With no cuts, NC universities’ budgets look better

jstancill@newsobserver.comJune 21, 2014 

After years of budget cuts, North Carolina’s public universities might see a glimmer of light as lawmakers work this week to finalize the state’s spending plan.

Despite an early threat by the state Senate to force the closure of struggling Elizabeth City State University, the UNC system might fare better than it has in recent years, ending with a flat or slightly increased state budget, about $2.5 billion.

The plan is likely to include salary increases for university staff, and the House wants to extend the raises to faculty at a time when university leaders say some of their best professors are being lured away by other states.

There are reductions to some areas – enrollment funding will drop to correspond to a slide in students. That will affect some universities more than others, and campuses that lost students are already cutting positions and laying off employees.

Still, the overall stabilization of state money is welcome news to university leaders after the recession and slow recovery. This year, the UNC system’s state funding was $100 million less than it was in 2007-08 – despite having 9,000 more students enrolled now.

But this year’s budget, which starts July 1, is likely to be viewed as a relief rather than a cause for celebration.

A strategy adopted by the UNC Board of Governors in 2013 has been largely stalled because of a lack of money. The plan would produce more degree earners, target high-return research areas and pursue expansion of online education. It also forces new efficiency standards on campuses and demands more emphasis on private fund-raising.

The UNC system had proposed to pay for part of the new strategy by carving savings out of its own budget. Last year, the system identified $25 million for the cause, and expected to add more this year to reach $38 million to be dedicated to the new priorities.

But in the state budget squeeze last year, the legislature swept up the UNC system savings for state coffers while ordering an additional cut.

Fred Eshelman, a pharmaceutical executive, prominent Republican and UNC board member, doesn’t hide his frustration.

“We did identify the savings and they took the savings, which we were supposed to be able to reinvest,” said Eshelman, an architect of UNC’s strategic plan. “But it didn’t work out.”

Now, he said, it’s important to “stop the bleeding” in the budget and chip away at the plan’s goals.

A 32 percent goal

It’s taking some time to win over the Republican-led legislature, which has often lobbed criticisms at the university system. Eshelman said the UNC plan has supporters on both sides of the aisle.

“You can say whatever you want to about university system, and there’s waste and you don’t like their politics,” said Eshelman, a major donor to the UNC-Chapel Hill pharmacy school. “It doesn’t change the fact that, in my view, it’s the biggest economic engine we have in this state. And our state is known for this system.”

The major goal of the strategic plan is to increase the share of state residents with a college degree to 32 percent of the population – which would place North Carolina among the top 10 states. In 2012, degree holders were almost 29 percent of the state’s population.

UNC system President Tom Ross wants to get more traction on the plan.

“We have to educate more people, we have to, if we’re going to be economically competitive,” he said. “I tell you moving the needle just from 28 percent to 32 percent is not easy, and that doesn’t get it done. There are states that are well over that number already.”

Ross reported to the Board of Governors last week on the progress of the plan. He pointed out some key things that have been accomplished – the ones that didn’t require much money.

The university has worked with community colleges to smooth the path for transfers. There is new outreach to enroll service members leaving the military in North Carolina. And the university is trying to prevent students from dropping out or failing through early warning systems and redesigned key introductory courses that improve student outcomes.

“We’ve also not thrown up our hands and said we’re not going to do anything because we didn’t get the money we needed,” Ross said. “Instead, I think we’ve moved smartly to do the things we can do.”

Peter Hans, the outgoing UNC board chairman, said he hopes the legislature will at least give the university more flexibility to reallocate money to the big priorities. The Senate, for example, has proposed that the system cut $15 million from campus centers and institutes and use that for the strategic changes.

Some lawmakers have criticized centers and institutes as ideological entities that have little value because they generally do not involve teaching undergraduates. An example often cited is the Poverty Center at UNC, linked to John Edwards, the former Democratic senator and presidential candidate. The Poverty Center is now privately funded.

“Campuses should separate wants from needs to focus on our core mission,” Hans said in parting remarks as chair, “and repurpose funds from mediocre programs to those which are or can be centers of excellence. Bigger is not always the definition of success. Better is success.”

Hans also said the state should maintain its historically generous investment in higher education, and that UNC must control costs.

Sen. Jerry Tillman, co-chair of the higher education budget subcommittee, said he likes UNC’s strategic plan and greater accountability, but added that small campuses are by their nature inefficient and need to combine some operations. He’d like to see fewer administrators and more market-driven academic programs across the system.

“They’ve made a good first step,” said Tillman, an Archdale Republican. “They’ve got quite a long way to go toward making more cuts and efficiencies.”

Tillman praised the Board of Governors, which is now dominated by Republicans. The new members, he said, are willing to dig into budgetary details.

“I like the direction they’re going in,” he said. “We will continue to work with them to try to let them have some of the savings they’ve realized.”

Poaching star faculty

Some of those board members asked pointed questions last week about data that showed a decline since 2011 in student credit hours taught per full-time equivalent faculty, following an increase during the recession. Some campus leaders cited the recent decline in enrollment as the reason.

One sticking point between the House and Senate budgets will be whether to extend the proposed $1,000 salary increase to faculty as well as staff.

UNC chancellors argued last week that they’re unable to make suitable counteroffers when other universities try to poach star faculty.

A system report showed that campuses retained only one-quarter of the 262 professors and 61 medical faculty who received outside offers in the last couple of years. The average salary offered by the competing university was $23,000 higher for professors and $106,000 higher for medical faculty, the report said.

“There are certain universities, and frankly, certain states that seem to be making a concerted effort to go after our faculty,” said UNC Greensboro Chancellor Linda Brady.

She said her faculty had been targeted by University of Texas and Texas A&M University. Two UNCG professors recently left for universities in Australia and New Zealand.

Some offers are impossible to match. Dr. Luda Diatchenko of UNC’s dental school, a renowned expert in the genetics of pain in humans, was hired by McGill University in Canada.

McGill’s offer included a start-up package with multiple faculty and staff positions to build a program in clinical pain genetics. Its total value: $30 million.

Stancill: 919-829-4559

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