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May 16, 2013

Triple pressures put squeeze on budget, chancellor cautions

nordenbergAlthough flat state funding for Pitt in the upcoming fiscal year seems certain, crafting a University budget “will not be easy” in light of a “triple threat” of federal, state and municipal budget pressures, Chancellor Mark A. Nordenberg cautioned.

As the University planning and budgeting committee prepares Pitt’s budget for the next academic year, “The challenges we face now are a little bit different because they’re coming at us from all three levels of government,” the chancellor told Senate Council in his May 8 report.

Nordenberg reported that an agreement between the governor and the four state-related universities to hold down tuition increases in exchange for flat-funding in the coming fiscal year appears to be holding in spite of state revenue receipts that have fallen “significantly below the projections upon which the governor’s February budget proposal was based.”

Gov. Tom Corbett’s proposed general fund budget of $28.4 billion represents an increase of nearly $679 million, or 2.4 percent, from the current fiscal year. It assumes a $544 million beginning balance based on general fund expenditures of $27.751 billion and available funds totaling $28.295 billion.

However, the state Department of Revenue stated that fiscal year-to-date general fund collections as of May 1 totaled $23.9 billion, or 0.3 percent above estimate.

The chancellor, who said he had spent several days in Harrisburg visiting with legislators earlier in the week, added, “There is likely to be a period of scrambling and perhaps a period of additional cutting before the budget for the next fiscal year is finalized. However, I saw absolutely no indications that anyone is at this point thinking about revisiting the flat-funding agreement that was reached with the state-related universities in February.” (See Feb. 7 University Times.)

Pitt’s current appropriation totals $144.34 million, including $134 million for general support and more than $2.08 million for rural education outreach, plus $4.05 million in academic medical center funding.

“The good news on the budget front, with respect to the state, is that our arrangement still appears to be in place. The other side of that news is that arrangement again keeps us at funding levels that are the equivalent, in unadjusted dollars, to the support we received in 1995.”

At the federal level, the University soon will be feeling pressure from the federal sequester, which, the chancellor said, ”most directly and most immediately will affect research funding.”

He added, “There are lots of other ways in which it could affect us as well.”

The University is estimating it could lose $32.6 million in federal research funding due to the federal cuts this fiscal year. (See March 7 University Times.)

Referring to Pittsburgh Mayor Luke Ravenstahl’s move to question UPMC’s nonprofit status, Pitt also is facing what Nordenberg called a “simmering challenge” to the nonprofit community from municipal government, which he said has been set aside in the midst of this month’s primary elections.

“For a while we had the pleasure of focusing on one as opposed to the other, but these days it really is kind of a triple threat that is coming our way,” Nordenberg said.

“The good news is that we will be dealing with all of those challenges from a position of relative strength,” the chancellor said, adding that, compared with peer institutions, “we have been more effective and maybe better equipped to deal with them.”

Declining to release specific figures, the chancellor said, “We have had a really outstanding year in terms of applications, at a time when many good schools have been facing application declines. Ours are way up, showing again that, within the marketplace, we really are viewed as a best-value institution.

“We’ll be moving forward from a position of relative strength and we also will be moving forward together.”

—Kimberly K. Barlow

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