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May 15, 2003

State-relateds plead case to legislators

WEST CHESTER, Pa. — Testifying together here at a May 2 hearing of the state House appropriations committee, Chancellor Mark Nordenberg and the presidents of Pennsylvania’s three other state-related universities described how cuts in state funding — combined with soaring costs of everything from library materials to employee health insurance — are squeezing their schools financially and making sizable tuition hikes nearly unavoidable.

The Pennsylvania fiscal year 2003-04 budget approved in March proposes cutting appropriations to Pitt, Penn State, Temple and Lincoln by 5 percent for the fiscal year that begins July 1. That percentage cut would reduce Pitt’s state funding to $14 million less than it was two years ago.

(Pitt is budgeted to get $176.7 million from the state this year, but Harrisburg has frozen 2 percent of that amount, offering little hope that the money will be restored to the University.)

Pitt faces a fiscal double-whammy as other state-supported agencies seek to make up for lost state funding at Pitt’s expense, Chancellor Nordenberg told lawmakers.

For example, one way that the Port Authority of Allegheny County hopes to compensate for its own reduced state funding is by hiking the annual fee that Pitt pays for ride-for-free service for Pittsburgh campus employees and students. See related story.

“Public transportation is extraordinarily important to the students and employees of an urban university,” Nordenberg pointed out. “So, to the extent that the Port Authority feels pinched, it looks toward one of its major customers. We’re not sure whether the year ahead will bring higher fees for us or reduced service or both.”

Penn State President Graham Spanier said his school has been forced to absorb $29 million in state funding cuts during the last year and a half. Gov. Ed Rendell’s proposed 5 percent reduction for next year would slice another $16 million from Penn State’s appropriation.

“Our fiscal problems are exacerbated by increases in health care costs, deferred maintenance, malpractice and other insurance costs, ADA [Americans With Disabilities Act] compliance costs, escalating costs of technical and library materials, utilities increases and increases in contributions to the state employee retirement system,” Spanier said.

Penn State’s most critical budgetary priority is its medical college, Spanier said, which ranks dead last among 76 public medical schools nationwide in the amount of state assistance it receives. (Pitt’s medical school ranks 72nd.)

While Penn State does not plan to close its medical college, according to Spanier, he said the unit is “in jeopardy” because of low state funding, skyrocketing costs of drugs and malpractice insurance, changes in reimbursement for clinical services, and the burden that academic medical centers must assume for treating indigent patients.

“The trimming and the budget cutting we’re doing is going right back out the door to pay for increased malpractice insurance premiums,” Spanier told the appropriations committee.

“I agree with everything President Spanier has said,” concurred Nordenberg, who noted that in 1998 state appropriations to medical schools per full-time equivalent student were about $87,000 per student in Texas, $64,000 in California, $46,000 in Ohio and $10,500 in Pennsylvania.

Ivory Nelson, president of Lincoln University, said that over the last three years insurance costs at the historically black school have risen by 88 percent, electricity costs by 25 percent, and expenses for employee benefits and fuel by 20 percent each.

Balancing the budget “is especially difficult for Lincoln because we operate on such a thin margin, and we serve a population of students who are, 95 percent of them, receiving some form of financial aid,” Nelson said.

Temple President David Adamany said enrollment pressures combined with declining state funding will force his university to turn away thousands of students next fall “who, five years ago, would have been eligible for admission and whom we would have been very pleased to enroll.”

Over the last five years, Adamany said, enrollment at Temple has risen by 19 percent (it’s expected to exceed 33,000 students next fall) while state funding will have decreased by 8 percent if the governor’s 5 percent cut is approved.

“The enrollment pressure on institutions of higher education, especially those most affordable colleges and universities in the public sector, are simply enormous,” Adamany said. “We are doing our best to serve this state’s people, but our best under the present circumstances is insufficient.”

University leaders would not speculate about how high their schools’ tuitions might increase next fall if their state funding were cut by 5 percent.

Nordenberg told the University Times: “I don’t really have a guess to offer [regarding next fall’s tuition increase] because we are continuing to work on that. But if you look at the swing in the likely support that we get from the state, the difference between what we requested and what has been recommended [by the governor] is $17 million. That is a big hole to fill. We’ll work as hard as we can to close that gap without adding burdens to our students, but there almost certainly would be additional tuition tied to that loss.”

In the funding request that Pitt submitted to Harrisburg last September, the University pledged to limit tuition increases to 5 percent in fall 2003 — but only if Pitt got a 5 percent increase in its appropriation.

Last fall, Pitt hiked tuition by 13.9 percent. Should students here expect another double-digit increase next fall?

