University Times

Two months into the University’s fiscal year (and the state’s), Pennsylvania lawmakers still have not approved what is expected to be a $163 million appropriation to Pitt for FY 2003-04.

But unless the budget impasse drags on into late fall, the University should remain in good shape financially and won’t have to borrow money to compensate for its monthly state appropriation payments, a Pitt fiscal administrator told the University Senate’s budget policies committee (BPC) recently.

That’s because Pitt’s cash balances always shoot up in August and September with the in-flow of tuition revenue, noted Thurman D. Wingrove, associate vice chancellor for Financial Information. “Tuition dollars don’t come in on a pro-rated basis each month throughout the year,” he pointed out. “We receive them in a lump sum early in the fall term, which gives us a cushion when something like this [delay in state funding] happens.”

On the down side, each tuition dollar that goes toward meeting operating expenses this early in the fiscal year is a dollar that can’t be invested, said Wingrove.

“That’s the real loss, the loss of investment income on those funds,” he told BPC.

Normally, Pitt invests all of its tuition revenue so that it begins generating some interest once it’s received, Wingrove said.

He also told BPC at its Aug. 29 meeting that:

• Salary raises for staff and faculty this year will, as usual, be retroactive to July 1. Raises will show up in October paychecks if the state General Assembly and Gov. Ed Rendell approve Pitt’s appropriation in September. Each additional month’s delay in Harrisburg would mean another month before raises would begin appearing in Pitt paychecks.
• Previously approved Pitt hirings and purchases are moving ahead despite the hold-up with the University’s state appropriation. “I can’t speak for each individual unit, but that’s the policy University-wide,” Wingrove said.

• The impasse over Pitt’s appropriation isn’t affecting state funding of building and renovation projects on the Pittsburgh campus or the University’s regional campuses. Pitt is slated to get approximately $35 million in capital funds from the state this year.

Unlike trustees at Penn State and Temple, Pitt trustees have not approved a tentative operating budget for FY 2003-04.

Wingrove said Pitt trustees and administrators decided to defer to the state’s timetable. Also, they did not want to give lawmakers the impression that the University is proceeding with business as usual “because it’s not,” he said. “We are losing a significant amount of money each month as this drags on.”

Despite the state’s delay in approving a Pitt appropriation for FY 2003-04, University officials plan to submit to Harrisburg, in late September as usual, a funding request for the next fiscal year. “We are under the impression that we’re on the same timeframe as we always have been,” Wingrove said.

Pennsylvania legislators returned to Harrisburg Sept. 9 after their summer recess with a load of controversial issues to address: public schools funding, tax reform and legalizing slot machines, among others.

Only after those issues are settled will lawmakers get down to approving Pitt’s appropriation, Pitt lobbyists predict.

Because Pitt — like Penn State, Temple and Lincoln — is a semi-private, “state-related” university rather than a state-owned school, its appropriation is a separate funding bill and is considered only after the basic state budget has been approved.

Costly as it is to Pitt, this year’s hold-up with the University’s appropriation is hardly unprecedented.

Dennis P. McManus, who worked in Pitt’s Commonwealth Relations office from 1977 to 2000, told the University Times: “In 1977, the University’s appropriation bill did not get signed by the governor until Dec. 23. To the best of my knowledge, since Pitt became a state-related university in 1966, that was the longest that the state-related schools went without having their appropriations legislation approved.”

McManus, who now directs Pitt’s Institute of Politics, said he remembered only one other year when it took legislators until October to approve a Pitt appropriation.

This year’s state appropriation is expected to represent less than 12 percent of Pitt’s total budget, down from 32 percent in the mid-1970s. Chancellor Mark A. Nordenberg, in a Sept. 9 University Update, pointed out: “During the past fiscal year, we were subjected to two mid-year 1 percent appropriation cuts, and the governor has recommended a 5 percent reduction to our original fiscal year 2003 appropriation for fiscal year 2004. The math is straightforward. That recommendation would leave us $14 million below our fiscal year 2001 appropriation. Those are ‘pure dollar’ reductions, without any inflation factor.”

— Bruce Steele