Policy Discussion 3: Budget

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Policy Discussion 3:

2011 – 2013

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Planning for 2011-13 Budget

October 7, 2010 October 7, 2010 The University of North Carolina

Board of Governors’ Policy Discussion

2008-09 UNC Summary – Revenues

(excludes capital revenues)

2008-09 UNC Summary – Revenues

(excludes capital revenues)

Other Revenues

Tuition & Fees 14.1% Federal

Appropriations, Contracts & Grants

13.5%

Total = $7.5 billion

Gifts 2.8% Local Grants &

Contracts 3.0%

2.9%

Hospitals Sales & Services

State Appropriations, Contracts & Grants

36.0%

The University of North Carolina

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Services 11.8%

Auxiliaries 15.9%

Source: IPEDS Data

*Investment income and endowments suffered a net loss of $388M in 2008-09. It is shown as zero for the purposes of this calculation.

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Other $0.85 Debt Service $0.71 Reserves $0.47 2% Health & H S i

NC State Budget - $19.6 billion

2010-11

NC State Budget - $19.6 billion

2010-11

$0.85 4% 4% 2% Human Services $4.32 22% Education $11.03 57%

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Justice & Public Safety

$2.18 11% UNC = 13% of overall state budget

and 23% of Education budget

Education Budget Breakdown

2010-11

Education Budget Breakdown

2010-11

DPI: $7 1 billion

DPI: $7.1 billion

UNC: $2.6 billion

NCCCS: $1.1 billion

Private Colleges: $.1 billion

DPI: $7.1 billion

UNC: $2.6 billion

NCCCS: $1.1 billion

Private Colleges: $.1 billion

g

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Fiscal Year 2010-11

2010-11 revenue projections are based on 2.7%

growth.

2010-11 revenue projections are based on 2.7%

growth.

Governor has required 1% to be reserved.

General Fund revenue $25 million below the

$2.75 billion target for the first two months of

the fiscal year.

The latest expectations are that the stagnant

slow growth scenario that emerged this summer

Governor has required 1% to be reserved.

General Fund revenue $25 million below the

$2.75 billion target for the first two months of

the fiscal year.

The latest expectations are that the stagnant

slow growth scenario that emerged this summer

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slow growth scenario that emerged this summer

will stay with us for the duration of 2010. Most

economic forecasts expect an uptick in

economic growth by mid-2011.

slow growth scenario that emerged this summer

will stay with us for the duration of 2010. Most

economic forecasts expect an uptick in

economic growth by mid-2011.

Source: Fiscal Research Division

Economic Outlook

The key economy-based taxes, wage and salary withholding and the sales tax, continue to reflect poor

The key economy-based taxes, wage and salary withholding and the sales tax, continue to reflect poor withholding and the sales tax, continue to reflect poor employment conditions and bleak consumer sentiment.

Most economists are forecasting the U.S. unemployment rate will remain above 9% through much of 2011.

North Carolina is not expected to fare any different than the nation.

Three economic events continue to drag down the U.S. d N C th i h i i withholding and the sales tax, continue to reflect poor employment conditions and bleak consumer sentiment.

Most economists are forecasting the U.S. unemployment rate will remain above 9% through much of 2011.

North Carolina is not expected to fare any different than the nation.

Three economic events continue to drag down the U.S. d N C th i h i i

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and N.C. economy: the ongoing housing recession, wary consumers that are still reeling from the recession, and the ongoing uncertainty of business leaders about the economy and their reticence to hire new employees. and N.C. economy: the ongoing housing recession, wary consumers that are still reeling from the recession, and the ongoing uncertainty of business leaders about the economy and their reticence to hire new employees.

