How UNC Can Shrink Its Budget

The North Carolina Senate has just proposed its budget for the 2014-15 year, which begins July 1. This is the second in an annual series. First we had the governor’s budget; now we have the Senate’s; and the House of Representatives will follow soon.

With a shortfall in state revenue, raises for teachers, and the increasing cost of Medicaid, the state of North Carolina needs to find savings. The Senate budget found them by cutting funds in the departments of Health and Human Services, Agriculture, Commerce, and Labor as well as in general government expenses.

It also cut $81 million from various statewide reserves, including funds for future benefit needs, the state retirement system, and the information technology reserve fund. These funds are the state’s savings account, providing for future needs and unforeseen problems. While there is undoubtedly room for reductions in the executive branch, cutting reserves is a bad idea. It leaves North Carolina vulnerable in the next recession. When revenues go down, the state will have to cut back even more or raise taxes on citizens.

Instead of reducing reserves, the budget writers should look to the UNC system for savings. That is what Governor McCrory did—recommending a total of $49 million in reductions.

Why should the University of North Carolina face cuts? Let’s look at the numbers. Higher education, including UNC and the community college system makes up 18 percent of the state’s $21 billion operating budget. The UNC system alone receives $2.5 billion annually.

But the UNC system has plenty of other money as well. Its annual budget—including tuition, federal money, private grants, and donations—totals $9 billion for 221,000 students. In short, the UNC system has room for cuts.

As a percentage of its budget, North Carolina spends more than the national average on higher education. And in real dollar terms, North Carolina spends more of its general fund on higher education than any other state in the Southeast.

Despite loud complaints from activists and university lobbyists, last year’s reductions of $68 million produced positive results and no increase in in-state tuition for 2014-15. According to a 2013 report by the UNC general administration, nearly 70 full-time equivalent positions previously funded by the state were shifted to other sources of funding, and 537 vacant positions were eliminated. When it comes to positions that actually had people serving in them, seven UNC schools eliminated no positions after the 2013-14 budget reductions. The general administration eliminated one.

One result was that universities focused a larger percentage of their total funding on instructional costs.

There are a number of ways to streamline the UNC system and its campuses in the years to come so that they operate more efficiently and better serve the people of North Carolina. And while studying and potentially closing an underperforming campus could yield savings down the road, there are quicker and less controversial ways the UNC system can save money now.

Here’s where cuts can be made:

Eliminate unnecessary administrators. Administrators outnumber faculty at every UNC campus. Ten percent of administrative staff earn more than $100,000 per year. Professional, paraprofessional, and clerical staff outnumber faculty at UNC-Chapel Hill by nearly 5 to 1! That’s one administrator for every four students.

Expect faculty to teach more, especially in the humanities. In some departments at UNC’s large research campuses, the average faculty member teaches fewer than two courses per semester. If tenure-track faculty teach more courses, the university can rely less on adjunct professors. That’s a win-win: more faculty attention for undergraduate students and considerable savings for the university.

Stop using state funding for non-academic or politicized “centers.” UNC’s 16 campuses host hundreds of centers and institutes—many of which have no academic mission and offer no courses. The Institute for Civic Engagement and Social Change at NC Central, the Institute for Community and Economic Engagement at UNC Greensboro, the Institute for Social Capital at UNC Charlotte, and the NC Institute for Sustainable Tourism at ECU are just few examples. See the Pope Center’s criteria for cuts here.

Eliminate program duplication. The UNC system has three marine science programs—only one of which is at the coast. It has programs of Art History, Criticism, and Conservation at five campuses. And even though only 83 students graduated in music in 2012-13, students can major in music at 10 different schools. Consolidating small programs would save the state millions.

The University of Georgia’s new chancellor, Hank Huckaby, has set an example. From 2010 to 2011, Georgia’s regents approved 71 new programs across the 31-school system and terminated 12. Since Huckaby became chancellor, 576 programs have been ended and only 99 added.

End remedial courses at all UNC schools. With the increase in minimum admission standards across the UNC system, remediation is unnecessary. All students entering UNC schools after 2013 must have a minimum GPA of 2.5 and a minimum SAT score of 800 (out of 1600). Their high school courses must include four English courses, two algebra courses, and at least three science courses. If UNC upholds these standards, remedial courses and summer bridge programs will not be necessary.

Cuts will compel chancellors to find waste and identify efficiencies on campus, focusing UNC’s spending on its core mission: undergraduate education.