Skip to main content

Featured Story

Chancellor on the Budget

To the NC State community:

Our governor and state legislators are beginning the task of responding to the state’s drastic budget shortfall of almost $4 billion. It’s not an overstatement to say this is the most difficult budget challenge the state and the university have faced since the Great Depression.

The state’s universities have been asked to prepare for budget cuts of as much as 15 percent. For NC State, that translates to almost 80 million dollars. Taking a one-time, 15 percent reduction is not an easy or painless task. But there’s an even more pressing reality: every signal indicates that this is not a one-time reduction but a long-term readjustment to our state funding.

Watch the Video Message

While much is still unknown about the state budget, we cannot wait for the final outcome of legislative budget discussions to take action. As part of our ongoing strategic plan discussion, the Resource Strategies Task Force has already recommended a broad review of our budget and business operations. I agree with this recommendation.

What we are facing necessitates fundamental changes in the way we operate the university. We must be smart, creative and think broadly and long-term about the best interests of our institution. In short, everything is on the table.

Over the next few weeks, we will carry out the work of responding to this budget crisis. Our response should be to take every effort to restructure our organization with the assumption of a shrinking state budget going forward.

As we examine our options, we will abide by five principles:

  1. Protect to the extent possible instruction and student support.
  2. Maintain and enhance the strength of our faculty.
  3. Build on our reputation as a leading research university by enhancing the capacity of our faculty and staff to discover new knowledge and transfer this knowledge to the marketplace for the benefit of all North Carolinians.
  4. Ensure well-maintained facilities and campus that support a safe and exceptional learning environment for our students.
  5. Ensure our continued position as one of the nation’s best values, combining quality and affordability to deliver a very strong return on investment for our students.

In keeping with these principles, I am asking Provost Warwick Arden and Vice Chancellor Charles Leffler to take the following actions:

> Consolidate decentralized business services into service centers distributed throughout the university campus, but reporting centrally.

These service centers should provide exceptional service to faculty and staff in human resources, purchasing, travel, pre-award and post-award grants and contracts administration and communications as well as other administrative support functions. This consolidation will  be organized to eliminate redundancy and reduce bureaucracy.

> Consolidate select academic units in an effort to reduce administrative cost and improve synergy in the delivery of academic programs and research opportunities.

Similarly, I will review our central administrative units for opportunities to consolidate.

> Review all low-enrolled courses and academic degree programs and under-subscribed majors and minors for possible elimination.

We cannot and should not be all things to all people, given the capacity of other universities in the UNC System. We also will need to bear in mind that on Friday, UNC President Tom Ross initiated a study aimed at streamlining the university’s academics by looking for “unnecessary duplication.” In this effort, we will consider our unique mission within the system and ensure our continued capacity to deliver on this mission for our students and stakeholders.

> Review the delivery of student support programs distributed across various units of the university in an effort to ensure we are providing the best service possible to promote the academic success of our students.

> Reduce organizational bureaucracy by reviewing university policies, rules and regulations.

There is no doubt that we will lose positions with such a deep reduction in our budget. Our top three business operations expenditures are labor-related. It is not clear yet how many jobs we will lose or what areas the positions will come from. But let me quickly add that new efficiencies gained through restructuring will have the net effect of negating some of our job losses and is our best opportunity to minimize the impact on our employees.

I have asked that this plan be delivered for my approval by March 15. We will then develop more formal timelines for implementation with a July 1 launch date.

Concurrent with our budget planning, we will soon complete a strategic plan that will reaffirm NC State’s commitment to be a world-class, research extensive, comprehensive university. The goal is to have our plan to the Board of Trustees for approval at the April meeting. We have scheduled a Chancellor’s Forum on Jan. 27 in the Talley Student Center to discuss the strategic plan.

While the budget deficit and reductions present challenges, our budget conversations and new strategic plan should be forward thinking with a goal of a university that emerges as a stronger, more flexible and dynamic institution.

Through regular messages to campus and the Budget News site, I will keep you apprised of the progress of these conversations. Difficult decisions are ahead of us; there are no easy answers. I appreciate your patience, understanding and hard work as we navigate extraordinary economic times.

To the NC State community:

Our governor and state legislators are beginning the task of responding to the state’s drastic budget shortfall of almost four billion dollars. It’s not an overstatement to say this is the most difficult budget challenge the state and the university have faced since the great depression.

The state’s universities have been asked to prepare for budget cuts of as much as 15 percent. For NC State, that translates to almost 80 million dollars. Taking a one-time, 15 percent reduction is not an easy or painless task. But there’s an even more pressing reality: every signal indicates that this is not a one-time reduction but a long-term readjustment to our state funding.

While much is still unknown about the state budget, we cannot wait for the final outcome of legislative budget discussions to take action. As part of our ongoing strategic plan discussion, the Resource Strategies Task Force has already recommended a broad review of our budget and business operations. I agree with this recommendation.

What we are facing necessitates fundamental changes in the way we operate the university. We must be smart, creative and think broadly and long-term about the best interests of our institution. In short, everything is on the table.

