Maintaining Momentum During Challenging Times: Nordenberg Testifies Before State Senate

(This is Pitt Chancellor Mark A. Nordenberg’s written testimony that was submitted to the Pennsylvania State Senate Committee on Appropriations on Feb. 28, 2013.)

This is the 226th birthday of the University of Pittsburgh. Today, then, we will formally conclude our yearlong celebration of the 225th anniversary of our founding as a log-cabin academy on Feb. 28, 1787. The telling and timeless example set by the pioneering people of western Pennsylvania, in making education a priority even as they struggled with survival at the edge of the American frontier, reaffirms the key role that education always has played, both in individual pursuit of the American dream and in our collective progress. 

The type of work done by Pitt and other research universities has become even more critical as we move further into the innovation economy of the 21st century. A recently released report by the National Research Council (NRC)—requested by Congress, written by a blue-ribbon panel chaired by the former CEO of DuPont, and entitled Research Universities and the Future of America—strongly emphasizes that point:

“America is driven by innovation—advances in ideas, products, and processes that create new industries and jobs, contribute to our nation’s health and security, and support a high standard of living. In the past half century, innovation itself has been increasingly driven by educated people and the knowledge they produce. Our nation’s primary source of both new knowledge and graduates with advanced skills continues to be our research universities.“

However, these institutions now face an array of challenges, from unstable revenue streams and antiquated policies and practices to increasing competition from universities abroad. It is essential that we as a nation reaffirm and revitalize the unique partnership that has long existed among research universities, the federal government, the states, and philanthropy and strengthen its links with business and industry. In doing so, we will encourage the innovation that leads to high-quality jobs, increased incomes, and security, health, and prosperity for our nation” (emphasis added).

Those are powerful words. In fact, with the increasingly competitive global economy as a backdrop, the report refers to research universities as “a major national asset—perhaps even its most potent one.”

The report goes on to list some specific advances that can be attributed to this potent national asset: “Lasers, radar, synthetic insulin, blood thinners, magnetic resonance imaging, computers, and rocket fuel are among the countless innovations in which university research has played an essential role.” That list has special significance for the University of Pittsburgh, because insulin first was synthesized by a Pitt faculty member in a Pitt lab, and a Pitt graduate was awarded the Nobel Prize in Medicine for his critical role in the development of the science of magnetic resonance imaging. That Pitt is so strongly connected to two of these seven key advances is a source of institutional pride.

The NRC report goes on to create a different kind of list by cataloging the critical challenges facing America’s research universities today. Though we are affected by them all, we know one particularly well. As stated in the report, “State funding for higher education, already eroding in real terms for more than two decades, has been cut further during the recent recession.”

In fiscal year 2012, Pitt faced state funding challenges taking multiple forms. One was coping with a steep reduction to our base appropriation. The budget originally enacted reduced our appropriation by 22 percent, or about $40 million. Then, in the fall of 2011, 50 percent of our capital projects support, or another $20 million, was withdrawn, and in January of 2012, we were directed to place an additional 5 percent, or $7 million, into “budgetary reserve.” That totaled $67 million in sequential reductions to state support for FY 2012. The bad news continued when an additional set of deep and disproportionate cuts was proposed for FY 2013. However, encouraging revenue numbers, combined with strong support from the General Assembly and the cooperation of the Administration, led to the restoration of those proposed cuts and a budget that held Pitt’s funding flat, at the FY 2012 level.

In addition to experiencing these recent cuts to state support, Pitt also is facing serious fiscal challenges from federal and local government. At the federal level, sequestration poses a grave threat to funding streams that are critical to Pitt’s principal missions—particularly federal support for student aid and for university-based research. Locally, the City of Pittsburgh, as directed by the state-appointed Intergovernmental Cooperation Authority, has begun a new quest to exact additional revenues from the nonprofit community, even though Pitt was a leader in the creation of the Pittsburgh Public Service Fund. Pitt has made voluntary contributions to the City for many years, and City leaders have expressed satisfaction with the level of those payments.

Given the funding challenges presented on the federal, state and local levels, it would not be inaccurate to characterize the last year as a time of great challenge for Pitt. However, to stop there would miss a very important point. Even in the face of these challenges, the “people of Pitt” were able to maintain the University’s momentum by crafting another year of remarkable accomplishments.

Indeed, Pitt maintained the sustained progress that has propelled it into the very top ranks of American universities. These efforts have been widely recognized by outside entities like The Prince-ton Review, which just this month included Pitt in its “Best Value Colleges” list for 2013. Kiplinger’s now has ranked Pitt as a top value in public higher education for eight consecutive years. Such rankings are particularly meaningful because they are grounded in assessments of both cost and quality. Kiplinger’s list of the top public university values “ranks schools on more-tangible measures of academic quality—including test scores and four-year graduation rates—as well as affordability.” And The Princeton Review “considers data on more than 30 factors in academics, cost of attendance, and financial aid.”

Given these “best-value judgments,” it is not surprising that Pitt has become an institution of choice for hard-working and high-achieving students from throughout the Commonwealth. To give just one telling example, the undergraduate programs on our Pittsburgh campus attracted 7,826 applications for admission for the fall of 1995. Applications for admission to those same programs for this fall had more than tripled, to 24,871, and applications for those programs already have passed the 26,500 mark for next fall’s class. Once enrolled, these students have a record of performing at the highest levels. Pitt has become a leader, among other measures, in producing students who earn such high national honors as Rhodes, Marshall, Goldwater, Truman, Udall, and Fulbright scholarships.

