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March 18, 1999

Report documents Pitt's financial health

Report documents Pitt's financial health

If Pitt's revenues dried up overnight, the University could live off its expendable reserve funds and stay in business for a little over a year without laying off employees.

That's better than Penn State and Temple, which could live off their reserves for only about six months.

But it's not as impressive as Harvard, which could operate for seven years without generating any further assets — thanks mainly to Harvard's $13 billion endowment, the largest of any U.S. higher education institution. (Pitt's endowment is about $780 million.)

The "primary reserve ratio" — a comparison of expendable net assets versus total expenses — is one of 18 measurements of Pitt's financial condition outlined in a report to Pennsylvania lawmakers.

The report, titled "A Ratio Analysis of the University of Pittsburgh and Other Selected Educational Institutions," indicates that Pitt is in sound financial shape compared with 20 selected universities, all but one of them (Temple) members of the Association of American Universities (AAU).

"If you had looked at our numbers in the early 1990s, this University would not have looked this financially healthy," said Vice Chancellor for Budget and Controller Arthur G. Ramicone, who shared the report with the University Senate budget policies committee on March 5.

The report shows that Pitt boasts a healthy cash flow, a solid ratio of contributed income to educational and general expenses, and sufficient net assets to meet its debt obligations, among other positive signs.

According to the report, 3 percent of Pitt's total expenditures in 1997 went to pay off debts — the same percentage as at Cornell, Johns Hopkins and MIT, and lower than at Penn State (5 percent), Columbia (6 percent) and Temple (14 percent). Only Carnegie Mellon and Washington had lower percentages (2 percent) than Pitt.

On the less healthy side, only 12 percent of Pitt alumni gave to their alma mater in 1997, and the average value of their gifts was $48.11. Both figures placed Pitt among the bottom five of the 21 schools included in the survey.

By comparison, 23 percent of Carnegie Mellon alumni contributed average gifts of $218.81 to CMU.

Pitt also had the oldest physical plant among a dozen universities for which such information was available. On the other hand, Pitt allocated 6 percent of its educational and general income for plant maintenance. "At that rate, you can keep your physical plant in decent shape," Ramicone said.

— Bruce Steele

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