UNC Financial Outlook & Budget Overview

1. UNC Budget Outlook November 7, 2008 UNC Faculty Council The University of North Carolina

2. UNC Summary – Revenues2006-07 Total = $8.2 billion Source: IPEDS Data

3. UNC-CH Summary – Revenues2006-07 Total = $2.5 billion Source: IPEDS Data

4. UNC System = $2.6 billion*2008-09 UNC-CH = 22% of UNC System State Appropriations • * Excludes capital improvements

5. NC State Budget - $21.2 billion*2008-09 UNC = 12% of overall state budget and 23% of Education budget • * Excludes capital improvements

6. UNC as a % of State Budget 12.0% 12.2% 13.2% 14.2% 16.5% • 2008-09 • 2003-04 • 1998-99 • 1993-94 • 1988-89

7. Education Budget Breakdown2008-09 • DPI: $7.8 billion • UNC: $2.6 billion • NCCCS: $.9 billion • Private Colleges: $.1 billion

8. Fiscal Year 2008-09 • 2008-09 revenue projections are based on 3.9% growth • Each 1% of growth = $200 million • Currently, revenues are approximately $300 million behind projections. This is a significant deficit for the 1st quarter. • Governor has issued 4% reversions • Other Factors: • State Health Plan has at least a $300 million deficit for 2008-09

9. 2009-11 Budget • North Carolina is a fast growing state • North Carolina will be the 7th largest state by 2030 • Pressures on state budget • Economy, declining revenues • State Health Plan deficit – $600 to $700 million over biennium • Medicaid – $50 million • K-12 requirements • Enrollment – $100 million • ABC Bonuses – $100 million • State Employee Salary Increases – each 1% is $130 million • New Governor, Legislators, & Treasurer

10. UNC State Budget • “A single, unified recommended budget for all of public senior higher education.” G.S. 116-11 • Statute prescribes form of budget requests – three categories: 1. Continuing Operations (enrollment, utilities, vehicle replacement) – allocated to institutions 2. Academic Salary Increases – lump sum to Board of Governors and then allocated to campuses 3. Expansions/Improvements Items – lump sum to Board of Governors and then allocated to campuses • New and expanded programs • Capital improvements

11. UNC State Budget • Legal Basis • State Executive Budget Act – G.S.143C • Higher Education Reorganization Act of 1971 – G.S. 116 • Board of Governors’ Role: • Presents comprehensive financial plans to General Assembly • Modifies plans based on resources made available by Legislature • Establishes annual budgets which are administered by the constituent institutions • Advocacy

12. 2009-11 Budget - Continuation • Campuses work with Office of State Budget & Management (OSBM): • Building Reserves for new State-funded Facilities opening during the biennium • Replacement Vehicles & Equipment • Inflationary Increases (library books, utilities) • Required Staff Benefits & Continuing Personnel • Campuses and GA work together, then submit to OSBM: • Enrollment

13. Expansion Budget Process • Budget Preparation • Campus Submissions (Sept) • UNC-GA Review (Sept-Oct) • 24 Chancellors’ & Affiliates one-on-one discussions (Sept-Oct) • BOG Workshops (Oct-Nov) • Final Recommendations (Nov)

14. 2009-11 Expansion Budget – Operating • Campus Safety • Our Citizens & Their Future: Access to Higher Education • UNC Need-Based Grant • Regional Partnerships • Student-focused Programs: • Community College/transfer • Under-represented populations • Retention and graduation

15. 2009-11 Expansion Budget – Operating • Increase Efforts to Recruit & Retain High Quality Faculty • 80th Percentile • Across the Board Merit Increases • Distinguished Professors • Recruitment & Retention Fund

16. 2009-11 Expansion Budget – Operating • Our Global Readiness • Graduates with 21st Century Skills • Critical and creative thinking • Analysis • Problem-solving • Verbal and written communication • Our Health • Dental Program • Medical Programs

17. 2009-11 Expansion Budget – Operating • Our University’s Outreach & Engagement • Regional Issues • Our Communities & Their Economic Transformation • NC Research Campus at Kannapolis • NC Research Competitiveness Fund • Graduate Student Recruitment & Retention

18. 2009-11 Expansion Budget – Operating • Our Children & Their Future: Improving Public Education • Programs focused on producing math & science teachers • Our Environment • Campus sustainability programs • Research related to sustainability • Efficient Use of Available Resources • Fiscal Integrity • Affiliated Entities

19. 2009-11 Budget – Capital • Fire Safety Improvements • Funding for projects which have been approved for planning • Planning funds for other important priorities • Repair and Renovation funds • Land

20. Results of Working Together 2006 Session (2006-07 Budget) • UNC began the session with $2.1 billion and ended legislative session with a budget of $2.3 billion • $140 million in capital support 2007 Session (2007-08 Budget) • UNC started continuation budget process at $2.4 billion; ended legislative session with budgetof $2.7 billion – $300 million increase • $1 billion in capital support 2008 Session (2008-09 Budget) • UNC received $159 million in increased appropriations • $623 million in capital support

21. 2009 NC Legislative Process“Long Session” • Governor’s Budget Proposal – January 2009 • General fund availability is determined • Two budgets may be submitted • General Assembly convenes – January 28, 2009 • Senate Budget – May • House Budget – June • Conference Process Results in Final Budget – June/July