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2011-13 Budget – Key Issues

Estimated $3.2 billion budget gap

Pressures on state budget:

z

Expiring temporary taxes ($1.3 billion)

z

Loss of Federal ARRA (Recovery/Stimulus)

Funds ($1.6 billion)

z

Weakened economy/other ($.3 billion)

Pressures on state budget:

z

Expiring temporary taxes ($1.3 billion)

z

Loss of Federal ARRA (Recovery/Stimulus)

Funds ($1.6 billion)

z

Weakened economy/other ($.3 billion)

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Source: Fiscal Research Division

UNC State Budget

The Board of Governors shall develop, prepare, and

present to the Governor and the General Assembly

The Board of Governors shall develop, prepare, and

present to the Governor and the General Assembly

p

y

a single, unified recommended budget for all of

public senior higher education. – G.S. 116-11

Statute prescribes form of budget requests – three

categories:

1. Continuing Operations – allocated to institutions 2 A d i S l I l t B d f

p

y

a single, unified recommended budget for all of

public senior higher education. – G.S. 116-11

Statute prescribes form of budget requests – three

categories:

1. Continuing Operations – allocated to institutions 2 A d i S l I l t B d f

2. Academic Salary Increases – lump sum to Board of Governors and then allocated to campuses

3. Expansions/Improvements Items – lump sum to Board of Governors and then allocated to campuses

2. Academic Salary Increases – lump sum to Board of Governors and then allocated to campuses

3. Expansions/Improvements Items – lump sum to Board of Governors and then allocated to campuses

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UNC State Budget

Legal Basis

zState Executive Budget Act G S 143C

Legal Basis

zState Executive Budget Act G S 143C zState Executive Budget Act – G.S.143C

zHigher Education Reorganization Act of 1971 – G.S. 116

Board of Governors’ Role:

zPresents comprehensive financial plans to General Assembly

zState Executive Budget Act – G.S.143C

zHigher Education Reorganization Act of 1971 – G.S. 116

Board of Governors’ Role:

zPresents comprehensive financial plans to General Assembly

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zModifies plans based on resources made available by Legislature

zEstablishes annual budgets which are administered by the constituent institutions

zModifies plans based on resources made available by Legislature

zEstablishes annual budgets which are administered by the constituent institutions

2011-13 Budget –

Base Continuation & Continuation Change

2011-13 Budget –

Base Continuation & Continuation Change

Governor’s Office of State Budget & Management (OSBM) has made significant changes to the budget process for 2011-13

process for 2011-13.

z One of the major changes is in how the state will consider items needed to maintain current operational levels.

Base Continuation Budget (Campuses submit directly to OSBM)

z Annualization of appropriations that were partially funded in the previous biennium

process for 2011-13.

z One of the major changes is in how the state will consider items needed to maintain current operational levels.

Base Continuation Budget (Campuses submit directly to OSBM)

z Annualization of appropriations that were partially funded in the previous biennium

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funded in the previous biennium

Operating funds (Building Reserves) for state-funded facilities that opened in 2009-11

z Removal of nonrecurring reductions and nonrecurring expansion items

z Certain technical adjustments/corrections funded in the previous biennium

Operating funds (Building Reserves) for state-funded facilities that opened in 2009-11

z Removal of nonrecurring reductions and nonrecurring expansion items

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2011-13 Budget –

Base Continuation & Continuation Change

2011-13 Budget –

Base Continuation & Continuation Change

Continuation Change (campuses work

(Continued)

Continuation Change (campuses work

with GA and OSBM)

z Building reserves for new state-funded facilities opening during 2011-13

z Replacement Vehicles & Equipment

z Inflationary Increases (utilities)

Continuation Change (campuses work

with GA and OSBM)

z Building reserves for new state-funded facilities opening during 2011-13

z Replacement Vehicles & Equipment

z Inflationary Increases (utilities)

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z Required Staff Benefits & Continuing Personnel

z Enrollment

z Required Staff Benefits & Continuing Personnel

z Enrollment

Expansion Budget Process

Budget Preparation

z Campus Submissions (Sept)

Budget Preparation

z Campus Submissions (Sept)p ( p ) z UNC-GA Review (Sept-Oct)

z 21 Chancellors’ & Affiliates one-on-one discussions (Sept-Oct)

z BOG Workshops (Oct-Nov)

z Final Recommendations (Nov)

Note: For 2011 13 the Governor and OSBM

p ( p )

z UNC-GA Review (Sept-Oct)

z 21 Chancellors’ & Affiliates one-on-one discussions (Sept-Oct)

z BOG Workshops (Oct-Nov)

z Final Recommendations (Nov)

Note: For 2011 13 the Governor and OSBM

Note: For 2011-13, the Governor and OSBM

will require that both continuation change

and expansion items be prioritized in the

University’s budget submission.

