UNC System scales back its budget request to legislators amid coronavirus pandemic
The UNC System is asking for less money in its biennial budget request to the state legislature as the coronavirus pandemic has diminished universities’ revenue and hurt the state’s economic health.
The revised budget request has a $185 million decrease in operating expenditures from the original budget request, UNC System interim President Bill Roper said at a Board of Governors meeting Friday. The budget removes nearly all $632 million of capital improvement projects at several universities across the state that were previously approved by the legislature, he said.
The new budget also includes a special $45 million request in one-time relief to offset new expenses and lost revenue as a result of the pandemic, Roper said. That money will be distributed to universities for costs related to the transition to online instruction for the spring semester, facility sanitation, canceled activities and other emergency expenses, plus digital learning enhancements.
“These revised budget requests will impact our institutions, no doubt about it,” Roper said. “But we understand North Carolina’s near-term revenue will be lean, and we are adjusting accordingly.”
While the system is tightening its belt and submitting a smaller request, this is not a budget cut. If the budget is approved by the state legislature, the system will still see “modest increases” in its budget from previous years.
“No one at this point is talking about an actual cut from the current amount of funding,” Roper told reporters after the meeting. That includes money that individual institutions are receiving, he said.
Roper hopes budget cuts don’t happen, but it’s unclear given the “very uncertain budgetary times,” he said.
Part of the unexpected expenses and loss of revenue are the prorated reimbursements of payments for unused housing and dining services for students that resulted from COVID-19. The system estimated the total cost to UNC System schools as a whole is just under $120 million.
Roper said institutions have already started sending those refunds to students. They anticipate 80% of the refunds will be processed by the end of next week.
What’s in and out of the budget?
Given the current situation, the “responsible” request intently focuses on health and safety and core education, Roper said.
Some of the critical needs in the budget include the following items:
- $2 million for faculty recruitment and retention, though that decreased from the original $15 million request;
$3.3 million to operate, hire faculty and fulfill program needs at the North Carolina School of Sciences and Mathematics Western Campus, plus a nearly $3.4 million tuition grant for NCSSM;
$1 million for the College of Health Sciences at UNC Pembroke;
$2 million for doctoral research funding for N.C. A&T and about $3.2 million for its Cooperative Extension and Agricultural Research programs;
$4 million for manufacturing biopharmaceuticals at N.C. State;
$32 million for enrollment growth;
$15 million for the buy down for NC Promise institutions;
and $19 million for building reserves.
The items include recurring and nonrecurring expenses.
Some budget items excluded are the rural residency program at East Carolina University, summer scholarships for student success and data modernization.
Several capital projects, including repairs and renovations were considered critical for the health and safety of students, faculty and staff on campuses.
These projects include:
- $16.5 million for the Western Carolina steam plant;
- $6 million for an HVAC System and Chiller at Elizabeth City State University;
- $2.5 million for the demolition of a dorm at Fayetteville State University;
- $8 million for systemwide demolitions;
- and $130 million for systemwide repairs and renovations.
The capital projects put on hold include a School of Medicine building at ECU, Carver Hall Renovations at N.C. A&T, a new library at ECSU, a STEM building and beekeeping facility at N.C. State, Jackson Library renovation at UNC Greensboro, renovations at science buildings at UNC Charlotte and others.
“All of these projects are of critical importance, and they will remain priorities at the appropriate time and opportunity,” Roper said. “We must revisit these delayed projects with renewed sense of urgency.”
The board’s request will go to the state General Assembly, which is expected to meet at the end of April.
“We’re in uncertain times and there may need to be further modifications moving forward,” Roper said.
Board of Governors Chairman Randy Ramsey said the board members have been working with elected officials who are “supportive” of the budget request “at this time.”
NC campuses get millions in federal relief money
In compiling this budget request, the BOG budget and finance committee also considered the $179 million of federal money allocated to UNC System campuses by the U.S. Department of Education. The money comes from the Higher Education Relief Fund established in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
At least $89 million of that money goes directly to students through emergency financial aid grants. That money can be used for expenses related to technology, course materials, housing, food, health care, childcare and other things disrupted by the coronavirus outbreak.
The money was distributed to institutions using a formula based on the number of enrolled students who are eligible to receive Pell Grants and total full-time enrolled students.
Ramsey said he is grateful for leadership in Washington for understanding how higher education is being affected during this pandemic. But while that money and the relief from the state will help, it is not going to be enough to replace the revenue losses and unexpected expenses from housing, dining, athletics and other areas, Ramsey said.
Campuses are still awaiting complete guidance from the federal government on restrictions and directions on how they will disburse the funds. Individual universities will set up their own processes for getting that money to students as soon as the schools get it, according to Roper.
The Education Department awarded about $378 million to 142 North Carolina colleges, universities and post-secondary institutions, and at least half of that money will be distributed as “emergency cash grants to college students,” according to Sen. Thom Tillis of North Carolina. The federal government also issued additional money to assist historically black colleges and universities.
Just over $120 million was distributed across the state’s 58 community colleges, with at least $60 million going to student emergency aid.
“Community colleges appreciate the national support for our students during a time of need as well as direct funding to the colleges because we expect an increased demand for workforce skills during this recession,” said Peter Hans, president of North Carolina’s Community College System.
The CARES Act funding allocated to North Carolina Independent Colleges and Universities campuses is $36 million for students and $36 million for campuses, according to president Hope Williams. Those private schools include Duke University, Campbell University, Wake Forest University, Elon University, Davidson College, Saint Augustine’s University, Shaw University, Meredith College and others.
“The institutional funds from the CARES Act have not been made available yet nor has the guidance which will govern how the funds can be expended,” Williams said.
The Education Department said it is considering whether colleges and universities can use the money for the room and board reimbursements to colleges, but that is not certain, according to Williams. She expects the money can be used toward the “significant costs” incurred by campuses to suddenly move to remote learning but it won’t completely cover them.
It’s also unclear if the student portion of the money can be used toward a student’s account balance for tuition payments for fall classes, as students and parents may be struggling financially because of the pandemic.
“NCICU and our campuses are grateful for this federal assistance and are trying to help our students as well as the colleges and universities,” Williams said. “Right now we are waiting for additional clarification from the (Education Department), which we understand may come today or early next week.”
This story was originally published April 17, 2020 at 2:53 PM with the headline "UNC System scales back its budget request to legislators amid coronavirus pandemic."
