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It's complicated, costly and in some ways unprecedented.
It calls on students and state legislators to share the burden of paying
for new academic buildings and fixing old ones -- a requirement likely to
encounter resistance from both.
It calls on faculty members to wait another academic year for hefty pay
raises, while asking the General Assembly to commit to spending $28.5 million
over the 2000-01 and 2001-02 academic years to make faculty salaries more
competitive with those offered at comparable public universities.
For all those reasons it's likely to be controversial.
But it's predicated on UNC President Molly Corbett Broad's belief that the
state and the university system have arrived at an extraordinary moment in
history when the state cannot afford to pay for all of what the university
system needs, and the university system cannot afford to wait until it
can.
On Jan. 7, Broad previewed the plan that she will present to the Board of
Governors on Jan. 14. She acknowledged parts of the plan offer something for
nearly everyone not to like. But it's the best way she knew how to distribute
the "pain" evenly to make the whole plan palatable to legislators who face a
money shortfall created by the $834 million emergency package for Hurricane
Floyd relief and the second part of a settlement that must be paid to state and
federal retirees.
In interviews in December, N.C. legislators Sen. Tony Rand, a Fayetteville
Democrat, and Rep. Verla C. Insko, a Chapel Hill Democrat, said the relief
package, coupled with election-year politics, had probably knocked the wind out
of any arguments for significant budget increases, at least for another
year.
The money isn't there, and the political will to raise taxes is not there
either, both legislators said.
Broad said she knows the state has no money, but the needs of the UNC
system are irrefutable. The needs for higher faculty pay and new buildings were
both documented in separate studies that the General Assembly ordered the Board
of Governors to do.
"We are responding to what we believe is a very unusual circumstance,"
Broad said. "I'm reluctant to call it a crisis, but it is certainly a
circumstance in which policymakers at the state level have had a very difficult
time reconciling the needs of the state and the resources available to respond
to those needs."
She describes her plan as "a draft" that she expects will go through many
changes.
Interim Chancellor William O. McCoy said Broad's plan addresses all the
key issues facing Carolina.
"Although some of the specifics vary from our original proposal to
increase faculty salaries, the approach is consistent with our
recommendations, and I'm delighted with its anticipated net effect on our
campus.
"It is a responsible and do-able strategy that would help us safeguard
North Carolina's investment in this great University, and I would hope that the
Board of Governors and the General Assembly act favorably on the
proposal."
Broad emphasized that she did not see her proposal as a permanent shift in
requiring students to pay more for their education while allowing the state to
do less.
The state has a 200-year record of financial support to keep the cost of a
university education as low as possible for state residents.
Once this budgetary crisis has passed, she expects the state's strong
commitment to resume.
Price tag for University students
If approved, some graduate students and all undergraduates at
Carolina would pay more in tuition, fees, or both.
Carolina law students and graduate students in journalism and mass
communication would see the biggest tuition increases under Broad's
plan.
Both in-state and out-of-state law students would see a $1,000 increase in
the 2000-01 academic year. In-state law students only would pay additional
increases of $2,000 in 2001-02 and 2002-03 that would bring the total tuition
increase for in-state students to $5,000 over the next three years.
In-state graduate students majoring in journalism and mass communication
would pay an additional $2,260 in the 2000-01 academic year, compared to $2,200
more for out-of-state students.
Money generated by the increases would be earmarked to enhance both
programs as directed by the chancellor.
Undergraduate students would see their tuition and fees increase by $332
for the 2000-01 academic year. In-state students would pay a total of
$2,629.82, compared to $11,795.83 for out-of-state students.
The $332 increase is made up of three parts:
* $100 for a "facility fee" that would increase to $200 in 2001-02 and to
$275 in 2002-03. Broad's proposal calls for the legislature to match the
revenues generated by the fees. The combined revenue would be enough to pay
debt service for $750 million in bonds borrowed over the next three years. The
$275 fee would remain in effect until the debt was paid.
* $32 that would help to pay for rising costs because of inflation.
* A $200 increase for the 2000-01 academic year at Carolina and N.C. State
that would raise faculty salaries at these two Research I schools.
