Why Is UNC Chapel Hill Tightening Its Budget During A Pandemic?

Jan 28, 2021

File photo of the Old Well on the UNC-Chapel Hill campus.
Credit Dave DeWitt / WUNC

UNC-Chapel Hill is preparing to make major budget cuts to balance a longstanding deficit that now amounts to an estimated $100 million.

Chancellor Kevin Guskiewicz spoke to the finance committee of the university's Board of Trustees Thursday, explaining that some of the university's budget issues are not new.

"Part of the challenge here is that we have been working for many years off of, I think, a broken model. We didn't really have a budget model," Guskiewicz said.

Guskiewicz said that when he took office as Chancellor, first in an interim role in early 2019, he learned the university did not have a unified budget and total revenue had not outweighed expenses in years.

"We really have not had a balanced budget, as best as we can tell ... in about nine years," Guskiewicz told the Board of Trustees Thursday.

Now, the University is facing revenue losses from the pandemic totalling up to $200 million this fiscal year, in addition to ongoing deferred building maintenance costs valued at an estimated $850 million.

Many other public universities in North Carolina also have revenue losses and deferred maintenance needs, but UNC-Chapel Hill has moved forward with discussion of substantial budget cuts not yet seen this year at other UNC System schools.

Earlier this month, Guskiewicz announced he is asking the University's deans and department heads to plan for strategic budget cuts, including a reduction in the salary pool by 1.5% and cutting certain operating expenses by 7.5% over two fiscal years.

The university has laid out principles it will follow in its attempt to balance the budget. Guskiewicz has emphasized the need to lean toward strategic vertical cuts rather than across-the-board cuts to all schools and departments.

At a recent joint meeting with the university's faculty council and employee forum, questions arose about the timing of the budget discussions.

"I've been asked on several occasions, why are we doing this now in the midst of the pandemic?" Guskiewicz told the Board of Trustees. "And [Provost Bob Blouin] and I have said repeatedly that we don't know what the future holds and we must ensure our financial stability given this uncertainty."

Uncertainty hangs over future state funding for higher education, as the North Carolina General Assembly will deal with its own budget constraints this year.

The UNC System Board of Governors released its legislative budget priorities this month, which included funding for enrollment growth, faculty and staff salary increases, and a boost to the building reserve fund for capital projects across the UNC System.

If funded, any of those initiatives would help universities' ailing budgets, especially as many UNC System schools saw strong enrollment growth last fall.