University Update

The holiday season now has passed, and the earliest days of 2012 are behind us. This is an important year for us, because the end of next month will bring the 225th anniversary of our founding. Pitt was chartered on Feb. 28, 1787, and began a life that now spans two complete centuries and parts of two others as a log cabin academy situated at the edge of the American wilderness. Today, of course, we are a major public research university respected for the quality and impact of our work, close to home and in far more distant locations.

Each member of today’s University community is helping to shape the current chapter in the long and proud history of Pitt. Our collective contributions over the course of recent years should be a source of special satisfaction, both because we have been able to fuel enviable levels of further progress and because we have done so in the face of historic challenges. Consider just some of the key successes of the past year.

• Looking at the undergraduate programs on the Pittsburgh campus, which are our largest programs and serve as a bellwether for the entire institution, we enrolled our strongest incoming class from our largest applicant pool ever. The academic credentials of students enrolled in these and other programs continued their dramatic rise, and the strength of our programs not only attracted students from across the country and around the world but, consistent with our public mission, retained many exceptional Pennsylvania students, increasing the likelihood that they will remain to live, work, and contribute here.

• Enrolled students continued to perform at levels that are a source of widely shared pride. To cite just a few examples, one Pitt undergraduate, from Somerset, was among only 32 Rhodes Scholars to be named nationally, and another Pitt undergraduate, from the North Hills of Pittsburgh, received a Goldwater Scholarship, the highest national honor available to undergraduates studying science, mathematics, or engineering. Pitt undergraduates also claimed six Boren Awards for International Study, a Pickering Undergraduate Fellowship for the Study of Foreign Affairs, and two Humanities in Action Fellowships, and Pitt was recognized as one of the nation’s top producers of student Fulbright Scholars.  Simply put, our students continue to compete against the best students from the country’s finest colleges and universities for the highest forms of national recognition.

• Alumni continued to earn recognition for their lives of distinction. Since the dawn of the new century, Pitt graduates have received the Nobel Peace Prize, the Nobel Prize in Medicine, the National Medal of Science, the Pulitzer Prize for Fiction, the Fritz Medal in Engineering, and the Shaw and Albany Prizes in Medicine, among many other awards of note. During this past year, one graduate claimed the National Book Award for Poetry, another was one of just 22 MacArthur (“Genius Award”) Fellows named nationally, and two were elected to the Institute of Medicine—all extraordinary honors. Of course, hundreds of thousands of other Pitt graduates are leading lives of impact and making meaningful, though less public, contributions to their communities.

• During the last year, we shattered past records with annual research expenditures that exceeded $800 million. These funds are a widely accepted measure of institutional stature, fuel pioneering work, and support, directly and indirectly, some 28,000 local jobs. Principal credit for attracting those grants belongs to the talented and committed faculty members who successfully competed for them—faculty members whose professional responsibilities include not only teaching, but also extending the boundaries of existing knowledge. Other signs of faculty strength include the fact that one faculty member was named a MacArthur Fellow, two were elected to the Institute of Medicine, and two were elected to the American Association for the Advancement of Science. Countless others earned high forms of recognition within their own disciplines.

• Of course, none of our important work would be possible without the contributions of the dedicated members of our staff. In December, we recognized more than 900 staff members for the longevity of their service. That group included more than 70 staff members with 40 or more years of service to Pitt and six staff members who already have worked for 50 or more years at the University. Such levels of longevity say something both about the loyalty of those honored and about the qualities of Pitt as an employer. In the weeks ahead, we will internally honor both faculty and staff for the excellence of their performance in their jobs and in their contributions to community.

• In athletics, the biggest news of the year came during the fall term, when we announced that we had accepted an invitation to join the Atlantic Coast Conference.  Our years in the Big East Conference have been good years that produced many wonderful memories, but we needed a more stable home for our athletics programs.  The ACC provides that. It also provides an especially good academic and geographic fit for Pitt.

• This past year also was the year in which our fundraising efforts began a new climb, following the decline that was suffered by virtually every nonprofit organization in the wake of the Great Recession. Total voluntary support rose to $114 million—still beneath our 2008 high of $128 million, but heading in the right direction. We took our capital campaign total past $1.85 billion, putting us within striking distance of our $2 billion goal. We look forward, with deep gratitude, to the many benefits that will flow from the extraordinary generosity of alumnus, trustee, and former board chair Bill Dietrich, whose commitments to higher education not only prompted local celebrations but attracted well-deserved national attention.  We also benefitted from investment returns in excess of 22 percent, which took our endowment from $1.997 billion to $2.462 billion, the largest single-year gain in our history.

Both further fundraising successes and favorable investment performance have become even more important in light of dramatic reductions in support from the Commonwealth—for public higher education generally and for Pitt in particular. To be clear, endowment returns, which most often are donor-directed to specific purposes, are not a complete substitute for state support, but they can make a huge difference in the pursuit of high institutional aspirations.

