September 3, 2014

Art Pope tells UNC board to exercise oversight over spending

Outgoing State Budget Director Art Pope, in a financial update to the UNC Board of Governors, said public universities enjoy generous taxpayer support and relatively low tuition - but boards should exercise more oversight of spending.

Outgoing State Budget Director Art Pope told UNC system board members Wednesday that North Carolina’s public universities have low tuition, generous taxpayer support and managerial flexibility that demands more transparency and accountability.

And, on a familiar topic, Pope challenged the board to exercise more oversight over the tens of millions of dollars of federal payments that now flow to UNC campus leaders in conjunction with research grants. The money, which is meant to cover the university’s facility and administrative costs for federal research, totaled $260 million in 2012-13 – the majority to UNC-Chapel Hill alone.

That is a huge pot of discretionary money in the hands of the Chapel Hill chancellor, Carol Folt, Pope said.

“She has more control over more money in the state of North Carolina than any other state official – $159 million,” Pope said, adding, “with a great deal of respect to Chancellor Folt.”

Folt was traveling Wednesday, a spokeswoman said, and could not immediately be reached for comment.

Pope – a Raleigh businessman, Republican donor and former legislator – has long taken aim at universities’ use of the federal money, often called “overhead receipts.” He mentioned it earlier this year in a memo instructing the UNC board to redo its budget request.

On Wednesday, he told the board there was no proposal by the state to try to recover that funding – only a suggestion that the campus trustees and UNC Board of Governors pay closer attention to how the money is spent at universities.

“This is real money,” Pope said.

Board Chairman John Fennebresque said he agreed with Pope’s call for more oversight of the federal money. “I think we do a mediocre job of that,” he said, “and I think we need to do a better job of that.”

Pope’s remarks came during a retreat of the UNC system’s governing board at the corporate headquarters of SAS, the Cary software company. Pope, who will step down as state budget director Friday, was invited to give the board a fiscal rundown in advance of the fall budget preparation season.

In an hourlong presentation with 50 slides, Pope made the case that the university system is in a healthy financial position, with $2.6 billion in state spending in 2014-15, or 12.47 percent of the state budget. The state ranks fifth in the United States on state spending per student, he said, but is first among the 10 most populous states.

“We have a world-class university system, and the state already has financial support for that,” he said.

Low tuition

Pope added that tuition in North Carolina is very low compared to public university tuition in other states; eight UNC campuses are at the bottom of their peer campuses elsewhere on tuition. North Carolina has a constitutional mandate that higher education should be free “as far as practicable.”

UNC campuses have raised tuition dramatically in the aftermath of the recession and state budget cuts. According to UNC system data, tuition rose 48 percent from 2009-10 to 2013-14, while state appropriations declined by 1 percent.

Pope defended moves by Gov. Pat McCrory and the legislature to raise out-of-state tuition over the concerns of some UNC leaders who said it will hurt competition for the best students from outside North Carolina.

Pope has not been shy about casting a critical eye toward university spending, but his family has also donated millions to the university. A higher education think tank funded by his family foundation is a frequent critic of university policies.


After the presentation, Ed McMahan, a board member and former legislator, thanked Pope and said he had been unfairly portrayed as “anti-higher education.”

The Republican-dominated board applauded.

Fennebresque added: “Art’s got two days left, and now we’re being nice to him.”

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