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UNC System approves performance-based metrics to fund universities

The UNC System Board of Governors has approved the final details of what they call a

performance-based funding model for its universities.

The formula will determine how much state funding the UNC System requests from the General Assembly for each of its universities, based in part on the institutions’ ability to meet certain goals. UNC System officials say the new model will incentivize universities to graduate more in-state students on time with less debt.

UNC Board of Governors meeting materials
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Under the prior funding model, the primary way a university could achieve more state funding was to enroll more students. Now college enrollment is trending downward at universities across the country and the UNC system, at some more than others.

Every UNC System university will benefit from the performance-weighted factor this year, but that may only buffer the funding losses some universities will face due to falling enrollment.

The board’s budget and finance committee voted yesterday to cap the amount of funding UNC Asheville, UNC Greensboro and UNC Pembroke would lose due to enrollment declines of in-state students.

UNC Greensboro stood to lose the most due to changes in enrollment. The policy approved by the board will cap its losses, saving the university about $3 million. That will be further alleviated by the university’s positive performance metrics under the new model.

UNC Greensboro Chancellor Franklin Gilliam told the board’s budget and finance committee he was concerned how universities would handle swift budget reductions.

A preliminary analysis by UNC System officials estimated that the 16 universities would lose a net total of $20.8 million in funding due to enrollment losses, before applying the cap under consideration.

“I don't know how we would absorb [that] reduction in our budget, and I don't know how we do it in a year or two years, quite frankly,” Gilliam said.

Gilliam said UNC Greensboro has recently reduced its workforce by 5% and moved professional track faculty to 1-year contracts. He urged for more time to help universities transition, and the committee responded by passing a 4.5% cap on funding losses due to enrollment. That metric is only one factor in the overall funding model.

UNC Pembroke's Chancellor Robin Cummings told the committee he supports the new funding model, but noted that it comes amid a changing landscape in higher education.

“This is change that's coming at a time of great instability, inflation, demographic changes, all the change that is upon us, that's impacting how we do our job every day, and now this is additional change,” Cummings said.

Ultimately, some public universities expect to face tighter budgets in the coming years. The UNC System will use the new model to make its funding request to the General Assembly during its session that begins in January.

Copyright 2022 North Carolina Public Radio. To see more, visit North Carolina Public Radio.

Liz Schlemmer is WUNC's Education Policy Reporter, a fellowship position supported by the A.J. Fletcher Foundation. She has an M.A. from the UNC Chapel Hill School of Media & Journalism and a B.A. in history and anthropology from Indiana University.