Budget Update - Correction

There was an error in the statement regarding longevity pay

In Dr. Roper's March 25 budget update, three items from the North Carolina State Budget were identified as having a major impact on UNC Health Care, the UNC School of Medicine and state employees. The second item stated, "Elimination of state employee longevity pay. Right now, state employees earn longevity pay after 10 years of service." That statement was in error; the proposal in the North Carolina State Budget is to freeze longevity payments for two years.

Here is the recommendation from page 31 of the state budget,

Freeze teacher and state employee longevity payments for two years, saving about $170 million per year of the biennium. Teachers’ and state employees’ final retirement calculations will be held harmless from this longevity reduction. State employees who are not on the Teacher Salary Schedule will receive bonus leave for each year of the biennium in lieu of longevity payments. The amount of bonus leave is commensurate to the employee’s years of service in state government.

The full budget proposal can be found online at: http://www.osbm.state.nc.us/ncosbm/osbm_library/superpubs/bgt0911.shtm

We apologize for the confusion created by this error. As stated in the letter, the proposal has not yet been approved by the legislature. Many parts of the proposal will change over time as the legislators debate and amend parts of it. When we know of the impact of budget on UNC Health Care, the UNC School of Medicine, and all of our employees, we will do our best to inform you in a timely manner.


The full message is provided below.


March 25, 2009

Dear Colleagues:

This week the governor released the recommended North Carolina state budget for 2009-2011. The governor's budget is designed to close a $3.4 billion gap during fiscal year 2010. All state agencies and state universities are impacted by the changes in the proposed budget.

The provisions that directly affect the UNC Health Care System and the UNC School of Medicine include:

  • A $10 million reduction of the hospital's appropriation for two years. Our current appropriation is $46 million.
  • Suspension of state employee longevity pay for two years. Right now, state employees earn longevity pay after 10 years of service.*
  • The state will fund the Biomedical Research Imaging Center, but UNC Hospitals must assume a portion of the annual debt service.

Let me emphasize that the proposed state budget has not been approved by the legislature, and we intend to continue to communicate to members of the legislature the importance of our mission to serve the people of North Carolina. During the Good Health Movement in the 1950s, the N.C. Memorial Hospital and the four-year School of Medicine were created with the ambitious goal to improve the health of all North Carolinians. The hospital would be "operated for and by the people of North Carolina."

UNC Health Care has grown tremendously since that time, but our mission has not changed. At this juncture, we must continue to work with the people of North Carolina to safeguard our critical role in the health of our fellow citizens.

I want to thank everyone who has been working at the division and department level to trim budgets and cut costs since the beginning of the economic downturn last fall. It is clear now that our work is not done. We expect to receive less state funding in the near future, and must plan accordingly.

We are all committed to providing North Carolinians with the best possible health care, even for those who cannot afford to pay. We cannot turn back on our commitment, so we must move forward to work with the state and university system to meet these challenges.


William L. Roper
CEO, UNC Health Care System
Dean, UNC School of Medicine
Vice Chancellor for Medical Affairs

*This statement has been corrected. Originally, the sentence said that state employee longevity pay would be eliminated.

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