March 23, 2010
1. Call to Order
Chair Margery Overton called the meeting to order at 3 p.m.
2. Approval of the Minutes of the October 20, 2009 General Faculty Meeting
A motion passed unanimously to approve the minutes .
3. Remarks from Chancellor Woodward
Chancellor Woodward thanked everyone for their work at this institution, especially the students we serve. He went on to say that he couldn’t imagine a more pleasant event for him to say goodbye as one that recognizes the good work of the faculty.
Chancellor Woodward reported on three priorities for the upcoming legislative session.
Legislative Priorities for the University of North Carolina
To get adopted a tuition increase plan approved by the Board of Governors in its last meeting.
Chancellor Woodward stated that the budget approved for 2010-2011 included an increase, and the way that the increased funding would be dealt with would be that they would go into the general funds for the state rather than come directly to the campuses that generated those tuition increases.
The Board of Governors has asked that they be considered campus initiated increases so the funds would come directly to the campuses.
Need Based Financial Aid
Chancellor Woodward stated that it is astounding that within the University of North Carolina, 71% of our students applied for financial aid, which is up from 66% about a year or 2 years ago. He said one of the priorities of the Board of Governors is to continue encouraging funding that will permit us to help our needy students. Minimize the additional budget cuts that we might have to incur.
Chancellor Woodward stated that going into this year the approved budget was essentially cut five percent and it was a 5% holdback from what had been appropriated. To date, the projected revenues have not been met and we are about 3% short.
Chancellor Woodward stated that he is hopeful that we will go into next year without the academic units being subjected to a further cut. We have the 5% holdback that could be taken from the base budget last year and there would not be further cuts back into the campus. We have contributed substantially to helping the state weather the financial difficulties this year; so at least going into the budget discussions next year, we are going in from really having done our share and also with a good argument that we are critical to the state.
Chancellor Woodward stated that we are fortunate to be in the state of North Carolina. He thinks it has been well managed by the leadership of the state leaders.
Chancellor Woodward concluded by thanking everyone for their friendship and support this year. “It has been an honor to work with you at this fine institution and again, I am delighted to be participating in an event that recognizes the outstanding faculty of North Carolina State.”
4. Budget Update
Comments from Charles Perusse, State Budget Director, State of North Carolina
Mr. Perusse reported that he met with Governor Purdue and her senior staff this morning and he thinks that from a budget perspective we are beginning to see some improvement.
Mr. Perusse reviewed what he has seen on the budget front over the last year and talked briefly about the current year.
Mr. Perusse stated that to put things in perspective, to say that 2008-09 recession was the worst recession that we have ever seen does not really do it justice. Since the great depression we have only had one year where year over year revenue collections actually declined from the prior year and that was in 2000-01 where our state revenue declined about two percent. This past year it declined year to year 11% on the base, and if you look at what happened, budget versus target we were actually down more than fifteen percent.
Mr. Perusse stated that each of the past recessions has their own personality. In the last recession we went from + to -140 to -702 to -1.5 budget versus target but you saw over a period of years that things were deteriorating. When you look at what happened in this past cycle we went from a 1.3 billion dollar surplus to basically being flat in 07-08 and then in 08-09 we just fell off the cliff. So from a personality standpoint of this it really is unlike anything we have ever seen. Obviously the 250,000 people that have lost their jobs over the last year can explain that better than any of us. We have never seen anything like this since the great depression and the numbers bare out that reality.
Mr. Perusse stated last year during the 3.2 billion dollar shortfall we did not leave any stone unturned. We reverted a lot of money from the agencies and universities, but if there were any reserve funds that had money in them, we transferred them to the general funds in order to have a balanced budget.
The shortfall that we dealt with in this present legislation totaled about 4.6 billion dollars in the current fiscal year and if you look at how we closed that 4.6 billion dollar shortfall you look at three areas:
Reductions—about 2.1 billion of the 4.6 was covered out of cuts.
- The federal government gave us about 30 percent
- We raised taxes about twenty percent
After having a 3.2 billion dollar shortfall obviously we adopted a very conservative revenue forecast in the budget for this year and for next fiscal year. We essentially budgeted negative growth in all the major tax categories for the current fiscal year. When you lump it all together it was about a 1.6% decline in basic tax revenue. To put that into perspective our thirty year trend growth rate in tax collection was 6.2% positive, so we took the thirty year trend growth rate and we budgeted negative growth for the first time ever and in the second year we only budgeted 2.8% growth so less than half of what our current growth rate has been over the last thirty years.
