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February 22, 2011

Present:  Chair Overton, Chair-elect Kellner, Secretary Hergeth, Parliamentarian Weiner, Provost Arden:  Senators Auerbach, Bernhard, Bourham, Edmisten, Funkhouser, Hammerberg, Havner, Khosla, Kidd, Kiwanuka-Tondo, Krim, Kotek, Levy, Mitchell, Moore, Paur, Robinson, Rucker, Sawyers, Sztajn, Tonelli, Tu, Williams

Excused:  Senators Aspnes, Carver, Headen, Townsend

Absent:  Senators Argyropoulos, Croom, Hatcher, Miller-Cochran, Washington

Guests:  P. J. Teal, Secretary of the University; Kevin Howell, Assistant to the Chancellor, External Affairs; Steven Keto, Assistant Vice Chancellor, Finance & Resource Management; Randy Woodson, Chancellor; Ethan Harrelson, Student Government; Charles Leffler, Vice Chancellor for Finance and Business

1. Call to Order
Chair Overton called the 10th meeting of the fifty seventh session to order at 3 p.m.

2. Welcome and Announcement
Chair Overton welcomed Senators and Guests.

The spring General Faculty meeting will be March 15th; the Secretary of the Faculty will be elected the last meeting in March.

Candidates will be screened to serve on the Executive Committee at the April 19 meeting. 

The university is setting up a University Values and Ethics Administrative Advisory Council.  Please contact Chair Overton if you are interested in serving on this council.

3. Approval of the Minutes, Meeting No. 9, February 8, 2011
The minutes were approved as submitted.

4. Comments –Chancellor Woodson
Chancellor Woodson announced according to the annual survey from the Princeton Review, North Carolina is the only state in the country with 3 universities in the top 10 of best buys for both public and private education.  They are UNC CH – 8, NC State University – 9, and Duke at number 2 on the private, so we are the only state in the country with three and one of only three states with two public universities in the top ten of best buys.  The other two are Florida and New York. 

Chancellor Woodson stated that we are fighting hard right now to continue state support to maintain the value that North Carolina has come to rely on and their students have benefitted from.

Chancellor Woodson announced that the Draft Strategic Plan will soon be posted for public comments.  Some of the goals the plan will set for NC State are:

To create a dynamic and flexible academic environment;

Chancellor Woodson stated that we will focus undergraduate education on quality and excellence, not on quantity.  We will also work to reorganize graduate education to the extent possible into broader and more flexible fields of study, recognizing that there are many fields of study that are narrow by definition.  We will also focus hiring on faculty and particularly those faculty most heavily engaged in comprehensive scholarship.  We will define and redefine NC State’s areas of research emphasis, and we will embed global understanding and relevance in all research and engagement activities.  We seek to create a campus environment that is an extraordinary place to live, and we are going to consider alternative academic and administrative structure.  We are going to alleviate internal bureaucracy.  We are going to expand extramural partnerships.  We want to diversify our research portfolio.


Senator Paur - What was our prior ranking in the Princeton Review

Chancellor Woodson responded that we were 13th last year.  We have always been high, but breaking into the top ten means we will be seen around the country. 

Senator Hammerberg - Do you see a role for nurturing graduate programs that don’t have a home.  Is there a way for the administration to foster these programs ?

Chancellor Woodson responded, at the end of the day these kinds of programs are all driven by faculty expertise, and so I think one of the things that we can do centrally is to support cross departmental and cross college faculty hiring that elevates those kind of interdisciplinary programs.  So one of the things that we will be looking at is how we can, in addition to the departmental hiring process, put out there a few faculty positions that are specifically targeted toward enhancing our interdisciplinary graduate education.

5. Comments—Charles Leffler/ Provost Arden
Vice Chancellor Leffler and Provost Arden presented a PowerPoint to update the Faculty Senate on the budget.

Vice Chancellor Leffler discussed the budget realities that are happening right now and what they’ve been asked to do this year and what they are looking to do this year.  We are looking ahead in the  budget process that we are involved with the legislature from the biennium and where the state is going to stand in terms of actions and what the governor’s budget might mean to NC State if it passes and how that ties into other activities these days.

Vice Chancellor Leffler reported that all of our forms of revenue are estimated to have a 1.2 billion dollar budget this year at NC State.  The biggest piece of that is the appropriations piece.  Revenues between tuition and state appropriations have already begun as we enacted that tuition increase last year.

The State Appropriations come to us in three buckets: 

Academic Affairs—general operation around campus, which is everything from the classroom work to paying the utility bill.  The Ag Extension bucket flows mostly through the College of Ag and Life Sciences for those particular programs. 