Over the next few weeks, we will carry out the work of responding to this budget crisis. Our response should be to take every effort to restructure our organization with the assumption of a shrinking state budget going forward.

As we examine our options, we will abide by five principles:

1) Protect to the extent possible instruction and student support.

2) Maintain and enhance the strength of our faculty.

3) Build on our reputation as a leading research university by enhancing the capacity of our faculty and staff to discover new knowledge and transfer this knowledge to the marketplace for the benefit of all North Carolinians.

4) Ensure well-maintained facilities and campus that support a safe and exceptional learning environment for our students.

5) Ensure our continued position as one of the nation’s best values, combining quality and affordability to deliver a very strong return on investment for our students.

In keeping with these principles, I am asking Provost Warwick Arden and Vice Chancellor Charles Leffler to take the following actions:

1) Consolidate decentralized business services into service centers distributed throughout the university campus, but reporting centrally.

· These service centers should provide exceptional service to faculty and staff in human resources, purchasing, travel, pre-award and post-award grants and contracts administration and communications as well as other administrative support functions.

· This consolidation will be organized to eliminate redundancy and reduce bureaucracy.

2) Consolidate select academic units in an effort to reduce administrative cost and improve synergy in the delivery of academic programs and research opportunities. Similarly, I will review our central administrative units for opportunities to consolidate.

3) Review all low-enrolled courses and academic degree programs and under- subscribed majors and minors for possible elimination. We cannot and should not be all things to all people, given the capacity of other universities in the UNC System. We also will need to bear in mind that on Friday, UNC President Tom Ross initiated a study aimed at streamlining the university’s academics by looking for “unnecessary duplication.” In this effort, we will consider our unique mission within the system and ensure our continued capacity to deliver on this mission for our students and stakeholders.

4) Review the delivery of student support programs distributed across various units of the university in an effort to ensure we are providing the best service possible to promote the academic success of our students.

5) Reduce organizational bureaucracy by reviewing university policies, rules and regulations.

There is no doubt that we will lose positions with such a deep reduction in our budget. Our top three business operations expenditures are labor-related. It is not clear yet how many jobs we will lose or what areas the positions will come from. But let me quickly add that new efficiencies gained through restructuring will have the net effect of negating some of our job losses and is our best opportunity to minimize the impact on our employees.

I have asked that this plan be delivered for my approval by March 15. We will then develop more formal timelines for implementation with a July 1 launch date.

Concurrent with our budget planning, we will soon complete a strategic plan that will reaffirm NC State’s commitment to be a world-class, research intensive, comprehensive university. The goal is to have our plan to the Board of Trustees for approval in their April meeting. We have scheduled a Chancellor’s Forum on Jan. 27 in Talley Student Center for the purposes of discussing the strategic plan.

While the budget deficit and reductions present challenges, our budget conversations and new strategic plan should be forward-thinking with a goal of a university that emerges as a stronger, more flexible and dynamic institution.

Through regular messages to campus and the Budget News site, I will keep you apprised on the progress of these conversations. Difficult decisions are ahead of us; there are no easy answers. I appreciate your patience, understanding and hard work as we navigate extraordinary economic times.

###

Responses (9 Comments)

  • Eric Hinesley

    Also, please ask faculty for suggestions.

  • Jason Treadwell

    Why are we spending $150 million dollars on a new student center while facing an $80 million dollar budget shortfall?

    Human capital is what makes this university great, not shiny new buildings.

  • David Muddiman

    The University needs to also take a strong look at the following:

    1) there is far to much middle management. Administrators are the most commonality to encounter in the University environment rather that faculty, so it seems. We need to remove these faculty, who maybe once taught or did research and now, using a leadership by authority approach, make faculty even more inefficient and frustrated and drain university resources.

    2) we need to remove such pilot project grants, travel award programs for post-docs, etc. We spend so much University infrastructure and faculty time in carrying out these functions that far far outweighs the amount of funds that are distributed. Again, programs that use administrators to manage but the funds actually have little impact. Research is expensive and is getting more expensive. Less programs and more money in each program seems to be a better solution.

    3) we have a lot of dead wood in our faculty. Maybe not a huge amount but consider the following. A faculty member who ran a research group for 20 years with external funding. Outstanding indeed! However, they have now been off the funding track for 5 years, no real chance of getting long-term financial support and thus, have been teaching one class per semester for 5 years. This faculty member makes $140k per year (9 month). Thus, per class per year, the University is spending $70k per class! We can no longer afford this. We need to clean house and set clear precedents. When your research program diminishes, a faculty member must return to the classroom in a major way. This is not unprofessional to ask of anyone. These faculty should return to the classroom and teach 2-3 classes per semester and teach effectively or be removed. We choose to turn the other way and in the end, this is also costing us a lot. At NC State, if we have 5% of faculty that fall into this category, that is $5M a year right there if we assume an average salary of $100k plus fringe.

    4) Facilities has major issues. There is a lot of real estate at NC State and that is understood with old building. However, we need more accountability about what they actually do for the money they have. If they can not handle HVAC, plumbing and other issues, lets outsource this to a reputable company and it will cost less and be more effective. If not, we can “fire” these people and hire a different company.

