University Budget Update

A letter from Chancellor Thorp

Dear Students, Faculty and Staff:

I'm writing again to share updates about the University's budget. You all know that we face serious budget cuts. The decisions that we make during tough times like these are going to be more important than any we might make when times are good. It would be easy for us to fall into the trap of hunkering down, making cuts across the board and just trying to survive. But the great institutions - the ones that will emerge from this economic crisis even stronger - will be those that are willing to look hard at what they do and then make really smart decisions. I intend for Carolina to be one of those great institutions.
That means we've got to be strategic and look critically at everything we do. We owe it to ourselves, and we owe it to the Legislature and people of North Carolina. We have an obligation to do our part in these tough economic times.

So far in this budget crisis, we have asked the vice chancellors and deans to look within their units to identify the cuts that we need to make. But what we haven't done is take a good look at ourselves from the cross-University perspective to see if there are ways to improve operations and reduce costs.

To do that, Bain & Company, a global business consulting firm, has been asked to conduct a study to help us identify innovative ways to streamline operations, become more effective, and perhaps achieve additional cost savings. The UNC-Chapel Hill Foundation is funding the study, which is made possible through a restricted gift from a Carolina alumnus.

I see this study as a great opportunity to bring in outside experts who can take an objective look at how the University currently operates to meet our campus-wide goals and to fulfill our mission to educate students and serve the people of North Carolina and beyond.

In my regular e-mail updates to the campus about the budget, lots of employees have written back with suggestions about how to improve and cut costs at the same time. Some of those ideas have to do with energy savings, sustainable practices, personnel, purchasing and procurement, technology and facilities.

There is always room for improvement in any operation. And we always have an obligation to try and be better in all that we do to best serve the taxpayers of North Carolina.

The goal of the study, which will be conducted this spring, is to provide the University with potential strategies for operational improvements and enhancements to the intensive planning we already have under way. The Bain study will give us one more tool to make smart decisions about Carolina's future.

I wanted you to have a larger context for where we're headed before sharing the latest developments about what happens next with the state budget picture. Last week, UNC General Administration sent the State Budget Director a memo detailing potential 2009-2011 budget reductions for the UNC system. This information reflected our input that I told you about last month - planning scenarios requested by President Bowles for reductions of 3 percent, 5 percent and 7 percent of our state funding. I also shared some numbers about the possible losses of faculty, teaching and staff positions from those contingency plans, our best estimates of the potential impact.

The General Administration memo also highlighted another UNC-Chapel Hill projection as part of a system-wide list showing the effects of a state cut at the 7 percent level. If we keep the current student-faculty ratio to maintain quality, the loss of about 230 faculty and teaching positions would warrant an enrollment reduction of more than 3,400 students - roughly the size of our incoming first-year class. The memo emphasized President Bowles' plans to make the best possible case with the State Budget Office, Governor Perdue and the General Assembly that permanent cuts next year would be the equivalent of sacrificing North Carolina's future. I wanted you to know that President Bowles and his staff, along with the Board of Governors, are advocating admirably on behalf of all the UNC campuses.

I continue to be impressed by the positive, but realistic approach that our community has taken with these budget issues. I'll keep sharing timely information with you. Regarding our current budget year, the next steps will depend on what happens in Washington with the federal stimulus package, as well as how state tax return revenues are running in April. We're doing all we can right now to be prepared.

Finally, if you're interested in reading the General Administration memo mentioned above, along with my previous budget messages and related background, refer to a new link, "Carolina Budget Update," on the University's homepage, www.unc.edu. And keep sending any creative cost-cutting suggestions to budgetideas@unc.edu. On behalf of the vice chancellors, I want to thank everyone who has taken the time to share their ideas.

Sincerely,


Holden Thorp