NC State University

Wednesday, October 22, 2008

North Carolina State University, like many institutions across the nation, is feeling the pressure of the economy. Governor Easley has asked all state agencies for a one-time 2 percent budget reversion. UNC System President Erskine Bowles has asked every institution to prepare for a reduction of up to 4 percent and there is a possibility that subsequent reductions might exceed 4 percent before the fiscal year ends June 30. You may recall that two recurring budget reductions were imposed by the legislature effective July 1 of this year.

In addition to the state budget impact, the recent worldwide credit and financial crisis has impacted multiple funding facets that support the university. It will take time to repair the damage. Our endowment spending will be impacted, as will foundation operations and their support to the university.

I wanted to provide you with some insights as to how we are approaching the situation and affirm that we are holding to our budget principles to think strategically about the university’s budget, not just about applying reductions across-the-board.

These budget principles can be found here and indicate that our budget should be both transparent and accessible. The principles also include a range of categories that should be protected from reductions to the extent possible, beginning with undergraduate and graduate academic programs.

At this point, we are taking the one-time budget reversion in three parts:

• The first 25 percent will be taken centrally from unallocated reserves.
• The second 25 percent will be allocated using the University Budget Advisory Committee guidelines, excluding teaching faculty and utilities budget lines.
• The remaining 50 percent will be allocated across all units since this is a one-time action that can best be met by holding positions vacant; reducing travel, eliminating or reducing the purchase of supplies and equipment; and deferring major expenditures for renovation and repair.

Each executive officer and dean has been asked to submit a budget reduction plan by Nov. 7.

In addition, we believe a permanent budget reduction of a significant amount is inevitable for the 2009-11 legislative biennium. We will begin the compact planning update process this year, one year ahead of schedule to accommodate the new realities of the economy.

The campus community will have two chances this week to learn more about the university’s budget, the budget decision-making process and current budget issues. The two sessions of the fourth annual University Budget Forum, sponsored by Faculty and Staff senates will be held Wednesday, Oct. 22, from 2 to 3:30 p.m. and on Thursday, Oct. 23, from 10:30 a.m. to noon. Both sessions will be held in the newly renovated Erdahl-Cloyd Theater at D.H. Hill Library.

Provost Larry Nielsen, Vice Chancellor for Finance and Business Charles Leffler, and Interim Vice Chancellor for Research and Graduate Studies Terri Lomax, will make presentations and answer questions. The forums also provide you with the opportunity to present your ideas for helping to develop a plan that meets the assigned budget reductions.

Many of you will remember that this is not the first time that North Carolina has experienced economic hardships that have impacted funding for the university system and other state agencies. As chancellor, I am committed to our role and responsibility as the People’s University and I expect us to continue to carry out our mission to the best of our ability on behalf of the people of the State. At NC State, we know that collaboration is an effective way to help solve a shared problem.

I appreciate your efforts and welcome your suggestions as we adjust our budget priorities.

James L. Oblinger