The Impact of State Budget Reductions on UNC Chapel Hill
Robert N. SheltonExecutive Vice Chancellor and
ProvostOctober 3, 2003
The University of North Carolina at Chapel Hill
$252,585
$283,826
$382,372
$331,650
$257,219$255,003$270,700
$302,337
$352,283
$308,245
$383,189$402,205
$368,505$368,024
$163,054
$149,577$132,966
$190,236
$213,230$235,196$244,485$247,950
$262,956$296,722
$321,330
$364,340
$403,684
$431,986
$54,228 $53,050
$59,158 $63,888
$82,721$87,398
$94,458$107,969
$132,285$148,310
$164,640$160,375$180,616
$163,500
$50,221
$60,247$66,718
$81,465$88,478$102,277$105,745$110,400
$46,719$75,531
$121,507$139,319
$150,537
$178,484
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
89-90
90-91
91-92
92-93
93-94
94-95
95-96
96-97
97-98
98-99
99-00
00-01
01-02
02-03
In T
hou
san
ds
State Appropriations
Govt. Contracts & Grants
Private Gifts & Grants-as reported toCAE (includes related entities)
Tuition & Fees
Carolina Revenues by Source, 1997-2002
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
% % % % % %
1997 1998 1999 2000 2001 2002
State Appropriations
Tuition and Fees
Federal Contracts andGrants
State Contracts andGrants
NongovernmentalContracts and Grants
Other Revenues
In his August 8th speech to the UNC Board of Governors, Chairman J. Bradley Wilson said:
I believe that the continued compression of the University budget creates an important question for this Board and the people of this state. Does North Carolina want to continue to have a state-funded University, or do we want a state-supported University? There is a difference—a big difference.
Wilson continued:
The proud heritage of the people of North Carolina is that we have a state-funded University that is as ‘free as practicable.’ We must recognize that to continue to cut the University budget—as has been done over the past four years—and to continue to fail to reward our administrators, faculty, and staff with raises and benefits that they so richly deserve, to continue to shrink general fund support for the University and to ask our students to pick up the tab, is a formula for disaster.
Quick FactsBy the Numbers Fall 2001-
2003
Operating budget Permanent Reductions $ 34.10 Million One-time Reduction $ 70.47 Million $104.57 Million
Funding for enrollment increases Academic Affairs $ 26.53 Million Health Affairs $ .49 Million
Increase in operating reserves $ 5.89 million
How Have We Managed?Implemented annual budget planning and hearing process with all deans,VC’s, and UPBACMade differential cuts, abandoning across-the-board approachProtected the classroom as much as possible, while streamlining administration and eliminating programsIncreasingly relied on alternative funding sources to maintain excellence (clinical income, research awards, F&A funds, Carolina First Campaign), but these funds are limited in areas of use
Criteria for Cuts
Protect activities that are central to Carolina’s mission, add value, or are required by law or for compliance purposes Deans and VC’s have discretion, but must manage within resources Academic Plan, Financial plan, unit plans guide reduction and allocation decisionsLook for opportunities to improve efficiency and eliminate duplicationMake decisions consistent with BOT Measures of Excellence
Impact of Budget Cuts:
Elimination of support programsLoss of faculty and staff positionsReduced competitiveness in retentionElimination of academic programsInfrastructure and support deteriorationLibraries affected
Elimination of Support Programs in Past Year
HEELS for Health ($165,000)Office of Continuing Education in Health Sciences ($150,000)Hanes Computer Training Center ($100,000)Arts Carolina ($130,000)Neonatal Nurse Practitioner Program ($75,000)Annual Preceptors Conference, Dept of Health Policy and Administration ($21,000)
Elimination of Support Programs in Past Year
School of Medicine Office of International Affairs ($78,000) Curriculum Technology Support Office ($287,000) Health Ethics Center ($191,000) Carolina Workshops in Molecular Biology ($152,000) Allied Health Rehabilitation Psychology and
Counseling Program ($435,000)
First Year Initiative Living Learning Program ($73,000)Institute for Nutrition ($200,000)Total Savings: $2,057,000
Loss of Faculty & Staff Positions 2001-2003
Instructional positions 157.63 fte Faculty positions (155.63 vacant, 2 filled ) $15.9 Million
Non instructional positions 218.78 fte Vacant positions (62.78 fte) and layoffs
(154 SPA, 2 EPA) $ 5.5 Million
63% of the permanent reduction ($34.10M) has been in position funding
Position Reductions
60.78
0.11
60.89
35.28
61.52
96.8
122.72
96
218.72218.78
157.63
376.41
0
50
100
150
200
250
300
350
400
2001-02 2002-2003 2003-2004 Total
Staff
Faculty
Total
0100200300400500600700800900
1000
1999 2000 2001 2002 2003
AA TenureAA FixedHA TenureHA Fixed
Full-Time Faculty 1999-2003
Total Full Time Faculty1999-2003
0200400600800
100012001400160018002000
1999 2000 2001 2002 2003
Tenure
Fixed Term
Reduced Competitiveness in Faculty Retention
The issue is not the loss of faculty due to retirement, non-reappointment, or career changeThe issue is the competition for our best faculty: those we treasure most, and who are most attractive to our peer institutions
Faculty Retention
In the mid-1990’s we lost 2.0% of our faculty to competing institutions; by 2002-03, our rate of loss had climbed to 2.9%Within Arts and Sciences, we’ve shifted from keeping 60% of those we fight to retain to losing 60% of those we fight to retain.Average salary difference in Arts and Sciences is $30,000 less than competing institutionFaculty received average raise of 2.48% plus one-time bonus of $550 for 2003-04, and average raise of 2.55% for 2002-03.