    5) Remove the college-centric nature of NC State. What a political and financial beast. It has grown in as many “universities” as we have colleges. We all act and think independently – as colleges. Thinking about protecting our interests first and when nothing to lose, think about our next favorite college. The future of education and research is CLEARLY for anyone that has been breathing in the past decade is interdisciplinary education and research. Bring down these walls Chancellor. This needs to end OR it will be the end of NC State as a leading institution.

    In short, NC State can be superior if we start realizing, for the first time in its history, that we are a business and we need to start running it like one. Retaining dead wood, bulking up middle management, and in general just being passive is not good for our future. A University is a business and that has to be understood. Let’s take these major budget cuts and stop the rhetoric and make some clear cut changes to the University. It is not the size of the University that makes us strong – it is business sense that can lead us to understand what hard decisions we need to make.

    Finally, the new Chancellor is a breathe of fresh air. Let’s stand behind him and support him in instilling a new way of thinking at NC State so that we may provide the quality education and scholarship to our students that we all want. I am hopeful that these tough times will bring us back to the grass roots that we need to get back to.

    Thank you!

  • michael dykstra

    Most of what Dr. Muddiman says rings of truth, but I have a problem with his support of the concept that the University is a business. On the contrary, it is an Academic institution that should be run on business principles. We cannot lose sight of education by pretending we are just like businesses such as pharmaceutical companies, car manufacturers, etc. Besides, if the business model for academia, as proposed by Mary Ann Fox in the past, was what we need, then a great deal more effort must be expended by the administration in terms of marketing our product. If we did that more effectively, the public and the legislature would clearly understand our value to North Carolina society and would be beating a path to our doors offering support.
    Businesses produce a defined product (a widget). We cultivate thinking and impart knowledge. Thus, running our University on business principles for management without losing sight of the fact that we are not, strictly speaking, a business is vital to our success in our mission of education.

  • David Muddiman

    I appreciate very much what Dr. Dykstra has commented and I fully agree. I also apologize for my spelling and grammatical errors :-)

    To expand on my point above: First, there are certain aspects of the a University that must be run like business because that is what they are (e.g., facilities). There is a defined need (broken sink) and a defined output (repaired sink). We just need to look at how much cost, including depreciation of assets (such as University trucks), personnel, etc. we are paying to keep the University functioning. This is the “easy” part of the business to understand.

    Second, I fully agree, our product (e.g., students and knowledge) is hard if not impossible to quantify – even over long time periods. I was commenting on certain aspects of this side of the business. We cannot deny that we faculty and staff and administrators that simply do not significantly contribute to the University. Moreover, the college-centric nature of the University makes it expensive. I am just asking that we consider not running a bunch of small businesses (i.e., colleges) with their own infrastructure that is sometimes specific but oftentimes duplication. Moreover, can we devise a plan to come up with new models for financial flow through the University. It has to be modeled and discussed and for certain, cannot detract from the creative and educational principles of NC State at any cost.

  • Bernard Eckhardt

    Any job title with a Vice, Assistant, Associate that does not have a direct impact on students should be examined. Each holder of this job title needs to supply a report on his/her impact. They then need to explain how the university would be affected if they were not here for a day, a week, a month, and a year. I believe that some of the answers that would be received would not stand up to scrutiny.

    I support students, staff, and faculty every day so I know that if I were away the department I work in would be directly impacted.

    I also know that everyone can be replaced. Please make sure that those making 6 figures and not directly impacting students remember this.

  • Edgar Levy

    I applaud the Chancellor’s plan to control the cost side of the equation. Considering that many of the University’s facilities online are already old and past their intended life expectancies, keeping these buildings working is often a daunting and expensive task that goes well beyond simple maintenance and upfit. The lack of adequate funding to replace or properly renovate some of these facilities will continue to make for expensive facilities for some time to come.

    One reason the budget crisis promises to be a problem for public universities more than for private institutions is the percentage that private donations typically factor in to the funding side of the equation. It is clear that the State of North Carolina and other states will not be able to fund our universities or other state programs at the rate required to keep pace with growing demands for some time. UNC and other state university systems have the opportunity to consider a shift in the mix of how much it targets alternate funding sources, such as alumni and other private groups, to support its university systems, now and in the future.

  • Billy Beaudoin

    Under the “Consolidate decentralized business services” heading, I find Information Technology to conspicuous in its absence from the list. It seems quite odd that the removal of academic programs and degrees is being considered before consolidating IT.

  • Mike Anderson

    Here is what they will do. A lot of redundant staff ( Vice, Assistant, Associate, faculty, directors, supervisors of supervisors, etc) who will be involved in deciding where the cuts come from will do everything possible to keep their jobs. Most of the cuts will come from the faculty and staff who actually make the university run day in and day out. I think anyone with any common sense could easily make cuts in the budget. The problem is most of the people making decision lack the common sense needed. It will not be what is best for the school and students. It will be whats best for their individual job!!!!!

Leave a Reply

Your email address will not be published. All fields except website are required.