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 University of North Carolina System since 2010 has entrenched long standing racial, class, and regional inequities. The COVID-19 crisis has aggravated this situation to the breaking point. All of us—students and their families, faculty, graduate, and campus workers at every UNC System school—are affected. We demand that UNC System administrators refrain from using austerity measures such as layoffs, furloughs, or salary cuts to address financial constraints. On the contrary, the UNC System should use the resources we show are available to ensure and enhance the security, the income, and the opportunities of all UNC employees and, in so doing, develop the educational experience of students at every UNC campus. It is time for a new solidarity across campuses and between all groups with a stake in UNC’s success. UNC campuses are a central element of local economies throughout the state and, properly funded, can serve as the engine of the future economic prosperity of North Carolina. By uniting to advance our common interests and to insist on fully funding the UNC System as a cherished public good, we can show that Another UNC is Possible!
In 2013 the North Carolina General Assembly 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% of taxpayers. The state has lost $12 billion since these tax changes went into effect. The largest public service, 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%, while forcing campus administrations to develop for-profit revenue models dependent on income from the provision of services to students and communities.
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. 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 Assembly and the BOG to act on all four steps is NOW.
We demand that the NC General Assembly take the following steps:
1. Roll back the 2013 tax changes. According to the North Carolina Budget and Tax Center, rescinding the 2013 tax changes would provide about $2 billion annually. The state devotes one-third of its budget to funding the UNC System. In line with this budget, the state should appropriate about $700 million of this restored tax revenue to the UNC System. This would be enough to create a more economically and racially just UNC by a) reducing tuition and fees for 72 percent of undergraduate students by at least 30%, and making them more affordable for the rest; b) increasing the average per-student allocation for the UNC System from $14,000 to more than $17,000 per year; and c) progressively rebalancing UNC funding by shifting proportionately more of the new resources to Promise Schools and Historically Black Colleges and Universities (HBCUs) which enroll a large proportion of economically disadvantaged African American, Latinx, and Indigenous students. The remainder of the $2 billion in restored revenue 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. Access the Rainy Day Fund. The state of North Carolina government has a $1.2 billion Rainy Day Fund. According to state law, up to 7.5% of the current $6 billion plus state budget can come from the rainy day fund during an emergency. We demand that the equivalent of 7.5% of the state budget be withdrawn immediately from the Rainy Day Fund, and that one-third of that amount (approximately $150 million) be allocated to the UNC system campuses. All campuses of the UNC System except those with large endowments, UNC-Chapel Hill and North Carolina State University, should have access to this emergency funding. We also demand the least well-endowed campuses of the UNC System, particularly Promise Schools and HBCUs, be given first priority to meet their operational expenses.
The BOG must act as well. The UNC System’s $6.5 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 25% and 50% cuts are being threatened faces fundamental challenges to maintaining the integrity of its research and teaching mission. Thus, the imperative to meet this mission while protecting its workers and students through bridge funding from a huge endowment is overriding.
We demand that the BOG take the following actions:
1. Divest from fossil fuels. $439 million, or 6.8% of the assets of the UNC Investment Fund are allocated in energy and natural resources, particularly fossil fuels. Those campuses with the largest share of fossil fuel holdings should divest from these holdings immediately and use the proceeds in the post-pandemic transition. For campuses holding endowments that are less than $100 million, fossil fuel holdings should be sold and the funds reinvested in green energy holdings.
2. Withdraw additional amounts from the two campuses with the largest endowments. UNC-Chapel Hill and North Carolina State University have large endowments of $3.5 billion and $1.1 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 appropriations that we demand that the General Assembly make in early 2021, after revoking the 2013 tax cuts. In the case of UNC-Chapel Hill, its Chancellor has mentioned the possibility of $300 million in losses for the campus in this current fiscal year. This $300 million would amount to a mere 8.3% of the UNC Chapel Hill’s $3.5 billion endowment. To this we add the $207 million withdrawal which is already earmarked to fund UNC-CH’s current ongoing costs for a total withdrawal of $507 million. Considering the 7.0% historic rate of return in the past eight years, it would take only 2-3 years to recover completely the $507 million in funds.