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The Devil’s in the Details: UNC System

The Devil's in the Details

This article is part of a series contrasting budget cut options identified by NC General Assembly joint appropriations subcommittees with revenue options that would preserve decades of public investment in the economic and social advancement of North Carolina. Click here for other articles in the series so far.

Legislative leaders announced their intent to cut $1.4 billion from the state’s education budget next year, which is $763 million more than all cuts proposed in the Governor’s budget. Approximately $2.9 billion of the state’s $11.9 billion education budget is spent on the University of North Carolina system. State funds comprise almost one-third of the 16-campus system’s total annual budget.

The spending cuts below[1] represent a selection of “options” under legislative consideration, which are presented to illustrate the severity of a “cuts-only” approach to balancing the North Carolina budget. A balanced approach to the budget shortfall would include raising revenue[2], which would help keep public higher education in North Carolina affordable, preserve hundreds of full- and part-time teaching jobs, and offset the cost of providing health care to hundreds of low-income children and families at UNC Hospitals.[3]

The legislature is considering the
following budget cuts …
… but instead of making cuts,
they could:
$90.0 million
Raise tuition by $750, spread over two academic years, at all 16 UNC campuses. This increase would be above and beyond the 6.5% annual increase currently allowed to each campus under law.
$100 million
Stop allowing multi-state corporations to shelter profits from the state corporate income tax.
$63.5 million
Offer fewer class sections and distance education courses, offer lower salaries to incoming faculty, and cut 229 part- and full-time adjunct faculty positions across 12 campuses
$70 million
Treat Limited Liability Companies (LLCs) like other limited liability businesses by extending franchise tax to all LLCs
$17.6 million
Increase class sizes at 6 campuses, eliminating 57 teaching jobs
$17 million
Repeal Article 3J “Bill Lee” business tax subsidies, which a recent UNC study found to be ineffective at creating jobs
$12.0 million
Eliminate all state funding for UNC-TV. The $12 million is roughly half of the station’s annual budget, and puts 124 jobs at risk
$12 million
Eliminate annual sales and use tax holiday
$7.2 million
Eliminate UNC Hospital subsidy provided to offset cost of charity care
$9 million
Eliminate tax credit for companies exporting cigarettes from a North Carolina port
Total Cuts: $190.3 million
Total Public University Jobs Lost: 286 to 348
Total Revenue: $208 million
Total Public University Jobs Lost: Zero

— Brenna Burch and Edwin McLenaghan, Public Policy Analysts, NC Budget and Tax Center

References:

[1] Joint Appropriations Subcommittee budget cut options for the UNC system are available at http://www.ncleg.net/documentsites/committees/JointAppropriationsEducation2011/2011-03-15am%20Meeting/FRD_2011UNCReductionOptions_2011-03-15.pdf

[2] Revenue options are based on NC Budget & Tax Center calculations, data provided by the Institute on Taxation and Economic Policy (ITEP), and the NC Department of Revenue’s Biennial Tax Expenditure Report available at http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBgQFjAA&url=http%3A%2F%2Fwww.dornc.com%2Fpublications%2Fnc_tax_expenditure_report_09.pdf&rct=j&q=dornc%20tax%20expenditure&ei=Sw-KTdrjD8OCtge3uZCGDg&usg=AFQjCNE4txFtjvg3kh7URG_dMI3pPSZP7A&sig2=9Q8V_jvdSbzmCzMFx0e1Gw&cad=rja

[3] In a November 2010 article in Triangle Business Journal, the value of charity care provided at UNC Hospitals in 2010 (year to date) was quoted at $121.8 million. This is different than the cost of providing that care, which could be in the range of 30 to 45 percent of its value, or $36.5 million to $54.8 million. Article available at http://www.bizjournals.com/triangle/print-edition/2010/11/19/hospital-bottom-lines-robust.html