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July 25, 2013

FY14 budget of $1.94 billion approved

The University has set a $1.94 billion fiscal year 2014 operating budget that includes a 2.5 percent salary pool increase and blended tuition rate increase of 2.9 percent.

Following confirmation of Pitt’s $147.69 million state appropriation (see July 11 University Times), the Board of Trustees executive committee on July 17 approved the budget for the fiscal year that began July 1.

The University’s budget has remained unchanged at approximately $1.94 billion for three consecutive years.

Arthur G. Ramicone, Pitt’s chief financial officer, noted that Gov. Tom Corbett’s commitment to maintaining Pitt’s appropriation in the current state budget enabled the University to free itself to concentrate on internal budget matters rather than on potential state cuts.


In addition to $147.69 million in state support, the University is anticipating net tuition revenue of nearly $565.76 million, an increase of 4.2 percent.

The University’s biggest revenue source, research grants and contracts, is expected to be down in FY14. The budget includes nearly $705.25 million in research grants and contracts, down from $722.06 million in the FY13 budget.

The budget also includes $5.82 million in stimulus grants and contracts, less than half of last fiscal year’s $17.32 million, a line item that has dwindled as funds from the 2009 federal American Recovery and Reinvestment Act expire.

Gifts and pledges are budgeted at $62.16 million, down from $65.69 million last fiscal year. Endowment/investment income and distributions also are lower — $34.44 million, down from $39.01 million in the FY13 budget.

Sales and services and other revenues are budgeted at $368.87 million, up from $361.78 million in FY13.


Overall, Pitt has cut $8.55 million in expenses from its budget.

Much of that has come through a $9.86 million reduction in compensation, the University’s largest expense, as Pitt’s employee ranks shrank by 405 in 2012. (See related story this issue.)

For FY14, compensation is budgeted at $1.13 billion ($859.61 million in salaries and wages and $270.96 million in fringe benefits).

That’s down from last year’s $1.14 billion ($867.33 million in salaries and wages and $273.1 million in benefits).

The departure of 352 staff members through Pitt’s voluntary early retirement plan — most of whom were not replaced, Ramicone said — helped reduce benefits cost in some areas. “The increase we’re seeing is once again in health care,” which rose by about $3.8 million, he said.

The University was able to keep utility expenses roughly on par with last year by securing rates for gas and electric that offset increased water and sewer costs, Ramicone said. “This is the first time in recent memory that utilities weren’t a big drag on the budget.” Utilities are budgeted at  $47.87 million, down slightly from last year’s $48.83 million.

In other expense line items, business and professional expenses are budgeted at $292.37 million (up from $280.33 million in FY13); $46.59 million for maintenance and facilities costs (down from $48.92 million); $107.24 million for supplies (down from $126.83 million); $164.65 million for depreciation  (up from $152.99 million); $42.48 million for interest (down from $43.69 million), and $63.85 million in other expenses (up from $62.14 million).

—Kimberly K. Barlow

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