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September 25, 2008

State money woes threaten cut in Pitt appropriation

Pitt could be forced to give back more than $7 million of its current state appropriation next June if the state’s financial picture fails to improve.

Gov. Edward G. Rendell, citing sluggish revenue collections and rising unemployment among the factors behind his actions, last week directed his cabinet secretaries to identify 4.25 percent of their enacted budgets for cuts. He also ordered an immediate state hiring freeze and halted state employees’ out-of-state travel.

A Sept. 16 release by the governor’s office did not specifically address the impact on state-related universities. An inquiry by the University Times has revealed that as part of Rendell’s directive, 4.25 percent of the 2008-09 appropriations for the state-related universities Pitt, Penn State, Temple and Lincoln are targeted for placement into the state’s budgetary reserve if the state’s financial outlook fails to improve.

Susan Hooper of the governor’s budget office said if the cuts are enacted, “the commonwealth will take each university’s 4.25 percent reduction out of the last 2008-09 fiscal year payment it makes. That way, if the economy improves later in the fiscal year and the funds do not need to be placed into budgetary reserve, they will be available to the universities.” The fiscal year ends June 30, 2009.

Hooper said the cuts would apply equally to each of the line items in each school’s state appropriation.

Pitt receives its appropriation in monthly payments of approximately $14.2 million. A 4.25 percent reduction in Pitt’s $170.73 million appropriation would leave the University’s June payment some $7.26 million short.

Vice Chancellor of Budget and Controller Art Ramicone said senior administrators have yet to develop plans for dealing with the possible budget cut. “It was still rumor last week,” he said. “We will make some plans, but we haven’t yet discussed what to do.”

In the release outlining his belt-tightening directives, Rendell said his action is not aimed at filling any specific gap in the current budget. “We are simply setting this amount aside as a prudent measure, in response to the recent economic indicators,” he stated.

The combined efforts are expected to save some $200 million to be placed into the state’s budgetary reserve.

Mid-year cuts in Pitt’s state appropriation aren’t exactly ancient history. Over the course of fiscal years 2001-02 and 2002-03, the University weathered a total of $8.8 million in mid-year reductions in approved state funding.

The most recent recision came during two rounds of spending cuts in 2002-03 when the state froze more than $3.5 million — a total of 2 percent — of Pitt’s $177.4 million appropriation. (See Jan. 9, 2003, and Feb. 20, 2003, University Times.)

The prior year the state froze, then cut, 3 percent of the budgets of Pitt and state-related counterparts. Ramicone said in the earlier cases, the cuts were “short notice, but immediate.” In the current situation, Ramicone noted, “there’s some element of wait-and-see, but by the time you know it’s too late to do anything.”

Which is preferable? “Either way the end result would be the same,” he said.

—Kimberly K. Barlow

Filed under: Feature,Volume 41 Issue 3

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