Commentary, Education

Vetoed budget would have shortchanged higher education

It’s a good thing state legislators might get a second chance to craft a budget for public education in North Carolina over the next two years.

Because the $24 billion budget they put together for 2019-21 – and that Gov. Roy Cooper vetoed Friday – falls far short of what’s needed to retain top-level talent at our public colleges and universities, make necessary capital improvements and make strategic investments to enhance our institutions and the state.

Legislators did commit significant dollars to capital projects, though bonds would be a more predictable source of funds and address more needs than the pay-as-you-go approach favored by the state Senate.

But they didn’t make anywhere near sufficient investments in human capital:

  • Public university faculty have received legislative raises of 1.5% or less since 2008-09, but legislators chose to provide average raises of just 0.5% for 2019-20 and 2020-21.Legislators did agree to put an additional $6 million into a Faculty Recruitment and Retention Fund to try to fend off offers from competing schools that try to lure away university faculty. With meager raises such as what they authorized, a large retention fund will likely be needed.
  • Community college faculty – who make less on average than public-school teachers – fared only slightly better. They would have received raises of 1% in each year of the budget, which would keep pace neither with our neighboring states nor with K-12 teachers.
  • For years, legislators have complained about graduation rates – which our public universities improved to an average of 70% last year, significantly higher than the national average of 62% at public universities.1Yet when the UNC System developed a plan to raise graduation rates further through expanded summer-school offerings that help students graduate on time, legislators didn’t support it (though the House included $35 million for summer school in its version of the budget).

Budget negotiators did eliminate several worrisome provisions in the state Senate’s version of the budget:

  • A punitive $35 million reduction in Medicaid reimbursements for Vidant Medical Center in Greenville, the teaching hospital for the East Carolina University Brody School of Medicine, based on Vidant’s move to bar the UNC Board of Governors from making appointments to its board.The conference report would have provided $28 million over two years as the first steps toward building a $215 million replacement for Brody – if Vidant allows the Board of Governors to appoint at least 45% of its board.
  • Reductions of $14 million at UNC Chapel Hill and $4 million at NC State University to offset finance and administration or “overhead receipts” the research universities receive as part of federal grants.

AMONG CAPITAL EXPENDITURES, legislators showed a willingness to commit significant dollars, including $1.5 billion for K-12 public schools, $400 million for community colleges2 and about $200 million for university projects, including initial funds for a $160 million STEM Building at NC State University.3

They also agreed to provide universities with $80 million for needed repairs and renovations.4

But the UNC System faces a maintenance backlog of at least $3 billion.5 So legislators agreed to allow universities to carry forward as much as twice as much into subsequent budget years as the 2.5% of General Fund appropriations they currently can, with an eye toward further reducing the backlog.

The Senate’s pay-as-you-go approach still falls short of the more reliable bond issue for capital projects that was backed by the House and the governor.

Unlike the House’s budget proposal,6 the compromise adopted by budget conferees did not include $10 million for the Kenan-Flagler Business School at UNC-Chapel Hill to begin planning for a new $150 million building, with $75 million coming from the state and $75 million matched by private donors.

Business is a popular and productive major at Carolina, yet fewer than 10% of undergraduates can major in business due to current space constraints. To deny funding for facilities to provide for more students to pursue that path is to deny students that opportunity.

So all in all, it’s good legislators could have another bite at the apple. In a year when they have a $643 million surplus7 and found $108 million for a corporate tax cut and $87 million for the state’s “rainy day” fund, surely they can do better than this.

1https://www.higheredworks.org/2018/12/unc-system-hits-70-graduation-rate/.
2https://webservices.ncleg.net/ViewBillDocument/2019/5051/0/H966-PCCS30485-LRXR-3, pp. 331-335.
3https://webservices.ncleg.net/ViewBillDocument/2019/5051/0/H966-PCCS30485-LRXR-3, pp. 327-331.
4https://webservices.ncleg.net/ViewBillDocument/2019/5051/2/H966-BD-NBC-5888, p. H1; https://webservices.ncleg.net/ViewBillDocument/2019/5051/0/H966-PCCS30485-LRXR-3, p. 330.
5https://www.higheredworks.org/2019/05/substantial-unc-capital-needs/.
6https://www.ncleg.gov/Sessions/2019/Budget/2019/AllCommitteeReport_ForFloor_2019_05_01.pdf, p. H4.
7https://www.wral.com/nc-revenue-surplus-lowered-slightly-still-largest-in-years/18386868/.

This essay is cross-posted from the website of the organization Higher Education Works. David Rice is the group’s executive director.

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