UNC-CH finance officer: ‘a lot up in the air’ regarding FY15 finances

Jul. 23, 2014 @ 06:44 PM

UNC-Chapel Hill leaders don’t have a final budget from state lawmakers yet, but they’re taking steps to prepare for state cuts in fiscal year 2015.

“(There’s) still a lot up in the air,” said Matthew M. Fajack, the University of North Carolina at Chapel Hill’s chief financial officer and vice chancellor for finance and administration.

State budget negotiations aren’t finished yet, even though the deadline passed earlier this month state lawmakers targeted for finalizing adjustments to the fiscal year 2014-15 budget.

Fajack told the UNC-Chapel Hill Board of Trustees finance committee on Wednesday that, based on information from the UNC System, they could see a net state funding cut at Chapel Hill of nearly $11 million.

The school already has a $15 million cut that was previously to take effect in fiscal year 2015, according to information Fajack presented to the trustees. He said in an interview that the school could also see some possible additional revenues.

In addition, the net total also counts revenue raised through a tuition increase for out-of-state undergraduates to replace a state funding cut of the same amount.

While the state had dictated how system schools would make up a $27.2 million state funding cut through out-of-state undergraduate tuition increases, UNC System leaders at the UNC Board of Governors approved an alternative plan, contingent on state leaders’ allowing them to implement it. If state lawmakers give the system the flexibility to implement that plan, UNC-Chapel Hill would see a reduced increase in tuition for out-of-state undergraduates.

UNC-Chapel Hill would have been one of four schools to see tuition for out-of-state undergraduates increase by 12.3 percent. But under the UNC System leaders’ plan, out-of-state undergraduate tuition would grow 11.7 percent to $31,505 per year.

In response to the possibility of a state funding cut, Fajack said department leaders have proposed where they’d make the cuts. Those proposals have not been evaluated yet, however.

“I’m optimistic that we can do without a reduction in force; we have enough open positions in the right spots,” Fajack said.

On top of that possible net cut in state dollars, Fajack said the school has another “unfunded mandate” to pay for starting Jan. 1, 2015: the employer mandate under the Affordable Care Act – also known as “Obamacare” --  to provide health insurance for all full-time employees. The law defines employees as fulltime if they work 30 hours a week or more.

Fajack said the university would be required to provide health insurance for additional workers, including some adjunct faculty members and others. He said they’re estimating an additional cost of $15 to $20 million in new health insurance costs.

In general, Charlie Perusse, UNC System chief operating officer, said they don’t know what’s going to happen in state funding “at the end of the day.” But he said that overall, he believes the budget proposals so far would put the system in a more stable position. At Chapel Hill alone, state cuts from 2008 through fiscal year 2012 were more than $230 million.

 “I would categorize it as much improved over the last several years,” he said.