THE UNC SYSTEM IS IN A DEEP FINANCIAL CRISIS

This crisis has resulted not only from the COVID-19 pandemic, but also from the implementation of a profit-oriented business model of operating the UNC System campuses. This model has seriously weakened the capacity of the University system to offer a high-quality education to our state’s University students in line with North Carolina’s constitutional mandate that “higher education as far as practicable, be extended to the people of the State free of expense.” We hold the UNC Board of Governors (BOG), the immediate past and current Presidents of the UNC System, and campus chancellors and provosts responsible for insisting on opening our UNC System campuses to thousands of students on campus during a pandemic, and for their adherence to an ideology that puts the financial bottom line from campus and local business revenues above the health and lives of the public. As a result, thousands of UNC students and workers (faculty, staff, graduate workers, and campus workers) have become infected with COVID-19, and a large number have suffered gravely from it and transmitted it to thousands of other community residents and family members. [1] At least one student has died. [2] In fact, the University is facing converging human, financial and environmental crises.


At the present moment, the UNC BOG and UNC campus high administrators now appear bound and determined to repeat the same disasters of reconvening thousands of students and employees in person in the Spring 2021 semester. They do so largely because their business model requires having students concentrate together to pay stipends and fees, rents for campus dormitories (and off-campus UNC endowment-owned housing), dining services, and sports events that are supposedly needed to make each campus “pay its own way.” Unfortunately, local chambers of commerce and other business boosters are cheering them on.


Neither the financial judgment nor the capacity for assessing the risk of COVID-19 to the public on the part of UNC BOG and UNC campus administrators can be trusted, nor can their demand that we blindly do the same thing that led to public health disaster previously. Meanwhile, these same elites hold us hostage to their reopening plans by threatening huge cuts, layoffs and furloughs of workers as well as the elimination of research and teaching programs that have been essential to the greatness of the UNC System’s accomplishments. Under these circumstances, we no longer have faith in the capacity of our UNC System leaders to lead us successfully out of the current crisis, one which is partly, and disastrously, of their own creation.

BACKGROUND TO THE CURRENT CRISIS

The current crisis has been long in the making, at least since conservatives took over the NC General Assembly in 2010, and then won reelection and the victory of Pat McCrory through gerrymandered electoral districts (subsequently ruled unconstitutional by the North Carolina courts). [3] Having achieved this trifecta of power, in 2013 the conservative supermajority went into wholesale restructuring of the North Carolina state budget by passing tax changes that took money from most Tar Heels and passed on the benefits of these changes to a very few wealthy families and corporations in the state and elsewhere. Conservative legislators increased average income taxes for the bottom 80 percent of taxpayers, while cutting taxes for the top 1% of NC residents by an average of $940,000. They failed to close tax loopholes for the wealthy, and increased sales taxes which most heavily impact low-income residents. According to a report written by the North Carolina Budget and Tax center, the conservative overhauling of the tax structure in 2013, eliminated the state’s Earned Income Tax Credit, harming the poorest citizens, while reducing the corporate income tax rate from 6.9 percent in 2012 to 3 percent by 2017 – effectively providing their corporate donors with a 57 percent tax cut.4 According to the director of the Budget and Tax Center, people of the state have lost an astounding $12 billion over the previous six years that these tax changes have been in effect (Alexander Sirota, personal communication, July 27, 2020). This wealth belongs to the people of North Carolina, and a substantial proportion of it should be spent on behalf of the largest public service of the state of North Carolina – its UNC System campuses.
 

Since 2010, the conservative majority of the NC General Assembly and its selected majority on the UNC Board of Governors have systematically steered the UNC System away from meeting its Constitutional mandate which states that “the benefits of The University of North Carolina and other public institutions of higher education, as far as practicable, be extended to the people of the State free of expense." Instead, they have pushed the UNC System toward a for-profit business model. After the 2013 conservative tax reform, the BOG imposed $680 million in “management flexibility” budget cuts on UNC campuses. [5] Salaries and wages of all workers have gone down in real terms since then, with the spectacular exception of administrative positions and salaries. [6] Instead of making it possible for students from poor families, particularly families of color and with immigrant status, to benefit from this constitutional provision, the BOG has increased tuition and fees since 2010 by 87%. [7] 
 

The massive cuts generated by the 2013 tax reform have forced campus administrations to develop for-profit revenue models depending primarily on rents of campus dormitories, hospitals, food services, “revenue-generating” sports and a wide range of other investment strategies implemented through the university endowment funds (see Figure 1). As a result, an increasing number of young North Carolina residents are unable to afford an education at a UNC campus, and a large number have gone into debt to do so. This increasing debt has and will continue to become an unbearable burden for large numbers of them. Instead of passively acceding to the demands by the UNC BOG and campus administrators that currently threaten the 47,000 employees of UNC campuses – to plan for budget cuts of up to 25% and 50% through firings, furloughs and program eliminations – we reject their attempt to define our realities by their power and claim that Another UNC is Possible! [8] 

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Figure 1. UNC System Revenue, 2019. UNC System 2019 Consolidated Financial Report. [9]