A dismal budget outlook for UNC

CHAPEL HILL, N.C. -- UNC President Erskine Bowles painted a bleak picture Thursday of the UNC system if the more severe of two budget-cutting scenarios is necessary.

As many as 1,700 jobs could be lost, he said.

Bowles even suggested that if North Carolina's economic health doesn't improve, the UNC system may eventually have to close a campus - which he called a smarter strategic and fiscal move than simply chipping away at every university in the system.

"If we keep having cuts, cuts, cuts, we'll have to look at eliminating schools, campuses," Bowles told members of the UNC system's Board of Governors. "If it went on for several years, that would be the smart decision. The unfortunate, smart decision."

To be clear, the university's situation is nowhere near that dire yet. But the state is facing a $3.2 billion budget hole, $1.3 billion in expiring taxes and the impending loss of $1.6 billion in federal stimulus money. With all that on their plate, state officials have directed the university system to plan cuts of 5 percent and 10 percent for next year.

At 5 percent, the UNC system would have to cut $135 million in spending and would likely have to eliminate 800 jobs across the state. A 10 percent cut of $270 million would kill 1,700 jobs, officials said Thursday.

And unlike in past years when campuses were able to fall back largely on vacancies and administrative positions, the cuts would likely include academic programs and faculty members, Bowles said.

"We're really going to impact the academic side," he said.

The specter of budget cuts hitting the classroom is not new. For years, Bowles and other university officials have said extreme budget cuts will soon affect students directly through larger class sizes, the loss of course sections and the elimination of other resources.

In large part, the UNC system avoided a worst-case scenario a year ago. Though the state House proposed a $175 million budget cut, the legislature eventually approved a budget that pared UNC spending $70 million, or less than 3 percent of the overall budget.

Nuts and bolts of budget

This week, the UNC system's governing board is analyzing the spending plan for next year that it will eventually submit to state leaders. It hopes to add $105 million for several priorities, but leaders say the budget won't reflect the university's total needs.

Along with continuing expenses such as salaries and benefits, the budget would pay largely for the nuts and bolts that keep campuses running - providing funds to open new buildings, pay utility bills, and replace vehicles and equipment.

"I think this budget is so much more responsible than some I've seen in my time," said Peter Hans, a board member since 2003.

"Erskine and his team have clearly taken a realistic approach."

The spending plan also requests about $2.6 million for campus safety and security improvements. In the wake of the 2007 Virginia Tech shooting that left 33 dead, the state legislature appropriated $17 million to begin a broad series of security improvements on campuses.

The system has received no funding since, and the new money would pay for additional campus police and mental health workers.

"I don't think this group wants to look back after something bad happens and say, 'we didn't try to get this money,'" Bowles told a committee of the governing board. "This is smart money."

Layoffs loom

Bowles is hoping for new money even while knowing the system will have to make cuts. At UNC-Chapel Hill, a 10 percent budget cut would likely mean another wave of layoffs.

"The jobs [Bowles] is talking about would be real people," Chancellor Holden Thorp said. "It would force us to really think about how we're doing things."

At East Carolina, the picture is rosier.

"At a 10 percent cut, I think we can reasonably manage it...," ECU Chancellor Steve Ballard said. "Above 10 or 12 percent, jobs become more at risk. If we go to 15 percent, I don't think we can promise that everyone keeps their jobs."