“We’ll keep any tuition increase as moderate as we can,” Nordenberg replied. “But again, it really would be premature for me to say anything because I don’t want people to rely on what is, at best, a guess at this point.”

This week, the chancellor said Pitt is studying how other universities have fared with differential, or tiered, systems whereby tuition is hiked by a higher percentage for, say, freshmen and other new students than for continuing ones. A growing number of universities, including Penn State, have adopted such systems in recent years.

Nordenberg said he hasn’t decided yet whether it would be a good idea for Pitt to begin charging differential tuition. “We simply have been looking at it in conceptual terms, recognizing that it is becoming more common,” he said.

With controversial speed, the General Assembly in March approved a 2003-04 state operating budget that included proposed 5 percent cuts in funding for Pitt, Penn State, Temple and Lincoln. But as “non-preferred” appropriations, funding for each state-related school requires passage by two-thirds of the House and Senate. Those votes have not taken place yet, and had not been scheduled as the University Times went to press.

Theoretically, then, there still is time for lawmakers to find additional money for the universities — but probably not much, members of the House appropriations committee warned.

The $21 billion state spending plan passed in March “leaves very little for us to work with relative to non-preferreds beyond what has been proposed,” said Rep. Thomas A. Tangretti, D-Westmoreland Co.

“Probably, you’re looking at cuts” in Pitt’s appropriation, said Rep. Dan B. Frankel, D-Allegheny Co., whose district includes Pitt, “although it’s very vague at this point. I do expect that there’s going to be some movement to restore funding to different line items that the universities receive.”

Democrats on the appropriations committee — including Tangretti, Frankel and Jake Wheatley Jr., D-Allegheny Co. — criticized Republicans for ramming through passage of the state’s 2003-04 budget within days of getting it from the administration, ignoring Gov. Rendell’s plea that the legislature wait until he could unveil a follow-up plan for economic development, property tax relief and increased funding for schools (initiatives likely requiring tax hikes).

Republicans on the committee, in turn, criticized Rendell for proposing deep cuts in the universities’ appropriations.

At times during the hearing, held at West Chester University’s Graduate Business Center, leaders of the state-related schools were reduced to the status of onlookers as committee members traded political barbs disguised as questions.

For example, after hearing Nordenberg and Adamany describe at length Pitt’s and Temple’s roles as “essential engines” powering Pennsylvania’s economy, Rep. John A. Maher, R-Allegheny and Washington Co.s, asked the four university leaders: “Has the governor discussed with any of you how he sees a consistency between rhetoric advancing the importance of intellectual capital and budgets which serve to undermine the critical mass of that intellectual capital in Pennsylvania?”

Earlier, Democratic Rep. Wheatley had inquired: “Have any of you had discussions with any of the legislators — mostly Republicans — as to their rationale for passing a budget within 48 hours, knowing it would impact you as it does?”

Penn State President Spanier earned the biggest laugh of the hearing, from legislators and his fellow academicians alike, when he replied: “I don’t think any of us at this table would want to be in the position of commenting on the rationality of members of the legislature — tempted as we might be.”

Following the hearing, Nordenberg said: “Certainly, it is a difficult year and you could see politics playing out in front of us. But fortunately, I think the level of the discussion, by and large, was quite substantive, and I did think it was a productive exchange.”

Among the points that Nordenberg made during his testimony were that:

• Pitt will attract nearly $500 million in external research funding this year, about triple the amount of its state appropriation. “I do not know of a more effectively leveraged public university in America,” said Nordenberg, citing a nationally accepted formula that every $1 million in research funding supports, directly or indirectly, 31 jobs. That means Pitt, through its externally funded research alone, supports 15,000 Pennsylvania jobs.

• Pitt and other research universities are driving the education and knowledge creation sector of Pennsylvania’s economy, a sector that generated more than 16,000 new Pittsburgh area jobs in the last decade. “Without a strong University of Pittsburgh,” the chancellor said, “such initiatives as the Pittsburgh Life Sciences Greenhouse, the Pittsburgh Digital Greenhouse, the Pittsburgh Supercomputing Center, the University of Pittsburgh Manufacturing Assistance Center, the Pittsburgh Tissue Engineering Initiative, the McGowan Institute for Regenerative Medicine and the University of Pittsburgh Cancer Institute simply would not exist as we now know them. And that is just a partial list.”

• “Everyone understands that you face enormous challenges this year,” Nordenberg told the appropriations committee. “No one can expect to be insulated from the effects of an ailing economy. And each of us has got to invest where we believe our dollars are going to have the greatest impact. Ben Franklin, perhaps the greatest Pennsylvanian of all, once said: ‘An investment in knowledge always pays the best interest.’ That was true when Mr. Franklin served as the speaker of this assembly, and it remains true today.”

—Bruce Steele

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