Faculty Retention
In 2002-03, we lost 53 of 76 retention bids across the University, or nearly 70%Outlook for 2003-04 is uncertain at bestEach case is unique, depending on faculty needsUniversal factor: benefits
60,630
13,400
970
60,504
13,250
1,246
59,419
12,737
2,844
58,911
12,707
3,382
57,793
12,358
4,849
56,544
12,337
6,119
56,220
12,260
6,519
55,811
12,010
7,179
55,594
12,074
7,332
54,736
12,083
8,181
54,702
12,250
8,048
53,173
11,705
10,122
52,514
11,176
11,310
Comparison of Annual Amount After Benefit Costs, FICA and Federal TaxesSalary of $75,000
Take Home Taxes Benefit Cost
Key Findings
Employees “take home” a significantly smaller share of their pay checks than employees at peer institutions
Family health insurance coverage is the biggest driver of high employee benefit costs
Employees also pay the highest out-of- pocket medical expenses of employees at peer institutions
Employees pay a higher than average share of retirement contribution
Moving Toward our Peers—Items for Consideration
Health How can we increase University contribution for dependent coverage? Should we implement sliding scale for premiums based on salary? Can we increase number of plan options offered?
Retirement How can we decrease employee contribution to retirement plans? How can we increase University contribution to defined contribution
plan? Should we decrease vesting period for defined contribution plan?
Other Should we subsidize dental insurance? Should we provide employer-paid life insurance? Should we consider a cafeteria style benefit plan?
Benefits Structure Should our benefits be comparable to programs offered to government
employees in southern states or should they be comparable to universities with whom we compete for faculty and staff?
Solutions
Endowed professorshipsResearch supportPhysical facilitiesBenefits and base salary improvementsRetention fund
Endowed Professorships
321 distinguished professorships as of 2000-01 247 unit based 74 University-wide
We added 18 University-wide distinguished professorships in 2001-03
Progress towards our goal of 200 endowed chairs
Progress since then: 16 chairs fully endowed and filled 18 chairs fully endowed and waiting to be filled 12 chairs completed and waiting for state match 46 chairs with pledge made and in process of
collecting remaining funds 13 chairs with pledge made but no payments yet 95 seeking donors (your name here) Total: 200
Academic Program CutsIncrease in average number of students per class section For freshmen and sophomores, class size
increased from 34.8 to 36.84 students For juniors and seniors, class size increased
from 22.9 to 24.1 students
The College of Arts and Sciences lost 36 faculty members but could only replace 1414 elective courses eliminated from BSBA, MBA and MAC programs
Academic Program Cuts
SILS eliminated core course lab and reduced TA’sSPH eliminated 10 TA’s from Health Behavior and Health Education classes HBHE postponed two new courses in Global Health and Health Communications due to lack of state funds to hire new facultyDept. of Epidemiology eliminated Doctoral Seminar program
Academic Program CutsEnvironmental Health Sciences Techniques course cancelled in ESESocial Work field education supervisor position eliminated, reducing help to 250 students in fieldDept. of Allied Health Services reduced admissions from 118 students to 80 studentsSOM eliminated Medical Informatics Track for BME studentsSOM cancelled development of spinal cord research program in Physical Medicine
Infrastructure and Support Deterioration
