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March 17, 2011

Pitt pleads budget case to Senate panel

“I’ve never had to close a $4 billion budget deficit and I’ve never had to do it in six weeks,” Chancellor Mark A. Nordenberg told the Senate appropriations committee in a March 16 budget hearing, acknowledging the pressure under which Gov. Tom Corbett’s state budget proposal was developed.

“I also do understand that all of us will need to do our share to bring things into better alignment economically, but I do hope as has been the case in the past that the proposal is the beginning of discussions — certainly discussions involving you, but also involving the individuals and institutions who will be affected so that collectively we might have the chance to develop a better approach for Pennsylvania.”

Nordenberg and the leaders of Penn State, Temple and Lincoln acknowledged the state’s budget woes and expressed their willingness to share in the pain. At the same time, they outlined the potential impact of Corbett’s proposal to cut their state support by more than half, counting layoffs, campus closures, tuition increases and deeper debt for students among the possible outcomes.

“The proposed cuts are deep, they are disproportionate and they are damaging to some of the most productive institutions in the commonwealth of Pennsylvania,” Nordenberg said.

“Whether you’re talking about investments in the young people who are pursuing higher education today and the support that their families have depended upon, or whether you’re talking about these institutions as economic engines that have become increasingly important in the 21st century, the proposed cuts really do represent a short-term solution to a very real problem that could have damaging impacts over a longer haul for the commonwealth of Pennsylvania and its people.”

Ivory Nelson, president of Lincoln University, called the proposed cut “a backbreaker” for his school. Both Temple University President Ann Weaver Hart and Penn State President Graham Spanier said cuts would result in tuition increases.

Spanier said the university leaders all had made contingency plans for the possibility of receiving no increase or a cut in their appropriation. “But I don’t believe any of us anticipated that we would see a proposal within a matter of weeks to have to decrease our budgets because of an appropriation reduction of over 50 percent.”

Spanier said tuition at Penn State would go up, but that the university would not attempt to close the gap solely on the backs of students. In addition to tuition increases, he cited pay freezes, potential campus closures and layoffs of at least 400 people in agriculture alone, should the governor’s proposal stand.

The proposed cuts would be disproportionately centered on the schools’ education and general (E&G) budgets because large portions of their overall budgets — research grants, designated gifts and medical center funds, for instance — are restricted for their designated purposes and cannot be used to bridge the budget gap such a cut in state funding would create, the leaders explained.

While the proposed cut represents a smaller portion of their overall operating budgets, for research institutions Pitt, Penn State and Temple it would be about 20 percent of the E&G budgets and about 11 percent for Lincoln, the leaders estimated.

“I’m really freaked out about this budget,” said Sen. Jim Ferlo (D-Allegheny). “It’s an attack and a whack job on working people,” he said, calling it disingenuous for the governor’s representatives to say there will be no tax increase given that higher property and school taxes and higher tuition would result.

In response, Nordenberg said he was bemused by Corbett budget secretary Charles Zogby’s recent assertion that someone would have had to be “living under a rock” not to have anticipated this budget. “I followed the election pretty closely. I had conversations with the governor while he was on the campaign trail. I co-chaired his education transition committee. I don’t think that I was living under a rock,” Nordenberg said.

“But in fact, the depth and disproportionate nature of these proposed cuts was both stunning and surprising to me. I think there was an expectation that spending would be brought under control. There were campaign statements made about not raising taxes. But I don’t think anybody was asked to buy into the notion that public higher education would suffer 50 percent cuts — really in our case closer to 60 percent. So what I think we are looking for is a conversation that permits us to not only advance this argument for fairness and proportionality but also to pick up on your points of the undermining of the very engines that are driving economic growth and generating jobs in 2011 in Pennsylvania.”

Sen. John T. Yudichak, (D-Carbon/Luzerne/Monroe) said, “The budget is much more than a rhetorical device, it is a policy direction.” Noting that a half-million Pennsylvanians are out of work, he said, “A 50 percent cut is really a change in direction,” touting the role the universities play in job growth. “We’re saying in this budget document advanced by the governor that we do not value higher education in Pennsylvania, that we do not see it has a role to play in economic growth. That goes against every study I’ve ever read about the evolution of a knowledge-based economy.”

