in effect for long, so I think the predictions of the demise of the smaller schools is overblown. I understand Bobby and other booster club heads fighting against the change, but the state needs to find money anywhere it can.

We have fewer sports, ergo fewer athletes. Several of their “extra” sports are things like lacrosse and field hockey that have almost no presence in NC, so all the athletes are from out of state.

This only comes into play with FULL scholarships. If out-of-state full-ride is valued at $25k (I made that number up), and you give $24995, the in-state rate does not apply. It created some really odd, and complicated, situations in almost all non-revenue sports, where scholarships can be split among multiple players but the total number is substantially less than the team size. (Football and basketball are “head count” sports, where every person receiving any athletic aid counts as one of your scholarships. You could give less than a full-ride to save money, but no major program ever would.)
Maybe your NCAA limit is nine scholarships, and you need 22 players to fill a team. Say you have a really good out-of-state kid, and you could justify giving him 60% of a full-ride. At that point you are giving him more than the cost of an in-state full-ride, but he’s still paying $10k out-of-pocket. Under the provision that was just scrapped, the athletic department would save money, and the kid would go to school completely free, if you just give him the full-ride so he is charged in-state tuition. But if you do that, now he counts as 1.0, instead of 0.6, out of your 9 scholarships, and you just blew the amounts you were going to give to two other kids that could be significant contributors to your program. A team at NC State or UNC, which is probably working at or near the NCAA max for scholarships in each sport, can’t afford to do that. MAYBE you do it for one year, with a very strong indication that he better get in-state residency because he is going to see a big cut in his scholarship level after that year. Then you hope you don’t get bitten in the butt if he fails to get residency, and then appeals the scholarship cut (because even though the NCAA technically says scholarships are for only one year, at most schools the system is actually very strongly weighted in favor of the athlete if you try to cut their scholarship for something other than misconduct.)

This is where the smaller schools in the system are going to get hit, and in some programs it may happen in a really big way. Most non-basketball programs at those schools have scholarship totals way less than the NCAA limit. They don’t care at all if they give an out-of-state student $12k and have it count as if it were $25k. They have been recruiting out-of-state kids that would have been out of reach if either side had to pay the full tuition bill (the school/team could not afford the full $25k, and the athlete never would have come if they had been left to pay the tuition difference). It would not surprise me if there are teams that are going to be 20% over their scholarship budget, and these are programs that don’t come close State’s (much less UNC’s) revenue, so they can’t just move some things around or postpone filling a couple of administrative vacancies.
I know of a program a couple years ago, in a sport where the NCAA limit was 18 scholarships, that had a dollar budget equivalent to about seven in-state schollys. They had three full-rides devoted to international athletes. Think about what kind of program you have if your budget adds up to much less than half the NCAA limit even if every single kid has in-state tuition. Now imagine that overnight you find out you are 43% over your scholarship budget. You have a big problem.