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February 22, 2007

Tough budget year could affect Pitt appropriation

This will be a very difficult budget year for the commonwealth, and that has ramifications for Pitt, according to Charles McLaughlin, assistant director of commonwealth relations.

McLaughlin reported on a number of factors contributing to uncertainty as the annual state budget process wends its way to completion.

Earlier this month, Gov. Edward G. Rendell proposed that Pitt’s state appropriation be raised by 1.96 percent to $167.86 million in fiscal year 2008, which begins July 1. That proposal fell far short of Pitt’s request, submitted last fall, for $198.54 million, or an 8.5 percent increase over fiscal year 2007’s total.

(See Feb. 8 University Times.)

“This year, the governor is calling for a lot of taxes, and tax shifting,” McLaughlin reported to the Senate budget policies committee Feb. 9. “But you also have 55 new members of the General Assembly. It will be difficult to get them to vote for a tax increase of any kind during their first year in office, especially when a number of them ran on a platform of reform and no new taxes.”

Recent news reports about state officials’ excessive bonuses and other fiscal abuses make taxes even less popular, he noted.

That conflict potentially could mean a budget will not be approved by the June 30 deadline, he said.

Other factors in the budget mix are how to deal with the public transit crisis and how to fund repairs for the state’s aging roads and bridges, he said.

“Given what we had heard in the weeks leading up the governor’s budget announcement, we weren’t sure there would be an increase for us at all, whether we would start out flat from last year and have to work our way up with the General Assembly, or even have our money reduced,” McLaughlin said. “When it came out it was 2 percent in the E&G (education and general) budget with the other non-medical lines flat, then with the medical lines going up (2.4 percent) with the federal Medicaid match, that pulled us up to 2 percent overall.”

The non-education budget medical lines include $9.2 million for the School of Medicine, $8.07 million for Western Psychiatric Institute and Clinic, $1.08 million for the dental school and $423,000 for the Center for Public Health Practice.

Pitt’s percentage increases were in line with the other state-related institutions, whose E&G budgets also would be raised about 2 percent, McLaughlin noted.

While Pitt, Penn State and Temple develop their budget requests separately, McLaughlin expected the three schools to work together through the next budget stages.

“We’ll talk to our friends at Penn State and Temple to develop a strategy,” he said. “I know that we don’t all ask for the same when we submit our proposal in the fall, but once we see the governor’s budget, and given that relative to our percentage, we’re usually treated the same, we work on a strategy together.”

He said one possibility is to shoot for a 3.6 percent increase in commonwealth appropriations, a percentage that matches the governor’s proposed increase in the overall educational budget. “Or we might go a little higher and see if the General Assembly will meet us in the middle,” he said.

Pitt is expected to make its case for more funding at the Feb. 27 House and Senate appropriation committees hearings.

Last year, Rendell proposed a 4 percent increase for the state-related institutions, but the legislature granted a 4.7 percent increase in the final budget.

“Also part of our strategy is to look to what we consider our high-water mark in 2001, before they started giving us the federal money, because at $177 million that was the most the state had given us,” McLaughlin said. “The last two years we exceeded that, but that was because of the infusion of the federal Medicaid dollars. If you just go by state dollars, we’re at a half percent less than 2001.”

He continued, “We do go back several years to chart out where our appropriation has gone relative to the CPI (Consumer Price Index) and, separately, relative to the higher education price index,” which typically runs somewhat higher.

McLaughlin said there were a few years in the 1990s when Pitt succeeded in getting funding for one-time line items, such as classroom technology improvements.

“We did better with the one-time line items, but then when times got tough those line items went away and we started taking hits on the other lines. That’s when we started focusing more on E&G increases in our requests,” he said. E&G funding gives the University the most flexibility in allocating monies, he noted.

McLaughlin said that Pennsylvania is peculiar in its overall education funding system because almost all other states fund their higher education institutions at a higher percentage, while the commonwealth funds the Pennsylvania Higher Education Assistance Agency (PHEAA) at a higher rate.

In its lobbying efforts, Pitt avoids simply supporting an increase in higher education funding, because a large share of that typically goes to PHEAA and not directly to the institutions, McLaughlin said.

Pitt and the other state-relateds benefit more from higher appropriations than from a PHEAA increase, McLaughlin explained, because it helps the schools keep tuition lower for all students. An increase in PHEAA funds only helps those students receiving PHEAA loans. “In our case what helps the average student the most is higher E&G and lower tuition.”

Pennsylvania’s budget system favors the state’s 90-plus private schools, McLaughlin maintained. “A lot of legislators have private schools in their districts that benefit their constituents, so they’re supportive of a grant program that offers students a wider selection.”

Private institutions also are eligible for institutional assistance grants, which this year totaled $45 million, he said. “The amount you get from that type of grant is based on the number of PHEAA recipients you have, but it’s not available to state-related or state schools.”

—Peter Hart

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