RALEIGH (May 22, 2015) – A University budget that grows by $139 million, or 5.3%, as the overall budget grows by 6.3% is a welcome change in the spending plan for 2015-16 that the N.C. House approved early Friday.¹

“It stops the cutting and begins to reverse the trend that began with the Great Recession,” said UNC Board of Governors Chairman John Fennebresque. “It also recognizes the tremendous role our faculty and staff play in the success of the state’s economy. The Board of Governors and UNC General Administration have taken significant steps to bring greater efficiency and savings to the UNC system.”

The House budget represents a departure from the disproportionate cuts the University system has seen in recent years. And it comes as projections indicate increasing demand for higher education across the state. In particular, funds to provide for 3,300 more students and 2% raises for University faculty are welcome features.

As state revenues recover from the Great Recession, a number of items in the budget the House passed early Friday morning are noteworthy:

• $49.3 million for enrollment growth to support 3,345 additional students in 2015-16.
• 2% raises for state employees, including $39 million for faculty raises.² Most University faculty have seen a single raise of 1.2% over the past six years. The House budget would provide 2% raises for most state employees, and it would grant the University of North Carolina Board of Governors flexibility to award faculty raises either across the board or based on merit.³ It remains to be seen, however, how a 2% raise would affect a 76% attrition rate over the past two years among faculty who received competing offers.
• An additional $2 million for “game-changing research” identified by the University’s strategic plan in six areas: Advanced manufacturing, data sciences; defense, military and security; energy; marine and coastal sciences; and pharmaco-engineering. The funds would bring total state support to $5 million.
• $8 million to stabilize the Brody School of Medicine at East Carolina University. Higher Education Works Co-Chair Brad Wilson makes an eloquent argument for state support here: http://www.highereducationworks.org/blog/ecus-brody-school-of-medicine-a-worthy-investment-in-primary-care
• $3 million to stabilize enrollment at Elizabeth City State University.
• $2 million for Union Square Campus, a joint program of NC A&T, UNC Greensboro, Guilford Tech and Cone Health to provide nurse education and training in downtown Greensboro.
• $2 million to support online and competency-based learning in the University system.
• $1.5 million for the NC New Teacher Support Program, bringing total funds for the program to $2.7 million.⁴
• A teacher scholarship program that would provide loans of $8,500 a year to promising students. The loans would be forgiven if the student teaches for four years in a difficult-to-staff subject area or high-poverty school.⁵ The program would come as North Carolina faces a looming teacher shortage: Enrollment in state schools of education is down 27% over five years.

“This is support the UNC system needs to continue producing talent for business and excellent teachers for our classrooms, creating new knowledge and discoveries through research, and serving the people of our state,” said UNC President Tom Ross.

The House budget does not include $500 million in bonds for University projects and $200 million in bonds for Community Colleges as Gov. Pat McCrory’s budget proposal did,⁶ in part because of a disagreement over timing for a statewide bond referendum.

The House budget proposal does, however, provide alternative financing for several University projects:

• $70.8 million for a Health Sciences Building at Appalachian State University;
• $65.1 million for an Engineering Building at NC State University;
• $90 million for a Sciences Building at UNC Charlotte.⁷

House Speaker Tim Moore, in particular, intervened on the University system’s behalf to help remove $18 million in so-called “management flexibility cuts.” The University system has endured almost $700 million in such cuts since the Great Recession.

The House budget also avoids a cap on use of state dollars for University fundraising that Gov. McCrory recommended in his budget proposal.

The move would cost University campuses $17.9 million and limit a partnership that successfully leverages public dollars to raise private donations. A report last month to the Board of Governors found that every $1 invested in University development yields at least $7.41 in cash contributions.⁸

The House budget still provides no increase in need-based aid, even though the Board of Governors has voted to raise tuition across the system in each of the next two years. Increasing tuition without increasing aid can only crimp affordability and access for middle-income students.

A provision in the House budget also would allow an unnamed private online university – generally acknowledged to be Western Governors University – to qualify for need-based scholarships the state awards to students at private institutions.⁹ The provision raises questions about added competition for already-scarce aid dollars.

The House proposal now moves to the N.C. Senate, which will produce its own version of the budget. Negotiators from the two chambers will then meet in a conference committee to reconcile the two versions, with an eye toward having a budget in place for the July 1 start of the 2015-16 fiscal year.

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¹ http://www.ncleg.net/sessions/2015/budget/2015/House_Committee_Report_as_modifiedbyrules_2015-05-21.pdf, pp. 2-5.

² Ibid, p. F11.

³ http://www.ncleg.net/Sessions/2015/budget/2015/H97-CSSVXF-25-v-3.pdf, p. 279-80.

⁴ http://www.ncleg.net/sessions/2015/budget/2015/House_Committee_Report_as_modifiedbyrules_2015-05-21.pdf, pp. F12-F-13.

⁵ http://www.ncleg.net/Sessions/2015/budget/2015/H97-CSSVXF-25-v-3.pdf, pp. 78-83.

⁶ http://www.ncleg.net/Sessions/2015/Bills/House/PDF/H940v0.pdf, pp. 201-202.

⁷ http://www.ncleg.net/Sessions/2015/budget/2015/H97-CSSVXF-25-v-3.pdf, p. 299-302.

⁸ http://www.northcarolina.edu/apps/bog/index.php?mode=browse_premeeting&mid=5208&code=bog, Committee on Budget and Finance Item 3 – University Advancement Update.

⁹ http://www.ncleg.net/Sessions/2015/budget/2015/H97-CSSVXF-25-v-3.pdf, pp. 87-88.