Budget Issues

May 4, 2011

PROPOSED BUDGET CUTS FOR PENNSYLVANIA HIGHER EDUCATION

The proposed budget includes a cut to higher education that the American Council on Education has called the largest single year percentage cut in the history of higher education, and likely, the largest absolute cut.

Proposed cuts include:

50%+ to state-related institutions
50%+ to PASSHE
10% to community colleges
1.9% to PHEAA

The cut is even larger when considering line items and loss of federal stimulus funding. The total cuts are over $600 million to higher education, in a budget that cut total spending by less than $800 million (in a combination of cuts to some budgets and increases to others).
The house hearings began on the 28th of March and the budget is supposed to be approved by May 31st.
Moody’s issued a warning that it may lower its rating of public higher education institutions in Pennsylvania if the budget cuts go through.

PROPOSED CUTS TO THE UNIVERSITY OF PITTSBURGH

General support: currently $168 million

For past two years has included $7.5 million in stimulus funding
Lost $7.5 stimulus and half of the remaining $160 million for a total cut of about $88 million
Combined total of 52.23%

Lost four line items in Academic Medical Center Funding that were zeroed out:

School of Medicine – over $8 million
Dental Clinic – almost $1 million
Western Psychiatric – over $7 million
Center for Public Health Practice - $378,000
It is unclear what happened to tobacco settlement money (typically $9 million in competitively awarded grants to Pitt). The budget moves the funding to Department of Health. It is not clear if the uses of the funds have changed.
Total is almost $17 million (not including tobacco), more than half of that funding is through a federal match --- $8 million PA and $9 million federal.

Total cuts to Pitt - $104,639,000 or 56.6% (not including tobacco money)
Cuts to PHEAA, UPMC, and state contracts may indirectly have an impact.

PROPOSED CUTS TO THE UNIVERSITY OF PITTSBURGH AS A PORTION OF THE BUDGET

The cuts equal 5.6% of Pitt’s overall budget
Most of our budget is not fungible:

Research dollars cannot be diverted since they are generally contracts for specific work
Auxiliaries: residence halls, food service, book store
School of Medicine Division

Education and General (E & G), the portion that pays for the academic programs is only about 41% of the total budget
The cut of nearly $88 million is about 11% of this Education and General budget

REDUCING CUTS

Members of the State legislature have been very supportive. The Senate Budget Committee moved its hearings up two weeks and those hearings were held on March 16th. The hearings were promising and it seemed that the members understood the importance of higher education and in particular, the state related institutions. The Chair of the House Budget Committee said he would not support the cuts to higher education.

ISSUES

Reductions in the budget cut could be potentially tied to our keeping tuition low, as has been the case in other states. This could be a reoccurring theme each year.
The Budget Secretary and the Governor have alluded to funding students rather than institutions.
There has been talk of having a commission to “rethink” higher education in Pennsylvania.
There is a general anti-intellectual, anti-higher education climate nationally and in PA.

ADMINISTRATION ACTION

Communicating with the governor’s office and legislators to try to reduce the size of the cut
Communicating with faculty, staff, students and their families, and alumni; to engage them in our efforts, and to prepare them for potential impact on tuition/budgets
Looking at how Pitt might close the budget gap
Considering the long-term implications for the University

QUALITY OF A PITT EDUCATION AND TUITION

Our focus should be on the quality of a Pitt education.
In our discussions with legislators and with faculty, staff, and students, we need to be transparent about our options in closing the budget gap, and the long-term vision.
We cannot focus solely on the affordability that the Commonwealth appropriation provides.
We need to be clear that there will be substantial tuition increases, even though this may not be what the legislators or our students and their families want to hear.
We cannot allow ourselves to be put into the position that the legislators and governor are trying to put us in, and that is that WE are the ones raising tuition and forcing families to pay more to come to Pitt.
We need to make it clear, from the beginning, that it is the Commonwealth that has abandoned its commitment to these students (not the institution) by cutting the subsidy that has allowed us to offer in-state tuition discount.

CURRENT COMMUNICATIONS TO FACULTY, STAFF, AND STUDENTS

Email blasts were sent out to parents, students, and staff members.
A Web site was posted http://www.progress.pitt.edu/ demonstrating the budget cuts Pitt has already made.
Follow up emails to the Council of Deans will be sent and these emails, when appropriate, should be passed on to faculty and staff to keep them aware and engaged.
The University has been responding to emails directing people who want to help with communication with legislators.
Betsy Porter is dealing with all the potential students and their families.
Student services staff throughout the University are dealing with current student questions.

COMMUNICATION EFFORTS

Government Relations is working directly and trying to channel efforts of the Alumni Legislative Network, students and their families. They have created a Web site http://www.govtrel.pitt.edu/advocacynetwork/resources.html that has addresses of legislators, sample letters, etc.
Op-ed pieces and letters to the editors are being sent.
Regional Campuses are very important for the legislative outcomes; they are engaging alums, local communities, and boards.
The administration is in communication with other state-related institutions.