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July 22, 2004

Pitt Makes its Case for Increasing Tuition, Salary Pool

In a press conference following the Board of Trustees executive committee’s July 14 approval of Pitt’s fiscal year 2005 budget, administrators defended this year’s 6 percent tuition increase and 3 percent hike in the salary compensation pool.

In other forums, including his June 25 report to the full Board of Trustees, Chancellor Mark A. Nordenberg has boasted of Pitt’s strong financial viability as evidenced by a record amount of research dollars, a growing endowment and a billion-dollar fundraising campaign that is ahead of schedule, making the fiscal year just ended one of the best in Pitt’s history. (See July 8 University Times.)

In an opening statement at the news conference, the chancellor argued that those positive signs were offset by a dramatically changing economic environment where funding for public education has declined while “cost pressures” continue to rise, forcing institutions such as Pitt to increase traditional revenue streams including tuition, in order “to keep our momentum.”

Under Pitt’s initial budget request last fall for $184.5 million in commonwealth appropriations, the University would hold tuition increases to 4 percent and increase the salary pool by at least 4 percent, Nordenberg said. “We fell well short of that goal. Still we were able to hold tuition to a moderate increase” by belt-tightening, efficiency measures and wise investments, he said.

Healthy increases in research dollars do not affect tuition decisions, the chancellor said. In fiscal year 1996 Pitt attracted $230 million in research support. That number grew to $570 million during the last fiscal year, and Pitt is projecting it will swell to $620 million in the fiscal year that began July 1.

“Those are extraordinarily important dollars,” Nordenberg said, because that money supports some 18,000 local jobs. “But they aren’t dollars, in the main, that are invested in the core educational mission of the University,” which relies on state funding and tuition as its chief sources of revenue.

A National Science Foundation grant, for example, can support a small number of graduate students, Nordenberg said, “but has only incidental economic benefits to the educational programs. Those aren’t dollars that can be used to support instruction in English or business or philosophy or law.”

The chancellor pointed out that Pitt’s research support has grown by 164 percent since fiscal year 1996, while state appropriation support has increased by only 15 percent in the same period.

In comparing tuition rates at Pennsylvania schools, Nordenberg noted that community college tuition is in the $2,500 range; the State System of Higher Education schools charge about $5,000; state-related research universities such as Pitt and Penn State are in the $10,000 range, and private universities such as Penn and CMU have tuition in the $30,000 range.

“So, the choices are there,” Nordenberg said. “But what is instructive to us in looking at this budget is that more and more students are making the choice to attend the University of Pittsburgh, a clear indication that amongst the pool of prospective students, the University of Pittsburgh is viewed as ‘a high-value provider.'”

Applications to the Pittsburgh campus have risen from 7,800 in 1995 to more than 18,800 during this past year, he noted.

But is Pitt pricing itself out of the market for middle-income families?

“We haven’t seen that to date, but it obviously is a concern,” Nordenberg said. “Education is the key of the American dream and we want very much to stay within the reach of middle income students.”

Acknowledging that Gov. Ed Rendell had urged Pennsylvania institutions of higher education to hold the line on tuition, Nordenberg said, “The specific request was not made to us [by Rendell]. We do understand the desire of the governor to control tuition to the extent that that is possible, and we have done everything we can to control tuition increases this year.”

Nordenberg said a high priority at Pitt is compensation for its employees, which represents the University’s largest expense. “As the reputation and ambitions of the University increase, we find ourselves in a different level of competition in terms of the people we’re able to attract to Pitt, which does have an impact on [compensation decisions].”

Arthur G. Ramicone, vice chancellor for Budget and Controller, elaborated on rising costs the University faces in determining a budget. Organizations across the country have faced double-digit increases in medical insurance in the last couple years, he said. “Also, 9/11 drove up a lot of insurance, especially property insurance. The last couple years we’ve had 10 percent increases in water and sewage, and natural gas has gone up 17 percent.”

Nordenberg added that Pitt’s city location affects the cost of doing business. “To keep our relatively safe neighborhood, for example, we employ the third largest police department in Allegheny County,” he said.

“Beyond that, we’re not an institution that is standing still. We are an institution that believes in quality, and invests in that quality.”

-Peter Hart

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