UNC System Awaits $150 Million in Enrollment Funding as Lawmakers Haggle Over Budget

As the North Carolina legislature aims to finalize a budget deal, the UNC System is still waiting for more than $150 million to cover the cost of teaching more students.

Public universities receive a certain amount of annual funding from the state, regardless of whether lawmakers pass a budget. But typically included in the budget is a subsidy known as enrollment change funding that the system requests from the legislature. It helps schools offer more course sections, hire academic advisers, or otherwise accommodate growing student populations.

“Enrollment funding keeps our institutions aligned to their access mission, covering the added costs for educating more students,” Jennifer Haygood, the UNC System’s chief financial officer, wrote in an e-mailed statement. 

In fall 2025, the UNC System hit a record enrollment of more than 256,000 students across the 16 university campuses, an increase of 3.4% from the prior year. But lawmakers haven’t passed a full budget since 2023. That means UNC System schools have been waiting on enrollment funding for two years. 

The system’s total requests for 2024 and 2025 amount to $153.8 million, which also includes the N.C. School of Science and Mathematics. Although that’s not a huge amount of money in the realm of university budgets, the UNC System said this year that it was making enrollment funding its primary request for the legislative short session.

Chancellor Kevin Howell of North Carolina State University said at a February Board of Governors meeting that without enrollment funding, students could see larger class sizes or fewer sections of courses they need to graduate on time. His school has requested $35 million from the legislature—the largest of the system—to cover increased enrollment in 2024 and 2025.

“If we don’t receive enrollment funding to the university and all of our universities, we have to absorb those costs,” Howell said. “Make no mistake about it; enrollment growth funding is the most important thing that any of us can be focused on at this moment.”

Legislative leaders have said they aim to hold votes on the state budget in the coming weeks. House Speaker Destin Hall’s office declined to comment on enrollment funding. Senate leader Phil Berger didn’t respond to a request for comment.

The Assembly looked into the process to determine how much enrollment funding each university requests and what schools do with the money. 

The Formula

North Carolina is one of 29 states that rely on some measure of student enrollment to determine funding for four-year institutions. At the most basic level, enrollment funding is an incremental adjustment to a university’s annual funding request depending on the change in the number of credit hours delivered to North Carolina residents. The system says that out-of-state students are supported solely through tuition.

Before 2017, the UNC System submitted projections to the legislature on how many credit hours it expected to be taught the following year and how much that would cost, and campuses received the money in advance. Now, the requests are retroactive for the previous full calendar year. In other words, there’s a lag between when a university’s student body grows and when the school gets the money to cover the increase.

“What we do is make those investments in faculty courses and resources up front with the trust and the hope that the state of North Carolina will fund us for what we’re doing to teach our students,” Howell said in February.

But determining how much funding each UNC System school should receive is not as easy as adding up the change in credit hours taught each year. 

First, the system determines the cost of each credit hour by discipline. The UNC System currently relies on data from the Cost Study, a research project by the University of Delaware that collects data from universities around the country, to assess the average cost per credit hour for each academic field. 

The UNC System then adjusts that discipline-specific cost per credit hour based on a couple of factors. One is the university’s Carnegie classification, which assesses its research activity. For instance, the University of North Carolina at Chapel Hill is an R1 institution, indicating very high spending on research and doctorate production, while UNC Greensboro is an R2. The higher the Carnegie classification, the higher the system deems the cost of instruction.

Schools also get more money per credit hour in priority disciplines. All engineering and nursing classes automatically get higher funding rates, and for master’s and doctoral credit hours in health professions or STEM disciplines, the funding is increased by a factor of 1.5 and 2.5, respectively. 

Consequently, most of the UNC System’s enrollment funding requests fall into these categories. Combining the 2024 and 2025 requests, the UNC System asked the legislature for more than $30 million from increased engineering credit hours alone, accounting for 19.7% of the total request. Funding from classes outside engineering, biology, nursing, business, or other STEM fields totaled over $12 million, 8.1% of the request.

Once each campus has calculated the cost of delivering credit hours by discipline, another cost is added for general overhead. This number represents how much the UNC System typically spends on core functions that support instructional activity but are not unique to one class.

Finally, the schools multiply the sum of the cost per discipline and the overhead by the change in credit hours for that discipline and add them up. The system requests that the legislature cover 80% of that total cost, with the expectation that the remainder will be covered by tuition.

The final request varies largely depending on the campus. For example, after NC State, UNC Charlotte had the next biggest ask at $30.3 million. The smallest request came from Winston-Salem State University, which asked for just over $1.4 million.

For one campus, East Carolina University, the UNC System requested a cut in its base funding of more than $6.6 million. Although ECU had its highest enrollment since 2021 last fall, the number of enrolled credit hours has declined from over 367,000 in fall 2017 to nearly 334,000 in fall 2025.

Where It Goes

Once universities receive enrollment funding, they do not have free rein over where they can spend the money. For instance, schools could not rely on enrollment funding for athletics.

But they have some discretion in how they use the money, as long as it generally goes toward institutional, academic, and student support. 

At the February Board of Governors meeting, Appalachian State University Chancellor Heather Norris said that at her campus, enrollment funding finances student support resources. 

She gave the example of a student who recently experienced a death in his immediate family. Norris said that because of enrollment funding, App State was able to provide the student with mental health resources, academic advising, and a summer scholarship, among other support measures to ensure he graduated on time.

“This is what an enrollment growth investment means for an institution like App State. With this funding, we can proactively identify students who need support at just the right time,” Norris said.

At North Carolina Central University, enrollment funding has been put toward cybersecurity and physical safety on campus, Chancellor Karrie Dixon told the Board of Governors in May.

Haygood told the Board of Governors at the same meeting that she wasn’t worried about the state providing the funding for those programs.

“We have been assured that there is support for enrollment funding,” Haygood said. “That being said, we have emphasized to our campus leaders that we need to continue to be vigilant in our advocacy for enrollment funding.”