Skip to Navigation
University of Pittsburgh
Print This Page Print this pages

January 22, 2009

Expense/revenue report could be made public

Public discussion of the University’s attribution report is “getting on track,” Senate budget policies committee chairman Richard Pratt told members at BPC’s Jan. 16 meeting.

The report attributes revenues and expenses to the University’s academic units and other responsibility centers, including athletics.

BPC has delayed inviting athletics director Steve Pederson to its meeting because the budget information on athletics was not available for public discussion.

BPC reviewed a draft version of the report in executive session last May but Pitt administrators have withheld public distribution of the report pending University Planning and Budgeting Committee (UPBC) approval of a final version of the document.

The report was not finalized until after UPBC’s final meeting last fiscal year. The committee held an orientation meeting in November, but did not address the attribution report. UPBC is not scheduled to meet again until Feb. 19.

Following BPC’s Nov. 21 meeting, Pratt contacted Provost James V. Maher, who chairs UPBC meetings, to seek the report’s release. (See Dec. 4, 2008, University Times.)

Pratt said he was among UPBC members who received a memo and a copy of the attribution report from Vice Provost Robert F. Pack Jan. 16 asking members to review the document and respond to him by Jan. 30 if they objected to the distribution of the report for public discussion.

The memo stated in part, “It is been the practice for that report to be distributed initially to the UPBC members for their individual consideration and the Provost has asked that I do so. It has not been the practice that UPBC consider the document collectively,” Pratt read.

Pratt said he would now approach Pederson with possible meeting dates.

Pratt noted that UPBC should have the governor’s budget proposal in hand at its Feb. 19 meeting and should be able to begin discussing salary and tuition levels for the coming fiscal year.

The governor’s budget proposal typically is released on the first Tuesday in February.

Pack told BPC that Pitt must make its budget plan based on the governor’s proposal rather than on changes to it that might come later in the state’s budget deliberations.

In light of sluggish revenues, the state already has asked the University to be prepared to have 6 percent of its current appropriation withheld when the fiscal year ends in June. The expected reductions would cut more than $11.3 million from Pitt’s combined $189.25 million in state support.

As Pitt’s individual units plan their budgets, Pack said, administrators have urged them to “plan in a way that will preserve as much of the important things as possible.”

Pack reiterated that Pitt hasn’t implemented a hiring freeze, although hiring has slowed and leaving vacancies unfilled is being encouraged in order to maintain budget flexibility.

“We want people to keep vacancies to the extent possible and delay appointments until we have more clarification about what next year looks like,” Pack said. “Everything depends on this governor’s budget message.”

Pack said unit administrators have been cooperative in the strategic belt-tightening. “The units understand the environment, understand the situation,” Pack said. “It’s hard to say the mood is good, but I think it is productive.”

Pack noted that a one-time cut in the amount of the state appropriation reduction could be withstood with relative ease, but a permanent cut of that magnitude would be more difficult “because it has to come out of a set of expenses that’s already there. In our situation, that set of expenses is people.”

The University is bracing for the long term, rather than expecting a one-time cut in state support. “It is not prudent to believe it will all be restored a year later,” Pack said. “You have to plan for reductions and take them in a way that in the long term you can keep focused on the things that matter to you.”

Arthur Ramicone, vice chancellor for Budget and controller, reported on Pitt’s FY2008 audited financial report for the committee. The document is available online by clicking on “financial statements” at www.bc.pitt.edu.

In his review for the committee, Ramicone told BPC: “If you look at total liabilities and assets, this wasn’t the year in which things fluctuated all that much; $4.4 billion [in FY07] versus $4.5 billion,” he said.  

“Our balance sheet doesn’t have a lot of fluctuations year to year unless have a really good or bad year in the endowment,” Ramicone said.

Pitt’s endowment investments as of June 30, 2008, were relatively flat, totaling nearly $2.4 billion compared with nearly $2.3 billion as of the prior year-end.

Remaining flat, relatively speaking, “actually was a good result,” in comparison to many universities whose endowments fell last year. However, “That seems like ancient history,” he acknowledged.

Next year, Ramicone said, “There’s going to be a significant decrease unless the markets rally before the end of June.”

(In a Dec. 18, 2008, University Update, Chancellor Mark A. Nordenberg reported that as of Nov. 30 the endowment had lost an estimated 22 percent of its value.)

Pointing out the endowment’s 21.5 percent gain in FY07, Ramicone said, “Things have turned around quickly and quite drastically.”

Pitt’s endowment spending policy provides for an annual payout of 4.25 percent of the trailing three-year average market value of the fund, provided that the amount is not less than the amount distributed in the prior fiscal year. In response to a question from the committee as to whether that payout policy might change, Ramicone said the trustees investment committee reviews the endowment spending policy each March.

Ramicone said the 2008 year-end balance hasn’t been tallied yet, but that the prior two year-end balances “were pretty high.” “We average that all and look at the impact and have that discussion with the committee,” he said.

In other business:

• Pratt said the Feb. 6 meeting could be canceled if there is insufficient business.

• BPC plans to hear from Provost James V. Maher and Vice Chancellor for Governmental Relations Paul A. Supowitz at its Feb. 26 meeting. Pratt noted that meeting is on a Thursday at 2 p.m. in 826 CL rather than BPC’s typical Friday noon meeting in 501 CL.

• BPC’s March 20 meeting has been moved to March 27. Arthur S. Levine , senior vice chancellor for Health Sciences and dean of the School of Medicine, has been invited to speak.

• Executive Vice Chancellor Jerome Cochran has agreed to come to the committee’s May 8 meeting.

— Kimberly K. Barlow


Leave a Reply