Despite rhetoric coming out of Chapel Hill about deep cuts in the operating budget due to the economic crisis, next year’s overall state allocation to higher education will not be significantly less than it was before the financial crisis, if the governor has her way.
Governor Beverly Perdue cited jobs and economic development as her primary concerns when she unveiled her budget proposal for the next two years on March 17. Because the community colleges are so directly tied to immediate workforce development, they were one of the few areas that received an increase (of one percent) instead of a cut.
Soaring enrollments also played a part in the governor’s generosity. Community college enrollments tend to rise during recessions, as out-of-work students retool their skills. This year was no exception: the system saw a 7 percent increase in the fall of 2008 over the previous year. And according to Andrea Poole of the legislature’s fiscal research division, the spring of 2009 is the first time in at least ten years that enrollment is higher for the spring semester than the fall.
The governor’s budget therefore seeks $47 million in increased enrollment funding based on the fall numbers, and another $500,000 on top of that for the expected increase in the spring. (Poole said the real cost of the spring enrollment increase could turn out to be as much as $10 million once the full enrollment numbers are known.) Also, there is an extra $3 million allocated to the enrollment growth reserve.
The University of North Carolina system (UNC) received a 1.2 percent cut from 2008-9. While there are specific cuts to many programs totaling $192 million, they are somewhat offset by additional funding for other line items. And a 1.2 percent drop is still less than the 1.8 percent reduction proposed for the entire state budget, and far less than the public K-12 school system’s 4.9 percent recommended decrease.
And system president Erskine Bowles’ two main priorities both get significant funding increases in Perdue’s budget—$44 million more for increased enrollment, and an additional $23.4 million for need-based scholarships. Bowles has said that these two items are particularly important in a down economy.
Falling tax revenues forced both higher education systems to make large temporary cuts this year. At the end of last year’s legislative session, and after various non-legislative adjustments were made to the budget, the amount appropriated by the General Assembly for fiscal year 2008-9 from the General Fund to the state’s community college system was $1.017 billion, and to the UNC system $2.894 billion.
Then, after several waves of cuts due to the economic downturn, the 2008-9 budget for UNC was revised to $2.727 billion, a 5.8 percent reduction from the final budget amount. NCCCS’ revised budget was reduced to $965 million, a 5.1 percent decrease.
UNC’s proposed allotment for 2009-10 is $2.858 billion, a 4.8 percent increase over the revised budget (including cuts). The recommended community college appropriation for the community colleges for 2009-10 (including post-legislative estimated adjustments) is $1.027 billion—an increase of 1.0 percent over the last year’s final appropriation, and a whopping 6.4 percent over the revised budget that includes the cuts.
Some of the vocational-oriented community college programs that received considerable increases in 2009-10 are:
- Twenty $150,000 vocational and technical education grants ($3 million);
- 65 additional nursing faculty ($4.8 million in 2009-10, $5.2 million in 2010-11);
- Help to reduce a significant backlog in equipment and technology ($5 million);
- Additional funds for the Military Business Center in Fayetteville ($1.25 million).
There is also a one-time $2.5 million allocation for job-training assistance for displaced workers, such as tuition, childcare, and transportation. However, this will be not come from the General Fund since it is will be funded by the American Recovery and Reinvestment Act (the federal “stimulus package”).
In one situation, the governor displayed the sort of innovative cost-cutting one hopes for in such times. Two educational centers that permit students to earn four-year degrees in their local communities, one receiving funding through the community colleges and the other under university administration, will merge. The Hickory Metro Higher Education Center, a consortium of universities and community colleges located at Catawba Valley Community College, will become part of the N.C. Center for Engineering and Technology, a Hickory facility administered by Appalachian State. Because redundancy in administrative and facilities costs will be eliminated, the state will save $305,834.
Two measures will cut into both systems’ discretionary spending. One is called the “Truth-in-Budgeting Reform.” In years past, the total allocation for university and community college salaries was overstated, since many employees left in mid-year, with no replacements. That money previously was used at the school’s discretion. The governor is now recommending that salary appropriations be reduced between 2 and 3 percent. This means a reduction of $19 million for the community colleges and $55 million for the universities.
The other measure involves “management flexibility accounts”—used at the discretion of the university chancellors or community college presidents. The university system will be given $96.6 million less than the current amount in 2009-10 (a 3.6 percent decrease) and $85.2 million less in 2010-11 (a 3.2 percent cut). The community colleges will see their flexibility allocation fall by $20.9 million for both years (2 percent of the current allotment).
Some other large cuts to the university system’s budget proposed by the governor include eliminating a scheduled $14 million inflation increase to the libraries, and a $10 million reduction in the allocation to UNC hospitals.
However, a lot can change between now and July, when the legislature is likely to give the budget a final vote. This downturn is causing the various government branches and agencies to take a look at their operations from new perspectives, and there should be ample opportunities to make other sensible strategic cuts like the one involving the two Hickory learning centers. Bowles described the governor’s budget as “step two in a five-step dance.” With any luck, we will see all kinds of new moves on the legislative dance floor.