University Update

To:             The University Community
From:       Mark A. Nordenberg
Date:         Sept. 2, 2009
Re:             A Year of Challenge and of Opportunity

Chancellor Mark A. Nordenberg

The cycles of the school year are so much a part of our early years that their rhythms can take on a force that almost seems to be biological. For those of us who are lucky enough to call a university campus their “second home,” the patterns of the academic year come to influence in even more pronounced ways how we work and even how we feel.

Once annual commencement ceremonies have been completed, a generally welcome period of comparative quiet begins. Graduates move on to open the next chapter of their lives, and most other students take a more temporary leave, typically working to earn at least some of the funds that will be needed when the next term begins. As the teaching responsibilities of most faculty members decrease, even higher levels of energy are invested in research and scholarly projects. Staff often focus on initiatives that cannot be undertaken effectively when campus population is at its peak and work to prepare for the demands of the coming academic year.

Then, suddenly, that quiet time is over. Our students and the special energy that they carry with them return to launch a new year. Their presence transforms our campuses and the neighborhoods that adjoin them. It is an exciting time—marked by new faces, new hopes, and new opportunities.

A New Year Is Launched. We began moving through that period of transformation, on all five of our campuses, last week. In Oakland, the challenge of moving thousands of students and their many possessions into a relatively compressed urban space known for its inhospitable topography was effectively met through our “Arrival Survival” program. Once moved in, more than 4,600 new students and family members attended our freshman convocation.

For me, two highlights of that event were especially worthy of note. The first was the spontaneous applause that greeted my report that Pitt had become one of the top-five American universities in terms of the National Institutes of Health (NIH) funding competitively attracted by members of our faculty. I took that reaction as one clear sign of our students’ enthusiasm for high academic achievement in whatever form it takes. The second particularly meaningful moment came when our new students, led by the President of the Student Government Board, rose to take the Pitt Promise. Their public commitment to civility is an important reminder of the type of community that we expect to nurture and sustain.

In so many ways, this is a very exciting time. Even if we cannot predict them all, we know that the new year will bring a wide range of important opportunities, and we will pursue them from a position of ever-growing strength. We are providing higher education programs of the highest quality, and our students are performing in ways that are a source of widely shared pride. The respect that we have earned as a center of pioneering research continues to grow, and the quality and impact of the work being done by our faculty members are the envy of universities around the world. We also sit at the center of the “eds and meds” sector that now is the single most significant force in this region’s economic development. Consider just the following signs of impact and momentum.

• In 1995, we attracted 7,825 applications for admission to the undergraduate programs of the Oakland campus. This year, that number topped 21,700. Though we cannot finalize current-year numbers until withdrawal deadlines have passed, average SAT scores appear to have risen from 1110 to 1264 in that same period, and the percentage of enrolled freshmen ranking in the top 10 percent of their high school graduating classes grew from 19 percent to 48 percent. Among the high honors claimed by enrolled students last year were our first Gates Cambridge Scholarship, two Goldwater Scholarships, and three Humanity in Action Fellowships.

• We did move from sixth to fifth place in NIH funding this past year—joining Harvard, Johns Hopkins, Penn, and UCSF. We also moved from 11th to 10th in total federal science and engineering research and development support. That National Science Foundation (NSF)-compiled top 10 consists of Johns Hopkins, Washington, Michigan, Penn, UCLA, Duke, Columbia, Stanford, UCSF, and Pitt. Among the many high honors earned by faculty members last year were election to such prestigious groups as the Institute of Medicine, the American Academy of Arts and Sciences, the American Educational Research Association, the American Academy of Nursing, and the American Association for the Advancement of Science, and the receipt of such special forms of recognition as the National Institutes of Health Director’s Pioneer Award, American Cancer Society Research Professorships, the American Society of Clinical Oncology Translational Research Professorship, the Rawley Prize in Atlantic History, Sloan Research Fellowships, Pew Biomedical Sciences Scholar designations, and the CINP-Lilly Neuroscience Basic Research Award.

• From 1995 to the past year, our annual research expenditures rose from some $230 million to more than $653 million. By nationally developed conventions, those expenditures support, directly and indirectly, some 23,500 local jobs. Education and health services now comprise the region’s largest employment sector, the only one that has added jobs each and every year since 1995. The role played by university-based research in transforming the economy of the Pittsburgh region, and in more broadly enhancing the vitality of our home communities, drew national attention during the past year. One of my favorite commentaries appeared in a New York Times column that stated, “Brainy cities have low divorce rates, low crime, high job creation, ethnic diversity, and creative capitalism. They are places like Pittsburgh, with its top-notch universities ... .”