Spanier noted that Moody’s has issued an emergency report in response to the proposed budget that could affect the public higher educational institutions’ bond ratings. “I can’t tell you the negative message that sends to companies that are thinking about locating in Pennsylvania. … They have not downgraded us yet, but they have said that they would consider doing so depending on the outcome of these budget discussions. ”

Sen. Wayne D. Fontana (D-Allegheny) asked about the philosophy behind the governor’s reference to the prospect of having dollars follow students in higher education as they do in K-12.

“There is something both substantively and superficially appealing about supporting students as opposed to supporting institutions,” Nordenberg said. “Of course, as is demonstrated by the numbers, the support that you give to these institutions is doing great good for large numbers of students — 150,000 Pennsylvania students getting the highest quality higher education experience through these four institutions,” he said.

“At the same time, the appropriations invested in our universities really have created anchor institutions,” citing the role the four schools play in their respective regions.

Nordenberg said the state’s investments in public institutions of higher education have impact not only in education, but also in research, economic development and contributions to community vitality. “I think the notion that you walk away from that and simply support students would reflect a policy choice that would not be good for Pennsylvania.”

Temple’s Hart said such a philosophy would disadvantage working and middle class families by limiting their choices. “It doesn’t help them make up those tuition gaps,” between public and private institutions, even as it would nudge state-funded institutions into a business model more akin to independent institutions. “It would be a tremendous shift in philosophy and have tremendous impact on the most vulnerable members of our commonwealth,” she said.

Spanier said it raises an important philosophical question about whether higher education is a private good or whether there is a public good in educating the population. Indeed education is good for an individual, whose increased earnings (which also yield tax dollars) can be quantified. At the same time, education creates a public good for society as a whole, he said.

Nelson said, “The middle class and the success that we’ve had in developing our country is based on the fact that we committed ourselves to educating our populace,” recalling the postwar economic boom that followed passage of the GI Bill.

“There is no way that the money following the student will provide the quality that you so desire because even if the money follows the student, that money will not be enough for a lot of those young persons to attend whatever institution they choose to go to. …Our country is heavily dependent on the fact of a highly educated populace and for the success that we need to have for the future we must ensure that.”

Sen. John Pippy (R-Allegheny/Washington) told the university leaders: “It just doesn’t make sense you’re getting targeted,” noting that inflation has risen 20 percent, state spending has increased 40 percent and basic education appropriations have increased 60 percent over the past decade while state-related universities’ funding has held flat. Pippy said he hopes to find ways to work together to minimize the impact of the budget constraints.

In concluding the hearing, Senate appropriations committee chair Jake Corman (R-Centre) presented an odd silver lining to the harsh situation. “I think in a lot of ways Gov. Corbett did you a tremendous favor by introducing the budget the way he did,” Corman told the four university leaders. “I think, just talking with him, a lot of this is driven by math. We certainly have significant financial issues here and we have to find where the savings are. But this isn’t new for higher education,” he said, acknowledging that the institutions’ appropriations have long been held flat. “I don’t know of another line item in the budget that suffered that same fate over the last eight years. We all know Gov. Rendell would have done this two years ago if he could have, but the maintenance of effort [requirements] of the stimulus act would not allow it. So now that this has been proposed, it’s sort of shocked the commonwealth in a lot of ways.”

Corman emphasized that balancing a budget this year will not end the state’s budgetary issues. “Even if we’re able to restore you this year, the math is going to lead us right back to this spot until we take good hard looks at some of the cost drivers of our budget,” he said, noting that corrections, health care, welfare and pension obligations all will continue to surpass the rate of inflation unless the state embraces real reform.

He reiterated that the governor’s proposal is just the start to budget negotiations. “Now the public’s going to get engaged and hopefully put higher education at a higher level of priority for our budget,” he said.

The complete hearing can be found at

—Kimberly K. Barlow

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