Pitt Board Approves Budget and Sets Tuition for 2005 Fiscal Year

PITTSBURGH—Against a backdrop of record-breaking successes in such critical areas as undergraduate admissions, research accomplishments, and private fundraising, the Executive Committee of the University of Pittsburgh Board of Trustees today approved a $1.49 billion operating budget for Fiscal Year 2005. This action follows the enactment, earlier this month, of the FY 2005 Commonwealth budget, including appropriations for Pitt and for Pennsylvania's other state-related universities.

In commenting on this action, Chancellor Mark A. Nordenberg said, "The budget approved by our board is a clear sign of Pitt's financial strength. It also positions us to continue our committed quest for excellence in all that we do and to effectively discharge our multiple missions as a leader in education, a pioneer in research, and a partner in regional development. During this past year, our alumni, faculty, staff, and students earned forms of national and international recognition that would be the envy of any university. We fully intend to build on that outstanding record in the year ahead."

The single largest revenue component of Pitt's budget, and by far the fastest growing, is the funding attracted, generally through highly competitive peer-reviewed processes, to support research conducted at the University. Those funds grew from $230 million to about $570 million from FY 1996 to FY 2004 and are projected to increase to about $620 million in FY 2005, a further increase of nearly

9 percent. These are the funds that support much of Pitt's path-breaking research, that help generate jobs throughout the region, and that have enabled the University to increase its own employment base by nearly 25 percent during the last nine years. Pitt's progress on this important front is reflected in rankings released by the National Science Foundation last month and showing that, over the most recently measured five year period, the University moved from the 20th position to the 10th position among all American universities in terms of total federal science and engineering research and development support.

Another critical revenue component is the Commonwealth appropriation, which was set at $168.9 million in the state's FY 2005 budget, an increase of 3.29 percent or $5.4 million, over the prior fiscal year. These funds, unlike research grants, are invested principally in educational programs. In fact, the state appropriation and student tuition and fees are the principal forms of support for any public university's instructional mission.

In commenting on state support, Chancellor Nordenberg said, "Particularly since Pitt became a state-related university nearly 40 years ago, Pennsylvania has been an important partner in our progress. The increase to our appropriation that is a part of this year's Commonwealth budget reverses the trend of recent years, which had been characterized by reductions, and we are deeply grateful to the governor and the legislature for this additional support. However, even with that increase, our appropriation for this year is nearly $9.6 million less than our authorized FY 2002 appropriation and more than $8.5 million less than the appropriation we received in FY 2001. Over just a slightly longer period, from FY 1996 to FY 2005, our state appropriation fell from being more than 19 percent of our budget to less than 12 percent of our budget."

In commenting more generally on the economic climate, Arthur G. Ramicone, Pitt's Vice Chancellor for Budget and Controller, stated, "Despite the many positive aspects of our financial position, rising costs have placed a strain on resources and have made achieving the University's ambitious goals more challenging. Like all business enterprises around the country, Pitt has been forced to confront rapidly rising healthcare, utility and insurance costs, and to make new investments in security. In addition, universities face such special challenges as dealing with the rapidly rising costs of technical journals and other library materials, the highly competitive market for top scholars, unusually heavy dependence on new technologies, and the investments required in emerging areas of education and research such as genomics and molecular biology. As has been true in past years, both aggressive cost control and forward-looking investments have been keys in shaping the University's budget for this fiscal year."

According to Chancellor Nordenberg, "Well targeted investments in academic and student life enhancements have driven our recent successes. In this regard, the strongest evidence of the fact that we are providing an excellent student experience at a comparatively reasonable cost is the fact that our undergraduate applications jumped by more than 140 percent over the last eight years. Quite clearly, we are viewed as a provider of high-value programs by prospective students." Continuing that pattern of investments in the quality of the academic and student life experiences, areas targeted for increased funding in the FY 2005 budget include curricular innovations, faculty recruitment and retention, information technology upgrades, public safety initiatives, and student service enhancements.

To help fund these initiatives and to meet rising costs, the approved budget includes a 6 percent tuition increase for most students, below the projected national average of 10 percent for public universities. Tuition increases will be somewhat lower for students enrolled in the Schools of Medicine and Dental Medicine. To help students and their families meet these cost increases, the financial aid component of the budget has been increased from under $102 million to $110 million, an increase of nearly 8 percent.

The approved budget also includes a faculty and staff salary increase pool of 3 percent. In commenting on this element of the budget, Chancellor Nordenberg stated, "This is an absolutely essential investment that better positions us to successfully recruit, retain, and support the people whose work has been so central to our many successes."

Building Pitt's budget is a process that spans most of the year. It begins with the recommendations of planning and budgeting committees within the various responsibility centers of the institution and includes subsequent recommendations to the chancellor from a University-wide planning and budgeting committee, which is chaired by the provost and includes administrators, faculty, staff, and students. Recommendations made by the chancellor are submitted first to the board's Budget Committee and then to the board or its Executive Committee for final approval. Because the Commonwealth budget had not been finalized by the time of the annual meeting of the full board in late June, the Executive Committee took action today.

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7/14/04/tmw