Budget updates:
  Thorp creates fund to help employees during hard times
  Budget challenges: Looking for solutions
  ‘Budget 101’ takes realistic look at budget possibilities

Thorp creates fund to help employees during hard times

The University, like all state agencies, is in a holding pattern of sorts. Everyone expects next year’s budget news to be bad, but no one knows yet just how bad it will be.

Until Gov. Beverly Perdue and the N.C. General Assembly prepare their versions of the state budget, and officials can get a handle on North Carolina’s income tax revenue – after April 15 – the extent of anticipated funding cuts will remain a question mark.

Despite the uncertainty, Carolina administrators have to plan for managing cuts in next fiscal year’s state appropriations coupled with reductions in the University’s endowment income. The endowment was down 16.5 percent through the end of 2008, Chancellor Holden Thorp told the Faculty Council on Feb. 20.

Although Carolina fared better than many others – large endowments across the country were down 23 percent on average, Thorp said – administrators had to prepare for the overall financial impact.

“We’re in extremely difficult circumstances,” he said. “The circumstances haven’t gotten profoundly worse, but we’re getting closer to the reality of dealing with the circumstances we’re in.”

Even so, he assured faculty that reality did not include eliminating tenured faculty positions, canceling fixed-term contracts in the middle of their terms or discharging tenure-track faculty members because of the economic situation. Budget constraints would not be the basis for making tenure decisions, he said.

“I would have to initiate the process of declaring financial exigency to take these measures,” Thorp said. “I haven’t done that and don’t intend to do that, and I can’t foresee the circumstances in which that would have to happen.”

University administrators also want to help ease the financial burden on faculty and staff.

“In South Building, we are committed to undergoing budget cuts at least as large as those taken by the rest of the campus,” Thorp said.

The vice chancellors and deans support using furloughs to cope with budget cuts, he said. If the legislature grants General Administration the authority to use furloughs, Carolina administrators favor targeting higher-paid employees more than lower-paid employees.

Employee Assistance Fund
“Some managers are already contemplating laying off state employees, and we have to face up to the fact that this is coming,” Thorp said.

He has authorized the creation of an Employee Assistance Fund to provide enhanced outplacement services for employees who are laid off.

The fund, totaling $445,000, will be created through $250,000 from an unrestricted gift that Thorp can designate for a high-priority need, a $100,000 gift from the Department of Athletics, $70,000 saved by canceling this year’s Tar Heel Bus Tour for new faculty members and a $25,000 gift from Thorp and his wife, Patti.

The effort, to be led by Brenda Malone, associate vice chancellor for human resources, will also explore ways to expand support offered by the Employee Assistance Program during challenging times like these. (See related information in the question-and-answer feature with Malone at left.)

Moving forward, the University will have to make many key budget-related decisions during the summer, Thorp said. He pledged to work with the Faculty Executive Committee, Employee Forum and Student Government to solicit input from the entire campus community.

“I consider this the greatest responsibility I’ve ever had, to help Carolina make the right decisions and to make those decisions consistent with the way we have always operated as a university,” he said.

ONLINE INFORMATION
Following the meeting, Thorp sent an e-mail update about the budget to faculty and staff.

All of Thorp’s budget-related communications to faculty, staff and students are posted on the Carolina Budget Information Web page, universityrelations.unc.edu/budget.

Last weekend, Thorp told the Carolina community in another e-mail message that additional information had been posted on the budget page.

The submissions used to develop Carolina’s response to the 2009–10 state budget reduction planning scenarios are posted. UNC President Erskine Bowles requested planning scenarios of 3 percent, 5 percent and 7 percent from all UNC campuses earlier this year.

Carolina’s summaries were posted on the Web site when it went live in February. The public records officer has redacted the latest documents to protect confidential personnel information, Thorp said.

“Remember, these scenarios were prepared as part of an exercise for preliminary planning purposes and don’t reflect actual decisions that have been made,” he said.

Campus units are funded from a variety of sources, and these documents reflect potential state cuts, which are only part of the total picture, Thorp said.

Also posted are additional details about the privately funded study being conducted by Bain & Company, the global business consulting firm that is working to identify ways Carolina can streamline its operations and effectiveness and perhaps save money.

Where things stand now
Last week, University administrators received word that another 1 percent of state appropriations for the current fiscal year would have to be reverted to the state. This brings the total reversion for the 2008–09 year to 7 percent.

“Although we have anticipated this additional reduction, I recognize that it places further strain on your already-challenged state resources,” Bernadette Gray-Little, executive vice chancellor and provost, said in her Feb. 27 correspondence with vice chancellors, deans and directors.

By comparison, many other state agencies have been asked to reduce their budgets by 9 percent this fiscal year.

The final reversions must be in the Budget Office by March 15, Gray-Little said.

BUDGET CHALLENGES: Looking for solutions

The University has been seeking suggestions from the campus community for ways to save money at budgetideas@unc.edu. Some of the most frequently mentioned ideas involve using furloughs or reductions in salary or work hours as ways to avoid layoffs.

