News & Messages

University leaders announce plan to address budget challenges

While Carolina’s financial challenges did not begin with COVID-19, the pandemic has hastened the need for a frank conversation on the University budget. We have a lot of work ahead of us, but together we will put ourselves in a stronger position for the future.

Dear Faculty and Staff 

We’ve spent the past 10 months meeting one on one with University leaders and speaking frankly about our budget challenges at Faculty Council and Employee Forum meetings. Some of you have been engaged in conversations about the state of our budget in your own units, as well. While Carolina’s financial problems did not begin with the coronavirus pandemic, it has exacerbated the need to address the budget.  

Carolina has operated in a highly decentralized financial environment that is inefficient and is simply out of date in today’s worldThe last time we operated with a balanced budget was nearly a decade ago. Wbelieve we can tackle our budget challenge in a reasonable and strategic manner while creating a more sustainable financial model for years to come. 

The imperative now is to find ways to reduce our spending to protect the financial health and viability of the University. Our campus leadership team is committed to meeting this challenge together. 

This week, we issued guidance to campus leaders, and we wanted to let you know where things stand and where we’re headed.  Implementing intentional and strategic budget reductions now will enable us to balance our budget in 18 monthsIn addition, we will have the ability to reinvest in school and unit initiatives that align with the goals of Carolina Next: Innovations for Public Good.   

As a reminder, the University faces three significant financial challenges: a roughly $100 million structural deficit in the University’s central funding sources (less than 3% of the University’s total budget), an estimated $200 million deficit in the current fiscal year directly due to the impact of the pandemic and around $850 million in deferred maintenance.  We have worked hard at managing the impact the pandemic has had on our current economic challenges. Ware also working with various stakeholders to address deferred maintenance. The structural deficit, however, is one that we must address together as a University community. While we realize these numbers look concerningwe are confident that the plans we are putting in place are manageable solutions. 

After months of budget analysis and deliberations with University leadership, we are moving forward with a plan to implement a 1.5% reduction in personnel funds and a 7.5% reduction to operating funds across schools and units for FY20-21, followed by another 1.5% reduction to personnel funds and a 7.5% reduction to operating funds in FY21-22. As we have said in public presentations these past months, we will be balancing these reductions in central funds with revenue-generating strategies to help the University maintain critical financial momentum. 

These budget plans will be developed and implemented over the next several months by deans at the school levels and vice chancellors at the unit levelsA Finance and Human Resources team will consult with schools and units on potential tools and strategies for meeting the scheduled reductions. That will put the University on stronger footing and allow us to continue facing down the still unknown pandemic impacts and tackle the deferred maintenance deficit 

We recognize that solving for budget shortfalls, especially during a year full of so much uncertainty and pain, can be unnervingWe are committed to ensuring that this process is as fair and equitable as possible—and to protecting our mission and our people. The actions we take now to balance the budget will allow us to reap the rewards of greater funding flexibility in the future.    

Implementing these reductions will not be easy. To help guide decisionmakers, we have outlined eight budget reduction principles: 

  1. Reductions should be consistent with the role and mission of Carolina and the University’s strategic planCarolina Next: Innovations for Public Good. Protect activities central to the mission. 
  2. Reduce budgets strategically, not across the board.  
  3. Streamline current processes and procedures to help reduce expenditures, eliminate redundancies and mitigate impacts on staff workload.   
  4. Ensure any non-recurring reductions used to meet FY20-21 targets are complemented with longer-term budget decisions that convert non-recurring reductions into recurring adjustments.  
  5. Decisions about cost reductions should always consider the impact on revenue generation. 
  6. Reductions that have the effect of shifting costs to other areas will not be permitted.  
  7. Consult broadly to determine the best reduction options. Units should communicate openly, honestly and frequently about their budget reduction process and their reduction decisions. 
  8. Balance personnel reductions across all layers of the University with a focus on reducing the number of senior administrators in our organization. 

We know that our community will have questions in the weeks and months to come. To help explain the complexities of the University’s finances, The Well is launching a series called Behind the Numbers, and we encourage you to read it to gain a better understanding of revenues, expenditures and other important topics 

Over the many decades, Carolina’s mission has been fueled by the vision of our faculty, staff and students. We have a lot of work ahead of us, but we remain confident that, together, we will overcome these challenges, balance our budget and put ourselves in a stronger position to deliver on the hopes and dreams we share for a better world. Thank you for your patience, continued support and commitment to Carolina. 


Kevin M. Guskiewicz 

Robert A. Blouin 
Executive Vice Chancellor and Provost 

Nate Knuffman
Interim Vice Chancellor for Finance and Operations