UNC Board of Governors undermined in UNC System move to Raleigh, conservative members say

After six years on the UNC Board of Governors, Leo Daughtry is moving to the North Carolina State Board of Transportation.

It wasn’t a move he sought, Daughtry told Policy Watch last week. But House leaders offered him a spot on the transportation board and he believed it was time to leave the Board of Governors. He will be replaced by Lee Barnes, CEO of the Family Fare chain of stores, who was chosen by lawmakers to finish Daughtry’s term, which runs to 2025.

The change, part of a political appointments bill passed at the end of the legislative session, was probably inevitable after Daughtry said publicly something a number of board members privately say they also believe: The plan to move the UNC System offices to downtown Raleigh is expensive, ill-considered and motivated primarily by politics.

In a phone interview, Daughtry declined to address whether political conflict was at the heart of his change in appointment. But he stands by his concerns about the relocation to Raleigh.

“It was time for me to move on,” Daughtry said. “I’m off that board now and I don’t want to be critical. I said what I needed to say.”

Daughtry was a long-time GOP leader in both the state Senate and House before his service on the Board of Governors. In May, he denounced the planned move to Raleigh for a lack of transparency and bemoaned the trend toward politicization of the system he said it represents.

The move has been talked about for more than a decade and seemed closer than ever to reality last year when the state budget allocated $1.8 million to study the possibility of moving to a new building complex; the budget earmarked another $11.4 million related to planning and design related to the move.

But the most recent budget bill, signed into law by Gov. Roy Cooper Monday, mandates the move before July 1, 2023. The budget item appropriates $15 million toward leasing space in Raleigh over the next four years. It also lays out plans and provides funding for a future $180 million downtown Education Campus to include the Department of Commerce, Department of Public Instruction, Community Colleges System and UNC System offices.

The bill proposes building the new campus at 116 W. Jones St., where the state’s Department of Administration now resides. That department would be relocated to a newly proposed state executive headquarters.

The plan and funding were tucked into a special provision in the budget and rammed though without public debate — either at the General Assembly or on the Board of Governors, whose members  say they weren’t consulted.

That tells you what you need to know about it, Daughtry said.

“When you have a special provision, it is something so controversial that the people putting the special provision in the budget do not want it to go to a committee,” Daughtry said. “So you don’t find out about it for several days because of the size of the budget. So it is my opinion that the move from here to Raleigh was done purely on the basis of politics. That’s why, I think, that we did it. And I didn’t know about it. And I don’t think many of you knew about it. Some of you probably did, but I didn’t know about it until I saw on WRAL that the university was going to move.”

“A lack of transparency”

The plan moves the university system offices from the traditional home of higher education in North Carolina, Chapel Hill — where UNC was founded as the nation’s first state supported university in 1789 — to the state’s center of political power, just down the street from the Legislative Building in downtown Raleigh. After more than a decade of criticism that Republican lawmakers have micro-managed and overly politicized the 16-campus system, the move is too audacious for even some conservative former lawmakers and system leaders.

Daughtry was one of three board members to speak against the move at the board’s May meeting. Along with Daughtry, the other two “no” votes on moving forward with leasing office space in Raleigh came from Art Pope and John Fraley, conservative Republicans who also served in the state House.

Pope, a GOP mega-donor who was deputy state budget director under Gov. Pat McCrory, agreed with Daughtry that the way the legislature conceived and passed the plan amounts to bad politics — and perhaps bad policy.

“This special provision did not go through any legislative committee,” Pope said at the meeting. “It was not in any filed bill. It appeared for the first time in the final conference report. Not the first time, not the last time that happens. But when law is made, when special budget provisions are made this way, oftentimes it’s not the best legislation or the best practice.”

The current politicization of the board would have disappointed Bill Friday, Daughtry said. Friday served as head of the UNC system for 30 years under Democrats and Republicans and worked to keep the system at arm’s length from political influence.

“Back when I was first elected to the Senate, there was only 11 Republicans,” Daughtry said. “We were basically irrelevant. We just sort of hung around and watched laws being passed. But I did have the opportunity to get to know Bill Friday at that time. And he was so pleased with the Board of Governors and the way it was set up.”

“He told us in committee meetings that there are so many states that use the university system as a dumping ground for ‘maybe politicians’ who needed a job, who only get $13,000 a year or who had lost,” Friday said. “Anyway, lots of states were using the universities as a place to put people. He said, ‘The Board of Governors is our buffer. It’s our wall to prevent, as much as possible, politics seeping into the university system.’”

The board maintained that wall until the last few years, Daughtry said. “Recently, it seems to me, politics is beginning to seep underneath our buffer,” Daughtry said. “We’ve hired people from state government who were making a little over $100,000 and are now making $300,000. We have a political operative, as I understand it, on a monthly retainer. But this particular issue is, in my opinion, the most political thing that has happened.”

Beyond the political implications, Pope and Fraley said, relocating the UNC System office, with its more than 250 employees, is an unnecessary expense when the offices and support systems for the university already exist in Chapel Hill. Even the $15 million to lease space for the next four years isn’t necessary, Pope said.

