Trustees Talk Short-Term Cost Savings as Bridge to Long-Term Plan
April 17, 2018
The collective efforts of the campus community have helped reduce the deficit projected in next year’s budget, chief financial officer Michelle Quinn announced during a special meeting of the UNC Board of Trustees on Monday.
Over the past few weeks, campus leaders have reviewed their budgets to identify temporary and permanent cost savings in response to the cumulative effect of deficit spending stemming from revenue not growing as much as anticipated from the intentional investments in strategic initiatives. The additional review by campus resulted in reducing the budgeted deficit for 2018-19 from $9 million to $6.5 million.
As Quinn and trustees previously discussed, the continued (and unsustainable) reliance on reserve spending is the result of slower than anticipated undergraduate enrollment growth coupled with increases in undergraduate institutional discounting in the form of student aid that UNC provides. That combination has contributed to expenses outpacing revenues, with next year marking six years of using cash reserves to make up the difference.
In response, Quinn and trustees discussed some immediate, short-term steps (which Quinn also outlined in a campus memo March 29 and presented to campus governance groups over the past few weeks) that can be recommended in next year’s budget to alleviate the burden on tapping into reserves. Those include:
- Reducing the undergraduate discounting percentage. University leaders will review the model, which factors in expected family contributions and incoming students’ academic preparedness, in determining the levels of merit and need-based aid.
- Stringent restrictions for staff and administrator travel and official functions.
- Personnel savings from salary freezes and holding vacant positions open for a minimum length of time before rehiring, which will also allow time to review the position to determine need, and redefine or restructure the open position. Staff furloughs have also been discussed.
- Deferring capital projects (including technology infrastructure)
- Limiting investment in the university nine core plans.
With only months remaining before the new fiscal year begins in July, the short-term
steps to minimize deficit spending will serve as a bridge to a longer-term strategy
during the university's leadership transition. The recommended 2018-19 budget, which
is still under development, will be presented to trustees in June.
At the beginning of the meeting, presidential finalist Andy Feinstein was introduced. Feinstein attended the meeting as part of his visit Monday and Tuesday to meet the campus and community. Feinstein is the finalist to succeed Kay Norton, who will retire at the end of the academic year after serving 16 years as UNC president.
Budget Presentation Slides
View slides Quinn presented at the meeting here (PDF.)