UNC amends budget request after Art Pope’s concerns

jstancill@newsobserver.comMarch 16, 2014 

— UNC system leaders are temporarily setting aside their request for $74 million in new construction money for 2014-15 in response to concerns from State Budget Director Art Pope, who called the original UNC budget request unrealistic.

In a memo to Pope that was copied to Gov. Pat McCrory and legislative leaders, UNC Board of Governors Chairman Peter Hans and UNC President Tom Ross said they were “keenly aware” of the budget challenges facing the state.

“We understand that resources will once again be tight and that state leaders will be forced to make hard choices about how best to use those limited resources,” they wrote in the March 11 memo.

Pope, in an interview Wednesday, said he has had constructive meetings and discussions with the UNC leadership.

“I think this is a very positive response and step forward,” Pope said of the plan described in the memo.

Pope did not rule out the possibility that the UNC campuses might receive state money for new construction. Some was funded last year, he said. “We’ll look at specific capital projects,” he said.

The university system is standing by its requested increase of more than $108 million in additional operating money, or 4.6 percent more than the 2013-14 appropriation.

In the memo, UNC leaders argued that the request is only 1.5 percent more than the university spent in 2012-13 and $8.2 million less than was expended in 2007-08.

“We are committed to being careful and effective stewards of the resources entrusted to the University,” the memo said. “We also have a responsibility to the people of North Carolina to preserve and strengthen one of the state’s greatest assets. Particularly when our capital and repair and renovation request are viewed in proper context, we believe the budget priorities adopted by the Board of Governors and submitted to the Governor and the General Assembly reflect that commitment and responsibility.”

The university system is also prioritizing a more modest request for repair and renovation funds. The original request put forth by the governing board was $163 million for repairs. Now, according to the memo, the system will put its needs in priority order in $30 million, $40 million and $60 million increments.

UNC leaders said the system has a backlog of repairs totaling about $2.2 billion, but would expect to receive only its designated percentage of available one-time repair funds for state facilities.

Coping with cuts

The university has made significant steps in recent years to cope with budget cuts while producing more degree earners, thus becoming more efficient, Ross and Hans said in the memo. Controlling for inflation, spending per degree has decreased by more than 16 percent since 2007-08, the university said.

As for new spending, UNC has proposed to spend $38 million on strategic priorities through other savings and cost-cutting measures within the university.

The UNC system wants the legislature to restore about $50 million in prior cuts, including the repeal of mandated tuition increases and cuts to the medical school at UNC-Chapel Hill.

The memo may ease tensions between UNC and Pope, a retail magnate and Republican campaign financier who has been a critic of the university’s spending in the past.

Pope’s letter

Two weeks ago, he wrote to the UNC board, saying it had not heeded his office’s instructions to state agencies in December to come forward with budget expansion requests of no more than 2 percent. The legislature will convene this spring in a short session to tweak the state’s spending plan for the second year of a two-year budget cycle.

In the current year, UNC system received $2.5 billion in state money for operations and $64 million for building repairs and construction.

In his memo, Pope had combined UNC’s operating request and its construction and repair requests into one figure of $288 million, or 11.3 percent over this year’s budget. And, he pointed out that UNC didn’t even include salary increases in that total.

UNC leaders said it did not include salary requests because university employees are considered in the overall state employee raise pool, and “we believed it was prudent to trust state leaders to do what they can during the upcoming short session to address this challenge for all state workers, including University faculty and employees.”

Pope had also questioned whether the university was sufficiently deploying cash reserves and overhead receipts from federal grants to take care of its construction and repair needs. UNC leaders said they were sending Pope a detailed accounting of the 2013 overhead funds received and spent.

“We look forward to continuing to work closely with you and the Governor over the next few months to develop a UNC budget that helps meet North Carolina’s educational attainment goals, produces the talent needed for our businesses, and grows the state’s economy,” the UNC memo said.

Stancill: 919-829-4559

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