University to take
5 percent cuts in
next year's budget |
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Chancellor Holden Thorp directed vice chancellors, deans and
other senior administrators to cut programs, operations and staffing equal to a
5 percent recurring state budget reduction in conjunction with the July 1 start
of a new fiscal year.
Although the state budget is in flux, the longer the University waits to enact inevitable cuts, the deeper the cuts likely
will be, Thorp said in a March 19 e-mail message to campus.
“We already know that what we at Carolina do – and how
we do it – will be significantly affected,” he said.
The Carolina Budget Information Web page, universityrelations.unc.edu/budget,
includes the latest budget information affecting Carolina and communications
from other UNC system chancellors to their campuses. Other UNC campuses are
taking similar steps as Carolina.
The Web page also includes recent
correspondence between President Bowles and Dana Cope, executive director of
the State Employee Association of North Carolina, about the timing of budget
actions at the UNC system campuses. |
Thorp told the Faculty Council on March 20 that he remained
committed to sharing information about the upcoming budget with the University
community as soon as he received it. He pledged to continue a spirit of
openness while acknowledging that the facts could be a two-edged sword,
lowering the anxiety level for some while raising it for others.
Gov. Beverly Perdue’s budget proposal, announced earlier
that week, called for $192 million in budget cuts from the UNC system –
for a 6.5 percent reduction.
As grim as that budget proposal would be, Thorp told faculty
members, Rob Nelson, UNC system vice president for finance, warned that
Perdue’s budget might be better than proposals still to come from the N.C.
Senate and House.
While acknowledging the difficult decisions that will have
to be made to balance the state’s budget, UNC President Erskine Bowles has
pushed for funding for enrollment growth and need-based financial aid.
Bowles also asked to hold budget cuts to 5 percent, make
them nonrecurring and ensure managerial flexibility for the campuses and
chancellors. He has said that permanent cuts in the governor’s proposal could
result in the loss of hundreds of jobs across the UNC system.
Proceeding with cuts
Thorp told Faculty Council members that he supported Bowles’
position and that the University did not have the luxury of avoiding or
delaying the decision to proceed with 5 percent cuts. To achieve any savings
for next fiscal year, he said, units had to move forward now to identify $29
million in permanent cuts. And that comes on top of $36 million in one-time
cuts the University has already absorbed this fiscal year.
The cuts are not just line items on a piece of paper, Thorp
said. Real people will lose jobs they have performed loyally and well. But as
difficult as these decisions are, there is no other choice.
Thorp said the sooner cuts were made, the greater the accumulated
cost savings would be, something that could help reduce the need for additional
cuts next year.
Although about 50 faculty searches were suspended this
spring, Thorp laid out two broad objectives to safeguard current faculty
members.
The first was to protect tenured and tenure-track positions
and honor all commitments to faculty members on fixed-term contracts.
Second, Thorp said he wanted to put the University in a
position to hire some faculty members next academic year that deans identify as
vital to educating Carolina students and keeping the University from losing
ground with its peers.
Revenue sources
Vice Chancellor for Finance and Administration Dick Mann
made two recent budget presentations to committees of the Board of Governors
and Carolina’s Board of Trustees. He emphasized that the University’s budget is
built on a combination of revenue sources, many of which have usage
restrictions and cannot be considered to address the current situation.
Most of Carolina’s state appropriations – $577 million
in fiscal 2008–09 – are used to pay employees’ salaries and
benefits, accounting for about 58 percent of total spending.
Other budget-cutting challenges, Mann said, include loss in
value of Carolina’s
endowment and compliance with federal and state standards for animal research
care, human subjects, human resources, purchasing
and finance.
In addition, ConnectCarolina (formerly called ERP) will
replace outdated business
systems to create an integrated management system for business processes
related to student services, human resources, payroll and finance.
Budget actions may include program reductions,
consolidations and eliminations, along with service level reductions, which are
affected by the status of vacant and temporary positions, Mann said. Options
also include leveraging other funding sources and consolidating administrative
functions, such as human resources and finance staffing.
Mann emphasized that reducing non-salary expenditures and
then vacant or temporary positions was preferable; cutting filled positions
followed only as “no other good choice.”
Each additional percentage cut in the state budget would
call for eliminating more filled positions, he said. Uncertainty about
continued state funding to support enrollment growth, the impact of budget cuts
on class size, and life safety, renovation and repair problems are concerns as
well.
Mann also updated the trustees’ Audit and Finance Committee
on the privately funded study under way by Bain & Company to help the
University identify ways to streamline operations, become more effective and
perhaps achieve additional cost savings. The consultants have been culling
baseline information and will identify savings based on study guidelines set
with the University (posted at universityrelations.unc.edu/budget).
Thorp has pledged to share the results of the study,
expected to be completed this summer, with the campus. He stressed that Bain
was only providing advice; the campus will decide what to do with the
recommendations.
Reaction
Last week’s trustees meeting attracted about 40 protestors –
a mix of students, faculty, staff and people outside the University who made
demands on Thorp and the trustees about layoffs, the Bain study and open
meetings.
Thorp met with the protestors, who later filed into the
trustees meeting and briefly addressed board members. Chair Roger Perry told
them the administration makes operations decisions on issues like the campus
budget.
In the Audit and Finance Committee meeting, Employee Forum
Vice Chair Brenda Denzler shared preliminary results of a forum survey of
employees on furloughs and urged the University to maintain openness about
budget cut and layoff plans and actions.
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