UNC System Gives $7 Million in Reversions to State

At a Board of Governor's meeting Friday, UNC-system President Molly Broad announced that the 16-campus system will contribute an additional $7 million in budget reversions to help the state confront a budget deficit that has grown to nearly $800 million.

The $7 million brings the total budget reversion required of the UNC system to slightly more than $32 million -- close to 2 percent of the system's total budget.

But at the meeting Friday, Broad reassured board members and system officials that the cut would not have a negative impact on any of the 16 campuses.

"The cuts will happen without any adverse affects to classroom activity, academic affairs and financial aid," Broad said.

Jeff Davies, UNC-system vice president for finance, said system officials have been in communication with the governor's office on how to contend with the crisis. "When the deficit increased to $800 million, the governor's office was talking to all the state agencies on how to deal with it," he said.

Davies added that UNC-system officials have worked to ensure that any reversions would not have a drastic impact on day-to-day operations.

"Our position was to ensure the impact on the (UNC-system) would be low enough where academic life would not be impacted," he said.

Last week Gov. Mike Easley declared a state of emergency and unveiled a plan to deal with a deficit of up to $1 billion. Reversions make up $250 million of that plan. But even the $1 billion that Easley has set aside might not be enough to deal with the budget deficit by June 30 -- the end of the fiscal year. The budget deficit has nearly tripled since November when Easley was elected.

The last time the state dealt with a budget crisis, in 1990-91, the estimated deficit accelerated from fall of the previous year until February of 1991 -- similar to this year's trend.

"As you get into the year, you get more of an accurate perspective of what the budget situation is," said David Crotts, senior fiscal analyst at the General Assembly.

He said part of the increasing budget shortfall can be attributed to a down-turn in both the national and state economies, which has lead to a decrease in tax revenue. Crotts added that the budget deficit could increase an additional $100 million to $200 million in coming months. It could exceed the $1 billion that Easley has set aside.

"If the job market situation deteriorates very rapidly, that could increase the budget shortfall," Crotts said. "There's always a chance it could get worse."

Davies said reversions this late into the year were difficult to handle because most universities already had appropriated funding for the semester.

"Future increases in reversions would be incredibly difficult this late in the year," Davies said.

But BOG Chairman Ben Ruffin said Friday that while it will be difficult for the system to handle any future cutbacks, the UNC system will continue to work with the state.

"How can we complain when we just received a $3.1 billion bond referendum from the people of North Carolina?" Ruffin said. "We will support the state in its time of need."

The State & National Editor can be reached at stntdesk@unc.edu.