By SUSAN JONES
Pitt’s Board of Trustees was prepared to vote on the University budget today (July 12) with or without a vote by the state on its budget. But somehow the stars aligned, and the state budget was signed July 11 with the same funding as last year, allowing Pitt’s finance officials to adjust and present a budget reflecting flat funding from the state.
“I want to emphasize this is a balanced budget, our revenues match or exceed our expenditures,” said Larry Merlo, chair of the board’s Budget committee. “And while this may sound like a given, more and more prominent institutions across the country are facing eight-figure deficits. So while we are in a favorable position this fiscal year, continued vigilance by this committee and management will be key to our long-term vitality. We must monitor the headwinds facing higher education as an industry and deploy proactive strategies to stay ahead of the curve.”
The $3.2 billion operating budget the board passed Friday, July 12, is a “balanced, constrained, cost-managed budget,” John Verbanac, Board of Trustees chair, said earlier this week.
The balanced budget “is important to maintaining the long-term integrity and survivability of the University,” he said. “We have many peers who are dealing with deficits. At this point, I think it’s a testament to both the demand for our product and the management of those precious dollars that we will have a balanced budget.”
Chancellor Joan Gabel told the board that information coming in from Pitt’s peers shows most “are going to be proposing a higher in-state tuition raise than we are," or also would be proposing cuts.
Salary pool
The salary pool for faculty and staff not represented by a union was set at 3 percent — 2.5 percent maintenance increase plus a .5 percent for merit, market and equity-based increases as determined by each responsibility center.
Last year, there was a 3 percent maintenance increase plus 1 percent for merit, market and equity.
Gabel said the raise pool aligns with the negotiated salary benefits for Pitt’s represented faculty, “and it reflects the University’s desire to continue to attract, invest in and retain top talent and be an employer of choice, and it aligns roughly with where inflation has been reported.”
Represented faculty will receive the flat raise of $3,140 that was negotiated in the contract adopted in May.
Salary increases will be included in Sept. 30 (if paid monthly) or Sept. 20 (if paid biweekly) pay, but will be retroactive to July 1.
Other budget highlights
This year’s budget is up 6 percent from last year, largely driven by increased research funding.
Research budget: $1.2 billion, with the National Institutes of Health, National Science Foundation, and the commonwealth of Pennsylvania as top sources of funding. “This reflects Pitt’s position as a global leader in research and innovation,” Gabel said at the board meeting.
Student aid: $300 million. This amount has increased more than 45 percent since 2019, Gabel said. More than half of all Pitt students, both in-state and out-of-state, receive financial aid.
Tuition: On the Oakland campus, most in-state undergraduate and graduate students will see a 2 percent increase, which averages to about $200 per term. Out-of-state students in Oakland will have a 4 percent increase. For the second year, there will be no tuition increases at the regional campuses. The money approved by the state for 2024-25 — $151.5 million in general funding, which has stayed the same since 2019 — all goes toward reducing tuition for in-state students.
A message from Wingrove said students will be able to see their specific tuition rates along with other cost-of-attendance information on Pitt’s tuition website beginning July 17, and student bills will be available in PittPay on July 24.
Room and board: Housing costs will go up 6 percent and meal plans will increase by an average of about 5 percent on the Oakland campus, interim Chief Financial Officer Thurman Wingrove told the Budget committee.
Capital budget: $265.2 million. Wingrove said this is strategically focused on projects and initiatives that align with the Plan for Pitt 2028, including BioForge ($78.8 million for core and shell and for ElevateBio fit-out) and fit-out of the building at Fifth and Halket ($34.5 milion), which will serve as the new home for School of Health and Rehabilitation Sciences. The capital budget also funds the purchase of the former Pittsburgh Athletic Association ($34 million) on Fifth Avenue across from the Cathedral of Learning.
Reaction
Senate President Robin Kear said she is pleased that Pitt is on such sound financial footing with this year’s budget. She also said she appreciates the input of shared governance into the budgeting process and the hard work of colleagues in the Office of the Chief Financial Officer, including interim CFO Thurman Wingrove.
“There are strong external factors that continue to impact the financial environment of higher education, and to our benefit, we are navigating carefully and thoughtfully,” she said. “Next year, I would like to see an increase of dedicated funds set aside for the obligations of the compensation modernization project for staff. I look forward to working with our new executive senior vice chancellor for administration and finance and CFO Dwayne Pinkney on this and other matters.”
Staff Council President Lindsay Rodzwicz also was complimentary of Wingrove’s work and the “robust shared governance of the annual University budget process, which includes our three staff representatives on the UPBC (University Planning and Budgeting Committee).”
“Given this year’s budget constraints, particularly with flat funding from the commonwealth of Pennsylvania, we recognize the significant value of the 3 percent total salary pool for our staff, especially considering the continued high increases in the cost of living,” she said. “With volatile inflation over the last five years, it has been a fiscal challenge for staff salaries to keep up with the cost of living.”
While acknowledging the University’s commitment to becoming an employer of choice and to enhancing the market and equity of staff salaries as part of the compensation modernization project, Rodzwicz said, “It is crucial that if compensation modernization continues to be part of the total salary pool for staff, we must urgently find ways to increase the maintenance portion of the pool to better align with inflation, as outlined in our salary policy.”
Comment period
John Verbanac, who took over as Trustees chair this month, said in an interview earlier this week that one of his goals is to make the board more transparent about its operations, and if today’s meetings were an indication, it’s certainly moving in that direction.
At both the public Budget committee and general board meetings, trustees were forthcoming with questions and comments about the budget. In past years, much of the comments were reserved for meetings behind closed doors and the public meeting was only for information and voting.
Trustee Gary Brownlee asked how Pitt has been able to deliver on its mission without any significant disruption, either to programs or staffing, unlike its neighbors, such as Penn State, which has a deficit of around $100 million, and West Virginia University at $45 million.
One reason, Gabel said, is “the budgeting process that we utilize requires each of the budgeting units to work within their own process to address the internal effects of inflation. So in effect, the impact of inflation is borne internally within each budget and requiring its own cost management or its own cost avoidance year over year. That is a natural mechanism that I think has been very productive for us.”
Having fewer regional campuses also means lower risk, she said. Penn State has offered buyouts to nearly 2,000 employees on its 19 Commonwealth campuses, and 21 percent have opted to participate.
“I think we’re very well governed in the partnership and expectations of the board. And that has served us well too,” Gabel said. “But this is not an easy time. There’s no question that there will be tough decisions that we will have to make over time.”
Dawne Hickton asked Wingrove, “What’s your confidence level as you go forward that we can continue to keep a focus on cost management?”
“My confidence level now is high,” Wingrove said. “For many years, the University’s budget has had a built-in parameter that we don’t grant inflationary increases on non-compensation expenses. ... That’s kind of been built into the DNA of the academic units and the support units, so they know they’re not going to see those automatic cost of living increases in their non-compensation expenses. That’s forced them to really think creatively and to be very diligent about how they manage those expenses. So they’ve taken steps to better utilize their attrition rates, to take advantage of IT opportunities for efficiencies, to share services across departments and units.
“The fact that’s kind of built in or ingrained in the thought process of all of the deans and all the support units," he added, "gives me a higher level of comfort that we’ll be able to manage those costs going forward.”
The full recordings of the public Board of Trustees meeting and the Budget committee meeting are available on Pitt’s YouTube channel.
Susan Jones is editor of the University Times. Reach her at suejones@pitt.edu or 724-244-4042.
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