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March 8, 2012

Ramifications of proposed state cuts outlined

In a hearing before a sympathetic yet cash-strapped state Senate appropriations committee, Pitt administrators described the potential impact on the University — and its regional campuses and medical school in particular — in light of proposed cuts in state support.

“We’ve got tough decisions,” appropriations committee chair Jake Corman (R-34) said at the Feb. 29 Harrisburg hearing. “The governor said, to his credit, that this is more of a math equation than it is policy-driven. … The governor is trying to put a budget together that reflects the revenues that we have.” Corman said the committee has the difficult job of trying to augment the proposed budget. “We have to find that revenue either within the current confines or elsewhere. And that’s our challenge.”

Sen. John N. Wozniak (D-35) added, “Many of your students and many of their parents voted for this administration, saying that they do not want tax increases — ‘Live within your means’ — and we’re all feeling that pain now. I think you have sympathetic members of the Senate here who want to work very diligently with you to try to bring those numbers up, but we have to work within the budget we have.”

Sen. Robert M. Tomlinson (R-6), appropriations committee vice chair, said, “I’m concerned that we are making too abrupt a correction, although we have to live within our own realities.”

Sen. John Pippy (R-37) said, “I don’t want to make short-term decisions that will have a generational impact on our universities,” raising the issue of the economic returns on the state’s investment. “As we look at a very difficult and challenging budget cycle, we need to start identifying those organizations that actually give a lot of money back and have a real dollar impact,” he said. “I know we don’t want to take money from other areas, but I think we’re going to be in a scenario where we’re going to have to start prioritizing based on the value added and brought back.”

Corman began the hearing with a two-pronged line of questioning, asking the administrators not only about the impact of the governor’s current budget proposal, which would cut Pitt’s general appropriation by 30 percent, but also about what would happen should the state withdraw its support entirely.

In light of the governor’s formation of a higher education advisory panel to review postsecondary education in Pennsylvania (see Feb. 9 University Times), Corman said, “I would assume at some point during that panel discussion, the idea of privatization will come up, and do we need to continue to fund the four state-relateds in particular, or is it time to maybe spin them off to be private universities?” Although the situation is hypothetical, “It’s going to be discussed, so we might as well discuss it now,” he said.

Public vs. private

“What would the University of Pittsburgh begin to look like in five-10 years if that’s the direction the commonwealth would decide to go?” Corman asked.

Chancellor Mark A. Nordenberg, a member of the higher education advisory panel, said, “We think that we have done good things with the support the commonwealth has been providing to us and now, as you have suggested, we seem to be facing a moment of truth.

“If you combine the cuts actually imposed last year with the cuts that have been proposed for the next fiscal year, they total well over $100 million,” the chancellor said.

“If the relationship can be measured in dollars and cents, we’d be half as public as we were two years ago,” he said.

“When you think about the ways in which we might need to change, probably the most apt comparison is to look at comparable private research universities.” Nordenberg noted that Pitt undergraduates in the arts and sciences pay about $15,000 in tuition, compared to about $40,000-$45,000 charged by comparable private universities.

Also, nearly 80 percent of Pitt’s undergraduates are from Pennsylvania. “If you went to a major private research university, you would probably see that ratio turned around — 20-25 percent in-state students and 75-80 percent out-of-state students,” he said.

“You would tend to see a more compressed array of programs. … If you look at private research universities, you don’t see regional campuses,” he said. “Carnegie Mellon has campuses in Qatar, Australia, Portugal, the Silicon Valley, while we’re in Bradford, Greensburg, Johnstown and Titusville. It’s simply a different mission, so there would be significant changes underway and we’re already wrestling with some of them.”

The chancellor also pointed to state cuts to Pitt’s dental clinic, public health practitioner training and the Services for Teens at Risk suicide prevention program. “Those are things that have been supported by the commonwealth basically up until this year,” he said. “There is a real question as to how we advance public work like that” if Pitt were private.

In response to questions by Sen. Stewart J. Greenleaf (R-12) and Sen. Bob Mensch (R-24) on tuition increases that occur even when state support is increased, Nordenberg said, “If your costs are going up and state support is going up, that won’t mean tuition won’t go up too if they’re sharing that burden.”

He agreed with Mensch’s assertion that state funding levels are not the sole contributor to tuition hikes. “But the suggestion that there is no relationship between levels of state support and tuition increases just isn’t borne out by the facts,” the chancellor said.

In perspective

Nordenberg described how Pennsylvania’s support for Pitt and Penn State, which are categorized by the federal government as “research intensive universities,” compares with other states.

“California’s appropriation just to UCLA is greater than Pennsylvania’s appropriation to Pitt and Penn State together,” he said, adding that the same is true for state schools in Minnesota, Connecticut and Florida.

“I wish I could argue to get us up to UCLA or Minnesota levels, but looking at it another way, just think about getting two big universities like this for the kind of investment that we’re seeing in one in so many other states.”

An eroding social contract

Sen. Jim Ferlo (D-38), the committee’s minority vice chair, said the budget cuts erode the state’s longstanding “social contract” with the University. Ferlo said he sees a pattern of transference that puts “more burden back on local nonprofits, county governments, human service agencies and individuals” as the state reduces funding in areas such as education and welfare.

“What we’re seeing is the beginning of the end of a state commitment to adequately fund higher education,” Ferlo said.

