Chancellor Makes Case to Senate Panel: Pitt Needs Adequate Funding to Remain Essential Regional Asset

Issue Date: 
September 19, 2011

This is the testimony of University of Pittsburgh Chancellor Mark A. Nordenberg at the Senate Appropriations Committee hearing in the Connolly Ballroom, Alumni Hall, on Sept. 12, 2011.

Alumni Hall’s Connolly Ballroom was packed for the Sept. 12 Senate Appropriations Committee hearing.Alumni Hall’s Connolly Ballroom was packed for the Sept. 12 Senate Appropriations Committee hearing.

In just a few months, the University of Pittsburgh will celebrate its 225th birthday. On Feb. 28, 1787, the Pennsylvania legislature breathed life into the institution that would become Pitt by chartering a frontier school then known as the Pittsburgh Academy. But it is another key anniversary, for Pitt and for Pennsylvania, that is even more directly relevant today.

Forty-five years ago, on Aug. 23, 1966, House Bill Number 2—sponsored by Democratic Representative, and later Speaker, K. Leroy Irvis—was signed into law by Republican Governor William Scranton. That bill converted Pitt, which to that point had been a private institution, into a public, state-related university. By then, of course, Pitt had grown from a log-cabin academy into a modern research university and had expanded to include four campuses outside of Pittsburgh—in Johnstown, Bradford, Greensburg, and Titusville.

With demand from a growing college-age population rising dramatically, the state faced the need to provide far higher numbers of reasonably priced university opportunities. It did so by turning to Pitt and Temple, two universities with established reputations and developed physical plants, eliminating the need either to build academic programs or to make the capital investments that “starting from scratch” with new campuses would have required.

The most obvious beneficiaries of Pitt’s new public status were the first wave of “baby boomers,” whose tuition obligations were steeply reduced. But another force also drove this legislation—a desire to invest in institutions that would fuel broader community growth. That goal was described in a 1966 resolution of the Chamber of Commerce of Greater Pittsburgh, which declared:


“We all are familiar with the impetus that outstanding educational complexes have given to cultural and economic growth in other sections of the country. We have similar educational resources in Pittsburgh and wish to maintain and expand them.”

The mission of Pitt, Penn State, and Temple—the state’s three public research universities—was best described in a state master plan issued in the mid-1980’s, shortly after the creation of the State System of Higher Education. That plan labeled these three universities as the “Commonwealth universities” and described their expected contributions in the following way:

“Together, these institutions offer a broad range of educational programs and services and carry special responsibilities for research, advanced graduate instruction, and for education in the professions, including law, medicine, engineering, business, and agriculture

. . . . The scope and quality of their programs and their geographic distribution permit them to serve the needs of the state and nation in the fields of undergraduate, graduate, and first professional education, research, and public service.”

That is a daunting mission. But Pitt now has been delivering on it for 45 years, with its record of impact and accomplishment growing dramatically over time. Let me briefly focus on the three key areas that I mentioned, beginning with education.


In the year before Pitt became a state-related university, its student body included 13,962 in-state residents. This past academic year, 26,457 Pennsylvania students were enrolled in our programs. The total number of Pitt degrees awarded since we became a state-related university is 287,000, a measurable and meaningful return on the state’s investment in our University.

Demand for admission to Pitt’s programs continues its dramatic climb, as do the records of academic strength presented by enrolled students. This means that we are keeping some of Pennsylvania’s very best students at home, increasing the likelihood that they ultimately will live and work and contribute here. It also means that we are attracting outstanding out-of-state students, who ultimately may choose to become Pennsylvanians.

It also is important to note that, even with lagging state support, Pitt has delivered its high-quality programs at tuition rates that are far lower than those charged by private university peers and has maintained a significant differential between in-state and out-of-state tuition. Put another way, Pitt has delivered on its end of the agreement making it a state-related university.


Pitt’s impact in research may be even more striking. Since becoming state-related, our faculty have attracted a staggering $10.5 billion in research grants, and the rate of growth has been amazing. In the year before Pitt became state-related, its annual research expenditures stood at slightly less than $23 million. By 1995, they had increased tenfold, to more than $230 million. This year, they exceeded $800 million. That means that we now are attracting more than $5.50 in research funding for every $1 of our appropriation—a return that probably cannot be matched by any other Commonwealth investment.

Addressing Pitt’s roles as one of the nation’s leading research universities and a driver of regional economic development were (from left) Pitt Chancellor Mark A. Nordenberg; Dennis Yablonsky, CEO of the Allegheny Conference on Community Development; Jared Cohon, president of Carnegie Mellon University; and D. Lansing Taylor, director of the University’s Drug Discovery Institute and the Allegheny Foundation Professor in the School of Medicine’s Department of Computational and Systems Biology.Addressing Pitt’s roles as one of the nation’s leading research universities and a driver of regional economic development were (from left) Pitt Chancellor Mark A. Nordenberg; Dennis Yablonsky, CEO of the Allegheny Conference on Community Development; Jared Cohon, president of Carnegie Mellon University; and D. Lansing Taylor, director of the University’s Drug Discovery Institute and the Allegheny Foundation Professor in the School of Medicine’s Department of Computational and Systems Biology.