Daunting Challenges Persist. Even as we celebrate past accomplishments and look forward to new opportunities, we continue to move through a time of historic economic challenge. In the past year, we saw our endowment decline in the face of the stock market collapse. Even committed supporters became more cautious as they assessed losses in their own portfolios. And as the ranks of the unemployed grew dramatically, we naturally worried about the economy’s impact on the financial health of our students and their families.

While contending with this deep economic downturn, Pitt and Pennsylvania’s other state-related universities also have faced unique challenges tied to state funding. By now, the basic source of those concerns—comparatively low levels of Commonwealth funding over an extended period of time—is well known to most of you. As we entered this past year, for example, the approved state budget for the fiscal year had grown by 4.8 percent overall, but it included only a 1.4 percent increase to our appropriation. This extended an all-too-familiar pattern. From Fiscal Year 2001 to Fiscal Year 2009, our appropriation was virtually flat, while the CPI rose by nearly 25 percent, and the Commonwealth’s budget increased by some 40 percent.

Early last fall, as the recession more clearly emerged, the Commonwealth further reduced its support, advising us to prepare for the withholding of $11.4 million, or a total of 6 percent of our appropriation. We quickly responded, not only to that anticipated loss but also to the general economic decline, in a range of ways. In October, budget cuts were imposed on both academic and support units; a process requiring central approval of all hiring authorizations was instituted; and the pace of capital projects was slowed. In December, officer compensation was frozen at FY 2008 levels, and in March, other salaries were frozen at FY 2009 levels. We also took steps to increase our liquidity and to protect against the higher interest rates that likely lie ahead.

From the time of our transformation to the status of public university in the mid-1960’s, the basic agreement between Pitt and the Commonwealth has been straightforward—in return for annual support from the state, the University would maintain lower tuition levels, for in-state students, than those charged by private universities. Clearly, the University has met its part of that bargain.  Though there are some small program variations, tuition and fees for a Pitt undergraduate for the current fiscal year total about $14,000. Tuition and fees at Pennsylvania’s two private AAU universities, in sharp contrast, are at or above $40,000.

At the same time, declining Commonwealth support necessarily generates pressure for higher tuition. This relationship was explicitly noted by Peter Orszag, now the director of the federal Office of Management and Budget, and his coauthors Thomas Kane and Emil Apostolov in their 2005 Brookings Institution report, “Higher Education Appropriations and Public University Quality.”  In that report, they stated:

Over the past twenty years, state government support for public higher education has gradually waned, and the share of higher education expenditure subsidized by state appropriations has declined. One result of declining state support has been the widely publicized rise in tuition at public institutions . . .

The unmistakable relationship between decreasing levels of state support and increasing in-state tuition rates also can be seen in direct comparisons of Pitt to peer universities. Those institutions, too, often have been affected by declining state support, but almost always to a far lesser degree. Consider the following chart, which was prepared by our Office of Finance from public financial statements and which compares Pitt to six peer public universities.

New Issues Emerge. Despite this unenviable position, we were buoyed by budgetary programs designed by the new administration in Washington that reaffirmed public higher education’s place as a high national priority. That priority reflected a belief that higher education remains essential to the successful pursuit of the American dream. It also was grounded in the knowledge that university-based research can produce both short-term economic growth and longer-term social gains. The package of stimulus assistance enacted by Congress, at the urging of the President, included: enhanced financial aid funding, which typically goes to individual students; increased research funding, which typically supports particular projects; and funding designed to sustain the overall strength of public colleges and universities that otherwise might be hurt, to our collective disadvantage, by reductions in state support caused by the recession.

However, in late June, we suddenly faced what I described as a serious and surprising threat when the Governor declared that Pitt, Penn State, Temple, and Lincoln were not “public universities” and, therefore, would not be eligible for stimulus support. By taking that position and imposing additional state reductions, the Governor targeted Pitt for more than $30 million in budget reductions for the current fiscal year. That level of reduction, as I noted at the time, “would take our appropriation to a point several million dollars beneath its 1995 level, when our enrollment was well over 2,000 students smaller, when our research enterprise was not much more than one-third its current size, and when costs generally were lower.” It also would have had a devastating financial impact on students enrolled in the four state-related universities, the single largest group of public university students in the Commonwealth.

