Pushing past the talk with UNC's budget

Feb. 14, 2011 4:40 pm

Chapel Hill
We began gathering information about UNC-Chapel Hill’s budget with a simple idea: Let the numbers speak for themselves.

Deep into the data gathering process, we had another thought: What good is the information without context?

We used our own graphic to look at trends that were especially interesting. You’ll find an explanation of these trends in the text below.

At various points in the article, you can click on the text to bring up the charts and figures that got us interested in digging deeper.

1.State appropriations are down.

Decreases in state revenues is the biggest reason less money is flowing into North Carolina’s public universities, said Edwin McLenaghan, a policy analyst at the North Carolina Justice Center.

After textile and manufacturing jobs moved overseas in the ’80s and ’90s and the Great Recession of 2008 hit an already downtrodden state economy, the budget became less than flexible.

Struggling to get back to the economic prosperity of the 1990s, the N.C. General Assembly decreased higher education appropriations primarily to avoid cuts to K-12 education. McLenaghan said K-12 remains one of the hardest areas to cut because of its political and everyday consequences.

In addition to funding decreases, the General Assembly could soon decide to reevaluate how much money they dole out to state universities, McLenaghan said. Currently, universities receive funding based on the number of students they enroll each year. The General Assembly could instead install a performance-based system in which universities are evaluated on graduation rates.

“There’s always an incentive to maximize organizational revenue by having enough students to increase your revenue but not to the point where you can’t absorb them each year,” said Sam Watts, a policy analyst at the North Carolina Center for Public Policy Research.

No matter how or how much the General Assembly decides to fund the UNC system, state appropriations remains an important source of revenue for higher education institutions.

“If you want to keep high quality education accessible to a broad range of the population, state appropriations is pretty critical,” McLenaghan said.

2.Tuition and fees are up.

The UNC-system Board of Governors recently announced tuition and fees would increase by 6.8 percent for in-state undergraduates, an indication that this trend won’t end anytime soon.

“There’s a real danger in tuition increases over this many years,” Watts said. “If they keep raising tuition and fees, the university is going to run afoul of the state constitution’s mandate that access to the university system be as free as practicable.”

Since 2001, both the state legislature and the Board of Governors have increased tuition, said John Sanders, former director of the UNC-CH Institute of Government and a leader in the 1968 North Carolina State Constitution Study Commission. These increases resulted in tuition and fees becoming a real and viable source of funding and revenue for UNC-CH, Sanders said. Tuition and fees brought in $249 million to the university in addition to state money from the general fund and spendable endowment earnings.

The state’s mandate to keep public education as free as practicable is open to interpretation, McLenaghan said. But if tuition and fees continue to increase, the mandate’s meaning could be decided in court suits brought by representatives of student groups.

3.Financial aid increased for needy students.

In fact, needy students are better off today than they were 10 years ago, according to documents obtained from the UNC-Chapel Hill Office of Scholarships and Student Aid. “Carolina has done very well,” said Shirley Ort, UNC-CH associate provost and director of scholarships and student aid.

“The good story is for the families who have need-based aid,” she said. “It has increased as a result of a growing awareness of the importance of education in the state, local and national economy.” Despite fluctuations, the average grant and scholarship award to needy in-state students increased by six percent between the years 2001 and 2009.

[scribd id=48878655 key=key-tjs2mod7g8nmzk7dbur mode=list]

But Ort and others say these gains might not be sustainable for much longer. Money from the state’s unclaimed property fund, called the escheats fund, is used to pay for scholarships and grants. The escheats has diminished during the last few years, making it difficult to fund student financial aid. Ort called the escheats fund “unstable.” She said the coming year will be a pivotal one for determining whether these increases in financial aid can be sustainable.

“The money is just not going to be there,” Watts said. “It could be a 60 or 70 percent cut.”

4.Financial aid decreased for non-needy students.

If the good story is for needy students, those who don’t qualify for need-based aid got the bad news. Financial aid for non-needy students decreased during the last 10 years, despite rising tuition and fees. Students who can’t get need-based aid are generally wealthier and rely on merit scholarships for financial assistance. The problem is that private money for merit scholarships have failed to keep up with increasing federal dollars for need-based aid.

“That means for admissions staff trying to recruit high-ability students who don’t qualify for need-based aid, it’s a growing challenge,” Ort said. The average grant and scholarship award for non-needy in-state students decreased by 23 percent between the years 2001 and 2009.

5.The endowment continues to be a source of supplemental revenue.

“An endowment is critical to any university’s economic health,” said Scott Ragland, spokesman for the UNC-CH Office of University Development. The UNC endowment has increased despite a poor economy and is largely unaffected by budget cuts. Ragland said last year was the third best ever for private gifts, raising $268 million. Private donations are often restricted for specific purposes.

“You can’t use private giving to offset budget cuts,” Ragland said. “Private giving supplements state money.”

Although primarily supplemental in nature, UNC-CH’s endowment can aid with funding critical areas of the budget that might be seeing decreases from the state. For example, endowed professorships keep UNC-CH competitive by recruiting and retaining top teaching talent. Endowment funds are also used to fund scholarships and the performing arts.

Jonathan Michels, a senior from Winston-Salem, N.C., is a multimedia journalist for the Reese Felts Digital News Project.
Elizabeth Jensen, a senior from Charlotte, N.C., is a multimedia journalist for the Reese Felts Digital News Project.