By SUSAN JONES
The budget approved today by Pitt’s Board of Trustees executive committee includes a salary freeze, no tuition hikes, a 78 percent reduction in capital spending and a permanent budget cut of 3.7 percent across the board on average, along with a one-time cut of 5 percent.
“This will be a challenging year for everyone at Pitt,” Hari Sastry, Pitt’s chief financial officer, said at the online committee meeting. “I appreciate the collaboration of our budget planning partners as we work together to create sustainable outcomes in support of the University.”
Both the operating budget for 2020-21 — $2.4 billion — and the research base — $878 million — are the same as the previous fiscal year. But the educational and general budget will shrink from $930 million last year to $878 million for 2020-21, and the capital budget will drop from $641 million to $140 million.
Pitt’s revenue comes from several sources, including money from the state, which has been approved to be the same as last year, and disbursement from the endowment, which the board decided to keep at the current rate of between 4.25 and 4.75 percent.
Tuition and room and board costs will remain the same as last year, Sastry said, in response to "the financial hardship COVID-19 will continue to have on our students and their families." For that same reason, the Pitt Success Program, which provides increased financial aid to students, has been fully funded in the budget.
Sastry said at the end of the fiscal year in June, COVID-19 related net costs and lost revenue totaled $50 million. It was clear during the budget process, he said, that there was a gap between expected revenues and expenses.
“The magnitude of that gap, along with the uncertainty of future costs related to the pandemic, drove several difficult decisions,” he said, such as freezing salaries for faculty and staff and continuing a University-wide controlled hiring process that began in April.
Chancellor Patrick Gallagher said after the meeting that the 3.7 percent permanent budget cut is designed to improve efficiencies in non-academic and support roles. Even before the pandemic, Gallagher said, the budget on the operational side was getting tight and inflation was eating away at the margins.
The long-term goal with this cut, Gallagher said, is have “more of our operational dollars going to our schools and programs and relatively less going to our support activities, … and you try to do that by getting more efficient in the kinds of administrative and technology support services that we offer.”
He said they will be looking at consolidating services, particularly as people take advantage of the retirement incentives being offered, and removing duplication of services, such as the merger last year of Pitt’s Financial Information Systems team with the Computing Services and Systems Development team to form Pitt IT.
The one-time 5 percent cut is designed to absorb the costs associated with the pandemic, Gallagher said, such as new technology, modifications to classrooms, testing for the virus and contract tracing.
“The reductions of buying less supplies, doing less travel, those kind of things which you can do once but you can’t do in a sustained way, are designed to offset those costs,” he said.
The drastic capital budget cuts for the upcoming year are what both Sastry and Gallagher called a “strategic pause.”
“The pandemic is having people rethink priorities when it comes to facilities and space,” Gallagher said. “A big part of our planned expenditures had to deal with things like housing and densifying house.”
The University announced earlier that it will spend $22 million this year to lease hotel rooms in an effort to de-densify residence halls.
He said in the coming year they will “go back to our facilities planning and give ourselves the opportunity to re-question some of the assumptions that were in our plan. We may decide, some of them are still exactly what we need, and then they go back on the list. Others, we may decide can be modified or changed or the priorities or timing of some of the projects be changed.”
With students beginning to return to campus in just four weeks and classes set to resume in five weeks, Gallagher said he understands the fear and uncertainty many feel about the upcoming semester. “I will be honest, I feel the same way. We’re watching the pandemic move toward what a lot of us consider the worst-case scenario. It’s moving in the wrong direction; it’s widespread; it’s happening in our region.”
The circumstances now are different than they were even a few weeks ago, he said. The Flex@Pitt plan “means we can adjust all the way down to essentially a completely remote operation with exceptions of some of the clinical and research activities.”
The issue now is how the administration communicates what specifically will happen when classes resume. Gallagher said they’ve taken the approach of releasing information as it becomes available, but the course of the pandemic can force those plans to be changed.
“If you’d asked me four weeks ago what the middle of July would look like, I would have gotten it wrong,” he said. “And I may get it wrong if I tried to project what the middle of August will look like.”
Pitt has the ability to adjust when people come back to campus and how spread out they are, Gallagher said. The University also will be looking at quarantining people they come back, and there will be an extensive virus testing program.
“The one thing I would tell the community is we are taking safety very seriously but in the face of a really dynamic environment,” the chancellor said. He’s relying on advice from the “very best health professionals that we have,” including the new chief medical officer — John V. Williams, chief of the medical school’s Division of Infectious Diseases — and medical response team.
“We’re the largest academic medical center in the United States. That gives us enormous capabilities in terms of testing and medical treatment. But there is going to be part of this … that we have to all sort of agree that some of those details are going to be kind of just in time.”
But he understands that people are frustrated. “I mean, I want more information. But I can tell you people are working incredibly hard. And we’re trying to be candid about our thinking, but not be so hypothetical about it that we’re confusing people.”
Susan Jones is editor of the University Times. Reach her at firstname.lastname@example.org or 412-648-4294.
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