RALEIGH -- With an anticipated revenue shortfall of $3.7 billion dominating the North Carolina legislative horizon this spring, the air will soon be filled with previously unthinkable ideas on how to cut the state budget. One such idea is that there is no reason why the 17-campus UNC system must retain its current structure.
The system's recently retired president, Erskine Bowles, even alluded to the possibility of closing a campus. However, a less drastic idea is to encourage one school to gradually become more self-supporting in exchange for greater autonomy. This concept has been gathering steam around the country in recent years, and UNC has the perfect campus to do so - Chapel Hill.
UNC-Chapel Hill's presence in the state system, as first among equals, is becoming problematic for both the state and for the school. As long as money flowed freely from legislative coffers, Chapel Hill could strive to be one of the nation's premier universities, with other UNC schools simultaneously sharing the state's generosity. But with huge cuts looming, either Chapel Hill's pursuit of excellence will be hampered by budgetary limitations or the other schools will have a legitimate gripe about Chapel Hill's favorable treatment.
Loosening the state's grip on Chapel Hill would neutralize that unwelcome tradeoff. Reducing Chapel Hill's $297.6 million annual appropriation could account for much of the UNC system's share of budget cuts. In return, Chapel Hill will gain the kind of autonomy likely to improve its standing in the world of academia.
The campus is different from the other UNC schools. It has a Nobel Prize winner on the faculty and its students regularly win Rhodes Scholarships. Its incoming freshmen average between 125 to 450 points higher than its UNC system counterparts on combined math and reading SAT scores. In many ways it resembles Duke or Wake Forest more than other UNC schools.
It also gets a relatively small percentage of its operating revenues from state appropriations - only 21 percent. That amount can easily be replaced by raising its tuition and by boosting the percentage of out-of-state students, who pay the full cost of their educations.
Critics of this proposal will cite the oft-repeated clause in the North Carolina constitution that says the university system must provide its education "as free as practicable." If tuitions rise, won't that price Chapel Hill beyond the ability of some families to pay?
It doesn't have to. Chapel Hill's students are generally a well-heeled lot. While statistics on family incomes are not easily available, a 1999 UNC report said that the median family income of Chapel Hill students was $75,000 in 1998, which translated to $98,245 in 2009. In fact, it is where many of the state's elite - who could certainly afford private schools - send their talented offspring.
(By keeping Chapel Hill's tuition low, the state's middle- and working class taxpayers are actually forced to subsidize many well-off students at a high rate, since the current tuition only covers a small portion of their education.)
Additionally, Chapel Hill is the one UNC school with enough resources to raise tuitions significantly without losing middle-income students. Because many of its students are from prosperous families, they can pay more to subsidize their less prosperous classmates, as at private colleges. Also, the school's sizeable endowment earnings can help with scholarships.
While no American public "flagship" school has gone completely private, many states are incrementally giving those universities greater autonomy. For instance, Penn State is now designated as a "state-related" school in Pennsylvania, with considerable autonomy, and gets only 6 percent of its revenue from the state.
And while UNC-Chapel Hill is limited to having only 18 percent of its students from other states, both the University of Michigan and the University of Virginia have more than double that percentage.
Naysayers may bemoan the potential adverse affects wrought by the loss of government control, particularly to the economy. But consider Massachusetts, where the public university system is merely a second-tier afterthought to the state's many fine private institutions, such as Harvard and MIT. If Massachusetts can prosper with a higher education system based primarily on private schools - and it has - North Carolina can afford a more self-sufficient UNC-Chapel Hill.
The school can certainly thrive and achieve greatness on its own, without burdening taxpayers further, and should therefore do so.
Jay Schalin is senior writer at the John W. Pope Center for Higher Education Policy.