The University trustees' proposal had called for a $300 increase each year
for the next five years, with about two-thirds of the additional revenues
earmarked for faculty pay and the remaining third for student aid.
The biggest difference in Broad's plan is that tuition would increase only
one year.
Broad said the $200 tuition increase would generate about the same revenue
for faculty pay increases as the trustees' plan would have in the first year.
At the same time, the plan calls for the General Assembly to set aside $36.8
million for a needs-based financial aid program for students throughout the UNC
system.
The Board of Governors discourages campus-initiated tuition increases,
Broad said, but the intense competition for faculty between public and private
Research I universities warrants an exception.
Broad cited a study that shows how the salary gap between full professors
at public and private research universities grew, in 1998 dollars, from $3,000
in 1980 to $15,600 in 1998.
In addition, Broad's plan would ask the General Assembly to pass an
"Excellent University Act" in this year's short session. Under this plan, the
General Assembly would commit to spending $28.5 million for faculty salaries
over the next biennium that starts July 1, 2001.
This part of Broad's plan follows closely the recommendation that the
consulting firm MGT of America Inc. of Tallahassee, Fla., presented to the
Board of Governors last November.
The $28.5 million of state money would raise salaries of faculty members
to the top 20 percent of salaries offered at comparable public universities,
Broad said. A combination of tuition increases and private donations at nine of
the 16-member institutions, including Carolina, would raise faculty salaries to
the top 20 percent offered among their respective peers.
Before Broad unveiled her plan, both Insko and Rand said they supported
the idea of tuition increases to raise faculty pay, at least for this
year.
"It's too bad if we have to go down that route, but I think it's essential
to find money for increases for faculty salaries," Insko said.
Said Rand: "If your primary concern is the amount of tuition you pay,
there are a lot of good schools you can go. If you are interested in attending
a university with a national and worldwide reputation, I think you might have
to pay a little bit more. It's still going to be very reasonable and a
wonderful bargain, and we will be able to keep the faculty that makes it the
special place that it is, and we will be able to recruit the new faculty that
will keep it that way."
Broad also wants the General Assembly to adopt a composite index for
public university faculty salaries that can be used to guide salary increases
in future years. The state has a chronic problem maintaining competitive
salaries for faculty members, Broad said. The index would fix that.
Finally, Broad is asking for an amendment to the state's Optional
Retirement Program that about 90 percent of recruited faculty members choose
because of its portability.
Under Broad's proposal, the state would pay into the faculty member's
optional retirement account at a rate comparable to what it's already paying
for faculty members who participate in the Teachers and State Employees
Retirement System.
Capital needs are a priority
Broad said she does not know of any other time that students have
been asked through fees to pay directly for academic buildings. She sees no
other way, and neither do the chancellors she spoke to. And she talked to them
all.
"When we talked with the chancellors, to a person they believe this was
the most urgent priority that they faced, and because of its urgency they were
all willing to contemplate an increase in tuition in order to help address it,"
Broad said. "It's a logical step for us to say, `We'd like to jump-start the
process on a very urgent and important matter, but we think it's imperative
that the state is a partner with us.'"
The facility fees would service bonds and would remain in effect until the
bond debts were paid off, which would likely be 20 years, Broad said.
About $420 million of the $750 million in proposed bonds would pay for
projects that already have been approved by the General Assembly.
Broad's plan also seeks to get back the $72 million worth of construction
money that was eliminated in this year's budget to pay for the flood recovery
package.
As an alternative to financing construction with student fees, Broad said
the UNC system is prepared to pursue a referendum in November if that is the
wish of the General Assembly. Last summer, UNC leaders suffered a major setback
when the General Assembly rejected a proposed $3 billion construction bond
package. The Board of Governors and legislature still need to agree on a way to
pay for the remaining $6.9 billion in campus construction needed over the next
decade.
Broad said improving facilities also has a strong connection with keeping
a top-flight faculty. She cited as a prime example the antiquated research
laboratories that renowned University scientists are forced to use. "It isn't a
case that we believe we can deal with one of these major issues and put off
another major issue. We are dealing with them simultaneously but laying out a
multi-year plan that is respectful of the state's financial condition in the
short term."
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