CHAPEL HILL -- The UNC system's Board of Governors will likely make a statement this week opposing the use of private funds to boost salaries for university chancellors.

The issue, to be tackled first this afternoon by the board's committee on personnel and tenure, emerged in recent months at N.C. State University, where trustees expressed a desire to use private dollars to supplement the salary it will pay its next chancellor.

But the state's governing board for higher education will likely put an end to any such discussion this week. The board's chairman, Brad Wilson, has asked the personnel and tenure committee to reaffirm the board's policy forbidding the use of private funds.

"Unlimited use of private funds creates an inherent conflict of interest," Wilson said Wednesday. "It certainly creates the perception of 'who do you work for?' Are you working for a private foundation, or are you working for the people of North Carolina?"

The policy prohibits the use of any private money for chancellor salaries at the 16 state institutions. Wilson said the board could consider using private funds in the future for other perks -- such as some sort of deferred compensation plan -- that could be used to help lure talented administrators.

But adding private money to state salaries, a practice used widely at state institutions across the nation, has no place in North Carolina, Wilson said. The board allowed it briefly in the 1990s, for two years, before scrapping it in 1997.

In putting a definitive end to the discussion, the university system would be running somewhat contrary to what has, over time, become a new trend in public higher education.

Over "the last decade, we've seen an increasing use of foundation funds to supplement [administrative] salaries and other benefits," said Sheldon Steinbach, general counsel for the American Council on Education, an umbrella group representing 1,800 colleges and universities. "It has become more of the norm."

In a lot of states, universities have used private money to boost the overall compensation package offered to prospective presidents or chancellors, raising the competitive stakes and driving up the price of academic talent.

In some cases, private money has also muddied the water, creating confusion about whom the chief administrator works for, Steinbach said.

But in North Carolina, institutions might be hindered by their inability to supplement salaries with private money, he said.

The absence of supplements "might leave a school, temporarily, at a competitive disadvantage," Steinbach said. "On the other hand, the quality of the institution, the integrity of the operation, may be more crystallized and less subject to questions."

The UNC board's statement on the private money issue would come as N.C. State searches for a replacement for Marye Anne Fox, who is leaving to lead the University of California, San Diego. She'll earn $350,000 annually at her new job, a raise of about $100,000 from what she earned while at the Raleigh campus.

At UNC Chapel Hill, officials would be open to the use of private funds as a salary supplement if it were allowed, said Stick Williams, chairman of Carolina's board of trustees.

"In a competitive marketplace, UNC Chapel Hill would want to be able to consider additional options," he said. "We have to make certain we have the absolute best leadership, and because we compete with prestigious private institutions, compensation is an issue."

This week, the full board may also adopt a recommendation put forth by the personnel and tenure committee in early June. At a special meeting, the committee recommended creating a minimum for chancellor salaries that, if instituted, would boost the annual pay of five current system chancellors, including Carolina's James Moeser.

All such pay raises would be contingent on funds being available.

Under the plan, each UNC system institution would measure it's chancellor pay against a given peer group. The new plan would require that all chancellor salaries be at the 25th percentile within the respective peer rankings for his or her campus. Moeser would stand to earn an additional $48,767, bringing his annual salary to $304,392.

UNC system President Molly Broad would also get a significant raise under the plan. Her annual pay would increase to $359,182, also placing her at the 25th percentile in a similar peer group of university leaders.

Though university leaders like Broad and Moeser -- who each live in university-owned homes and drive cars issued by the state -- appear well compensated, board members and other university officials say they fall well behind their peers from many other states.

A few examples: The president of the University of Michigan system earns $677,500 a year, the head of the University of Georgia system earns $533,168, and the president of the University of Connecticut system earns $412,500.

In all three of those cases, deferred bonuses or contributions from university-related private foundations bolster public funds.