Our federal appropriations comes through a variety of sources, mostly CALS kind of activities we are going to see in that, which is 2% of our budget or about $23M. 

The grants and contracts include the federal grants and contracts that you would expect to be in this category.  Our state grants, private industry grants that many of you worked to get, this does include the federal student aid.  Facilities and Administrative Receipts –those grants that generate F&A particularly the federal ones which is about $35M and that is allocated out to the campus.

One of the standard features that we make is that F&A that we receive, $35M, is for the extra services that are necessary.  It is the cost of providing common services to the university.

Sales and Services - $186M - is an item that people are not familiar with on the campus.  We have a lot of businesses so when you look at the list of things that make up the $186M; they are the auxiliaries that you would expect to see, things that are basically self supporting throughout the campus.

Gifts and other Sources are the gifts we get annually from the programs, the money that comes off of the endowment and foundations.  The money that comes in from the Wolfpack Club goes to students’ scholarship support.  Our other foundations that are not in NCSU could be anything from the Textiles Foundation to all the others.  Just to give you a perspective on that money that comes in from endowments and foundations spending accounts,  our endowment is about one half of a billion dollars, which is not large, but when you talk about endowment for supporting purposes you talk about everything that supports the university. 

In terms of how we spend the money, the biggest slice goes to Instruction, followed by organized research, public service, academic/student support, etc.

We have a fairly typical array of the expenses for this university as you would see in most universities.  Now when you look at the college slice you really get a feel for how diverse our colleges are. They are not one size fits all.  The structures are different internally and the decision making are often different and the reporting is sometimes different and those are all the things we have to keep in mind. 

When you think about expense, where we actually spend that money, categorically the biggest slice is spent on salaries and benefits.  

Budget Realities
Provost Arden reviewed the impact of the 2009-2010 State appropriations reductions.

Provost Arden reported that in the current budget year we are not really in bad shape because some of the legislative actions that took place during the last budget to the current budget year.  We had a management flexibility reduction of almost $20M and on top of that we had a 1% appropriated reversion of $5M in the current year.  The Legislature authorized a tuition increase of $25.2M and this included the campus initiated tuition increase where we had suggested in the fall along with that additional $750 authorized at the end of the budget year.  Not all of that is available because we do have to put some of that toward need based financial aid, but it did provide enough funds to offset the majority of the flexibility reductions in the current year.  So our actual base budget in the current year is slightly above what it was in the prior year.

Provost Arden pointed out that the University Budget Advisory Committee has a very important role.  The committee is not so much charged with making specific budget recommendations in a given year.  This committee is charged with making sure that we have overarching priorities that we try to follow when we are vetting our budget from year to year. 

Because we did a 10% reduction going back 18 months and we had to give up one half of that permanently, but we still had some to carry forward and because of the enrollment increase funds we had a pool of money that was available to us on an ongoing basis and we didn’t want to allocate most of that out on a recurring basis knowing that we had a bad budget coming u.  We were going to have to use some of those funds to offset budget reductions in the coming budget, so we did want to reinvest into the university as much as we could and our priorities for reinvesting into the university were to increase seats and sections in high demand areas; rebuilding capacity and hiring faculty; protecting library access and resources, student advising, counseling, career planning; and providing infrastructure to enable the above.

Provost Arden emphasized that disproportionately we invested into the academic side of the house, it was really important to start to rebuild capacity especially lost capacity in the academic side of the house and secondly, that the majority of these investments were done one time and not on a continuing basis. 

The other adjustments that were made in the current budget year by the Office of State Budget Management and UNC /GA was at the beginning of the year there were:

•1% required reversion at beginning of year ($4.9 Million)

•Additional 2.5% reversion ($12.2 Million)

•Limit hiring to critical vacant positions

•Develop strategies for recurring 15% reduction

Provost Arden stated that we have been asked by GA to prepare 5, 10, and 15% budget reduction scenarios.  He explained if you are breaking out –Academic Affairs/Agricultural Research/Cooperative Extension you have about $422M in the academic affairs budget codes, $59M in the Agricultural and $44M in Cooperative Extension.

Provost Arden pointed out that as you go into sequential years of reduction the impact of the core activities of the university is felt disproportionately more, so the way we are planning on handling the budget reduction is we are going to have to do a fifteen percent reduction in the current year and we will hope that it’s not a fifteen percent reduction.  We have the ability because of potential funds that we have been able to carry forward over the last couple of years to offset our reduction to the tune of somewhere around 27 or 28 million dollars that we would take off the top before we would have to pass it on to the units, so the balance to be allocated would be not $78M, but $51M across the three budget codes, so $38.6M for academic affairs, $7.6M for Ag Research, and about $5.5M to cooperative extension.  

