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July 21, 2005

Trustees approve FY06 budget

Pitt’s budget has topped the billion-and-a-half dollar plateau for the first time.

Last week, the executive committee of Pitt’s Board of Trustees approved a $1.52 billion operating budget for fiscal year 2006, as well as the salary compensation pool and tuition fees. The FY06 budget also calls for $5 million in cuts across the University.

Pitt will receive $175,079,000 in total state appropriations for FY06, which began July 1. That is an increase of $6.3 million, or 3.74 percent, over last year’s total state appropriation.

But Pitt officials at the July 15 trustees meeting pointed out that the $175 million in appropriations is about $3.5 million less, in actual dollars, than Pitt’s FY 2002 appropriation.

This year’s allocation also reflects a continuing decline in the percentage of the overall operating budget that state appropriations cover; this year’s percentage is less than 12 percent, compared to more than 30 percent in the 1960s, the officials said.

Pitt’s educational and general expenses (E&G) base funding was increased by 2.5 percent to $154.2 million.

The 2.5 percent increase in E&G is higher than the 2 percent increase put forward in Gov. Ed Rendell’s February budget proposal, but falls short significantly of the 10.4 percent Pitt requested of the state. (Pitt had requested an overall appropriations increase of 10.6 percent.)

The trustees also approved a 3 percent increase in the employee salary pool and a 6 percent tuition increase for in-state undergraduates, with a 3 percent increase for out-of-state students.

One component of the budget is still unsettled, with respect to line item funding provided for the Schools of the Health Sciences. In a proposal dubbed “federalization,” the commonwealth hopes to obtain funds from the Medicaid program to supply approximately half of the governmental funding for the School of Medicine, the dental clinic, the Center for Public Health Practice and Western Psychiatric Institute and Clinic (WPIC).

The General Assembly approved moving those four line items from the Department of Education budget to the Department of Public Welfare budget in an attempt to qualify for federal Medicaid funding.

If federal funds are not forthcoming, the programs will receive state funds at least equal to last year, the state said.

If the proposal is approved at the federal level, Pitt’s School of Medicine would receive a $2.2 million boost in total funding to $8.8 million, combining state and federal dollars.

The other three line items are expected to receive funding at last year’s levels, whether some of the funding comes from the federal government or all of it comes from the commonwealth:

• $1,037,000 for the dental clinic.

• $251,000 for the Center for Public Health Practice.

• $7,740,000 for WPIC.

The budget approved by trustees also calls for $5 million in “disciplined budget reductions” across the University.

“Like all business enterprises nationwide, Pitt must confront rapidly rising health care and utility costs, and continue to invest in both physical security and security measures for the protection of the institution’s information technology resources,” stated Arthur G. Ramicone, Pitt vice chancellor for budget and controller.

The $5 million budget reduction continues “the administration’s policy of seeking greater efficiencies, focusing a critical eye on current operations and programs and redirecting financial resources to higher-priority programs,” he said.

Senior administrators will meet soon to determine how the budget cuts will be distributed, and units affected are expected to be notified within a couple weeks, Ramicone said.

Most of Pitt’s fiscal year 2006 line item funding is budgeted at last year’s levels. The exception is the rural education outreach program, which was increased by 24.34 percent to $1,742,000.

Pitt’s commonwealth appropriation also includes the following line items:

• $416,000 for student life initiatives.

• $423,000 for recruitment and retention of disadvantaged students.

• $500,000 for WPIC’s teen suicide center.

The trustees executive committee also approved a $45.4 million capital budget for construction and renovation projects.

—Peter Hart


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