Abusing the Rules

Rule by individuals who exercise broad discretionary authority, rather than rule by impartially written and objectively enforced laws, can lead to poor stewardship and even malfeasance.

Such broad discretionary authority given to the University of North Carolina Board of Governors may explain why, in three different cases, North Carolina Agricultural and Technical State University has obtained advantages not enjoyed by other schools in the UNC system.

The Greensboro-based historically black university received special treatment 1) after it failed to meet UNC system standards for nursing exam pass/fail rates; 2) after it overestimated its enrollment numbers, and was “held harmless” for the resulting $2.1 million over-appropriation; and 3) after it exceeded its out-of-state enrollment cap by as much as 72 percent, without penalty.

The Nursing Program

NC A&T’s nursing program, which graduated 55 students last year, has struggled for years. In 2005 and 2006, program graduates had a 69 percent first-time pass rate on the state’s nurse licensing exam—the lowest rate of the system’s 10 programs at the time (13 nursing programs exist in the system today). The pass rates improved over the next three years, but in 2010 and 2011 they dropped to 61 percent and 74 percent, respectively.

After 2006, and again after 2011, the nursing program should have been eliminated according to system policy. The president is supposed to ask the board to initiate program termination procedures for any program having a first-time passing rate of less than 75 percent for two consecutive years.

The program was given a pass each time.

As a condition of the second waiver in 2012, NC A&T officials promised to raise standards and increase licensing exam success. Despite that promise, graduates’ pass rates fell below the board’s minimum in 2012 and 2013.

At the April 10, 2014, meeting of the UNC Board of Governors, the issue came up again. Chancellor Harold Martin lobbied eloquently for another extension, promising higher standards and program improvements.

This time, NC A&T did not get its way. The board voted to suspend the program after 2014 and to convene a panel to consider program elimination. The panel will make its decision regarding program elimination by the middle of June.

Several members of the Educational Planning Committee, who weren’t Board of Governors members when the previous waivers were granted, expressed frustration with the program and the fact that it hadn’t received closer scrutiny in the past.

It’s good that the board is now being more critical of a program that, according to university policy, should have been eliminated years ago. Unfortunately, the board’s ability to avoid responsibility in future cases remains intact.

Enrollment Funding

The UNC system’s enrollment funding formula is intended to help finance instruction costs as they fluctuate with enrollment changes. While that funding process is somewhat convoluted, one part of it is clear: campuses that overestimate their enrollment figures suffer, according to a 2010 report by the NC General Assembly’s Program Evaluation Division, only “minimal consequences.”

That is because the Board of Governors can ask the legislature to grant a school “hold harmless” status. That status protects a school’s base budget when it experiences enrollment declines. The 2010 legislative report noted that the system’s General Administration referred to that funding protection as a “safety net.”

NC A&T’s example shows how that “safety net” has created bad incentives. The university overestimated its enrollment for the 2006-07 year. But it received the “hold harmless” status, and was able to keep the $2.1 million for “unrealized growth.” That amount was not just a one-year gift, but was built into future enrollment funding.

From academic years 2006-07 through 2010-11, the university continued to receive “hold harmless” status, which means that it was able to keep more than $10 million during that span. (The General Administration and NC A&T did not respond by the time of publication to my question of whether the “hold harmless” status continued after 2010-11.)

In-State vs. Out-of-State

UNC system policy places an 18 percent cap on the number of out-of-state students that universities can enroll. In part, the rule is designed to ensure that North Carolinians—who pay state taxes or come from households that do—take precedence in college admissions.

After NC A&T exceeded the cap by 72 percent in 2012 (31.4 percent of its entering freshmen class were out-of-state students), the Board of Governors began considering the possibility of exempting select universities—mostly schools that system officials call “HMIs,” or historically minority institutions.

Chancellor Martin has previously argued that his university has difficulty attracting enough talented students from North Carolina. The school has a focus on engineering—a highly competitive field—and North Carolina’s top minority students are vigorously recruited around the country.

Earlier this year, after debating the issue and receiving a letter from Martin promising to maintain a commitment to in-state students, the Board of Governors caved in on the out-of-state issue. The board decided to run a “pilot program” in which NC A&T will, for one year, be able to increase its out-of-state student population to 25 percent. After the first-year trial, the president can renew the program.

In order to justify its actions and give future “pilot programs” legitimacy, the Board of Governors in February added a clause to its out-of-state enrollment policy stating that the board “may, on the President’s recommendation, authorize enrollment pilot programs that are exempt from the requirements of [the preceding rules].”


The three cases involving NC A&T are indicative of a university system that too often relies on loose governance and ad hoc policymaking.

North Carolinians would do well to pay more attention to the checks and balances of this university system, which last year received $2.5 billion from the state’s taxpayers, and which has been entangled by instances of academic fraud, political favoritism, and even embezzlement.

No matter how well intentioned system administrators and campus officials may be, when the system’s “rule of law” is violated, we shouldn’t be surprised that abuse follows.