UNC released a two-year budget plan and guidelines Friday for its schools to balance their budgets in light of the COVID-19 pandemic.

The plan, which includes 18 months of reductions to personnel and operations funding, was shared in a message to the campus community by Chancellor Kevin Guskiewicz, Executive Vice Chancellor Provost Bob Blouin and Interim Vice Chancellor for Finance and Operations Nate Knuffman.

In each of the 2020-2021 and 2021-2022 fiscal years, schools and units will implement a 1.5% cut to personnel funds and a 7.5% cut to operating funds. According to UNC leadership on Friday, such reductions in central funds will be “balanced with revenue-generating strategies to help the University maintain critical financial momentum.”

If completed, the university said it could see a balanced budget once again by the start of fiscal year 2022-2023.

Operating on an annual budget of $3.5 billion, the university faces several challenges presented by the coronavirus pandemic that caused its significant deficit. Students taking classes remotely for part of the spring and nearly all of the fall means there is very limited housing revenue. The lack of a new state budget, which now has seen additional spending to combat COVID-19, already presented issues the university in early 2020 before the pandemic. Sporting events having no fan attendance also creates revenue shortfalls.

UNC faculty were alerted of potential cuts to funding during its September Faculty Council meeting. At the time, Knuffman told instructors the university would likely face a $300 million deficit in the 2020-2021 fiscal year from the coronavirus pandemic. Furloughs for some employees, including in the athletics department, were implemented in October to offset some of the revenue losses. Officials said at the time any personnel pay cuts would be distributed so those with higher earnings would share more of the burden.

In Friday’s message to the campus community, UNC leadership said in addition to the $300 deficit from structural funding and its current fiscal year’s spending, around $850 million in deferred maintenance is now estimated for the university.

UNC said the budget plans will be developed and implemented by deans and vice chancellors over the next several months to re-evaluate spending for schools and units. The university said a Finance and Human Resources team will help with the process, consulting with schools and units on strategies for achieve the budget cuts.

“We recognize that solving for budget shortfalls, especially during a year full of so much uncertainty and pain, can be unnerving,” Guskiewicz, Blouin and Knuffman wrote. “We are committed to ensuring that this process is as fair and equitable as possible — and to protecting our mission and our people. The actions we take now to balance the budget will allow us to reap the rewards of greater funding flexibility in the future.”

More information about UNC’s budget plan and reduction priorities can be found here.

 

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