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January 6, 2011

Compromise possible on budget information

The Senate budget policies committee (BPC) may receive some of the University financial information it has been seeking. BPC members responded favorably to a proposal by the University’s chief financial officer Arthur G. Ramicone to prepare a revenue and cost attribution report every three years, with less-detailed reports presented in the two intervening years. Previously, the full report had been prepared annually.

While the University Planning and Budgeting Committee (UPBC) must approve the plan as well, BPC chair John J. Baker said many BPC members “strongly support this as an idea and would like to see it go forward.”

The report, which the Office of Budget and Controller prepares for UPBC, shows the revenues and expenses attributable to each of the University’s academic units and other responsibility centers.

Ramicone said the document is time-consuming to prepare, estimating that each attribution report takes 300-350 hours of staff time. “The discussion has been over the years to kill it because the senior administration has always said they don’t rely on this document to make resource allocations to the units,” he said.

The document — and the value of it — has become the subject of much debate since BPC sought UPBC permission to discuss the report in open session. UPBC has since declared the document private and questioned its usefulness in aiding understanding of University finances. UPBC meetings are not open to the public.

According to minutes from UPBC’s Feb. 19, 2009, meeting, the committee passed the following motion by a vote of 21 in favor, none opposed and three abstentions: “While the committee values transparency of the fiscal affairs of the University, the sub-committee report, ‘Revenue and Cost Attribution,’ is not one that should be shared with other elements of the University’s internal governance structure unless those elements are willing to maintain confidentiality.”

The most recent attribution report presented to BPC, which covered fiscal year 2007, was presented in draft form during a closed session at BPC’s May 2, 2008, meeting.

Richard Pratt, then chair of BPC, sought to invite Pitt athletics director Steve Pederson to a public meeting and wanted the document made public to permit discussion of the Athletics budget with him. (See Dec. 4, 2008, University Times.) That discussion has never taken place, nor has the report been made public.

More recently, BPC and UPBC members have debated what alternative information might take the place of the report.

“We don’t lack for data,” Ramicone said at the Dec. 10 BPC meeting, noting that his office reports University financial information to the state and other government entities regularly. Revenue and expense information and tuition data could be provided to BPC, but Ramicone noted that would require the committee to put it into cohesive form to make it useful. That prompted him to propose that his staff prepare a full report every three years. “It really seems fair in terms of who’s going to know the information better than us,” he told BPC, adding that eliminating the preparation of a full report every year would cut the workload for his staff as well.

He noted that there tend not to be large changes from one year to the next in how the institution allocates its resources to the various responsibility centers. He proposed that current revenues and expenses for each area be provided, but that the University’s support for each be in the form of a percentage. “We’d use the actual expenses from each year, but we’d apportion them using the respective percentages by responsibility center,” he said. Every third year, the actual report would be generated.

BPC member James Cassing of economics agreed that year-to-year changes likely would not be large, but that it is useful to have a sense of how much each area within the University is subsidized. “I think it’s really useful to do it, but to do it and talk about it every three years seems reasonable to me,” he said.

BPC’s Baker said, “I understand the problem with the work involved with generating it, especially if it’s not being used by the people putting together budgets. There are a lot of academic decisions that go into deciding what a particular unit’s budget should be and they’re not reflected by this document.”

Still, he said, the faculty want the document and find it useful. “I think part of that is because we don’t see the other information that the administration gets.”

BPC member Phil Wion continued to advocate for the value of the report’s Athletics financial data, noting that the most recent attribution report showed that the revenue-producing sports of football and men’s basketball were generating more revenue than they were costing, thereby subsidizing in part non-revenue sports. “That’s a good thing for the University. Lots of institutions spend more on those sports than they bring in,” he said.

“I hope it will be continue to be part of the attribution study and at another date we can discuss again the question of how much of the study is public and how much isn’t,” Wion said.

In other business, salary issues were on committee members’ minds.

Cassing suggested that the University’s salary policy be revisited.

“I think the administration is managing the ship really well, but the sailors do a lot of work too and I think that sometimes gets lost in the discussion,” he said. “One way to operationalize that is with a coherent salary policy that recognizes achievement and accomplishment at all levels.”

The University’s salary policy is online at The policy states that the salary increase pool “should be sufficiently large to provide adequate funds” for four components: maintenance of real salary; merit increases; equity adjustments, and market adjustments.

In recent years, the salary pool increase has had two parts, with a percentage increase to cover salary maintenance, or cost of living for employees demonstrating satisfactory performance, and another percentage increase covering merit, market and equity adjustments. (The 3 percent fiscal year 2011 salary pool increase included 2 percent for salary maintenance and 1 percent for merit, market and equity adjustments at the unit level.)

Wion said that although cost-of-living increases have not always kept up with inflation, the salary policy’s stated priorities have not been abandoned, adding that the policy is cited each year when the chancellor announces the salary pool increase.

Baker believes the University salary pool distribution policy works well. “I think the basic components of the policy are fine,” he said, arguing that the size of the salary pool is the problem. “I think the problem is there just isn’t enough there,” Baker said, noting that the salary maintenance component of the pool often has been below the inflation rate.

BPC member Chandralekha Singh brought up her concerns about a gender gap in faculty salaries, which she said is 12-13 percent for assistant professors and full professors and about 6 percent at the associate professor level. Although the University reports faculty pay averages, she lamented that more specific analysis has not been available.

Baker acknowledged that the gender issue has remained an ongoing question. Cassing noted that models and figures from other universities are available and volunteered to study the issue if Pitt data are made available. “I think it’s really important and I would like to see it revisited,” he said.

University Senate President Michael Pinsky restated his suggestion that longitudinal salary information be studied. (See May 13, 2010, University Times.) Among the drawbacks of the salary report is that each year’s report represents a different mix of people due to faculty movement through the ranks, or in and out of the University, he noted. “What I recommended was that we just take a cohort and follow them over a period of six years retrospectively,” Pinsky said. “This could be done across departments or within specific schools.” To ferret out gender-based information, “We could just as easily identify as a separate question a group of female faculty and do the same plotting at the same schools,” he said.

“The advantage of it is they would be the same people over the same six-year period. You wouldn’t be talking about people coming and going,” Pinsky said. “You’re talking about the same person over time and what was their (salary) change.”

Should significant systematic differences emerge, he said, “that would be legitimate and that would suggest that we need to address it. If we have the documentation that in fact these folks are the same, then that’s prima facie evidence that in fact any difference has to be due to some other job mix issues.”

Baker said he discussed the gender equity report issue with Provost Patricia E. Beeson after it came up at Faculty Assembly (see June 11, 2009, University Times), and said speaking with the provost about compensation issues should precede a request for new cohort-based reports. “I told Patty there was still a lot of interest in the issue and asked if the Provost’s office would be willing to revisit it. She said they would. I don’t know whether it would be this particular year but it is something they’re interested in doing,” Baker said, adding that BPC could invite the provost to meet with the committee to discuss the salary issues.

—Kimberly K. Barlow

Filed under: Feature,Volume 43 Issue 9

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