Budget updates:
  Perdue transfers money into the state’s general fund
  Forum discusses furloughs as one option for saving jobs
  Community meeting focuses on budget situation, layoff policy

Perdue transfers money into the state's general fund

In her recent State of the State address. Gov. Beverly Perdue vowed to do whatever was necessary to pay the bills.

Last week, she made good on her promise by allocating $787 million from the state’s emergency “rainy day fund” to the general fund, which is used to pay the state’s general expenses.

Nearly one-third of the money, $250 million, will be used to bolster the financially ailing State Health Plan for Teachers and State Employees, and the rest will be reserved to help the state meet its financial obligations.

The move is not unprecedented. During the 2001 recession, then-Gov. Mike Easley took similar action.

And at the beginning of this month, Perdue allocated $300 million from four dedicated accounts, including $87.6 million from the Education Lottery Reserve Fund, to help close the estimated $2.2 billion gap in this year’s state budget. Money was also moved from the Clean Water Management Trust Fund, the Public School Building Capital Fund and the Public School Textbook Fund.

If the $2.2 billion estimate proves to be correct, it marks a 10.6 percent decline in revenue that was budgeted for this fiscal year and 5.9 percent less than the state received during the last fiscal year, according to figures reported by The News & Observer. The State Budget Office is predicting a deficit for each of the next two fiscal years topping $3 billion.

Perdue had not submitted her proposed budget for the 2009–10 fiscal year by the time the Gazette went to press, but it was expected to be released this week.

Health plan
Recent actions of both the governor and the N.C. General Assembly are designed to get the State Health Plan back on track.

The Senate Appropriations Committee approved legislation last week to allocate the $250 million Perdue moved into the general fund for the health plan this fiscal year and an additional $609 million for the next two fiscal years.

The legislation, which has to be voted on by the Senate and the House, also would raise co-payments and deductibles for the plan’s more than 666,000 state employees, teachers and retirees.

Senate Majority Leader Tony Rand, who sponsored the legislation, said the bill would have to clear the legislature by the end of the month for plan changes to take effect July 1. Failure to do so could reduce savings by 15 percent, Rand said in an interview with The News & Observer.

On campus
Although the full extent of next year’s budget deficit is not yet known, economic conditions are taking a toll on some of the University’s planned construction projects.

The latest to feel the pinch is the second phase of renovations to Kenan Stadium. Construction to add club seats, individual suites and a new academic center to the south side of the stadium will not start after the 2009 football season as originally planned, Chancellor Holden Thorp and athletic director Dick Baddour announced earlier this month.

Rent from the boxes and club seats is expected to pay for the project in 12 to 14 years. To move forward with plans and approvals so construction could start in January 2010, the athletic department wanted to have at least half of the new seats – about 25 to 30 suites and 1,250 club seats – sold by October.

While the project has a high level of support among University administrators and Educational Foundation members, all agreed the timing was not right.

The first phase of stadium renovations, however, began last month and will be completed by September. The Educational Foundation will raise $18 million to add a fifth floor to the existing football center on the stadium’s west end.

This project is important, Baddour said, because Carolina’s two revenue sports – football and men’s basketball – are largely responsible for supporting the entire 28-sport program. Ticket sales from football accounted for about $10.3 million of the athletic department’s $61.4 million budget in 2008–09, while men’s basketball tickets accounted for about $8.8 million.

Forum discusses furloughs as one option for saving jobs

Heightened anxiety over the prospect of some University employees losing their jobs in the coming fiscal year was a focal point of discussion at the March 4 Employee Forum meeting.

That anxiety found expression in a debate about employee furloughs – unpaid time off – as a means to keep more people working. Any discussion of furloughs is hypothetical, however, unless the General Assembly authorizes the UNC system to use them.

Alan Moran, a carpenter in Facilities Services who serves on the forum’s Compensation and Wages Committee, introduced a resolution asking Chancellor Holden Thorp to keep furloughs from being applied to any employee who earned below a “living income standard.” In his resolution, Moran defined that standard as a family with an income equal to twice the federal poverty level.

Vice Chair Brenda Denzler told Moran she understood the spirit of the resolution and supported his goals, but it was important to consider alternatives to a furlough. Without it, she argued, there was the real possibility that more people, including the people Moran wanted to hold harmless, could lose their jobs completely.

Denzler also suggested that the resolution, though well intended, needed to acknowledge the broader context from which the idea of furloughs sprang.

People have suggested furloughs as a way to use the cost savings from reduced work hours to help more employees keep their jobs.

While losing income from unpaid leave can be bad, she said, it can be far worse for people to lose jobs that they may never be able to get back – something Denzler compared to “having to choose between cutting off a foot or putting your leg in a cast for the next nine months.”

The resolution will be referred back to various committees for revision before it is presented to the forum again for action.

Another resolution dealt with the hundreds of tickets that have been issued to employees who park in the Dogwood Deck on Manning Drive and the Ambulatory Care Center lot off Mason Farm Road without first getting a temporary permit to do so. The parking areas are reserved for hospital and dental school patients and visitors weekdays between 7:30 a.m. and 5 p.m.

