University Times

Pitt is requesting a 5 percent increase in its state appropriation for fiscal year 2012, which begins July 1. With that level of support, the University intends to raise the compensation pool by at least 3 percent and to limit tuition increases to 4 percent.

In its request to the state Department of Education dated Sept. 30, the University asked for nearly $176.4 million in general support and  $17.7 million in academic medical center funding for a total of $194.1 million.

The requested medical center funding, which comes through the Department of Public Welfare budget, consists of nearly $8.7 million for the School of Medicine, $1 million for the dental clinic, $7.6 million for Western Psychiatric Institute and Clinic and $397,000 for the Center for Public Health Practice.

In a presentation to the University Senate budget policies committee Oct. 8, Paul A. Supowitz, vice chancellor for Governmental Relations, outlined Pitt’s request and briefed BPC members on upcoming budget issues and other state government concerns.

Pennsylvania’s four state-related universities, Pitt, Penn State, Temple and Lincoln, were held to flat funding in the current fiscal year’s budget, faring better than most recipients amid sharp cuts in the state’s current fiscal year budget.

“It’s kind of depressing to put a positive spin on the fact that you’re just treading water, which is really what we’ve done in the last couple of years,” Supowitz said. “But almost everything else in the commonwealth budget has been cut pretty dramatically in most places. So, it’s been a struggle but I would also say we’ve met that struggle as best as we could have under the circumstances.”

There is a bright spot in the state’s capital budget. Pitt’s yearly allotment of capital funding for construction and capital projects has been doubled to $40 million. Pitt’s share had been unchanged at $20 million since the Gov. Tom Ridge administration, Supowitz said. “We’ve been working hard over the past four years to get that doubled, and we finally did that,” he said.

The additional capital funding from the state impacts the University’s budget by reducing the need for borrowing and helping avoid debt service costs, Vice Chancellor for Budget and Controller Arthur G. Ramicone told BPC.

The funding cliff

Looking ahead, however, Pitt is facing a “funding cliff” when the final year of American Recovery and Reinvestment Act (ARRA) stimulus funding ends. Pitt’s current fiscal year appropriation from the state includes $7.5 million in federal stimulus money.

“That is the elephant in the room,” Supowitz said, noting that the state must find a way to replace those federal dollars merely to maintain the current appropriation.

Complicating matters is the fact that the cash-strapped state also has to make up for stimulus funding that is expiring in other areas of the budget. In the larger picture, the state will have a $1.5 billion-$2 billion budget hole to fill, Supowitz estimated.

Tax revenues also play a role in the budget concerns. Although recent collections have been slightly higher than projected, “Speculation is that the hole could be significantly larger than that, depending on revenue collections,” Supowitz told BPC.

“Regardless, we know there’s going to be a big hole in the state budget this year because of the funding cliff,” he said.

The legislative landscape

Supowitz noted that because there will be a new governor in Harrisburg for the upcoming fiscal year, the state budget proposal could be delayed until early March. Typically, the governor announces a proposed state budget in early February, but new administrations are given more time to prepare a budget proposal. Given that Pitt’s budget request has been made and budget talks in the legislature won’t begin in earnest until spring, the focus is on the more immediate issue of the Nov. 2 elections, he said.

Regardless of whether a Democrat or Republican is elected, Supowitz noted that the new governor will be from western Pennsylvania and will be familiar with Pitt’s role not only as an educational institution but also as a force in economic development and growth.

While that understanding is a plus, the new governor still will face difficult fiscal decisions, Supowitz said.

Although changes in House and Senate leadership are on the horizon, Supowitz noted that the state Senate is likely to remain in Republican control. However, in the House, where Democrats currently hold a slight edge, the majority could change.

“It could be very interesting if the House and Senate are Republican, and there’s very possibly a Republican governor, if you believe the polls. It could be tough for Democrats,” he said. “We will see what happens on Nov. 2.”

—Kimberly K. Barlow