PW exclusive: UNC System exploring worst-case scenario budget cuts of up to 50%

The UNC System is preparing for possible budget cuts of up to 50% at its 17 campuses, according to an email obtained by Policy Watch this week.

The email, from UNC Board of Governors Chairman Randy Ramsey to the system’s chancellors, cites the potential impacts of the ongoing COVID-19 pandemic and the possibility that campuses may again close after reopening next month.

In the email Ramsey asks the chancellors for several documents:

*A report from each chancellor on the financial impact of closing their campus and reducing tuition and room and board fees.

*A plan from each chancellor to reduce their budgets by between 25% and 50%, to account for the reduced revenue resulting from reduced enrollment under various degrees of closure.

*A projection of how the cancellation of fall athletics will affect each campus and their specific plans for revenue shortfalls.

*A General Administration analysis of the long-term impact on “UNC institutions that have struggled financially and remain on shakier financial footing.”

“These plans should not be general in nature,” Ramsey wrote. “They should be very specific and include details of which programs will be shuttered, which positions will be furloughed, laid off or eliminated entirely and all other details of how a 25% to 50% spending reduction will be handled.”

Ramsey ended the email by stressing he wanted the plans quickly.

“This in not a request,”Ramsey wrote. “This is a directive, and I want each of you to respond to this email confirming that you understand that you are to take no action until the board and new President have met to make a decision about how to proceed. I also need to know by tomorrow when you will have this analysis and information available so that we can schedule a meeting to review it and discuss it.”

Interim UNC System President Bill Roper followed up the email by asking the chancellors to work quickly and to be prepared to discuss their plans Thursday.

Ramsey also makes clear in the email chancellors won’t be able to ultimately decide whether to close their campuses due to COVID-19 infections. Instead, that call will be made by incoming UNC President Peter Hans and the UNC Board of Governors Ramsey said.

“I want to be very clear about one thing,” Ramsey wrote in the email to chancellors of the 17 UNC campuses on Tuesday. “I expect Peter and the board to make the decision about this fall consulting with current leadership.”

“We all know the health and safety of our students, faculty, workers, and administrators is weighing heavily on each of our minds, and I really appreciate your diligence as we confront such an unprecedented challenge,” Ramsey wrote. “However, it is imperative that people that will have to deal with the consequences and repercussions of our decision regarding how to handle the fall semester in the University System make that final decision.”

The email came one day after UNC-Chapel Hill Chancellor Kevin Guskiewicz told a Faculty Executive Committee meeting that he expected any closure after the beginning of the fall semester to be a local decision made by individual school administrations.

Eric Muller, a law professor at UNC-Chapel Hill and member of its Faculty Executive Committee, said these decisions should be left up to individual chancellors. “The spread of this illness will be different at different universities in the System,” Muller said.  “The impacts of that spread on students, staff, and faculty will be different at different universities in the System. The medical infrastructure to support the sick and the quarantined will be different across the System too. Each university in the System should be empowered to make the best possible decision that fits its unique circumstances.“

“The Board has accorded the Chancellors discretion in planning these experiments in reopening,” Muller said. “The Board should also trust them to know whether and when the human costs are too great for the experiment to continue.”

Not having the ability to close campuses puts the chancellors in a terrible position, Muller said. “I know that I would not want to be made responsible for an experiment that risks the lives of the people in my community without also having the power to stop it.”

Deb Aikat, a journalism professor at UNC-Chapel Hill and member of its Faculty Executive Committee, said he was not surprised to hear Ramsey and the board have asserted their power to make the final call on closing campuses. They have for years made it clear that the individual campuses can and will be dictated to by the board in matters large and small, he said.

The 25% to 50% budget reduction plans are more disturbing, Aikat said: “I think the spirit is to prepare for the worst and hope for the best.”

After 25 years at the university, Aikat said he has seen bad financial times and heavy budget cuts. But this is unprecedented. “We’re really talking about the defunding of the universities,” Aikat said. “I hope it doesn’t come to that.”

In a statement to Policy Watch this week, Ramsey said the plans are for “worst-case scenarios.”

“I recently asked our chancellors to develop financial models that reflect potential worst case scenarios resulting from COVID-19,” Ramsey said in the statement. “This scenario-planning directive is an important part of our Board’s responsible oversight as we continue to confront and adapt to an unprecedented and unpredictable situation. This financial analysis gives us an essential understanding of a situation that we hope not to be facing.”

“As Board chair, I know our high priority is ensuring the health and safety of our students, faculty, and staff,” Ramsey said. “Face-to-face instruction with professors is essential for student academic success and are core to the UNC System’s educational mission. We are taking the necessary precautions to ensure our campuses are open and safe places to teach, study, live, and work and look forward to their return in August and September.”

“Senior leaders at the System are closely coordinating with our leading federal and state health authorities and state and local government officials,” Ramsey said. “We will continue making important, operational decisions as a System, in consultation with our Chancellors, just as we have been doing since the Spring. Making informed decisions means we must understand the full implications of these decisions, both good and bad, short-term and long-term.”

“I expect to continue these discussions with Interim President Roper, President-elect Peter Hans, our Board members, our senior leaders and health and medical experts, and our chancellors,” Ramsey said.