University Times

The University is lowering its expectations to reflect tougher fiscal realities as it asks for state budget support in the upcoming fiscal year.

After several years of 8.5 percent requests, Pitt is seeking a 5 percent increase in its state appropriation for FY11, which begins July 1. Asking for a 5 percent increase “demonstrates need without being unrealistic,” said Vice Chancellor for Budget and Controller Arthur G. Ramicone.

“None of the governments, be they local, federal or state, have any money. There’s no sense making a pie-in-the-sky request,” he said. “Five percent’s probably an unrealistic request based on the state of the commonwealth’s budget.”

In Pitt’s Nov. 12 request to the state Department of Education, administrators stated that the University intends to limit tuition increases to 4 percent and to increase the compensation pool by at least 3 percent if the state appropriates the  $194.68 million the University is seeking.

Pitt asked for $172.3 million for educational and general (E&G) support, $457,000 for disadvantaged students, $541,000 for Services for Teens at Risk, $2.64 million for rural education outreach and $449,000 for student life initiatives.

The total also includes $18.28 million in academic medical center funding that is received through the Department of Public Welfare budget. The academic medical center funding request includes nearly $8.96 million for the School of Medicine, $1.05 million for the dental clinic, nearly $7.9 million for Western Psychiatric Institute and Clinic and $412,000 for the Center for Public Health Practice.

Ramicone said it is unclear how much of an increase in the FY11 appropriation would be necessary in order to lift the salary freeze University administrators imposed for FY10. However, he estimated that a 1 percent increase in payroll currently would equate to about $4.5 million.

“We all realize you can’t freeze salaries forever — at some point you lose your best people, who have other options,” Ramicone said.

“We would love to be in a position where we could give a salary increase next year.”

In each of the past three years, Pitt requested an 8.5 percent increase from the state, an amount administrators said reflected the University’s funding needs. Legislators responded with an increase of 2.16 percent in fiscal year 2008 and a hike of 1.5 percent in FY09 (that later evaporated as nearly $189.3 million in approved state funding shrank to an actual $177.9 million following mid-year budget cuts).

Given that the University’s state appropriation for the current fiscal year that began last July 1 has yet to be approved, the 5 percent increase is pegged to a FY10 “expected budget” amount based on Gov. Edward G. Rendell’s proposed $189.26 million (including federal stimulus funding) for Pitt, Ramicone said.

In a statement that accompanied the budget request, Chancellor Mark A. Nordenberg said, “The University has worked diligently and extensively to implement cost-cutting and operational efficiencies. Pitt has done much to streamline operations, but the need to sustain excellence remains our primary concern.

“An adequate and predictable increase in our appropriation is essential if Pitt is to offer a quality education to qualified Pennsylvania students at an affordable price.”

Nordenberg cited continuing declines in state support for the University, pointing out that Pitt’s appropriation has been reduced in four of the past eight fiscal years and that the increases in FY08 and FY09 failed to keep pace with inflation. Most recently, a mid-year budget cut in January resulted in the state “reserving” 6 percent, or $11.3 million, of Pitt’s appropriation.

“As a result of this mid-year reduction, the University’s FY09 appropriation was $177.9 million, which is about the same amount that was appropriated to Pitt in FY 2001, unadjusted for inflation,” the chancellor stated. He pointed out that academic medical center funding line items have been bolstered by the use of matching federal Medicaid funding since FY06. “Thus the commonwealth is investing nearly $10 million less in the University in FY 2009 than it did in FY 2001,” Nordenberg stated.

Still awaiting FY10 funding

In its request for the current fiscal year, which began July 1, the University sought $205.34 million. (See Sept. 25, 2008, University Times.) However, an appropriation bill for the University, SB1036, which remains in the House appropriations committee, includes $160.49 million in state support for Pitt and $7.5 million in federal stimulus money for FY10 as well as $8.64 million in stimulus money for FY09.

Rendell signed the state’s FY10 budget on Oct. 9, but nearly $730 million in appropriations for Pitt, its fellow state-related universities, and two dozen other institutions that receive nonpreferred appropriations from the state remain in limbo pending an agreement in the state legislature on casino table games revenues to balance the budget.

In spite of the governor’s proclaimed optimism for a quick resolution, no agreement has been reached, although negotiations are ongoing.

A meeting between the governor and legislative caucus leaders had been scheduled for Tuesday afternoon, as the University Times went to press. However, the Senate’s next scheduled session is Dec. 1; the next House session is Dec. 7.

Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, told the University Times,  “In terms of the negotiations on gaming reforms and the authorization of table games, we are optimistic that can be settled by the end of this calendar year.”

Brett Marcy, spokesman for the House Democrats, said, “The non-preferred appropriations, such as those for state-related universities, are inextricably tied to the legislation that will legalize table games in Pennsylvania. We cannot spend money we do not have, and in order to raise the money needed for those appropriations, we must legalize and tax table games.

“Our staff has been working on this legislation continuously since the budget passed, but it has to be done right. While we understand the immediate financial concerns of the University of Pittsburgh and other state-related universities, House Democrats are focused squarely on the long-term financial impact of this legislation. We remain adamant that the final table games legislation must generate enough revenue to fund these institutions, not just this year but also for years to come.”

Noting that the Senate has passed appropriations bills for Pitt, Penn State, Temple and Lincoln, Arneson said, “The Senate Republican caucus has consistently said that funding for the state-related universities should be approved now, without regard to table games.

“There is enough money in the already-enacted budget to cover that funding, so there is no good reason for the delay.”

No FY10 budget for Pitt

The University has not set its own FY10 budget pending a finalized state appropriation. “You’re expected to be fiscally responsible,” but without current-year figures, it’s difficult to compare actual expenses with available and remaining budget amounts, Ramicone said.

If Pitt’s appropriation weren’t in limbo, the University would have received about $75 million of it by this point in the fiscal year, Ramicone said, adding that it’s costing the University “in the six figures” in interest that its cash reserves would have been earning.

About $10 million in PHEAA grants for Pitt students that typically are released to the University in August were delayed until after the state budget was passed. Another $10 million in spring-term PHEAA grants is expected to be released in January as scheduled.

The University also sent tuition bills totaling about $220 million last week, which are due Dec. 17.

—Kimberly K. Barlow