University of Pittsburgh

Chancellor Issues Update: Fiscal Year 2014 Budget

To: Members of the University Community

From: Mark A. Nordenberg

Date: July 30, 2013

Re: Fiscal Year 2014 Budget

As most of you know by now, the Budget and Executive Committees of the Board of Trustees met in public session on July 17 to approve the University’s operating budget for the current fiscal year. Just a few days before that action was taken, legislation providing for our state appropriation was formally enacted into law.

Because of Governor Corbett’s much earlier announcement that he would recommend “flat funding” for Pitt and other public institutions of higher education, the processes leading to the approval of this Pitt budget were both less dramatic and less draining than had been the case in either of the past two years. That was a very welcome change. Not only were we spared what had threatened to become an unbroken series of difficult annual battles over state support, but knowing what levels of support we would receive positioned us to invest more time in building our own budget.

To be clear, though, building that budget was challenging. As I noted in the media release announcing the Board’s approval of our operating budget, “[O]ur state support, in nominal dollars unadjusted for inflation, remains at the levels of funding that we received in the mid-1990s. Since then, essentially all of our costs have increased, and the University also has grown substantially.” Becoming more specific, that release went on to say:

To place this in context, the Consumer Price Index has risen by 53 percent since the 1995 fiscal year, while the Higher Education Price Index, a more accurate measure of university operating costs, has risen by approximately 77 percent over that same period. At the same time, the number of highly qualified students attending the University has increased, with full-time enrollment rising by more than 21 percent. The University also has experienced similar growth in terms of research expenditures. Since 1995, Pitt has attracted more than $9 billion of sponsored research support into the region. Annual research funds have grown from $230 million in 1995 to nearly $760 million in the current year, and the University now ranks fifth among all American universities in terms of the federal science and engineering research and development support attracted by members of our faculty.

In short, this University continues to effectively advance what has become a defining institutional characteristic – the ability to do more with less.

It also is important that Pitt continues to be worthy of the “best quality” rankings that we have regularly received in recent years. That means we must do what we can to constrain tuition increases, even while continuing to make investments in institutional quality – including, in particular, investments in the people whose work has shaped Pitt’s enviable record of excellence and impact. The budget approved by our Board strikes the best possible balance as we continue to move through these challenging times.

That budget includes a University-wide blended tuition-rate increase of 2.9 percent. Tuition for students enrolled in programs on the Pittsburgh campus will increase by 3.25 percent, the second-lowest increase since 1975. The one Pittsburgh-campus exception is that tuition will increase by 5 percent in the School of Medicine, which still is working to recover from the far deeper reductions to its state support that were inflicted upon it two years ago. Tuition will increase by 2 percent for students enrolled in programs at our regional campuses in Bradford, Greensburg and Johnstown and will be frozen at Pitt-Titusville.

Consistent with past practice, the approved operating budget also increases University resources devoted to financial aid by the same percentage as the blended tuition-rate increase. This means that financial aid provided by the University will total approximately $165 million during the current fiscal year.

The budget also includes a salary-increase pool of 2.5 percent. Though modest, this pool is larger than most involved in the budget-building process anticipated would be possible under existing circumstances. In that sense, it does clearly recognize that this is an institution driven by the talent and commitment of its faculty and staff.

The funds in this pool will be distributed in the following way: 1.5 percent for salary maintenance for all employees whose work has been assessed as satisfactory and 1.0 percent for merit, market and equity adjustments at the unit level. Though some portion of the salary-increase pool typically has been set aside to be distributed by senior officers to address imbalances that exist between the various units that report to them, I have decided to use the monies that might have gone into that portion of the pool to increase the salary maintenance component this year.

As I have regularly said in the past, I remain deeply grateful for all that you have done to make the past year another year of outstanding performance and exceptional progress at Pitt. I also look forward to working with you to craft another memorable year in the months ahead. In the meantime, please enjoy the few remaining days of summer!