Provost Arden stated that they wanted to protect Library, Utilities, and Advancement so they were asked to plan on 6%, the academic units have been asked to plan on 9% and all other units 11.25%.

Provost Arden explained that when you do a 15% reduction it is 15% of the appropriation, it is not 15% of the total requirement, so when that reduction hits the academic affairs budget at the college or departmental level it is somewhat less because tuition funds a part of that budget.  So a15% reduction to the appropriation would amount to somewhere around 12 or 13% reduction to the academic affairs budget.  When we take into account the additional 26 or 27M that we have been able to take off of the top this brings it down into the 9% range. 

Provost Arden briefly discussed the different types of budget requests—continuation budget; expansion budget; capital improvement budget; tuition.

Provost Arden stated that the continuation budget request basically goes from one year to another, i.e., benefits increases, maintenance and operation of new facilities general inflationary increases and enrollment growth request.

Provost Arden stated that there is a proposal under review to introduce a new model on enrollment growth funding which is a performance based model.  This essentially says we are no longer going to fund based on the number of headcounts that we enroll, but we are going to hold you accountable to levels of performance as judged by retention graduation rates, degrees award and efficiency.   This could play out in two ways 1) whether or not we give you permission to grow your enrollment in any given category undergraduate, graduate, and otherwise and 2) if you do particularly well in meeting your target, we may give you what they call cost factors or those enhancements to your funding formulas to reward you for meeting your target.   This has not yet been passed by the BOG, it is under review. 

Resource Strategies
Provost Arden stated that the specific recommendations from the task force were to look at new resource allocation and methodology.   There are a couple of big issues facing us in terms of resource allocations.  I’m thinking how much distance education generates versus on campus instructions.  At the moment those coming in to the enrollment funding formula to new resources, but then they are handled in very different ways once they come in, so I think we need to look at coordinating those two pools of money and making sure that we basically handle them in very much the same way.

The other thing is to achieve a balance between demands of the resource allocations versus strategies of resource allocations.  So getting that balance between demand driven and strategy driven resource allocations is going to be very important.

Planning Process
We have three major processes that are closely related.  One is the budget process that we have been talking about a lot today.  The other is the strategic planning process and the last is the organization process the Chancellor has asked us to look at and make a report on by March 15.  The Chancellor specifically asked us to look at the way we organize our business services across the university, whether or not there will be value to consolidating or reorganizing academic and administrative units, whether or not we should eliminate or consolidate low enrolled programs including courses. 

We are going to have to ask ourselves some really hard questions about how we are organized and how we are putting out resources to our core mission as effectively as we can be.

The PowerPoint presentation is available on the Faculty Senate website at:



Senator Paola stated that she wonders where should faculty be spending their time as faculty?

Provost Arden stated that you have to ask yourself, what makes a great academic institution and what makes a great academic institution is having outstanding faculty who are heavily engaged in scholarship and who are directly engaged in student instruction as well to have a balance of those activities.  So, yes, do we as a whole need to be committing more grants and generating more extramural resources? Yes.  Do we need to be supporting more graduate students off of those resources? Yes.  I’m not saying we need to be turning our backs on instruction to do that and that is why this balance of tenure, tenure track is going to be critically important, but there is no doubt that as an institution we have grown rapidly in our student enrollment.  We have stressed by providing that level of instruction in the most cost effective manner and so we intend to follow the path of throwing out teaching faculty, I think that while that has been good in some areas, we need to redirect.  We need to rebalance more tenure, tenure track faculty and more scholarly engagement.

Senator Robinson--Commented that he thinks that there needs to be a focus on effectiveness of writing grants.   Encouraged making grant writing of our faculty more effective.

Provost responded that one of the things under faculty excellence in the strategic plan is faculty development and the faculty development on this campus is revolved around teaching and instruction.  I would love to see faculty development really broaden into other elements of scholarship as well including grant writing and more integration with research. 

Senator Levy: We have only had one budget that was passed in the summer—we are being asked to make cuts up to 15%, so when are these plans going to be put into place.

Provost Arden responded that this is a problem that we face every year is being able to forecast ahead and make those allocations where appropriate and when necessary and among the highest priorities of our allocations will be to ensure that we provide appropriate instruction to the student body that we plan to admit in the fall.  In terms of where the final budget comes down that is not going to happen until June or July.

Chair Overton charged the Resources and Environment committee with reviewing the presentation again to come up with other questions. 

6. Resolution Supporting a Resolution of the UNC Faculty Assembly on Academic Freedom
Secretary Hergeth read the resolution for its first reading.

A motion passed to extend the meeting 5 minutes.

The resolution will be presented for a second reading in the next meeting.

7. Adjournment
The meeting adjourned at 5:05 p.m.

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