In the face of strong Congressional opposition, the language of the act itself, and a long history of these universities being treated as public, and not private, under both federal and state law, the U.S. Secretary of Education refused to accept this position. Instead, he found that “Pennsylvania State University, the University of Pittsburgh, Temple University, and Lincoln University must be considered public institutions of higher education (IHEs) under the SFSF [State Fiscal Stabilization Fund] program.”  The state was instructed “to revise its application to include State support for these State-related institutions in its maintenance-of-effort and restoration calculations.”

The Secretary went on to note that “[i]n determining the amount of support to provide each public IHE, the Governor may take into consideration the extent to which the institution agrees to limit tuition increases for in-State students.” Since we already had made the decision, in this period of financial challenge for our students, to do everything that we could to limit our tuition increases, this should not be a problem for Pitt. We had announced our intention to freeze regional campus tuition in April and imposed overall in-state tuition increases lower than those assessed by the State System of Higher Education, to provide two relevant points of reference.

The State Budget Impasse. Since then, of course, serious problems of a different sort have emerged in Harrisburg. For the seventh consecutive year, the Commonwealth has failed to approve a budget by the constitutionally mandated June 30 deadline. Two months after the passage of that deadline, in fact, this year’s stalemate continues, and there have been few tangible signs of progress. At this point, it could not be viewed as surprising if the state was without a budget, and the University was without an appropriation, for a prolonged additional period.

In the meantime, as the arrival of our students has signaled so clearly, there is important work to be done, and we need to push forward. Doing what we can to provide necessary relief in a difficult situation, we have permitted students whose support from the Pennsylvania Higher Education Assistance Agency has been delayed to move forward for the fall term, sharing their expectation that these funds ultimately will be received. In other respects, too, we will attempt to manage our finances in ways that minimize disruptions.

Even as we attempt to “make the best” of our circumstances, though, it is important to recognize that we still are moving through particularly problematic times. The general condition of the economy remains weak, and the pace of any recovery is uncertain. Neither the terms upon which the ongoing budget impasse in Harrisburg ultimately will be resolved nor the impact of those terms on public higher education can be confidently predicted. We believe that the merits are with us, we enjoy strong legislative support, and we are being very attentive. However, this clearly is one case in which “it isn’t over until it’s over.”

A Distinctive September. Much of what we do this month will be typical of the start of any new year—including the work done in our classrooms and libraries and labs, the excitement that we anticipate on the football field and in other athletics venues, and the range of professional social activities that enable community members to connect with each other. In two respects, though, this September will be unique. We already are beginning to confront the problems posed by the H1N1 influenza, and we are looking forward to the special opportunities that will be presented when President Obama brings the G-20 Summit to Pittsburgh while also recognizing that some special efforts will be required to meet its accompanying challenges.

There is, of course, absolutely nothing positive to say about the onset of H1N1. However, we do hope that we are as well prepared as possible to deal with it. For the past several months, an interdepartmental task force, building on earlier efforts directed toward the avian flu, has been preparing for the arrival of H1N1, and even before the first classes of the new term had been taught, the virus appeared among us. By the end of last week, six students with an “influenza-like illness” had been identified, and a small number of additional cases emerged this week. To date, each of the flu-afflicted students has presented relatively mild symptoms.

The University is following the “Guidance for Responses to Influenza for Institutions of Higher Education” that was released by the Centers for Disease Control and Prevention. We also have been in regular contact with the Allegheny County Health Department and have consulted with our colleagues at UPMC. Posters designed to facilitate prevention efforts have been placed around our campuses, information has been posted on our Web site, and letters have been sent to all students, parents, faculty, and staff. Hand-sanitizer stations have been placed in dining areas, residence halls, and other high-traffic locations, and two separate hotlines have been established—one for students and the other for parents.

Students with flu-like symptoms—whch include fever, fatigue, headache, vomiting, body aches, diarrhea, cough, or sore throat—have been directed to contact their resident advisor or the Student Health Services. Residence hall students who experience flu-like symptoms and whose permanent home is within reasonable traveling distance are being asked to return home. Students experiencing such symptoms who are not able to return home are being advised to remain in self-isolation—a status that includes not attending class or participating in social activities—until their symptoms resolve. Residence hall students in self-isolation will be monitored by University personnel and provided with meals in disposable containers. Members of the faculty or staff experiencing such symptoms should contact their primary health care provider but also should self-isolate to help limit the spread of the virus.

We obviously must be prepared to make appropriate adjustments to this response plan if the spread of this illness requires other steps. To this end, our task force is constantly assessing the situation as it unfolds and considering what, if any changes, should be made. At the present time, though, that team feels comfortable with the actions that have been implemented.

