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

January 8, 2009

Money woes: Pitt cuts costs

Belt-tightening is a necessity on college campuses this season and Pitt is no exception. Executive pay has been frozen, hiring decisions are being scrutinized and classroom resources are being consolidated as the University responds to uncertain economic times.

A second round of budget cuts in Harrisburg is likely to lop additional amounts from Pitt’s budget by the end of the fiscal year, bringing the expected reduction to Pitt’s combined $189.25 million in state support to more than $11.3 million.

No layoffs or hiring freezes have been implemented as a result of the state budget cuts, according to Vice Chancellor for Public Affairs Robert Hill. However, some vacant staff positions are being left unfilled as a way to make up some of the reduction in state funding and all hiring must be approved by the appropriate super responsibility center head.

In a Dec. 18 University Update, Chancellor Mark A. Nordenberg stated that while the University expects to move ahead with some appointments, the hiring review process has been implemented “with the expectation that levels of hiring will be significantly reduced during the current year, as we wait for the economy to stabilize.”

In addition, the five super responsibility center heads (Nordenberg, Executive Vice Chancellor Jerome Cochran, Provost James Maher, Senior Vice Chancellor for Health Sciences Arthur Levine and Vice Chancellor for Budget and Controller Arthur Ramicone) are responsible for determining where in their units to find their area’s share of the state money that likely will be withheld at the end of the fiscal year.

In the School of Arts and Sciences, adjustments are being made in the classroom. Faculty are not being laid off, nor are teaching loads increasing, said Senior Associate Dean James Knapp. However, “We are asking chairs to make sure the faculty resources we have are being as well used as we possibly can.”
Rather than order across-the-board cuts, Knapp said A&S administrators are counting on department chairs to determine where savings can be found. “We’re trying to do things in an intelligent way,” he said.

That includes canceling classes that fail to meet minimum enrollments (unless there is an extenuating reason to keep them); combining low-enrollment sections of the same course into one, and offering some courses less frequently.

It also means that some part-time faculty are finding they no longer are needed as A&S attempts to put as many tenure-stream faculty into the classroom as possible.

Knapp said some faculty course releases for administrative work are being eliminated and some vacancies are not being filled. In addition, “we are not necessarily replacing courses” when, for example, a faculty member is out on medical leave, he said.

Faculty have been very understanding and accommodating, Knapp said. “I think everyone understands this is really a pretty unprecedented — at least in our lifetimes — economic situation.”

While there have been no wage freezes announced for Pitt employees, as has been the case at Carnegie Mellon University, Pitt’s Board of Trustees’ compensation committee in December froze the salaries of the University’s top leadership.

The trustees did not take any action on the retention bonuses of $75,000 for Nordenberg or $50,000 for Cochran, Maher and Ramicone should they continue in their positions through June. (See Dec. 4, 2008, University Times.) Without trustee action, the bonuses continue indefinitely.

Adding to the financial woes is an estimated drop of some 22 percent of the University’s endowment value as of Nov. 30. Pitt’s endowment stood at nearly $2.4 billion as of June 30, 2008, according to the University’s FY08 consolidated balance sheets.

The FY10 operating budget request Pitt submitted to the state last September listed endowment income revenues of $51.45 million in FY08.

When it comes to distributions, however, the decline in the University’s investments won’t be felt all at once. Distributions from the endowment are based on a three-year trailing average to help smooth the effects of such market fluctuations.

In addition, Pitt’s distribution formula includes a “floor” that guarantees the endowment will not distribute less money than it did in the previous year, enabling deans and schools to better plan their budgets.

—Kimberly K. Barlow

Filed under: Feature,Volume 41 Issue 9

Leave a Reply