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July 25, 2002

FY03 budget includes 14% tuition increase

FY03 budget includes 14% tuition increase in tuition

The University's fiscal year 2003 operating budget includes the largest Pitt tuition hike since 1978 — 14 percent for Pennsylvania residents and 10 percent for out-of-state students in most schools.

Those increases bring the tuition rate for in-state undergraduates in the College of Arts and Sciences to $7,868, or $966 more than last year's rate. Tuition for out-of-state CAS students will increase by $1,516, to $16,676.

Like officials at other Pennsylvania universities that have announced double-digit tuition hikes for next fall, Pitt administrators and trustees said the hefty increase was unavoidable. They cited declining state funding, rapidly rising costs and the need to maintain academic quality.

"Making a decision to increase tuition is never easy, and making a decision to increase tuition by this amount certainly is nothing that we take lightly," Chancellor Mark Nordenberg told reporters following the July 15 meetings of the trustees' budget and executive committees, which gave final approval to Pitt's $1.17 billion FY 2003 operating budget.

"What drives this more than anything is our continuing commitment to quality," Nordenberg said. "We do believe that nothing is more important to the future of the institution, nothing is more important to the students of this University, than that we sustain our momentum and keep making the investments that improve Pitt's position in American higher education."

Those investments and improvements will include the following this year:

* $13.4 million for faculty recruitment, curriculum updates, freshman instruction programs, counseling and placement services, and recreation and security initiatives.

* A $10.1 million investment in research infrastructure.

* Money to offset $4.2 million in new operating expenses associated with the Petersen Events Center, the Sennott Square multi-purpose academic center and the University Library System's new, high-density library storage center.

In addition, Pitt will increase the pool of salary money by 3.5 percent to help the University compete for high-quality faculty and staff, Nordenberg said. Compensation is the University's biggest expense, representing nearly 60 percent ($692 million) of FY 2003 spending.

Pitt will cut certain, yet-to-be-determined units' budgets by a total of $8 million this year, the chancellor said. Other cost-cutting measures, he said, will include refinancing some of Pitt's long-term debt, taking advantage of group purchasing rates through preferred vendors and an Internet procurement system, and energy conservation to offset the University's rising utility bills.

To help offset next fall's tuition hikes, Pitt budgeted $9 million more for financial aid for a total of $89.3 million, Nordenberg said.

Additional scholarships, chaired professorships and other academic endowments will be provided by the University's capital campaign, he noted. The campaign recently exceeded its $500 million goal, prompting Pitt leaders to extend the campaign and raise the goal to $1 billion.

Asked why the University doesn't offset rising costs by spending more of the earnings from its endowment, which passed the $1 billion mark two years ago, Nordenberg noted that Pitt's endowment spending policy is based on a three-year, rolling average of endowment income. "It's designed to see us through good times as well as bad," the chancellor said.

Nordenberg said that despite declining state appropriations, Pitt has no intention of going private — for example, through a series of double-digit tuition hikes, gradually weaning the University away from dependence on state support (the scenario that one reporter suggested).

Nor was Pitt trying to send a message to state lawmakers by raising in-state tuition by a larger percentage than out-of-state tuition, the chancellor said.

"The decision to differentiate between in-state and out-of-state students was driven both by a sense of equity and a knowledge of the marketplace," Nordenberg told reporters. Pitt doesn't want to risk pricing itself out of the market for out-of-state students, he said.

That's why not all Pitt schools will raise their out-of-state tuitions by 10 percent next fall. Tuition for graduate students in the schools of nursing and pharmacy actually will be reduced by several thousand dollars next fall, as will tuition for out-of-state students in the School of Health and Rehabilitation Sciences professional programs. Out-of-state tuition will increase by 5 percent for first professional students in dental medicine and for graduate and first professional students in the medical school.

At Titusville, tuition will go up by 11.2 percent (in-state) and 7.3 percent (out-of-state).

"Competitive market forces" drove Pitt's decisions to impose lower tuition hikes at Titusville and in the Health Sciences programs, said Robert Hill, vice chancellor for Public Affairs.

q At this point, Nordenberg argued, Pitt is not at risk of pricing itself out of the market for in-state students seeking a high-quality university education. Despite last year's 7.5 percent tuition increase and next fall's double-digit hikes, Pitt remains a bargain for Pennsylvania residents, the chancellor said.

Pitt administrators considered — but rejected — the idea of increasing tuition for incoming students by a higher percentage than for returning students, as a growing number of universities (including Penn State and Carnegie Mellon) have done in recent years. "I would say that remains a possibility for us in the future," Nordenberg said. "Our best judgment right now, though, was to stick with a constant tuition rate for the students who are enrolled in the same programs and not to differentiate" between incoming and continuing students.

Pennsylvania continues to rank third from the bottom among states in per capita spending on higher education. Nordenberg was asked: How long can that trend continue before Pennsylvania begins losing resident students to universities in other states?

"I can't really answer that question," he replied. "It is a concern. On the other hand…there probably is no state that you could look at and say, 'We'd trade the colleges and universities that you've got for the ones we've got.'"

— Bruce Steele

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