CHAPEL HILL (Jan. 15, 2021) – Between reduced state support over the past decade and additional spending due to the coronavirus pandemic, UNC-Chapel Hill faces substantial financial challenges.
“We will have a financial shortfall due to the pandemic that we’re going to have to address. But we don’t yet know the full extent of it,” Chancellor Kevin Guskiewicz says in the accompany video.
The University hasn’t operated with a balanced budget in nearly a decade, Guskiewicz and other university leaders said in a message Friday to faculty and staff.
Guskiewicz breaks the University’s shortfall into three parts:
- A structural deficit in central funding of roughly $100 million (less than 3% of the University’s total annual budget);
- About $850 million in deferred maintenance;
- And a deficit of roughly $200 million in the current year due to the pandemic, particularly in auxiliary units such as athletics, housing, dining and transportation/parking.
Guskiewicz says funding under the federal CARES Act approved last spring has helped, as well as reserves in some of those units. He adds that he’s pleased the University enacted measures last spring to conserve funds, such as a pause in non-essential hires and non-personnel spending.
“But clearly, we’ll need to address this,” he says.
ON FRIDAY, Guskiewicz’s office shared a plan to balance the University budget over the next 18 months.
It calls for a 1.5% reduction in personnel spending and a 7.5% reduction in operating funds during the current, 2020-21 budget year; followed by another 1.5% reduction in personnel expenses and a 7.5% reduction in operating funds for 2021-22.
The memo acknowledged how “unnerving” budget cuts are in a year with so much uncertainty and pain, but added: “We are committed to ensuring that this process is as fair and equitable as possible – and to protecting our mission and our people.”
Some faculty have speculated that the personnel reductions can be achieved through attrition – employees retiring or leaving.
The memo also offers a set of guiding principles, among them:
- Reductions should be consistent with the University’s mission and strategic plan. “Protect activities that are central to the University’s mission,” it says.
- Reduce budgets strategically, not across the board.
- And balance personnel reductions “across all layers of the University” with a focus on reducing the number of senior administrators.1
Paul Friga, a clinical associate professor at the UNC Kenan-Flagler Business School, told WRAL the reductions are “extremely proactive.”
“The most proactive universities are making moves now to address those shortfalls and not just waiting for it to go away. So, this is a very positive step in terms of leadership on our campus,” Friga said.2
1 https://thewell.unc.edu/2021/01/15/university-leaders-announce-plan-to-address-budget-challenges/.
2 https://www.wral.com/coronavirus/unc-chapel-hill-to-cut-personnel-spending-to-address-pandemic-losses-long-term-deficit/19478653/.
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