medical school, cut from $5 million to $2 million; medical school expansion planning at several campuses, cut from $5 million to $2 million; and the university system’s specialized schools, N.C. School of the Arts, N.C. School of Science and Math, and UNC-Asheville — reduced from $2.5 million to $1.25 million; and an increase in faculty salaries as part of the “distinguished professorships” program, dropped form $7 million to $1 million.
Gone from the governor’s and UNC’s proposal was the $34 million for enrollment increases. Easley’s suggested $750,000 in funding for a policy think tank was only included in a list of secondary recommendations, and UNC’s request for a policy center was eliminated.
Despite such reductions to the requests by the governor and UNC system, some of the major items that Bowles’ originally requested are still in play, according to Nelson, including the money for enrollment and salaries. “It’s a long, iterative process,” he said. It will go on at least until the end of June and possibly into the summer.
Jay Schalin is a senior writer with the John W. Pope Center for Higher Education Policy in Raleigh.