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November 6, 2008

Pitt considers consequences of state, world financial problems

Pitt is taking a careful look at the ramifications of the recent international financial crisis, a double-whammy on the heels of likely commonwealth appropriation cutbacks announced in September.

The University was told by Gov. Edward Rendell to expect the state to withhold 4.25 percent ($7.25 million) of its fiscal year appropriation next June, barring a turnaround in the state’s revenue shortfall.

Pitt’s senior administrators already have asked units to cut budgets as a result. (See Oct. 9 University Times.)

“Obviously, whenever state support declines, there is pressure to increase the tuition charges to students. And $7.25 million is a big hole to fill,” said Chancellor Mark Nordenberg last week. However, he said the University would not impose a mid-year tuition hike. “We need to be sensitive to the fact that students and their families are under pressure. We want to look for the best ways to deal with this situation without burdening students.”

Regarding the larger Wall Street-based crisis, Nordenberg acknowledged that Pitt’s endowment and capital projects are among the fiscal components that likely will be impacted.

“Obviously, our endowment — like every other fund of its type — has declined in the declining markets of recent weeks,” Nordenberg told reporters following the Oct. 24 Board of Trustees meeting. “But I don’t see any immediate pressure as a result of the market decline.”

Pitt’s endowment as of June 30 was almost $2.4 billion, according to the financial audit report the trustees approved at the meeting.

Nordenberg said, “We’ve always been fiscally conservative. Our bond rating is strong; the debt is manageable. The rates we’re paying continue to be in a good range. We are now taking a careful look at our capital projects. We have a 10-year capital plan and each year we look at that and make adjustments. To the extent it seems prudent to delay projects or construction, we’ll do that.” He added that Pitt’s facilities plan places a higher priority on renovation and reclamation projects than on new construction.

Nordenberg declined to comment on potential long-term effects of a sustained economic downturn.

“It really doesn’t make any sense for me to speculate. We’re not expecting the situation to become that dire. We remain committed to moving forward and maintaining momentum. At this point, it’s more a matter of taking prudent steps rather than speculating about future consequences,” Nordenberg said.

“One of the real challenges is the level of uncertainty, uncertainty about the extent of the crisis, uncertainty about how long this might last. Each day brings about a new wrinkle to these challenges,” he said.

—Peter Hart

Filed under: Feature,Volume 41 Issue 6

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