RALEIGH — Two years ago, North Carolina lawmakers agreed to contribute about $300 million to efforts to build the state’s first standalone children’s hospital.
Now Republicans in the state House don’t want to fund it anymore — one of several disagreements with the state Senate that has led to a budget stalemate. Rivals Duke Health and UNC Health previously announced plans to partner on the hospital, which could cost upwards of $3-billion. They choose a location in Apex in July.
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But on Tuesday, when House Speaker Destin Hall listed a variety of reasons for his chamber’s change of heart on funding for NC Children’s, he included an unexpected reason to support his chamber’s new position: Duke’s quarterback.
“Duke and UNC have a lot of money, and in particular Duke,” said Hall, a Republican and first-term speaker from Caldwell County. “They both have multibillion dollar endowments. Duke paid Tulane’s quarterback $8 million to come play for them this year. And so our members are asking the questions of, why is the state sending this money to two entities that already have a ton of it for a project that the state may not necessarily need?”
With what seemed like an aside, Hall tried to draw a connection between Duke’s quarterback, who has no connection to the state legislature, and the legislative debate over funding a children’s hospital.
Paying players and university endowments
Quarterback Darian Mensah transferred from Tulane to Duke in the offseason, one of the most coveted quarterbacks available in the transfer portal. He is being paid $8 million over the next two seasons, according to multiple reports. Mensah, Duke’s starter, leads the Atlantic Coast Conference with 11 touchdown passes and is second in passing yards this season.
NCAA rules allow for schools to directly pay student-athletes through revenue sharing and have allowed for third-party entities, called collectives, to make name, image and likeness payments to players from funds they collect from fans or boosters. Spending on football talent, particularly at quarterback, has taken off. Mensah is believed to be one of the highest-paid quarterbacks in the sport.
Athletics departments typically generate their own money through ticket sales, media contracts, sponsorships and donations. Collectives raise money outside of the university.
“We can’t take money from the ACC television contract and spend it on the chemistry department and all of our peers are in the same situation,” UNC Chancellor Lee Roberts said in July when asked about athletics spending at a time of university cuts.
Duke’s endowment is worth about $12 billion. UNC announced this week that its endowment had eclipsed $6 billion. Both rank among the nation’s 30 biggest university endowments.
University endowments aren’t “simply a large savings account to draw from at will,” Nate Knuffman, UNC’s chief financial officer, said in a recent interview published by the university. “Each donation is codified in a gift agreement, which is a legal contract, that designates the specific purpose to be supported. Universities must honor donor agreements that specify how their gifts can be used.”
President Donald Trump’s signature tax-and-spending bill, passed in July, included higher taxes on larger endowments. Duke would continue to pay its current rate, narrowly missing the threshold for higher taxes, according to an analysis by Forbes.
House questions need for, location of hospital
Hall said members of his caucus are questioning why the state would commit hundreds of millions of dollars to a project in Wake County, one of the state’s strongest economic counties. Especially, he said, when hospitals in rural areas could use those funds.
He questioned the oft-used description of NC Children’s as the “first standalone children’s hospital.”
“I don’t know what that means,” Hall said. “Has anybody asked: What does it mean? What is a standalone hospital? Why is that a good thing?”
Hall said the state has at least five children’s hospitals.
“If we felt like the children of this state were not getting health care, we would act,” Hall said. “But the fact is, they are getting health care. You have a small number of children who have unique and very rare diseases that there might be one hospital in the world that would treat, and this wouldn’t change that.”
The health systems, on the hospital’s website, say that freestanding children’s hospitals are created just for children and don’t share resources with adult programs, as they do at existing children’s hospitals across the state. The hospital would serve children with the most complex health issues and have highly specialized pediatric services. The systems say children must leave the state for this type of care.
In a joint statement, Duke Health and UNC Health said that North Carolina ranks 36th in the U.S. for children’s health and well-being and that the state is the most populous one without a dedicated children’s hospital.
“Our goal in creating the Carolinas’ only independent, dedicated academic children’s health system is to reduce childhood illness and injury and provide world-class care for our children and their families,” they said.
UNC Health and Duke Health said they are contributing their pediatric services, which they said is equal to approximately $1 billion each year, and have launched a campaign to raise more than $1 billion for the new hospital.
“Along with being grateful to the state for the support we have received, we continue to advocate for additional investment in the health and well-being of our children,” the health systems said.
The 2023 state budget authorized about $320 million over three fiscal years. The final tranche of money, about $103.5 million, is set to be distributed in the current fiscal year, but needs to be authorized in a budget bill.
The Senate’s 2025 two-year budget proposal called for an additional $535.5 million for the proposed 500-bed pediatric hospital. The chamber has since backed off that proposal and is seeking just the previously approved money, WRAL previously reported.