“The simple fact of the matter is, we have space here,” Pope said. “It’s not costing us $15 million over the next four years to continue here. That’s $15 million over the next four years that’s not going to be available to meet the needs of the people of North Carolina in general and for education in particular.”

At current costs, that $15 million could fully fund a four-year college education — including in-state tuition, fees, books, room and board — for approximately 153 in-state students at UNC-Chapel Hill.

As increasing costs lead to discussion of tuition increases, Pope said, this spending seems particularly ill-considered.

“I certainly don’t want to hear about a tuition increase when we’re spending $15 million unnecessarily,” Pope said.

That $15 million is just the beginning, Fraley said, and it’s unclear what the total cost will be or how it will be funded.

“The permanent move that is going to follow the temporary move has little or no specific detail to it at this point,” Fraley said. “This move is going to cost us a lot of money that we really do not have to spend and could be $100 million or more ultimately.”

“We have to know our roles”

Several board members told Policy Watch this week they agreed with Daughtry, Pope and Fraley philosophically. But as political appointees of the General Assembly’s Republican majority, they said, they understand when they are supposed to advise and when they are supposed to comply with orders.

Those board members asked not to be identified so that they could discuss board decisions and express opinions about the board’s relationship to the General Assembly without, like Daughtry, abruptly finding their service on the board at an end.

“The Board of Governors has weighed in on this for years and we’ve studied it and voted and said it wasn’t a good idea,” one board member said. “At this point it is apparent that they have heard what we had to say in our advisory role, they disagree and now they just want us to vote to execute the play they have called. They’re moving the system to Raleigh whether we like it or not, so we can complain about it publicly and vote against what is happening anyway or we can understand a bill has been passed, a decision has been made, and we have to know our roles.”

But that’s not the role of the board, said Lou Bissette, a former chairman who came into conflict with fellow board members after his own public criticism of the board’s politicization.

“This idea surfaced back around 2015 and 2016,” Bissette said of the move to Raleigh. “The BOG appointed a committee to study this move. The committee came back and recommended against the move, so the board did not proceed.”

If the board finds such a proposal needless and needlessly expensive, Bissette said, it is not their duty to simply do as they’re told.

“Members of this board owe their fiduciary duty to the UNC system and not to the entity that appoints you,” Bissette told the board at its May meeting. “And I think you need to keep that in mind. If you believe this move is good for the system, you should vote for it. If you don’t, you should vote against it.”

During and after his tenure on the board Bissette wrote about the dangers of a lack of diversity and surplus of partisanship on the system’s governing board.

The same appointments bill that moved Daughtry to the transportation board included an appointment for Bissette on the UNC-Asheville Board of Trustees.

In a 2020 essay for the group Higher Ed Works Bissette highlighted how the Board of Governors — overwhelmingly white, conservative and male — fails to reflect the universities it governs or the state as a whole. To better represent the people of the state, Bissette wrote, the board needs to be more racially and ethnically diverse, needs more women, and more people from different parts of the state.

“The biggest gap, however, between a board that looks like our state and the current board, is political,” Bissette wrote. “When I first started serving, Democrats and Republicans were just about equally represented on the Board of Governors. It functioned effectively.”

After the Republican takeover of state government, the UNC Board of Governors went years without a single Democrat. After much criticism was voiced over its lack of diversity, one Democrat was appointed last year — former state Sen. Joel Ford. But Ford, who lost a Democratic primary for his seat, has openly contemplated joining the Republican Party, and has faced heavy criticism from progressives for his record on LGBTQ issues and his demeanor when dealing with members of that community.

“Whether you’re a Republican, a Democrat or you’re unaffiliated, those who appoint us want us all rowing in the same direction,” one board member said. “And they are going to dictate that direction. That’s what they do. If you can’t row in that direction, you aren’t going to be on the board much longer. Look at Lou [Bissette] and Leo [Daughtry]. It’s not that you can’t have an opinion, but you’re not going to dictate the direction. You’re going to row in their direction or you’re not going to be in the boat.”

Daughtry, Pope and Fraley speaking up against the system’s Raleigh relocation is notable because it isn’t just about partisanship or money. All three men, solid conservatives who themselves served as GOP state lawmakers, suggested current legislative leadership is bypassing the advisory role board members are supposed to play as appointees. Their objections have at their heart an existential question: If lawmakers are willing to bypass the system’s governing board on some of the largest and most costly decisions related to the UNC System, then what is the purpose of the board?

Individual members of the board have spoken to lawmakers about the concept of a move, Pope said — himself included. But the board was not given the chance to review the current plan, discuss it as a board and speak with one voice.

“As a board of governors, most of us never even heard about it until we read about in the newspaper,” Pope said. “We were never consulted ahead of time. We were never in a position to advise the General Assembly.”

Daughtry’s move to the transportation board is effective July 31. He said he hopes the Board of Governors will fulfill its mission in a nonpartisan manner, wherever the system office is located.

“I hope they can keep the legislature at arm’s length,” Daughtry said. “I think they have the ability to do that.”