During the past year, Pitt also was ranked by the National Science Foundation as among America’s top five universities in total federal science and engineering research and development support. Our annual research expenditures, which had topped $800 million when federal stimulus funding was supporting additional grants, still are close to $750 million per year and remain an important force in the economic rebirth of the Pittsburgh region. And as Pitt climbs ever higher within the ranks of this nation’s top research universities, we are advancing the goal publicly adopted by our Board of Trustees more than a dozen years ago—that “[b]y aggressively supporting the advancement of Pitt’s academic mission, we will clearly establish that this is one of the finest and most productive universities in the world.”

Pitt’s accomplishments over the past decade were recognized by the Middle States Commission on Higher Education in a reaccreditation report released last summer. The Middle States team praised the University of Pittsburgh as a “world-class research university” with an “unwavering commitment to excellence.” However, the team also highlighted steep reductions in state support as the “greatest challenge to the University.” In the language of the report, “[w]hile the University has been advancing, state support has been diminished at an alarming rate.” The report further characterized state funding cuts as going “beyond bone to marrow.” 

The accrediting team catalogued the University’s extensive efforts to deal with these reductions. “In response to these cuts, the University “already has made operational efficiency a priority; and it has undertaken budget cuts, redesign of benefits, efficiencies, productivity increases, and the imposition of University-wide salary freezes.” After that report was written, and in order to deal with the historically deep cuts that were imposed for FY 2012 followed by flat funding for this year, the University instituted a program that led 352 experienced staff members to take early retirement.

The reaccreditation report also commented on the long-term consequences of reduced funding for public higher education and for public research universities, in particular: “[I]n the decades ahead, great cities and states will depend increasingly on the existence of great universities within them (the University today is a wonderful example of this synergy) . . . [R]educing public support for the University of Pittsburgh and institutions like it is singularly short-sighted, even if judged in narrow economic terms... .” This view also was advanced by the National Research Council report, which asserted that only by revitalizing support for research universities will we “encourage the ideas and innovations that will lead to more high-end jobs, increasing middle-class incomes, and the security, health, and prosperity we expect.”

In mid-November, the Governor’s Advisory Commission on Postsecondary Education produced a thoughtful and temperate report, identifying Pennsylvania’s postsecondary education system as a key Commonwealth asset but also mindful of the economic challenges that remain with us. That report specifically recommended that funding for the next fiscal year be maintained, at a minimum, at FY 2012 levels, asserting its belief that “it is imperative to the health and vitality of our postsecondary system that funding not fall below this level.” The context for that observation was described by the Commission in the following way:

“Due to the economic downturn and General Fund pressures, Pennsylvania’s higher education funding has declined over 20 percent in nominal dollars from its FY 08/09 peak. This level of funding impacts both the affordability of postsecondary education for families in the Commonwealth and the ability of institutions to maintain high levels of quality while advancing their missions.”

At the University of Pittsburgh, current levels of state support are equal to the levels of support received in 1995—in nominal dollars, with no adjustment for inflation. Of course, our expenses have not remained flat over that extended period. In fact, over those years, the Consumer Price Index has risen by nearly 55 percent, and the Higher Education Price Index has risen by more than 75 percent. Dealing with a 2013 cost structure when state support has been taken back to 1995 levels, then, is one very significant challenge. It also should be noted that Pitt enrollments have grown by nearly 3,000 students and our annual research expenditures have increased by more than $500 million since 1995, so the Commonwealth is receiving a much higher rate of return from every dollar invested in Pitt.

The report of the Governor’s Advisory Commission explicitly recognizes that “lower than average levels of state funding per student” have been a key driver in positioning Pennsylvania below many states in terms of affordability. That report also focuses on institutional cost structures and urges that affordability be a shared commitment—of the Commonwealth and of the postsecondary institutions it supports. 

A shared commitment to cost containment was central to the Governor’s well-received proposal that state support for higher education not be further reduced in the next fiscal year but be maintained at current levels. As we pledged at the time, Pitt will work to keep tuition increases as low as they can be. Given the context already described, doing so will be very challenging—just as it was last year. As the Commonwealth moves forward with its budget-building process, then, we will be examining available options within the University Planning and Budgeting Committee and with the Budget Committee of our Board of Trustees.

As noted, the Governor’s Commission had proposed flat funding as a minimum for the next fiscal year. It further proposed funding increases, tied to the development of a performance-based system for the allocation of such increases, in the years ahead. It is our sincere hope that, as we move to a time that is less challenging economically, further investments in institutions of higher education, particularly those that have demonstrated real impact—in education, in research, and in public service—can and will be made. 

In the words of our founder Hugh Henry Brackenridge, a distinguished member of the Pennsylvania Legislature and a Justice of the Pennsylvania Supreme Court, “We well know the strength of a state greatly consists in the superior mental powers of the inhabitants... .” We have been fortunate to see the remarkable impact that Pitt, as a top research university, has made—in the lives of its students, in the economic growth of its home region, and in the health and strength of the larger society. 

With gratitude for past support, we look forward to a strong partnership with the Commonwealth as we work to extend our University’s strong, unbroken, 226-year-old tradition of building better lives.