UNC-Chapel Hill to cut personnel, spending to address pandemic losses, long-term deficit

Posted January 18, 2021 4:01 p.m. EST
Updated January 18, 2021 9:56 p.m. EST

— The University of North Carolina at Chapel Hill has laid out plans to cut personnel costs by 3 percent and operating expenses by 15 percent over the next two years to make up losses incurred during the coronavirus pandemic, as well as a "structural deficit" the school has had for several years.

"This isn’t going to be easy, but I feel confident that we can get through this together. This is the responsible thing to do for the future of our university," Chancellor Kevin Guskiewicz told members of the Faculty Council and the Employee Forum on Friday.

"Deans and unit leaders will have the autonomy in deciding how, specifically, they will make their cuts," Guskiewicz said, noting that he wants "some strategic vertical reductions, not simply across-the-board cuts."

"We’ll aim to protect our mission and our people," he said.

Paul Friga, who studies strategy and operating models in higher education as a clinical associate professor at UNC's Kenan-Flagler Business School, called the moves "extremely proactive" and said universities nationwide are taking similar steps.

"The most proactive universities are making moves now to address those shortfalls and not just waiting for it to go away. So, this is a very positive step in terms of leadership on our campus," Friga said. "If anything, there may be more need in terms of potential deficits, depending on how the spring goes, how enrollment goes and when we get control of the pandemic."

The pandemic cost UNC-Chapel Hill $200 million this year, Guskiwicz said, through a combination of lost housing and campus dining revenue when fall semester was held primarily online and increased expenses for testing and protective gear. Last fall, administrators were estimating a loss of up to $300 million.

The school's annual operating expenses were nearly $3.2 billion in the 2019-20 fiscal year.

"Percentage wise, these are indeed material," Friga said of the planned cuts. "That’s millions and millions of dollars, and that’s also people’s lives, in terms of positions."

"It affects all of us. It affects our teaching, it affects our research, and it affects the public service that we do," said Deb Aikat, an associate professor in the Hussman School of Journalism and Media and a member of faculty executive committee.

"We are working harder, and to hear about the budget cuts, it was not fun," Aikat said. "But having said that, I think we appreciate our UNC leaders for having a compassionate approach. They were transparent about it, and they’re looking to the future."

But Michael Palm, an associate professor of communications and president of UNC-Chapel Hill's chapter of the American Association of University Professors, questioned why administrators are tackling years of budget deficits at the same time as making up for pandemic-related losses.

"If there have been ongoing budget shortfalls, this seems like an inopportune moment to address those," Palm said. "As someone who has worked at UNC for more than a decade, I come by my distrust honestly. It seemed like the old adage, 'Never let a crisis go to waste,' was being operationalized by UNC administrators."

Some faculty members, workers and graduate students across the UNC system devised an alternative budget that calls for tapping endowments and the state's "rainy day" reserve fund, divesting of fossil fuels investments and rolling back 2013 tax cuts to avoid any layoffs, furloughs and pay cuts druing the pandemic.

"UNC’s coffers are still controlled by the state assembly and by the [UNC Board of Governors], and administrators throughout the UNC system at the campus level have shown time and again they are not willing to stand up to political pressures at the state level," Palm said. "I don’t think there’s any reason to be optimistic about more money coming from those sources."

In fact, Friga, said, UNC-Chapel Hill's planned cuts might not be enough.

"The scary part is, this may not be the worst of it because we have not yet had to deal with states decreasing their budgets for universities," he said.

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