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January 12, 2012

Units face cuts as state freezes 5% of appropriation

Pitt leaders have been told to cut their budgets in the wake of Gov. Tom Corbett’s budget freeze.

The University is facing a possible $6.8 million cut in current state funding as part of a 5 percent freeze on state appropriations to Pitt, Penn State, Temple and Lincoln universities.

The heads of Pitt’s five super-responsibility centers — the offices of the Chancellor, Chief Financial Officer, Executive Vice Chancellor, Provost and the Senior Vice Chancellor for Health Sciences — have been assigned to make the cuts in University budgets, Chancellor Mark A. Nordenberg stated in a Jan. 6 University Update.

The University declined to comment in detail on what those reductions might include, but Nordenberg, in his University Update, warned of possible effects on employment levels and tuition rates, cautioning that Pitt’s commitment to preserving jobs might not be able to be maintained “if economic woes are prolonged and we suffer further reductions to our state support.”

He also stated that it is “not possible for any university to sustain public university tuition rates if it is not supported like a public university. As our public funding decreases and Pitt becomes measurably less public, then tuition comparisons to private universities of comparable quality become increasingly relevant.”

His message is posted at

On Jan. 4 Corbett froze $160 million in state spending and placed $25.7 million in funding for the four state-related schools into budgetary reserve following a Department of Revenue report that showed state revenues were $486.8 million below estimate at the fiscal year 2012 midpoint.

In a prepared release, Corbett stated, “We did not make the decision to freeze these funds lightly. If the revenue picture improves in the months ahead and we determine these funds no longer need to remain frozen, we may be able to free up some or perhaps even all of the funds we are now placing into budgetary reserve.”

Pitt’s regular payment schedule will not be affected immediately. Pennsylvania Office of the Budget spokesperson Susan Hooper stated:  “Only the University’s last scheduled payment will be reduced if it is ultimately determined that the commonwealth must retain the 5 percent amount.”

The potential cut to Pitt’s appropriation includes a $6.7 million reduction in general support and a $104,000 reduction in rural education outreach funding, which would reduce the state’s FY12 support to $129.3 million, excluding academic medical center funding.

Corbett’s freeze did not extend to the state’s academic medical centers appropriation, which is part of the Department of Public Welfare budget.

Pitt’s Bradford campus has been hit especially hard by continuing reductions in state support.

In addition to sharing in Pitt’s overall cuts resulting from the governor’s funding freeze, Pitt-Bradford will be affected by the 5 percent freeze in the rural education outreach line item; that funding enables UPB to deliver educational services to rural populations in northern Pennsylvania. Outreach funds support several academic programs on campus. The funding also supports credit and non-credit programs at off-campus outreach sites in northern Pennsylvania as well as continuing education and business assistance programs.

UPB President Livingston Alexander on Tuesday told the University Times that he had received instructions from the Office of the Provost regarding the campus’s share of the freeze and that he was just starting to discuss the impact with units that may be affected.

“It is a significant reduction for us,” he said referring to the decrease in UPB’s base budget in addition to the 5 percent freeze in its rural education outreach line item. He declined to offer details on specific cuts that would be made on campus as a result.

The $104,000 freeze on UPB’s rural education outreach budget comes on the heels of the $433,000, or 19 percent, cut legislators made to that line item as part of the FY12 state budget.

“There are faculty and staff positions supported by the line item,” Alexander said, adding that although the earlier cut was covered mainly through non-personnel reductions,UPB did have to lay off two people as a result.

“We try as hard as we can to not reduce positions, especially positions that result in laying off people. But, as more cuts come, that becomes impossible,” he said.

Counting the most recent freeze, state support for rural education outreach has fallen from $2.56 million in FY09 to $1.98 million, a 22.6 percent drop.

“It is having a significant impact on our ability to offer the programs and services we had intended when we developed the strategic plan,” Alexander said.

Although the frozen state funds are in budgetary reserve, the release of the money appears to be unlikely. In comments related to his midyear report, state Budget Secretary Charles Zogby cited a weak national economy and the economic crisis in Europe as factors that pose a threat to state budget stability in the current and upcoming fiscal year. Additional concerns include uncertainty over federal funding and projected increases in health care, pension and debt service costs in the upcoming fiscal year.

Zogby estimated that medical assistance and long-term care costs are expected to rise by $400 million, state pension costs will grow by $520 million and debt service will increase by $80 million in FY13.

Corbett is to present his proposed state budget on Feb. 7, after which legislators will hold appropriations committee hearings, then work out a final FY13 budget.

For the upcoming fiscal year, the University has asked the state for a total of $168.1 million, including nearly $151.5 million in general support. That represents an increase of $26.3 million or 16.3 percent over the enacted FY12 appropriation. (See Oct. 13, 2011, University Times.)

Paul A. Supowitz, Pitt vice chancellor for Governmental Relations, said, “We’ll see what the governor says on Feb. 7. The pattern certainly makes us very concerned about what we’re going to see since the governor has targeted public higher education as the place to balance the budget.”

Pitt’s FY12 state appropriation already had been cut by more than $40 million overall — a 21.7 percent decrease from the previous year. (See July 7, 2011, University Times.)

At that time, lawmakers in Harrisburg lopped nearly $32 million from Pitt’s $168 million FY11 appropriation and halved its academic medical center funding for Pitt’s medical school, Western Psychiatric Institute and Clinic, dental clinic and Center for Public Health Practice, reducing it to $8.4 million.

The Corbett administration also has cut in half current capital budget commitments for projects at the state-related and State System of Higher Education universities, reducing the total from $310 million per year to $155 million.

Pitt’s $40 million share has been cut back to $20 million, which is the annual amount Pitt received from 1997 through 2008, according to the state budget office.

The University would not comment on which capital projects, if any, would be affected by the capital funding cut.

—Kimberly K. Barlow

Filed under: Feature,Volume 44 Issue 9

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