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April 27, 1995


Today, across virtually every institution of higher education, the issue of balancing budgets in an environment of rising costs and constrained revenues has taken on priority consideration. In Pennsylvania, the state university system and the state-related universities face a similar challenge both in the short term as well as over the long term.

As you are undoubtedly aware, Governor Tom Ridge's proposed 1995-96 budget calls for holding the University's FY1996 allocation, as well as the other three state-related universities, at its current level. Needless to say, we are concerned by the Governor's recommendation, and in hearings before the Senate and House Appropriation Committees, I made clear our concern over the persisting pattern of inadequate funding for Pennsylvania's public universities. We had requested a modest increase of 6 percent for FY1996, which even if received, would have required some additional cost-savings measures. While we will not know what the final FY1996 Commonwealth appropriation will be until the entire state budget is approved, we have begun to consider some actions to produce a fiscally responsible University budget for FY96 based upon our estimates of revenues. Our colleagues in other state higher education institutions are proceeding likewise, as evidenced by the State System of Higher Education's Board of Governors recent action to institute a hiring freeze holding all employment in the 14 state-operated universities to their current levels.

I have presented several cost-containment actions to the University Planning and Budgeting Committee which are under active consideration by the administration. These include a freeze on all executive and deans' salaries which would take effect immediately. Executive salaries would remain at their current level throughout FY1996, and deans' salaries would remain at their current level through January 1996. Further, there would be no staff and faculty salary increases until January 1996, and then only if increases can be met through savings from staff and faculty attrition; and a review of all University-funded capital requests with a delay of all but the most urgent projects. Further, all units of the University will be asked to review their costs and to make reductions which do not impair essential functions.

As we discuss these cost-savings measures, I also want to assure you that we are continuing to seek new revenue enhancements. However, we are clearly limited as to how much more we can realistically increase tuition. Both national and local pressures to keep college tuition rates affordable dictate that we be responsive, if we are to remain competitive within a declining college-age population market in the presence of growing concerns on the part of students and parents. But even these concerns notwithstanding, a tuition increase is necessary, and therefore, I have suggested to both the House and Senate Appropriations Committees a tuition increase of 3.5 percent for FY96. Consistent with this move, we will also undertake a comprehensive enrollment study for the purpose of improving retention and for enabling the University to forecast long term enrollment projections, which will immeasurably improve our academic and budgetary planning process.

I will continue to engage UPBC and the Board of Trustees in discussions on these proposed cost-saving and budgetary control measures, which — though subject to final approval of the overall University budget by the trustees — will be disconcerting to many of you. But I believe they represent the most responsible means currently available to ensure the continued fiscal viability of the University of Pittsburgh — a goal which I know you also share.

J. Dennis O'Connor

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