Last year the state General Assembly played Santa Claus to the UNC system, with a four percent increase in the operating budget and a 12 percent increase in the capital budget. Perhaps this year, with the country teetering on the edge of a recession, legislators will play the Grinch.
UNC system president Erskine Bowles presented his budget priorities for the 2008-2009 fiscal year at an April 22nd meeting of the General Assembly’s Joint Appropriations Subcommittee on Education. Much of what he requested should undergo extreme scrutiny before passage of the budget. The non-essential nature of much of the budget was even indicated by Bowles when he said he didn’t expect to get everything he asked for.
The university system is seeking an additional $320 million in recurring expenditures, plus $21 million in one-time (non-recurring) costs. Recurring expenditures are expected to be an annual expense indefinitely, except when a limited length of time is specified.
The requests for the coming fiscal year are for additional funding beyond what the assembly appropriated for the fiscal year during last year’s session. For example, the state based its allocation for 2008-9 on an expected enrollment increase of 2.2 percent. According to Bowles, there was an actual enrollment increase of 4.2 percent, so he is requesting an additional allocation of $34,667,264 to take care of any shortfalls.
While the need to allocate additional money for students already accepted to the system is obvious, many other proposals suggest either an expansion of the university system or unnecessary expense.
There are underlying philosophical assumptions in the budget that translate into enormous expenditures of taxpayers’ money, with uncertain benefits. One is a belief that large increases in professors’ salaries are necessary to keep North Carolina prosperous. In this budget, that belief translates into a permanent increase in faculty salaries of $153.8 million, nearly half of the total budget request for this year.
Another assumption is that the state government and state university system should drive economic development, as if their roles were similar to those of private capital and industry. Bowles is asking for $68 million in research, most of which is intended to help develop industry in the state, and $22 million for non-research economic development projects.
Following is a list of Bowles prioritized budget requests, including commentary:
1. Campus Safety $11,700,000 Recurring
$17,500,000 Non-Recurring
Bowles repeatedly asked the committee to fund campus safety items before anything else. Colleges and universities nationwide began beefing up campus security last year in response to the slaughter of 32 students and teachers at Virginia Tech in April. Bowles said the budget requests came directly from the Campus Safety Task Force that was convened by the state attorney general in the aftermath of that tragedy.
This includes items like warning sirens, cameras, communication systems, safety education programs, card-lock systems that restrict access to buildings, and expanded police forces and training.
Although some of these have merit, one area that might prove particularly troublesome are changes to the university mental health system recommended by the task force about the sharing of personal information. These proposals could possibly infringe on students’ civil liberties, and were explored in a Pope Center article when the Campus Safety Task Force report came out in November 2007.
2. Faculty Salaries $153, 847,371 Recurring
Somehow it has become accepted in UNC circles that faculty salary levels must rise to the 80th percentile of peer institutions. If achieved, this level means that the average full-time professors’ salaries at each of the 16 system schools would be are higher than at four out of five equivalent schools (as defined by a system known as the “Carnegie classifications”) across the country. Such generosity is required, or so it is claimed, to keep North Carolina’s workforce globally competitive.
The question arises whether increasing professors’ salaries is the most efficient way to make the state competitive. The ties between economic performance and professors’ salaries are tenuous at best. Are we to assume that, if teachers are paid at the 80th percentile, this exactly translates to a workforce that has skills at the 80th percentile? It is highly unlikely that any such direct correspondence exists. And as Jon Sanders pointed out in a 2007 Pope Center report on professors’ salaries in the UNC system, adjunct professors and graduate students are increasingly the ones who actually instruct students.
The salary increases, however, are only intended for full-time professors.
Even if this belief that teachers’ salaries directly translate to workforce preparation is accepted, there might be far better way to allocate the scarce resources the state will have to disburse this year, given the economic downturn. It might be better to raise community college salaries or elementary and secondary school salaries. Faculty salaries at the community colleges are particularly low, ranking 41st in the nation.
3. Student Success & Retention and Graduation $300,000 Non-recurring
This is targeted to the Earn-and Learn program, for high school students who wish to take online courses for college credit, according to Bowles.
4. Research $63,796,117 Recurring
$4,000,000 Non-recurring
Many items in the nearly $68 million in requests for research give pause for reflection. Perhaps the most glaring is the $30 million request for “N.C. Research Competitiveness & Commercialization Gap Funding.” This is money used to smooth the “gap” in time and funding between faculty research discoveries and the start of commercial enterprises based on that research.
This request represents a massive increase over the $3 million allocated last year for this “gap” funding. Bowles said that, while no jobs had been created yet, the $3 million had translated into another $35 million in funding from other sources. He did not specify what those sources were.
This dramatic increase in recurring funding seems extravagant, given the program’s unproven status. Private capital tends to seek out and exploit all profitable opportunities–if a researcher’s findings are promising, investors are likely to be attracted. A Raleigh News & Observer article highlights that there has been no bonanza of job creation or income to the university system due to this type of “transfer-of-technology” from the colleges to the private sector.
Another $14 million is sought for the North Carolina Research Campus in Kannapolis. Bowles admitted to the project’s uncertain outcome: “I’ve got a long neck, and I’ve got it way out there on this project…I really believe in it, but it might not work. This is a high risk deal.”
This illustrates why the university system should refrain from rushing headlong into further involvement with economic development. Although Bowles might suffer some professional setback should the Kannapolis project fail, he has no financial stake in it. The real risk is borne by the taxpayers, many of whom had no say in how their money is used, and many who will receive no benefit if Kannapolis is a success.
It is not unreasonable to suggest that private investors, because of their personal financial stake, are likely to be more judicious than government bureaucrats gambling with taxpayers.
5. More and Better Teachers and Improved Schools $8,504,000 Recurring
Many of the requested items are not mainstream functions, but are for increased funding for various centers and initiatives–some of questionable merit, and some that might not belong in the university system, such as the N.C. Center for International Understanding. Since the state universities train most of the state’s K-12 teachers, it is natural that there is some functional overlap where both the university and K-12 educational systems could lay claim to having authority. However, it might be best to avoid further entanglement of the two systems for the sake of efficiency.
6. Healthcare $24,000,000 Recurring
Demographic studies suggest a continued high demand for health-care professionals, and the UNC request reflects this. Also, over half of this amount ($12,500,000) is for additional funds for indigent care.
7. Regional & Statewide Economic Transformation and Competitiveness $22,418,750 Recurring
The above questions about research apply here: is the university system to be part venture capitalist and part support service for private industry? Or should it focus on its narrower missions of education and basic research? Exactly where does the university system end and the rest of the world begin?
One item is a $1 million request for the North Carolina School for the Arts. It is difficult to imagine how this additional expenditure is imperative for the state’s economic well-being.
8. UNC Systems & Data Integration $800,000 Recurring
9. Affiliated Entities $953,522 Recurring
This includes a $588,533 request for “UNC-TV Public Affairs and Informational Programs Services.” This is hardly a “must” for the state in a time of shrinking revenues and high demand for services.
A $200,000 expansion (a recurring increase over its existing operating budget) for “N.C. Arboretum International Institute for Natural Biotechnology and Integrative Medicine” also does not seem to be something the state cannot do without.
In summary, the 2008-9 budget request comes at a time when the economic outlook for the near future is uncertain. Most of the budget requests are not necessary to continue operations, but are expansions of programs that are not part of the university system’s core mission. The year 2008 is a time of belt-tightening for many North Carolina residents, and it would be a good time for the General Assembly to show its concern for the taxpayers by examining each requested item carefully before embarking on another session of gift-giving.