University Update: 225 Years of Building Better Lives

The academic year that brought Pitt to the 225th anniversary of its founding was a time of both trials and triumphs. In fact, on the positive side, the achievements and impact tied to our “big birthday year” were a true cause for celebration—as was described in greater detail in my annual report to the trustees, which was published in written form in the July 9 issue of the Pitt Chronicle. Without repeating that entire narrative here, let me just say that, when a university’s students are selected for such honors as Rhodes, Udall, and Goldwater Scholarships and for Whitaker and National Science Foundation Fellowships—and when its faculty and alumni are named MacArthur Fellows and elected to the Institute of Medicine and National Academy of Sciences—that is an institution of real academic stature.

When that same university takes its annual research expenditures beyond $800 million and is ranked among this country’s top five universities in total federal science and engineering research and development support, it has moved to a special level. The report released last month [June] by the National Research Council, Research Universities and the Future of America, begins by noting that America’s research universities “are widely recognized as the best in the world, admired for both their research and their education.” As Pitt climbs ever higher within the ranks of this nation’s top research universities, then, 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.”

The path that we have traveled together, though satisfying in so many ways, certainly has not been an easy one. Think of everything that we have faced in just the past few months—the shootings at Western Psychiatric Institute and Clinic (WPIC), the series of bomb threats that disrupted life on this campus for several weeks, and the recommendation—despite all of our many successes and all that we have contributed to the economic stability and social vitality of Pittsburgh, Western Pennsylvania, and the Commonwealth as a whole—that we be subjected to a second straight year of deep and disproportionate cuts to our state support. The heroic actions of the Pitt police protected our community from even greater harms at WPIC. Our collective strengths, combined with the support of local and federal law enforcement, enabled us to advance our work in the face of extended and unrelenting threats to our security. And advocacy efforts that were both determined and sustained, as well as the unstinting support of legislative leaders and an upturn in state revenue receipts, spared us from a second wave of destructive state budget cuts.

To return to a familiar fact, Pennsylvania lagged far behind most other states in terms of the support that it has provided to its public universities—ranked in the bottom five states by many measures—well before the current budget crisis arrived. Then, during the last fiscal year, bad went to worse as historically deep cuts were imposed. At Pitt, they totaled some $67 million—$40 million in initial cuts, $7 million from a midyear “budget reserve,” and a $20 million loss in capital projects support. When the Governor’s budget proposal for the current fiscal year was released in February of 2012, we faced the prospect of a further cut to our general and academic medical appropriations in excess of $40 million, plus the complete elimination of a state health-related research program supported by the tobacco settlement fund. Because of our competitive strengths in that broad research area, Pitt had received an average of more than $13 million per year in support from that program, and those funds were leveraged to secure even larger federal grants.

As noted, our success in resisting those proposed reductions was aided by a late upturn in state revenue receipts. Both the help of committed friends and our own advocacy efforts also were essential. All of us should be grateful for the strong support delivered by legislative leaders who believe in the power of public higher education and were determined to protect it. And it was heartening to see virtually all of the various campus constituencies—alumni, faculty, friends, staff, students, and trustees—come together to advance such a worthy cause.

The state budget enacted for the current fiscal year provides levels of support roughly equal to those approved for the last fiscal year. It does so by eliminating the additional cuts that had been proposed for our general and academic medical appropriations and by restoring much of the research program supported by the tobacco settlement fund. At our recent Board dinner, two distinguished former state Senators, one from each party, remarked that times certainly had changed when public universities considered “flat funding”—particularly following deep cuts—to be good news. Sadly, that is the nature of the times through which we now are moving.

To repeat what already has been widely reported, one component of our alliance with supportive legislative leaders was an agreement by the state’s public universities that flat funding would be followed by constrained tuition increases. More specifically, we pledged that our blended tuition increases would not exceed the Consumer Price Index (CPI) for 2011, which was 3.2 percent. The tuition increases just approved for the next academic year are straightforward: 3 percent increases for all students, in-state and out-of-state, enrolled in programs on the Pittsburgh campus, and 2 percent increases for students, in-state and out-of-state, enrolled in programs on the regional campuses. Notably, then, all of our tuition increases are lower than the agreed-upon rate, and these increases produce a blended rate of 2.74 percent for Pennsylvania students and 2.8 percent for our entire student body.

These are the lowest percentage tuition increases at Pitt in many years, which obviously is good news for our students and the family members who support many of them. However, deep cuts to state support, followed by flat state funding, combined with constrained tuition increases, in a world in which higher education costs regularly increase at rates higher than the CPI also present real challenges in crafting a budget that positions us to continue delivering the high levels of quality that our students and their families have come to expect from Pitt.

