House Budget: "Real and Lasting Damage"

The state House adopted a $19.3 billion budget proposal for 2011-12 on Wednesday that would reduce state support for the University of North Carolina system by more than 15.5 percent.

UNC President Tom Ross issued the following statement on the House proposal:

“The budget approved today by the House of Representatives would inflict real and lasting damage to the academic quality and reputation of the University of North Carolina.  We are thankful that House leaders provided the University some flexibility in determining how to apply and manage mandated cuts.  That said, no amount of flexibility could offset the impact of permanent net cuts totaling nearly $491 million. 

“We are particularly concerned that even deeper cuts in the pool of need-based aid are now being proposed.  That is a tremendous setback, given that 60% of our in-state undergraduates depend on need-based financial aid.  This loss of funding would reduce the number of eligible students who could receive need-based aid by more than 5,500, and middle-class students would be hit particularly hard.  As the budget process moves forward, we will continue to work with legislative leaders to lessen cuts to the University and increase the pool of funding for need-based aid.”

The House budget:

o   Cuts appropriations to the UNC system by roughly 15.5%, or $456 million.

o   No longer sets a cap on University tuition, as early versions did.

o   Fully funds projected enrollment growth in the system of 1.2% (2,337 full-time students) with $46.8 million.

o   Provides $26.4 million system-wide for need-based financial aid – $34 million less than in the current budget year.

o   Cuts $44 million for indigent care from UNC Hospitals, but allows those dollars to be replenished from other sources.

o   Cuts tuition remissions for out-of-state graduate students by 20%, or $8.6 million.

o   Eliminates $6 million for out-of-state academic scholarships.

o   Eliminates $12 million in funding for the Center for Public Television by 2012-13.

o   Cuts Legislative Tuition Grants for attendance at private colleges and universities by 10%, or $5.8 million.

o   Cuts spending on K-12 public schools by 8.8%.

We generally expect better treatment of the University by the state Senate – which will take up the budget next – and a budget that emerges from a House-Senate conference committee that would likely result in a 12-13% cut for the University. Gov. Beverly Perdue is widely expected to veto the General Assembly’s first attempt at a budget, however, leaving the future of funding for the University and other state agencies in doubt as the beginning of the 2011-12 budget year approaches on July 1.

Gov. Perdue can be expected to clash with legislators over the necessity to extend or phase out a one-cent sales tax that is currently scheduled to expire June 30.  The governor’s budget proposal generated more than $800 million in additional revenue by keeping ¾ of the sales tax in place.  The House budget does not extend the tax.