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January 23, 1997

Belt-tightening, additional funds should yield balanced FAS budget

Thanks to a series of school-wide, belt- tightening measures — plus a $1.4 million bailout by the Chancellor's and Provost's offices — the Faculty of Arts and Sciences (FAS) is expected to finish the current fiscal year with a balanced budget.

In November, Dean Peter Koehler alerted the Provost's office and FAS department chairpersons that the school faced a potential $2.6 million shortfall for the fiscal year that ends June 30, 1997. Koehler attributed the shortfall to FAS faculty hiring commitments for this year, combined with orders from the central administration to cut the school's base payroll by $1.1 million. The administration granted FAS an additional $2.2 million in compensation funds this year, but that money was earmarked for faculty and staff raises. It could not be used to offset the cut in the base compensation budget.

"We received these instructions [to cut the base payroll] in late June, five days before the beginning of the current fiscal year," Koehler said. "By that point, all the commitments for hiring new faculty had already been made for this year, so it was nearly impossible at that point to de-commit." FAS, unlike some other Pitt schools, is so tightly budgeted that it counts on recovering unspent salary monies each year just to balance its budget, according to Koehler.

Provost James Maher noted that Pitt's other schools and administrative offices had to make comparable cuts and reallocations, in order to increase the University's pool of money available for salary raises by 3.5 percent this year. As for tight budgets, some lower-priority Pitt schools absorbed budget cuts even before they were forced to adjust their compensation budgets last summer, Maher added. The reason FAS faced a budget crunch this year was because of excessive faculty hires authorized by Dean Koehler, the provost said.

To cope with this year's budget reductions, some Pitt schools resorted to eliminating vacant jobs, leaving others unfilled and even laying off staff. The FAS dean's office itself eliminated 16 staff jobs (while adding five), but those changes were part of the school's ongoing long-range planning process and were unrelated to this year's budget crisis, Koehler said.

The following actions have been taken to balance FAS's budget: * After reviewing its research grants billing last fall, FAS administrators found that the school had an additional $600,000 coming to it from outside agencies such as the National Science Foundation. That reduced the school's shortfall to $2 million.

* FAS reduced its shortfall by another $600,000 by making one-time cuts and deferring spending on laboratory start-ups, departmental travel budgets and other operating expenses, and by leaving an as-yet unspecified number of staff jobs vacant. "The details haven't been worked out yet, but the target is not to have layoffs but rather to transfer people from one area where we think there might be too many staff to other areas where there are not enough staff or where there are vacancies," Koehler said.

* The remaining $1.4 million will be offset by one-time allocations from reserve funds administered by the offices of the Provost and Chancellor, the dean said. Provost Maher told the University Senate's budget policies committee (BPC) at its Jan. 10 meeting: "The chancellor and I have both scoured our budgets, looking for ways to help" reduce the FAS shortfall. Maher said he is confident that the school will eliminate its deficit, "but it will be painful." BPC members pointed out that FAS used to routinely overspend its budgets during the 1970s and 1980s (some faculty accused the central administration of purposely underfunding the school back then) but that in recent years FAS had been balancing its budgets.

Provost Maher agreed. "This is not something Dean Koehler had done before in his nine years in office," he told BPC. "It's a very awkward situation." Maher said that he and the chancellor approved the $1.4 million bailout of FAS because the school is a high priority unit.

To help avoid a similar crunch next year, the FAS administration has cut back on faculty hiring for fall 1997. "Instead of the typical hiring of 20 or 25 faculty members, which is just the normal annual turnover for FAS, I've only authorized the hiring of eight or nine faculty members for next fall," Koehler said.

This year's FAS budget crisis was unrelated to a shortfall in the school's enrollment. FAS's administration had set a target of enrolling a total of 9,200 full-time equivalent undergraduates in fall 1996. The actual enrollment was just over 8,600.

What impact will the enrollment shortfall have on FAS's budget? "At this point, none," Koehler said, "other than tremendous pressure to make sure that this doesn't happen again." But at some point this year, the Provost's office will penalize FAS financially for failing to meet its tuition goal, the dean said.

The school has increased its fall 1997 freshman enrollment goal from 2,100 to 2,300 full-time equivalent undergraduates, Koehler said. "Eventually, we hope to reach the 9,200 [total FTE] goal, but maybe not all within the next year." Maher told BPC that Pitt's planned new financial accounting systems will give the central administration earlier warning of potential budget crises at individual schools.

— Bruce Steele

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