Of particular concern is the fact that limited revenue growth limits our capacity to reward the members of the faculty and staff who have taken us to these high levels of quality. Recent contributions of this talented, committed, and hard-working group to Pitt’s financial stability have included salary freezes and salary increases that have been both delayed and limited. Because 352 members of the staff accepted the offer embodied in our Voluntary Early Retirement Program, we also will be moving through this new fiscal year with a smaller employee complement, which inevitably will add to the responsibilities of those who remain.

In the end, we did our best to strike a proper balance by building a 3 percent salary increase pool into the budget for the current fiscal year. We expect that salary pool to be competitive with the levels of increase provided by other universities, though it obviously is not large enough to make up for increases foregone in recent years. The funds in that salary increase pool are to be distributed in the following way: 1.5 percent for salary maintenance for all employees whose work has been assessed as satisfactory; 1.0 percent for merit, market, and equity adjustments at the unit level; and 0.5 percent to be distributed by senior officers to address imbalances that exist between the various units that report to them. It is particularly important that this year’s salary pool include the measure of flexibility provided by that last distribution component because we know that both the Voluntary Early Retirement Program and recent limitations on salary increases have created differential impacts across the units of the University.

As you know, we did not move forward with this early retirement program because there had been any decline in the amount of work to be done at the University. To the contrary, even in the midst of the “Great Recession,” the demand for the services that we provide, both through our educational programs and through our research, continued to grow, which has distinguished us from many other types of organizations. In that one, important sense, higher education was described by many as a “recession-proof” industry. However, even as demand for our services continued to climb, we retained a strong commitment to cost-effectiveness and efficiency, as directed by our Board of Trustees more than 16 years ago. Many of our cost-cutting initiatives have been highlighted on the University Web site, and cost cutting will continue to be one key to our efforts as we move through the year ahead and into the years beyond.

However, what most basically distinguishes a public university from a private university are levels of state support sufficiently high that they enable the public university to maintain a reduced in-state tuition rate. Despite unsubstantiated statements to the contrary, independent analyses regularly confirm that there is a direct correlation between the levels of state support received by a public university and the in-state tuition rates charged by that university. In the case of Pitt, that relationship is a particularly close one. In fact, over the course of the past several years, tuition increases have mainly covered increased costs, particularly as a pattern of flat or declining state support has shifted an ever-larger share of the burden of shouldering rising costs to students. Of course, it also is telling that this has been a period of dramatic institutional progress at Pitt, clearly reflecting the fact that we not only have made wise investments of available resources, but have consistently found ways to do more with less.

As we move forward to meet the challenges that lie ahead, we can be inspired by the example of our pioneering predecessors—who, in the midst of their struggle for survival, built an academy at the edge of the American wilderness, clearly understanding that education was the key to both individual advancement and to collective strength. In the words of Hugh Henry Brackenridge, our founder, “We well know the strength of a state greatly consists in the superior mental powers of the inhabitants . . .”

We also can be inspired and enlightened by more modern analyses, such as those advanced in the just-released National Research Council report, Research Universities and the Future of America. That volume begins with a James Madison quote: “Knowledge will forever govern ignorance: And a people who mean to be their own governours must arm themselves with the power which knowledge gives.” In discussing more recent history, the report states:

America is driven by innovation—advances in ideas, products, and processes that create new industries and jobs, spur economic growth, support a high standard of living, and achieve national goals for defense, health, and energy. In the last half century, innovation in turn 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 its research universities.

In assessing the current condition of our country, the report concludes:

[T]he relative rankings of the United States in the global knowledge economy at a time when new knowledge and technological innovation are critical to economic growth and other national goals have shown that other countries increasingly are investing in their own competitiveness. . . . As America pursues economic growth and other national goals, its research universities have emerged as a major national asset, perhaps even its most potent one. … Despite their current global leadership, American research universities are facing critical challenges.

The report goes on to catalogue those challenges, and, as you might expect, we have experience with essentially all of them, including the one that is listed first – that “the financial health” of research universities “is endangered as each of their major sources of revenue has been undermined or contested.”

At Pitt, we have been fortunate enough to see the remarkable impact that a top research university can make—in the lives of its students, in the economic growth of its home region, and in the health and strength of the larger society. Our strong collective commitment—to individual students, to this region, and to the greater good—almost certainly is one key reason that we have been able to meet each of the many challenges that already have come our way. It would be nice to think that our triumphs of the past year would bring some substantial relief from future trials, but there is nothing in the recent history of Pitt to suggest that will be the case. However, that history does strongly suggest that whatever challenges arise will be effectively met and that we will continue to extend our University’s strong, unbroken, 225-year-old tradition of building better lives and doing so in wide-ranging ways.