Budget Increases UNC Spending by 11 Percent

RALEIGH – Two months into the 2006 fiscal year, lawmakers finally reached a consensus and approved a budget plan that will increase spending within the UNC system by 11 percent.

UNC’s appropriation for the 2005-06 fiscal year is $2.086 billion, representing 12.1 percent of the $17.2 billion budget, which was approved by the state House on Wednesday. Senate members are expected to give final approval today. A stopgap spending plan to keep state government running during the negotiations expires later today.

The budget for the 2006-07 fiscal year further increases UNC spending to $2.12 billion.

The budget compromise was hammered out in a conference committee that included ranking members of the Democratic Party in both the House and Senate. No Republicans were named to the conference committee. When committee members released the budget Monday night, it included several provisions that had originally been included in both the House and Senate plans. Some of the more controversial aspects to the original Senate budget were dropped, however.

Gone from the final budget plan was a Senate proposal to give UNC-Chapel Hill and North Carolina State University the ability to set their own tuition rates without approval from the UNC Board of Governors. That contentious provision had been pushed by several in the Senate Democratic leadership as well as the Citizens for Higher Education Political Action Committee, a group of UNC-Chapel Hill supporters who have given several hundred thousand dollars in campaign donations to members of both chambers.

What survived the conference committee, however, was another controversial proposal that originated in the Senate budget plan, allowing schools to consider out-of-state students who receive a full scholarship as residents of North Carolina. The plan would charge the low in-state tuition rates to non-residents with full scholarships. The provision was pushed by groups such as the Rams Club and Wolfpack Club that fund athletic scholarships for out-of-state and in-state athletes.

The budget also includes the continuation of the North Carolina School of Science and Mathematics tuition waiver program. That policy awards a free tuition to any UNC institution to graduates of the residential high school, regardless of their academic records. House members had included a provision in their budget plan to phase out the program. Instead, the budget increases funding for the program by $585,565 in 2006 and $1.5 million in 2007 because of funding for future graduates. In January, the Pope Center strongly criticized the tuition waiver as an unfair and ineffectual subsidy.

Also in the budget is a provision for $72.8 million in enrollment growth funding, which gives money to campus based on the number of students at each campus. Along with that is a requirement that UNC leaders, the Office of State Budget and Management and General Assembly’s Fiscal Research Division review the way the enrollment growth funding is used. In March, UNC President Molly Broad asked legislators to move enrollment funding to the continuation budget, similar to what is done with the Average Daily Membership money in the Department of Public Instruction, to guarantee the money to the 16 campuses each year.

Other spending provisions in the budget includes $150,000 for the Program on Southern Politics Media and Public Life at UNC-Chapel Hill; $500,000 for the James B. Hunt Jr. Institute for Educational Leadership Policy in Chapel Hill; $100,000 in equipment and operational support for North Carolina Central’s athletic and early high school programs; and $20,000 for North Carolina State to operate the North Carolina Japan Center.

While there were considerable increases in the state budget, legislators did find some areas where to cut spending for certain programs. The budget eliminates nearly $24 million in funding from the general fund for need-based financial aid programs. That program will be funded at $67 million with funding coming from the Escheat Fund.

The budget also calls for 1.72 percent in management flexibility reductions in both the 2006 and 2007 fiscal years. That amounts to about $31 million in reductions system wide before the budget increases.

In all, total UNC spending is the third largest appropriation, by grouping, in the budget, trailing only the Department of Public Instruction ($6.6 billion), and mental assistance funding ($2.5 billion). UNC spending also outpaces what the state spends on justice and public safety ($1.7 billion), and natural and economic resources ($457 million).

Shannon Blosser is a staff writer with the John W. Pope Center for Higher Education Policy.