Mr. Perusse said in the current year we are about $45M behind our budgeted target through February but that is a little misleading. The Department of Revenue has a cooperate settlement initiative going on; we had budgeted $150M for that initiative this year and we collected $422M so we actually over-collected in that one area by $272M; if it wasn’t for that $272M of one time money on a recurring base economic forecast we are really about $320M behind our budgeted forecast through February. So you can see that even though we were really conservative, we were not conservative enough on what we were going to see in revenue collection. Our two largest revenue sources remain weak: withholding and sales tax continue to be behind schedule. We budgeted essentially flat growth and withholding for the year, we were down negative 3.5% this first six months, but January and February have started to get better. We were about on budget for those two months and we think March is going to be the same way.
Sales tax is an area where we have seen the least improvement. On a base control for the tax increase we anticipated about a 5% decline in sales tax revenue year over year and we have seen a 10% decline through February. February was a little better and March looks a little better so far but the sales tax area is really the area that we have been hit the hardest in this recession.
The second half of the fiscal year is our biggest risk. April is the biggest month of tax collections, we are hoping for the best. We do not anticipate seeing a large shift in April because we budgeted such a low forecast.
Mr. Perusse stated for planning purposes we have been assuming in our office a seven to nine hundred million dollar decline in base revenues for next year, but before we do anything good and noble we are going to have to find $900M in cuts just to get to zero next year. We are at the bone and muscle now. The one good thing is from the 30,000 foot level as we believe we have stabilized and aren’t going to deteriorate any worse. We know we have a challenge with this campus, and the university system as a whole has been a leader in helping us get through this tough time. It has been a pleasure to work with the Chancellor and with Vice Chancellor Leffler and his office. I would be remiss if I didn’t say how fortunate you are to have Charlie Leffler and the great staff that you have in the business campus. We work with all sixteen campuses and NC State has some of the best and brightest working with you.
5. Interim Provost Arden
Provost Arden talked about where we begin the year at NC State and close out of this year.
Provost Arden stated that we have a base budget of about $650M, which is really about $530M of actual appropriation and the balance is tuition and fee money. We took about $53M out and we are able to identify about $10M to put back in the budget as we went through the budget process and that came from a number of different sources. It came from unfunded parts of the continuation budget increase. Each year the base budget is increased slightly for inflationary reasons and once again the budget for this year was slightly larger than the budget for the previous year, but the difference is unfunded and so when we elected not to do some of those unfunded increases, those in fact, were essentially dollars that we did put back into the budget. We also did an administrative services fee which raised a reasonable amount of the money, about $1.6M, that we were able to put back into the budget. We had a little additional benefits money and we had a little additional utilities money. We had additional budget allocations which came to about $33M. Those additional budget allocations were our enrollment increase money for this year which was $11M. It also included the budget expansion for the College of Engineering, also included Kannapolis and some other minor increases as well, so we ended up with a base budget in the current year of $640M and that includes tuition and fees.
Provost Arden stated that it is not possible to loose that much money from your academic affairs budget and not have a significant impact. We lost 117 faculty positions with the majority being vacant positions so you may not feel that immediately, but as we all know those vacant faculty positions are the life light of growth at the university to allow us to bring new faculty into the university and many colleges use those vacancies for other hires and other expenditures.
Provost Arden reported that we lost 323 staff positions and we lost 300 class sections, almost 10,000 seats, and it is definitely impacting our student body; larger classes and teaching loads, less frequent building maintenance, and new construction and major repair renovation, so those have been the impact as we go into this year.
Comments from Charlie Leffler
Vice Chancellor Leffler stated that we will have to see what the legislature does on the budget that the governor proposes. In terms of what happens on a permanent basis, we are not anticipating additional reversions on this fiscal year, and we are expecting the ability to carry over money in the next year.
Vice Chancellor Leffler stated that looking ahead to next year, which is what we are focusing on at this point, we do know that there is going to be some kind of additional reduction. We have submitted to General Administration and in turn to the budget office, a 5% reduction plan for next year and how we actually apply that and whether it is truly 5% we have to wait and see what the legislature does. We do know that if the budget for the second year biennium stays where it is we are going to have an additional flexibility cut.
Vice Chancellor Leffler stated that we are not expecting legislature pay increases based on the information that we are getting. We know that there is going to be impact of other issues on our employees and we are not going to be allowed to make expansion requests other than the ones that we have.
6. Faculty Teaching Awards
Provost Arden recognized the 2009-2010 recipients of the outstanding teaching awards that will join other colleagues as members of the Academy of Outstanding Teachers.
Provost Arden recognized Dr. Robert Beichner as the winner of the 2010 Board of Governors’ Award for Excellence in Teaching.
Chair Overton commented on the ongoing Faculty Senate elections.
Chair Overton announced that the Faculty Senate passed a resolution to thank Chancellor Woodward for everything that he has done for the university this year.
A reception to honor Chancellor Woodward was held immediately following the meeting.
The meeting adjourned at 4 p.m.