“My worst fear is it will change the whole dynamic, not only of your ability to survive as an institution, but I think it will trickle down to basically be a denial of a long-held social contract that we’ve held with middle-class families,” he said.

Nordenberg agreed. “It’s a retreat from a belief that has governed much of what we have done in this country over much of my lifetime,” he said, citing GI bill education benefits for World War II veterans, the development of the community college system, the Pennsylvania Higher Education Assistance Agency and the state-related universities as examples that “clearly reflected a belief that we needed to do something for the next generation,” he said.

“We see not only a pattern of transference, but if you’re talking about the other side of things, how is it that we’re going to move Pennsylvania into a highly competitive position in the innovation economy of the 21st century? I don’t know how you do that if you don’t support research universities.”

Regional concerns

Sen. John C. Rafferty Jr. (R-44) expressed his support and concern for the state-related schools, not merely as educational centers, but as important economic engines, particularly in rural parts of the state. “I’m a big proponent of the regional campuses,” said Rafferty, who is a Pitt-Johnstown graduate. “In some of those areas the universities themselves are the main employer,” he said.

Nordenberg said the regional campuses “would be the most vulnerable units of the University if we’re pushed to privatization.”

Sen. Lisa Baker (R-20) asked whether regional campuses might have to be closed.

Nordenberg said, “I don’t want to say something that would be anxiety-producing in a premature way, but if you look at those campuses, they would have the greatest difficulty sustaining their operations without state support. … If we keep getting pushed out this continuum, clearly it’s yes.”

Impact on the medical school

Sen. Mary Jo White (R-21) inquired about the proposed elimination of the Commonwealth Universal Research Enhancement (CURE) program, which funds research through federal tobacco settlement dollars.

Arthur S. Levine, senior vice chancellor for Health Sciences and dean of the School of Medicine, said that Pitt has received about $90 million in CURE funding over the past decade, which has been leveraged to attract $600 million in National Institutes of Health support.

Should CURE funding be redirected, “The impact would be profound,” Levine said. “We’ve used that money basically to position ourselves to obtain federal grants, corporate grants and foundation grants. None of those grants would be given to us if we didn’t have laboratories in place, if they weren’t equipped and especially if we hadn’t been able to recruit young researchers that will compete for those grants.

“Without the tobacco money, we would be bereft of the ability to recruit young scientists, at least with the momentum we’ve had historically; we would be bereft of the opportunity to build and renovate laboratories and to equip them,” he said.

Levine said, “Not only is recruitment an issue, but now retention has become an issue also,” describing how he is dealing with the potential loss of two “superstar investigators” who are being recruited by institutions in California and Florida.

“It’s far more expensive to replace a departed investigator than to retain one, and if we’re having problems even with retention you can what the magnitude of the problem is,” Levine said.

In addition, “at best, federal dollars only cover 75 percent of the cost of our doing research. So we’ve been using the tobacco money to help to cover the other 25 percent,” he said.

Impact on medical education

State funding cuts also would affect medical education at Pitt. “It costs about $90,000 per year to educate a medical student. Our tuition is about $45,000 per year. We have to use other funds to make up for the other half of the cost,” Levine said. Noting that medical students graduate with an average of $160,000 in debt, he said, “We’re producing a generation of young physicians that will ultimately have to pay off a debt of almost a quarter of a million dollars. … That has a major impact on their choice of geography and their choice of specialty.”

Levine said, “What the country needs more than anything now are primary care physicians, but they make the least amount of money. So we’re overproducing super-specialists in well-to-do suburbs and egregiously under-producing primary care physicians in rural parts of the commonwealth.”

Cost cutting

Sen. Baker inquired about Pitt’s efforts to cut costs, citing the University’s statement that the $67 million in state funding cuts would equate to eliminating 1,000 University positions.

Nordenberg said, “About the only thing we haven’t done is to lay off large numbers of people. We’ve had salary freezes. We have changed benefits programs and further deferred renovations. We have distributed cuts throughout the University,” he said. “Often business people look at you as if you’re not a good manager unless you’ve laid off 1,000 people. My view of life is you’re not a good manager unless you’ve looked at how you can avoid laying off 1,000 people.”

Nordenberg reiterated that demand for Pitt’s services continues to rise. “Pressure from potential students continues to grow. The research dollars that our faculty bring in continue to grow. So, it’s not as if we’re in a position where the cars we’re manufacturing aren’t selling.”

High quality is what sells in education, the chancellor said. “We really have put an emphasis on the quality of the student experience.”

Sen. Wozniak inquired whether high student demand would enable Pitt to raise tuition.

Noting that more students seek admission on the Pittsburgh campus than can be accommodated, Nordenberg said, “Yes, in a pure market sense that does put us in a position to raise tuition.”

Sen. Corman added, “I don’t think there’s any question that the University of Pittsburgh with all its prestige and what it offers certainly could attract a much higher tuition and still fill the main campus,” noting again the difference between a public mission and a private mission. “The public mission keeps your tuition at a much more competitive rate,” he said. “If you had a different mission my guess is that you would look at it much more from a competitive nature, at what you could get, as opposed to what is the social contract that Sen. Ferlo referred to.”

What’s next

Testimony before the Senate and House appropriations committees (see Feb. 23 University Times) is part of the annual state budget process. The governor’s budget proposal (see Feb. 9 University Times) provides a starting point for negotiations that will result in a final budget bill, which is supposed to be approved by June 30. More details on the budget process can be found at

—Kimberly K. Barlow

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