$5.1million in maintenance cuts = loss of funding for 1.15 million square feet of space87 maintenance-related positions lost – equivalent to a 15% reductionOver 2,100 preventative maintenance tasks eliminated by reducing scheduled frequenciesState allocation for R&R in last three fiscal years was: $0, $0, $0.9M (historical mean of $14M)
Infrastructure and Support Deterioration
Closed five residence hall computer labsClosed computer lab in Greenlaw and computer classroom in VenableEliminated all public access modem linesReduced IT service to instructors (MyUNC and Faculty/Staff Central) with layoff of three staff
Libraries AffectedPriority area protected from reductions through year end investments Permanent - $955,000 (cut would have been
>$1.2M if applied across the board) (Added $1,858,600)
Temporary - $1,239,066 (Added $1.5 M)The Health Sciences Library reduced monograph purchases by 60% and video purchases by 80%Unable to replace 125 computers that are over seven years old in Davis LibraryReduced student assistant hours by 6,900 in Health Sciences and Academic Affairs libraries$130,000 in serial cancellation in Law Library over last three years (from total acquisition budget of $1.1 million, 85% of which are serials)
State Appropriation & Permanent Reductions
Three Year Cumulative Permanent Reductions
State Appropriation92% $390M
Permanent 8% $34M
Lost Expenditure Capacity for the Period$104M
Temporary, $70M
Permanent, $34M
State Appropriation & Enrollment Increase
Enrollment IncreaseFall 2000 to Fall 2003
Fall 2000 24, 870
94%
Increase - 1,490 6%
Three Year Cumulative Permanent Reductions
State Appropriation92% $390M
Permanent 8% $34M
SummaryWe continue to pursue academic excellence and initiatives, despite the cuts. These include:
Implementation of the Academic Plan Launching the new undergraduate curriculum New investments in research computing Creation of a new biomedical engineering program in
partnership with NCSU Creation of the Institute for Advanced Materials, Nanoscience
and Technology Development of Carolina North An aggressive building campaign Continued progress towards completion of the Carolina First
case statement goals, including 200 new professorships and 1,000 new scholarships
Closing Questions and Comments
Tenured/ Tenure-Track
Fixed Term Total
Tenured/ Tenure-Track
Fixed Term Total
Tenured/ Tenure-Track
Fixed Term
Grand Total
921 260 1,181 861 559 1,420 1,782 819 2,601
894 269 1,163 868 628 1,496 1,762 897 2,659
911 180 1,091 876 615 1,491 1,787 795 2,582
943 189 1,132 891 678 1,569 1,834 867 2,701
941 193 1,134 875 720 1,595 1,816 913 2,729
Academic Affairs Health Affairs Total University
Full Time Permanent Faculty
Fall 1999-2003
UNC-Chapel Hill Current Funds Revenues by Source
(in thousands)
1997 1998 1999 2000 2001 2002
State Appropriations $331,650 $352,283 $382,372 $383,189 $402,205 $368,505
Tuition and Fees 102,277 105,745 110,400 121,507 139,319 $124,661
Federal Contracts and Grants 221,548 231,687 259,152 276,548 311,821 $365,172
State Contracts and Grants 26,402 31,269 37,570 44,782 52,519 $38,512
Nongovernmental Contracts and Grants 40,092 44,729 51,128 56,764 70,343 $75,536
Other Revenues 340,313 361,535 380,059 416,648 480,465 $515,049
Total Current Funds Revenues $1,062,282 $1,127,248 $1,220,681 $1,299,438 $1,456,672 $1,487,435
1997 1998 1999 2000 2001 2002
% % % % % %
State Appropriations 31.2% 31.3% 31.3% 29.5% 27.6% 24.8%
Tuition and Fees 9.6% 9.4% 9.0% 9.4% 9.6% 8.4%
Federal Contracts and Grants 20.9% 20.6% 21.2% 21.3% 21.4% 24.6%
State Contracts and Grants 2.5% 2.8% 3.1% 3.4% 3.6% 2.6%
Nongovernmental Contracts and Grants 3.8% 4.0% 4.2% 4.4% 4.8% 5.1%
Other Revenues 32.0% 32.1% 31.1% 32.1% 33.0% 34.6%
Total Current Funds Revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
For the Year Ended June 30,