Board of Trustees examines looming budget cuts

The Board of Trustees audit and finance committee is bracing for upcoming budget cuts that could threaten instructional budgets and impact academics at UNC.

At its meeting Wednesday, the committee discussed the previous fiscal year and the possible effects of budget cuts that will start with the new fiscal year — but didn’t go forward with any concrete action.

Dennis Press, University controller, offered at least one positive sign. After expenses rose above revenues in 2009 — the first time in recent years — the University is once again in the black.

Despite signs of economic recovery, the University is already preparing for 5 percent cuts this year that will cost $26 million and go into effect at the July 1 start of the next fiscal year.

But Gov. Bev Perdue has also asked officials from the UNC system to consider additional scenarios with 10 and 15 percent cuts.

Cuts of 15 percent would total $78 million and bring the total cuts at UNC since 2008 to $191 million, said Dick Mann, the University’s vice chancellor for finance and administration. Mann said the cuts made thus far have primarily affected support and administrative units.

“I think we’re pretty much as we expected to date,” he said.

But he said new cuts beyond 5 percent could cut into the instructional budget, particularly with regard to course offerings.

“It becomes very material for the University after that level,” he said.

Chancellor Holden Thorp expanded on that prediction, saying cuts beyond 5 percent could affect credit hours, courses offered, graduate school enrollment and fixed-term faculty whose contracts are up for renewal. He indicated in an address to the University community earlier this month that fixed-term faculty in the middle of their terms would be exempt from a 5 percent cut.

Looking forward

To combat potentially severe budget cuts, the University is looking to invest in areas that could create economic growth. Thorp said the University hopes to further invest in its own intellectual property as a way of generating funds and creating jobs.

He said the University is examining the potential of venture capital funding. If UNC pursues the idea, it would make new investments in start-up companies that use promising University research.

UNC has already invested in companies that use its intellectual property, such as Liquidia Technologies and Inspire Pharmaceuticals.

Thorp said the UNC-Chapel Hill Foundation would be the main vehicle for such a fund, though the University will not be making decisions on pursuing venture capital funding for several months.

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