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The start of the fiscal year has come and gone, but Carolina's state budget
remains in limbo.
Legislators from the N.C. General Assembly's House and Senate are now in
conference hashing out competing spending plans for this budget year, which
began July 1.
Overall, the House budget would mean less funding for Carolina compared to the
Senate's spending plan. While both the House and Senate would put expansion
dollars into Carolina's budget, the House would cut the campus's recurring
allocation by roughly $16.6 million, compared to the Senate's $6.87 million
reduction.
"Although each version of the budget creates different budgetary and policy
concerns, the reductions in the Senate version would certainly give Carolina
more degrees of freedom," said Nancy Suttenfield, the University's vice
chancellor for finance and administration. "After a decade of consecutive
reductions and other costs that we have absorbed without funding, we remain
hopeful that the final cut will be the lesser amount."
For the UNC system, a big difference in the two plans deals with the number of
positions that would be cut from the state payroll as part of the legislature's
efforts to close a budget shortfall running in the hundreds of millions of
dollars.
The Senate plan calls for both UNC system SPA and EPA non-faculty positions to
be trimmed by 2 percent.
The House plan would cut these positions by 2.8 percent, plus the UNC system
would absorb an additional 1.5 percent cut in personnel funding that the House
has proposed for all state agencies.
According to Suttenfield, it's not known how either scenario would play out at
Carolina because the campus most likely would decide which positions to
eliminate, and the total number would depend on the funding amount attached.
"After previous budget reductions, we consider all of our positions to be
necessary for the smooth operation of the University," Suttenfield said.
"However, when we know the magnitude of the final staffing reductions, Carolina
will then need to evaluate how best to protect mission critical operations and
to assure that it is able to fulfill other important responsibilities, such as
compliance with federal, state and local laws."
One change in the House budget that the University would welcome is that it
would give the campus flexibility in deciding how to handle a "Faculty
Productivity" cut that would use current tenure-track faculty to help shoulder
increased teaching loads stemming from enrollment growth. The Senate wants the
move -- expected to save $3 million -- to be implemented by requiring tenured
faculty to teach at least 15 credit-hours per semester.
"The importance of this flexibility [included in the House proposal] cannot be
overstated," said Robert Shelton, the University's executive vice chancellor
and provost. "The calculation of the allocation of the `productivity' cut in
funds is based on a single number -- student contact hours -- that comes
nowhere near capturing the extent of faculty `teaching' at Carolina. We will
work to improve our method of reporting such information.
"Thus to tie a budget cut to this number makes no sense. We understand that the
state must make cuts and a requirement for Carolina to be more productive in a
broad sense is logical. [But] Carolina has shown wisdom in handling its budget
-- therefore, allow us to take these cuts in a manner that will least
jeopardize our ability to serve the state."
A House measure that would go against Carolina's interests is a proposal to
take $2.79 million from the University's overhead receipts. Of that, $2.4
million would go toward promoting enrollment growth at smaller UNC system
schools and $385,000 would go toward funding a photonics research consortium at
Carolina, N.C. State University, N.C. Central University and Duke University.
Overhead receipts are part of the money that comes from the federal government
and other agencies to fund research and pay for management and support costs
that result from conducting that research.
"These funds are awarded on a highly competitive basis, primarily by federal
agencies who have the expectation that they will be used in support of the
research mission of the University," Shelton said. "We rely on these funds in
numerous ways to support our infrastructure and to remove them would bring
extensive harm. Such action would be short-sighted since each dollar put into
research infrastructure generates multiple new funds.
"Carolina has proven to be an excellent steward of these funds and we should
continue to invest them in our enterprise for the value they bring to all
residents of this state."
Other major comparisons between the Senate and House budgets:
* In both, Carolina would get $11 million for enrollment growth in regular
classes. The Senate would give Carolina $1.9 million for enrollment growth in
distance education, whereas the House would allocate $2.73 million.
* In both, Carolina would get a share of an $8.93 million increase for
need-based financial aid.