As I am sure you will recall (because I suspect that few of us will ever forget), the first state budget proposal for the current fiscal year would have reduced Pitt’s appropriation by more than $100 million. After months of advocacy, that cut was trimmed to slightly more than $40 million. That obviously was a far better result in the comparative sense, but it still left us with a large gap to fill as we worked to build an operating budget for the current fiscal year. It also was a disproportionate reduction when compared to general cuts in state spending.  Overall, state funding was reduced by 4 percent, but our appropriation was slashed by 22 percent.

Unfortunately, such challenges cannot be viewed simply as “problems of the past.” Late in the fall term, we were notified that the Commonwealth’s annual support for capital projects at Pitt was being cut in half—from $40 million to $20 million. Last week, the administration reported that state revenue collections were down even more than had been anticipated, raising the specter of midyear reductions. At the same time, Congressional budget negotiations have been unproductive, triggering concerns about future federal support for research and student aid.

Late Wednesday, the state’s “budget ax” fell again when it was announced that the Governor had directed his budget office to freeze nearly $160 million in state funding. Most of the affected state agencies were directed to reduce their spending in the current fiscal year by 3 percent. However, the state-related universities were subjected to a larger 5 percent reduction. This means that the state-related universities, whose appropriations represent less than 2 percent of the state’s budget, have been assigned 16 percent of the near-$160 million reduction.

The midyear reduction imposed upon Pitt is slightly less than $7 million. This is on top of the 22 percent, or $40 million, cut that came at the beginning of the current fiscal year. This most recent reduction will be assigned proportionately to our five “super responsibility centers” (the Offices of the Chancellor, Chief Financial Officer, Executive Vice Chancellor, Provost, and Senior Vice Chancellor for the Health Sciences). Consistent with past practices, the University officer in charge of each of these units will decide how to meet assigned budget reduction responsibilities.

To this point, as noted above, we have been able to continue moving forward, even in the face of such daunting challenges. To a considerable extent, our current successes are built on past efforts to enhance both financial and market strength.  We have been unwavering in our commitments to build a stronger asset base and to develop levels of programmatic strength that would set us apart in either good or bad times. The products of those latter efforts can be seen in the ongoing marketplace demand for both of our main “lines of service”—education and research—where we clearly have become one of the country’s preferred providers.

Our successes also are the product of a culture that is disciplined, forward-looking, and selflessly committed to the greater good. Pitt always seems to have been expected to do more with less, but we never have been as good at it as we are today. Our upcoming birthday reminds us that if our University is to continue doing its important work for another 225 years, those of us in positions of responsibility today must be attentive stewards of Pitt’s tomorrows. And if we are truly committed to all of the wonderful work that is done here and understand that our progress is the product of work that takes many forms and that is done by countless individuals, then our march through challenging times has got to be driven by a spirit of shared sacrifice.

We have seen that spirit amongst our employees – who, looking at the realities of a stalled economy worldwide, have embraced the belief that our preferred path should be one that places a high priority on preserving jobs, as opposed to providing higher levels of compensation to a reduced employment base.  That approach not only has been preferable in human terms but, as a business matter, has positioned us to continue delivering the high levels of quality that have fueled the still-rising demand for our services in education and research. It also has been one of the many ways in which we have helped protect this region from the worst of the economic downturn. Whether we will be able to maintain this position, if economic woes are prolonged and we suffer further reductions to our state support, remains to be seen.

Levels of state support also play a critical role in establishing tuition rates.  From the late-1780’s until the mid-1960’s, Pitt was a private university with private-university tuition rates. At that point, a new relationship with the state provided increased levels of public support so that Pitt’s tuition rates could be reduced to levels more typical of public universities. Levels of state support, which had been eroding for years, now are being more visibly and dramatically slashed. Put most simply, it is not possible for any university to sustain public university tuition rates if it is not supported like a public university. As our public funding decreases and Pitt becomes measurably less public, then, tuition comparisons to private universities of comparable quality become increasingly relevant. And there is, of course, no comparison. Pitt’s tuition is a fraction of the tuition typically charged by comparable private universities.

Even when compared to other public universities, Pitt fares well. Last week, in fact, Kiplinger’s ranked Pitt as one of the country’s best values in public higher education. The Kiplinger 100: Best Values in Public Colleges, 2011-2012, called its top 100 values “four-year institutions that deliver a stellar education at an affordable price.” The magazine’s senior editor further stated, “This year’s top 100 public schools deliver strong academics at reasonable prices. We applaud these institutions for tightening their belts without compromising quality.” Within the 100, Pitt was ranked as the top value in Pennsylvania. Nationally, we were ranked the country’s 15th best value for out-of-state students and the 29th best value for in-state students.

Delivering uncompromised levels of quality is central to our aspirations but will become even more challenging if the effects of a troubled economy linger much longer and if public support for public higher education continues to decline. We can take some comfort from the successes crafted by our predecessors as they met their own challenges—which included wars, floods, fires, and the Great Depression. We probably can take even greater comfort from our own more recent successes. Working together, we have been able to handle—effectively, if not always easily—everything that has come our way and have maintained Pitt’s momentum.  Hopefully, such continuing progress, as well as an appropriate acknowledgment of 225 years of rich history, will be a hallmark of 2012.  Certainly, I look forward to advancing that goal with you.