Forum Treasurer Marshall Dietz, a systems analyst for Energy Services, first raised the issue in January. His resolution, which was discussed but not voted on, would have called on Thorp to void all the citations that have been issued and refund the fines employees have paid until the Department of Public Safety strengthens its efforts to notify employees about the parking restrictions.

One suggestion was to simplify the wording and look of the signs posted at the entrances to these parking areas.

Finally, the forum endorsed “The Song of the University Employee” as the official University staff poem. Its author, Jeffery Beam, was on hand to read the poem (see Working at Carolina).

Community meeting focuses on budget situation, layoff policy

Nearly 400 staff members and students attended a community meeting with Chancellor Holden Thorp and top administrators on March 2.

The session, organized and sponsored by the Employee Forum, was called “University Budget 101,” but in reality no one knows yet what next year’s budget will look like. It was that singular point – it is too early to offer definitive answers – that Thorp and other speakers emphasized during the discussion.

The forum invited Thorp, Dick Mann, vice chancellor for finance and administration, and Brenda Malone, associate vice chancellor for human resources, to address the group. Vicki Bradley, senior director of employment, classification and compensation, and Matt Brody, assistant vice chancellor for human resources, also presented a layoff overview for SPA employees and EPA non-faculty employees, respectively. 

Emerging themes
Some consistent themes emerged, however, including Thorp’s emphasis that Carolina administrators wanted to help ease the financial burden on faculty and staff by taking cuts at least as large as those of the rest of the campus.

Another theme was the efforts of vice chancellors and deans to trim their budgets wherever possible to prevent job cuts and to assist affected employees. (Last month, Thorp authorized the creation of an Employee Assistance Fund to help employees who lose their jobs; refer to hr.unc.edu.)

“I’m convinced that Carolina has what it takes to get through this crisis,” Thorp said. “We have people here who have been through it before.”

He told audience members he shared their frustration about the lingering uncertainty over what might happen. There are reasons to be worried, he said, but there also are reasons to be hopeful.

For instance, the UNC system is likely to experience smaller budget cuts than other state agencies. At this point, Gov. Beverly Perdue has asked the UNC system to undergo 7 percent  cuts this year, while many other state agencies have been asked to take a 9 percent cut.

Both Thorp and Mann said the state would not have a clear picture of revenues until April 15 after all state tax returns have been submitted. And it is not yet altogether clear what impact the federal stimulus package might have on the University because a great deal of work must be done both in Washington D.C., and Raleigh first, Thorp said.

One certainty is that there will be more money for federally sponsored research – money that would likely create staff support positions to help manage contracts and grants. The stimulus package should also include money for “shovel-ready” construction projects, but it is not clear if any here will be funded.

Thorp spoke about the possible use of temporary furloughs as a way to reduce layoffs, but the General Assembly has not authorized the legislation to make that possible, he said.

Campuswide perspective
Thorp admitted that how well he handles the budget situation could be the most important thing he does as chancellor, because it will affect not only how well the University weathers the crisis, but also how it will be positioned to achieve new heights once the crisis has passed.

Several students stood in the back of the room holding placards supporting staff members keeping their jobs. One student asked Thorp about the implications of a study of University operations now under way by Bain & Company, a global business consulting firm.

Thorp said he approved the privately funded study to get an objective campuswide look at how the University currently operates and how it can streamline operations and better stretch available resources to fulfill its mission.

The study will supplement input he has already received from individual units about ways to reduce costs and will shed light on enhancing efficiency from a University-wide perspective in areas such as information technology, purchasing and energy. 

An oversight committee consisting of Thorp, Mann and Elmira Mangum, senior associate provost, will meet with Employee Forum Chair Tommy Griffin and Faculty Chair Joe Templeton to get their input on the study.

The student asked Thorp to guarantee that privatization, the cost-cutting practice of converting functions handled by public employees to a private firm, would not be considered.

Thorp refused, but said it was possible that the Bain & Company study could generate ideas about using privatization in selective ways that would make sense financially and could be accepted by the larger University community.

He emphasized the University’s commitment to transparency throughout the process.

Both the University’s agreement with Bain & Company and the scope of work have been posted on the Carolina Budget Information Web page, universityrelations.unc.edu/budget. Also posted are Thorp’s budget-related e-mails to campus and the University’s submissions used to develop its response to the 2009–10 state budget reduction planning scenarios for 3 percent, 5 percent and 7 percent cuts.

Griffin ended the session by thanking panel members for participating and Forum Vice Chair Brenda Denzler for organizing the event.

“It is a tough situation, but don’t leave here thinking you are going to be laid off tomorrow,” Griffin said. “I’ve been here 36 years and these are horrible times, but don’t leave here thinking nobody cares about you because we do care.”

Griffin reminded people that the University and the country had been through – and survived – tough times before. And it will again, he said.