* Both include $46 million in repairs-and-renovations funds for UNC system
schools. Based on past practice, that would mean about $9.2 million for
Carolina.
* Both would raise $24.7 million through 2001-02 tuition hikes to avoid deeper
budget cuts to the system. But the Senate would increase tuition by 5 percent
across the UNC system, which would be on top of a UNC Board of Governors
request for a 4 percent hike. The House would do away with the Senate and Board
of Governors proposals and raise tuition only for out-of-state students.
* In the Senate, Carolina's Institute of Government stands to get a one-time
allocation of $250,000 for technology support. The House excluded these
funds.
* The House budget calls for cutting funds from Carolina's Institute of Southern
Politics, Media and Public Life. The Senate budget has no such proposal.
* The House would cut from Carolina $500,000 that funds faculty research
conducted in the summers.
* In the Senate budget, Carolina would get a share of $1 million for research in
genomics and bioinformatics. In the House budget, Carolina would get shares of
$1 million for genomics and bioinformatics and $250,000 for optoelectronics
research.
No one can say when the legislature will pass a budget, but best-guess
estimates say it might not happen until late August or early September,
Suttenfield said.
On health insurance, the legislature already has approved several changes in
the State Health Plan that took effect July 1. They include:
* An increase in the individual deductible from $250 to $350 for the fiscal
year, with the family cap jumping from $750 to $1,050. These increases are
slightly less than what was expected earlier this summer, when it looked like
the deductible would rise to $400 with a $1,200 family cap.
* An increase in the 20 percent co-insurance maximum out-of-pocket amount from
$1,000 to $1,500.
* Employees continuing to pay up to only $10 for generic prescription drugs, but
the co-payment maximum for other types of drug rising to as much as $40 for a
non-formulary drug.
Any increases in health insurance premiums won't be final until the legislature
passes a budget, but officials expect a hike of as much as 30 percent.
That would mean employees' monthly out-of-pocket costs would jump from $117.16
to about $152 for employee/children coverage and from $281.04 to about $365 for
employee/family coverage. The state is expected to pay the entire cost of
covering an employee, which would be about $244 per month. The premium
increases would take effect with the State Health Plan's next "plan year,"
which begins Oct. 1.
As for HMOs, neither of the two offered to state employees this year --
WellPath and PruCare -- made a proposal to be offered to employees for the
upcoming plan year. WellPath had planned to pull out before the end of this
year, with its coverage for employees ending June 30, but a court order has
since required the company to maintain coverage through Sept. 30 (call the
Benefits Department at 2-3071 for more information). The press has reported
that WellPath plans to take additional legal action.
Employees will have the chance to switch or add dependents to their insurance
plans during an annual open enrollment period in August. Employees now on HMOs
will have to enroll in the State Health Plan to keep insurance through the
University.
For more information about health insurance benefits -- including programs that
can help employees cope with higher costs -- call the Benefits Department at
2-3071. Employees should also look for information in future issues of the
Gazette, mailings from the State Health Plan and e-mail messages from HR
Facilitators.
Raises handled differently
One difference in competing state legislative budget proposals for
2001-02 is that the House plan includes $625 raises for all SPA and EPA
employees. The Senate budget includes $625 raises for each SPA employee and
enough funding to give that amount as an average to EPA non-faculty and faculty
members.
Drake Maynard, senior director for administration in Carolina's Office of Human
Resources, stressed that any news about salary increases could very well change
as House and Senate budget writers negotiate the final budget bill in
conference committee.
Maynard said that employees should keep these points in mind as the spending
plan makes its way through the legislature:
* Until a final budget is approved, Human Resources will be unable to announce
what 2001-02 raises will be and when they will begin to appear in employees'
paychecks.
* Human Resources has not received any instructions from the Office of State
Personnel on how the legislative increase is to be processed for SPA employees,
so it's not known whether the increase will be tied to performance. Also, Human
Resources
does not know what will be done for employees whose salaries would fall at or
above a new salary range maximum.
* Human Resources will keep the campus informed about pay raises as information
becomes available.
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