Note: For 2011-13, the Governor and OSBM

will require that both continuation change

and expansion items be prioritized in the

University’s budget submission.

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2011-13 Expansion Budget –

Operating

2011-13 Expansion Budget –

Operating

Campus Safety

z

University Police Departments

Campus Safety

z

University Police Departments

z

University Police Departments

z

Student Mental Health & Counseling

z

Emergency Management

z

Physical Security

Our Citizens & Their Future: Access to

Higher Education

z

University Police Departments

z

Student Mental Health & Counseling

z

Emergency Management

z

Physical Security

Our Citizens & Their Future: Access to

Higher Education

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Higher Education

z

UNC Need-Based Grant

z

Student-focused Programs:

Retention and Graduation

Higher Education

z

UNC Need-Based Grant

z

Student-focused Programs:

Retention and Graduation

2011-13 Expansion Budget –

Operating

2011-13 Expansion Budget –

Operating

Increase Efforts to Recruit &

Retain High Quality Faculty

Increase Efforts to Recruit &

Retain High Quality Faculty

z

80

th

_{Percentile and/or Across the}

Board Merit Increases

z

Distinguished Professors

z

Recruitment & Retention Fund

Retain High Quality Faculty

z

80

th

_{Percentile and/or Across the}

Board Merit Increases

z

Distinguished Professors

z

Recruitment & Retention Fund

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Our Health

z

Dental/Medical/Nursing Programs

Our Health

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2011-13 Expansion Budget –

Operating

2011-13 Expansion Budget –

Operating

Our University’s Outreach &

Engagement

Our University’s Outreach &

Engagement

z

Regional Issues

Our Children & Their Future:

Improving Public Education

z

Programs focused on producing math

Engagement

z

Regional Issues

Our Children & Their Future:

Improving Public Education

z

Programs focused on producing math

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g

p

g

& science teachers

g

p

g

& science teachers

2011-13 Expansion Budget –

Operating

2011-13 Expansion Budget –

Operating

Our Environment

z

C

t i

bilit

Our Environment

z

C

t i

bilit

z

Campus sustainability programs

z

Research related to sustainability

Efficient Use of Available Resources

z

Fiscal Integrity

z

Campus sustainability programs

z

Research related to sustainability

Efficient Use of Available Resources

z

Fiscal Integrity

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Repair and Renovation Funds

2011-13 Budget – Capital

Funding for projects which

have been approved for

planning

Planning funds for other

Funding for projects which

have been approved for

planning

Planning funds for other

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Planning funds for other

important priorities

Planning funds for other

important priorities

Results of Working Together

Minimized Cuts

Received funding for high priority items

Minimized Cuts

Received funding for high priority items

z Keep tuition receipts on campuses

z Enrollment growth

z ECU School of Dental Medicine

z UNCC EPIC

z NCA&T & UNCG Joint School of Nanoscience d N i i

Received funding for high priority items

z Keep tuition receipts on campuses

z Enrollment growth

z ECU School of Dental Medicine

z UNCC EPIC

z NCA&T & UNCG Joint School of Nanoscience d N i i

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and Nanoengineering

z NCA&T and NCSU Colleges of Engineering

z Distinguished Professors Endowment Trust Fund

z NC Research Campus at Kannapolis and Nanoengineering

z NCA&T and NCSU Colleges of Engineering

z Distinguished Professors Endowment Trust Fund

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2011 NC Legislative Process

“Long Session”

2011 NC Legislative Process

“Long Session”

Governor’s Budget Proposal – January 2011

z

General fund availability is determined

General Assembly convenes – January 26, 2011

z

House Budget – first

z

Senate Budget – second

z

General fund availability is determined

General Assembly convenes – January 26, 2011

z

House Budget – first

z

Senate Budget – second

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z

Conference Process Results in Final Budg

et

–

June/July

z

Conference Process Results in Final Budg

et

Policy Discussion 3: Budget