Looking ahead to the G-20 Summit, our general approach will be to maintain operations that are as close to normal as possible, but that event, too, almost certainly will require some modifications, institutionally and individually, to customary routines. In fact, much of the public attention to date has focused on security and transportation issues that will affect the city when the summit is held here near the end of this month. However, any inconveniences that may result from Pittsburgh’s selection as the summit’s host surely are not the most significant feature of this event. Instead, the fact that the leaders of many of the world’s most important countries will be traveling here to discuss issues of global importance should provide special learning opportunities for us while also making our home region a center of world attention.

The staging of the summit here in Pittsburgh not only is a generally positive development for the broader community but has particular significance for Pitt—with a mission that includes the preparation of students for lives in a rapidly changing world and with our rich traditions in international education and research. Because the University has played such a key role in the transformation of this region’s economy, the fact that the President selected our region as the host site, at least in part, because of those changes provides another link between us and the summit.

The timing of the session also is unique. As you will have noted, much of this update has been devoted to the particular problems that we are facing as we work to cope effectively with what has been called the “Great Recession.” Now, in just three weeks, the leaders of the world’s greatest economic powers will be gathering in our midst to discuss that economic crisis, to debate steps that might be taken to speed our escape from its clutches, and to consider measures that could help protect us from such massive declines in the future.

Many academic units have planned programming tied to the fact that the G-20 Summit is coming to Pittsburgh. In fact, some of those efforts already are under way. It is our hope that we also may be able to take advantage of the presence of such an impressive array of world leaders through other events. However, the implementation of such programming remains highly dependent upon the final schedule for the summit itself.

We are told that final plans for the summit and accompanying events will not be confirmed by officials in Washington any earlier than the week of Sept. 14. Members of our own administrative team have been in regular contact with the G-20 host committee, as well as with local officials, and are working with those groups to understand and assist with their planning. Our Office of Public Safety, among others, has been actively involved.

Most official summit activities will take place in the downtown area, some distance from campus, which should make our practical challenges more manageable. The one widely known exception is the heads-of-state dinner to be held on the evening of Thursday, Sept. 24, at the Phipps Conservatory and Botanical Gardens. The presence of that signature event at a facility that sits literally on the border of our Oakland campus almost certainly will affect our operations here that day. When it becomes more certain what changes will be required, we will begin the processes of notification and implementation. However, even during that particular period, our approach, as noted, will be to maintain campus operations that are as close to normal as possible.

As we all have been reading for weeks, soe transportation routes, particularly those passing through the downtown area, will be affected at various times during the summit. Airport operations also likely will be affected. Once more specific information regarding road closures, changed public transportation routes, and altered airport operations is received, we will do our best to share it, as will local officials and members of the media. In the main, however, we anticipate that experienced commuters, armed with the right information, will be able to adjust to whatever short-term challenges are presented.

Maintaining Our Momentum. In that respect, the G-20 is not unlike most of what comes our way in life. Even good things typically arrive in packages that include complications and qualifications and challenges. Meaningful progress would not be possible if we permitted those limiting factors to prevent us from moving forward. In a very focused way, that can be said of the approaches we choose to take to the two days of the G-20 Summit. It is equally true of the broader opportunities that await us and that are ours for the taking, if we continue working, collectively and effectively, to do what is necessary to seize them.

To be clear, then, my somewhat lengthy description of the economic problems that we currently face was meant to be informative and realistic and even sobering. These issues are of great importance to us all. That description, though, was not meant to be discouraging.

Like every other institution in the world of 2009, we face an array of very real challenges, and we must find ways to meet them. However, returning to a principal theme from the opening passages of this update, as well as from a succession of other presentations, we are poised to push forward from a position of unusual strength—in terms of our dramatically improved financial condition, in terms of our rich reservoir of human talent, and in terms of our clearly demonstrated commitment to advance our important work. Put another way, our own recent history suggests that we are poised to emerge from this trying period comparatively better positioned than we were going into it.

On some past occasions, I have made note of Pitt’s long and proud history. Later in this academic year, we will mark our University’s 223rd birthday. Over the course of that extended institutional lifetime, our predecessors endured floods and fires, the Civil War, two World Wars, and the Great Depression. In the face of these and many other obstacles, they kept Pitt moving forward, and I have no doubt that we will do the same.

Welcome to the new academic year—a year that will be characterized by wonderful opportunities, even if it also brings more than its share of challenges. I wish all of you the best of everything, appreciate what each of you will do to help fuel Pitt’s continuing progress, and look forward to traveling through the 2009-2010 academic year in your distinguished company.