ANOTHER UNC IS POSSIBLE
The Human, Financial and
Environmental Crises of
The University of North Carolina
The state and the university system have access to the resources needed to respond to the current crisis and to lay the groundwork for a more just and dynamic university system.
The for-profit model imposed on the UNC System since 2010 has entrenched long standing racial, class, and regional inequities. The Covid-19 crisis aggravated this situation to the breaking point. All stakeholders at UNC—students and their families, faculty, staff, graduate and campus workers, and the citizens of North Carolina—are affected. We call on our leaders to resist the all-too-predictable response to managing fiscal difficulties—program reductions, layoffs, furloughs, and salary cuts. Such measures would further erode a vital public good that has already been undermined by misguided policies. The UNC System should use the resources available to ensure and enhance the security, income, and opportunities of all UNC employees and, in so doing, improve the educational experience and affordability for students at every UNC campus.
UNC campuses are a central element of local economies throughout the state and, properly funded, can serve as the engine of future prosperity in North Carolina. Moreover, our students deserve a future without onerous debt. Above all, those who lead, work, and study at UNC System campuses must contribute to the effort to save our species by rapidly decreasing the UNC System’s support for and use of fossil fuels that cause greenhouse gas emissions and an increasingly unlivable planet.
ANOTHER UNC IS POSSIBLE. And it is time for legislators, campus stakeholders at every UNC System school, and the people of North Carolina to join forces and create that new reality.
Text from image above: Alternative to Austerity in the UNC System
Reverse the 2013 tax changes to restore $700 million annually to the UNC System.
Withdraw emergency funds from the state Rainy Day Fund to help campuses meet operational expenses.
Divest UNC endowments from fossil fuels to help finance the post-pandemic transition.
Withdraw additional funds from the two largest endowments, UNC Chapel Hill and NC State University.
In 2013 the North Carolina General Assembly (NCGA) raised sales taxes and increased average income taxes for the bottom 80 percent of taxpayers, while cutting the corporate income tax and the income taxes of the top 1 percent of taxpayers. The state has lost more than $12 billion since these tax changes went into effect. The largest public service in the state, the UNC System, has had to bear the brunt of these cuts. Since 2013, the UNC Board of Governors (BOG) has imposed $680 million in budget cuts on UNC campuses. Salaries and wages of employees have gone down in real terms, with the spectacular exception of administrators. The BOG has increased tuition and fees since 2010 by 87 percent, while forcing campus administrations to develop for-profit revenue models dependent on income from the provision of services to students and communities.
We propose a four-point plan to address the immediate financial concerns of the UNC System and facilitate a more equitable transition toward a post-pandemic North Carolina. These points form an integrated whole. The time for the NCGA and the BOG to act on all four steps is NOW.
We call on the NC General Assembly to take the following actions:
1) Roll back the 2013 tax changes. According to the North Carolina Budget and Tax Center, rescinding the 2013 tax changes would restore about $2 billion annually. The state devotes one-third of its budget to funding the UNC System. In line with this, the state should appropriate about $700 million of this restored tax revenue to the UNC System, thus increasing the state’s support of per-UNC student from $14,024 to $16,933 annually, an increase of almost 21 percent.
This $700 million annual increase would be enough to create a more economically and racially just UNC System by:
a) Reducing tuition and fees for 72 percent of undergraduate students by almost 35 percent, while shifting proportionately more new resources to where they are most needed, our HBCUs and Promise School campuses;
b) Increasing need-based undergraduate scholarships and graduate fellowships by $70 million in order to increase the affordability of UNC campuses for our most economically disadvantaged and/or most racially marginalized students;
c) Increasing the long-depressed wages, salaries, and benefits of university workers and staff, graduate student-workers, contingent faculty, and full-time tenure-track faculty by allocating 45.2 percent, or $317 million of the additional $700 million across all 15 campuses. This could also make whole the losses suffered by UNC workers during the pandemic from layoffs, wage furloughs, and program cuts, while insulating the University from the austerity cuts now being proposed by the BOG and UNC administrators.
Finally, ten percent of the $700 million could be used to jump-start a capital campaign to convert all energy use by UNC campuses from fossil fuels like coal and natural gas to renewable energy.
The remainder of the $2 billion in restored annual revenues should go to other pressing needs of the people of North Carolina, including K-12 education, the expansion of Medicaid, and increasing the budget of the Community College System.
2) Withdraw funds from the Rainy Day Fund. The NC government has a $1.2 billion Rainy Day Fund. According to state law, up to 7.5 percent of the current $6 billion plus state budget can be withdrawn from the Rainy Day Fund during an emergency. We call on the NCGA to take the equivalent of 7.5 percent of the state budget from the Rainy Day Fund, and allocate one-third of that amount (approximately $150 million) to UNC System campuses. All campuses of the UNC System except those with large endowments, UNC Chapel Hill and NC State University, should have access to this emergency funding. The least well-endowed campuses, particularly Promise Schools and HBCUs, should be given first priority to meet their operational expenses.
The BOG, too, must act. The UNC System’s $6.7 billion endowment is the property of the people of North Carolina. Where endowment funds are designated for specific functions, they could still be reallocated to meet current needs. A University where serious cuts in staff and programs are threatened faces fundamental challenges to maintaining the integrity of its research and teaching missions. Thus, the imperative to meet teaching and research missions while protecting workers and students through emergency bridge funding from huge endowments is overriding.
We therefore also urge the BOG take the following actions:
3) Divest the UNC System endowments from fossil fuels. $293 million or 4.5 percent of the assets of the UNC Investment Fund balance of $6.7 billion are allocated in energy and natural resources, particularly fossil fuels. The campuses with the largest share of fossil fuel holdings should divest from these holdings immediately and use the proceeds from UNC-owned holdings to finance the post-pandemic transition. Holdings owned by non-UNC organizations within the UNC Investment Fund and invested in trust in fossil-fuels should be divested so as to bring these organizations into compliance with their non-profit legal charters. For campuses holding endowments of under $100 million, fossil fuel holdings should be sold and the funds reinvested in green energy holdings.
4) Withdraw additional funds from the two campuses with the largest endowments. UNC Chapel Hill and NC State University have large endowments of $3.5 billion and $1.4 billion, respectively. In addition to their fossil fuel holdings, the accumulated endowments of these two schools should provide bridge funding between the current situation and the new appropriation of $700 million that we call on the NCGA to make by revoking the 2013 tax cuts.
For instance, the (at least) $150 million that the UNC Chapel Hill endowment holds in fossil fuels plus an additional withdrawal of $200 million for bridge funding should be immediately withdrawn for this purpose. Similarly, the BOG should immediately divest the $63 million held in fossil fuels from the NC State University endowment. Considering optimistic and pessimistic scenarios, it would only take between two to five years for the UNC Chapel Hill and NC State University endowments to recover the entire $350 million and $63 million, respectively.
ANOTHER UNC IS POSSIBLE AND NECESSARY.