Budget Crisis Barely Slows UNC Agenda

Daily headlines, both state and national, project impending budgetary catastrophes—in North Carolina, the forecasts are for revenue shortfalls, furloughs, cutbacks, and more. Although the legislature has not yet presented a final budget for the next two years, the main question for the University of North Carolina system is how deep the cuts will be—not whether there will be cuts.

At the May 7 UNC Board of Governors meeting, Rob Nelson, the university’s vice president of finance, said that the system is looking at potential cuts as deep as 15 percent next year, should the state’s economy continue to spiral down. And at UNC-Chapel Hill, before deciding on specific budget-cutting measures, Chancellor Holden Thorp brought in an outside consulting firm, Bain & Company, to review that school’s business practices.

Yet the university system is still managing to effect major changes without the annual flood of new money provided by the legislature in recent years. Some of the changes, such as the Financial Improvement and Transformation program (FIT), were set in motion by system president Erskine Bowles well before the economic downturn. Others are driven by guidelines set down by the UNC Tomorrow Commission, an overall blueprint for the university system that Bowles did not initiate but fully embraced and made a top priority. The commission had already made most of its recommendations when the economy soured last summer.

The FIT project began with a year-long study of the system by national accounting firm Ernst and Young. UNC is now implementing Ernst & Young’s recommendations of best business practices and improved internal controls.

Ironically, some of the efficiency methods intended to cut costs are being held up by a lack of funding, according to Gwen Canady, the project manager for the implementation of FIT. “We won’t be able to do as much this year,” she said. Ernst and Young provided recommendations in five areas. The goal was to establish consistent standards for all the UNC constituent universities (or campuses). Of the five, two had to be pushed off for another year due to cuts.

One of the suspended improvements involves UNC’s process for making purchases and paying for them. Another is the creation of a centralized payroll system for nine universities that now use a state system.

But in three of the five areas, progress is being made. They are contracts and grants, student financial aid, and general accounting and reporting. Canady said many of the changes made are “cost avoidance” measures. She cited financial aid. A number of campuses have run afoul of federal compliance regulations, leading to expensive penalties. The new regulations are intended to prevent such lack of compliance, and therefore reduce or eliminate the federal penalties.

While the FIT program focuses on greater efficiency, UNC Tomorrow is an ongoing program designed to usher in a major transformation of the university culture. “Our goal at UNC Tomorrow, from the very beginning, was not only just to identify the needs of our state that the university needed to focus on, but to change the way we do business so that the focus is maintained going forward,” said UNC Tomorrow director Norma Houston.

Some of the more ambitious initiatives may not be achieved over the near term. After the meeting, Houston referred to “important initiatives that have grown out of the UNC Tomorrow that clearly may not be able to be moved forward this year or next year because of the budget crisis.” She did not specifically identify the delayed projects.

Houston said that UNC Tomorrow originally included plans to build a system of branch and satellite campuses, which “traditionally involves bricks and mortar—a physical presence.” The purpose was to increase access to four-year education in rural areas.

However, “the state does not have the resources to start building satellite campuses,” Houston said. For example, Appalachian State University’s branch campus in Hickory, which already had legislative approval and funding. Because of the budget crisis, Appalachian State will hold upper-level courses at area community colleges, instead of building a new campus. Houston said this was much more “cost-effective,” a “good example of where we still have forward progress despite some things not going forward.” She said that many more changes are under way because of “reprioritizing. ” Some areas, such as curriculum review, will move forward because they “don’t cost new money.”

Many of the UNC Tomorrow guidelines are focused on diversity issues. Houston said that the UNC system has an aging faculty, with 37 percent of all tenure-track professors over the age of fifty-five. “The good news is that there is a major opportunity to increase the diversity of our workforce,” said Houston.

A UNC Tomorrow document prepared for the board meeting cited several curriculum changes resulting from the UNC Tomorrow recommendations. One was UNC-Charlotte’s move from a traditional method of teaching writing that relies on “freshman composition” classes to a “communications across the curriculum” approach. This change reduces the number of composition courses, and instead embeds writing instruction in major subject classes.

The UNC Tomorrow document also mentioned UNC-Wilmington’s “extensive revisions to general education, including requirements on information literacy, diversity, and living in a global society.” This represents the current trend toward de-emphasizing education about American culture, history and government in favor teaching students about diverse cultures. (Here is an article about N.C. State’s recent changes to its general education requirements in accordance with UNC Tomorrow.)

The university system is adopting a larger role in economic development, partly in response to the sluggish economy. Specific initiatives mentioned in the UNC Tomorrow document include a “multi-university economic development effort focused on building the design industry in the Triad” and numerous advisory economic relationships with municipalities. Also, the document says that “UNC Chapel Hill has been advising the NC Department of Commerce on which industry sectors show most promise going forward.”

Furthermore, there is a new emphasis on entrepreneurship. “N.C. State is in the midst of implementing a new university-wide entrepreneurship initiative,” the document adds.

Distance learning (online education) is rapidly gaining on traditional classroom-centered education. According to Bowles, 40 percent of the enrollment growth for next year is for online classes.

There is also movement toward fostering cooperation between the university system and various community organizations. These include, for example, UNC-Chapel Hill’s “Community-Campus Partnership for Tomorrow” program, which forges “partnerships with underserved communities in North Carolina.”

Environmentalism is getting a large push in the UNC system as well, with such programs as N.C. A&T’s creation of a “Green Campus” and N.C. State’s “Future Renewable Electric Energy Delivery and Management Systems Center.”

While the focus may be on the budget, UNC is continuing to evolve in many ways, some good, some bad. Individual projects might be cut, and efficiencies might be added, but the system is still following an aggressive liberal (mostly) agenda created before the recession.