In the second of an occasional series examining some of these ideas, the Gazette spoke with Brenda Malone, associate vice chancellor for human resources, about the University’s options for SPA and EPA non-faculty employees. (Faculty appointments and policies are managed through the Academic Personnel Office in the Provost’s Office.)

Gazette: How is the University coping with budget projections that could call for losing some positions next year?

Malone: We believe that the University needs to have a variety of options available to meet budget challenges during these difficult economic times. The Office of Human Resources is working with General Administration to ensure that Carolina has the maximum range of options available to help and protect the interests of our employees.

Some options under consideration may require legislation to enact – such as the furlough concept recently suggested by President Bowles. Similarly, a flat percentage salary reduction for all employees, or a University-wide reduction in hours worked, with a corresponding reduction in salary, could require legislative action or approval from the Office of State Personnel and/or General Administration.

Gazette: Can the University use any of these options now?

Malone: Yes, a reduction in work hours is an action that we can currently take for individual SPA employees. If a department wishes to make a permanent reduction in hours for an employee covered by the University’s layoff policy, the employee is given the choice to accept either a reduction in hours or a layoff.

Without legislative action, we cannot institute furloughs or an across-the-board flat reduction in salary for SPA employees – that is, reducing salaries by a certain percentage for all employees.  

Gazette: How do these options apply to EPA non-faculty positions?

Malone: It depends whether the employee is an EPA non-faculty at-will employee or an EPA non-faculty employee with a fixed-term appointment, and whether a funding contingency is in the appointment letter.

Positions for EPA non-faculty at-will employees could be eliminated or those employees could have either a salary reduction or work schedule change with appropriate notice, as outlined in our EPA employment policies. The notice would be 30 or 90 days, depending on length of service to date.

For fixed-term EPA non-faculty appointments, such changes could be implemented with a funding contingency as long as the budget cuts are related to funding sources other than permanent state or permanent trust funds. This is also in accord with our EPA non-faculty employment policies.

There is no layoff policy for EPA non-faculty employees, however. Also, we cannot institute furloughs without approval from General Administration.

Gazette: Which options would have a more significant impact on the budget situation?

Malone: In general, furloughs are better suited for one-time budget reductions rather than long-term cost savings, while a flat salary reduction obviously has a long-term effect on the budget.

However, many issues would have to be addressed before instituting furloughs. For example, among the details to be addressed are items related to maintaining employees’ uninterrupted eligibility for benefits and the University’s ongoing contributions to those benefits.

It is important to remember that these are only options the UNC system is considering. No decision has been made yet about enacting any of these options, but President Bowles has indicated that he wants to be able to give UNC system campuses the opportunity to offer furloughs. Of course, that depends on legislative authorization. In addition, we have no details on what any of these programs may look like until legislation is passed.

Gazette: How does the layoff process work?

Malone: The initial step is for department management to decide that a layoff may be necessary based on business needs, and they develop a layoff plan. That plan is submitted to the Office of Human Resources. We review each plan individually to ensure that it is consistent with state and University policies.

For example, our policy at Carolina states that employees can be laid off only after the department considers all other available alternatives, such as terminating any temporary employees and delaying the filling of any vacant positions.

After the department’s plan has been approved, the department has to provide at least 30 days notice to the affected employees. Those employees then meet with an OHR staff member to discuss benefits and their eligibility for career transition services, and get answers to their questions.

Gazette: Can you tell us more about the new Employee Assistance Fund that Chancellor Thorp recently announced?

Malone: I’m very pleased that we will have these services in place if they’re needed. The Employee Assistance Fund will allow us to expand the career transition services we currently provide to eligible employees upon layoff. It will also let us provide those services to more employees if they are needed.

In addition, we are looking at broadening our current Employee Assistance Program, which gives employees a confidential place to go for help with stress or other challenges – either at home or in the workplace.

We are in the process of establishing this fund, and as details are fine-tuned, we will include information on the Human Resources Web site, hr.unc.edu.

Gazette: How do these policies and procedures apply to faculty positions, both tenure-track faculty and fixed-term appointments?

Malone: The Office of Human Resources manages all SPA and EPA non-faculty positions at Carolina. For more information about HR policies, refer to hr.unc.edu/employees/policies.

Faculty appointments and policies are managed through the Academic Personnel Office in the Provost’s Office. For more information about faculty personnel policies, procedures and guidelines, refer to hr.unc.edu/EPA.

‘Budget 101’ takes realistic look at budget possibilities

Several hundred University employees and students were on hand for the University “Budget 101” information session sponsored on March 2 by the Employee Forum. Featured speakers included Chancellor Holden Thorp, left; Dick Mann, vice chancellor for finance and administration, shown at the podium presenting an overview of the current budget situation; and Brenda Malone, associate vice chancellor for human resources. The session concluded as the Gazette was going to press. Refer to preview.html for complete information about the discussion.