Pitt ranks in the top five nationally in funding from the National Institutes of Health and is regularly in the top 10 or 12 universities in total federal research support. These competitively awarded funds fuel pioneering research efforts, but they also have an immediate economic impact. By standard national conventions, every $1 million in research expenditures supports, directly and indirectly, 36 jobs. Pitt’s $800 million of research expenditures, then, supports nearly 29,000 local jobs.

Pitt has played a lead role in creating virtually all of the region’s technology-based economic development initiatives. And just since the beginning of the new century, Pitt research has resulted in the issuance of 373 new patents, the execution of 628 new license or option agreements, and the creation of 67 new companies. Though they seem to have agreed on little else, both President George W. Bush and President Barack Obama placed Pittsburgh in the national and international spotlight as an inspiring example of economic transformation and underscored the importance of university research to that economic rebirth.

Community Development

In fact, what could not have been anticipated when Pitt became state-related is the extent to which the impact of its work would become so central to regional economic development. Particularly as we continue to move through the “jobless recovery” from the “Great Recession,” the links between the positive economic forces unleashed by research universities and higher levels of employment have become even more critical.

Consider the following reports from the U.S. Bureau of Labor Statistics. From March of 2008 to March of 2009, the Pittsburgh metropolitan area lost more than 25,000 jobs: 7,400 manufacturing jobs; 5,300 leisure and hospitality jobs; 5,200 trade, transportation, and utilities jobs; 2,600 professional and business services jobs; 1,700 construction jobs; 1,100 information and 1,100 financial services jobs; and 1,000 government jobs. The only sector to gain at least 1,000 jobs was education and health services, which added more than five times that many, at 5,400 jobs.

In the most recent assessment period, signs of an improving economy began to emerge. However, the prominence of the “eds and meds” was unchanged. According to the Bureau of Labor Statistics, “In the Pittsburgh metropolitan area, the education and health services supersector gained 5,300 jobs from March 2010 to March 2011, more than any other industry . . . As of March 2011, this supersector was the largest industry in the Pittsburgh area, employing more than one-fifth of the local workforce.”

Eroding State Support

What recent history teaches, though, is that even extraordinary returns of this type do not drive state investments. And this is true whether those returns are measured arithmetically, in terms of dollars flowing into the economy, or in more human terms—by lives enhanced through the power of education, or lives improved through the products of research, or lives fulfilled by the opportunity to hold a job and engage in meaningful work.

Though a pattern of decline can be traced over an even longer period, the absence of any correlation between delivery on mission and state support became particularly pronounced during the past decade. Our appropriation was cut in six of those 10 years, with the Commonwealth’s investment in Pitt’s appropriation, excluding federal dollars, standing at $9.3 million less in the fiscal year just closed, before the truly deep cuts hit, than it was 10 years earlier.

During the eight years of the previous administration, inflation rose by more than 20 percent; overall state spending increased by nearly 40 percent; and state support for basic education increased by more than 60 percent; but support for higher education remained flat. In 2008, the most current year for which data are available, Pennsylvania ranked 46th among the 50 states in terms of per capita spending for higher education.

Pennsylvania’s per capita investment of $185.12 stood in stark contrast to the higher levels of funding provided by such neighboring states as Michigan ($258.28), New Jersey ($259.73), Delaware ($278.47), Connecticut ($295.46), West Virginia ($309.87) Maryland ($331.45), and New York ($331.54). To express that range in a somewhat different way, neighboring New York spent nearly 80 percent more per capita on higher education than Pennsylvania did.

These comparatively lower levels of state funding inevitably translate into dollar disadvantages for individual institutions and the people who depend upon them. Looking at state support as a percentage of total budget for institutions typically ranked with Pitt among the country’s top American research universities provides one set of relevant comparisons. Within that group, Berkeley stood at 26 percent, the University of Florida at 32 percent, North Carolina at 22 percent, and Wisconsin at 18 percent. At that time, Pitt was just slightly less than 10 percent, and the only university in that group ranked below it was Michigan at 7 percent.

And that was before the drastic cuts that came in the state budget for the current fiscal year. The Governor first proposed that Pitt lose 50 percent of its general appropriation and 100 percent of our academic medical center support. In the end, and with a great deal of help from members of this committee, we improved those numbers, ultimately suffering a 19 percent reduction to our general appropriation and losing 50 percent of our academic medical center support.

Obviously, that is lot better than where we started, but those are hardly numbers to spark a celebration. Instead, Pitt suffered an overall 22 percent cut to its state support, the highest percentage reduction of any of the state-related universities. That left us with a $70 million budget gap—$40 million of it tied to cuts in state support and $30 million tied to unavoidable increases in the cost of doing business.

Dealing with that large gap required a number of actions:

•  Increasing tuition more than we would have liked, given the added burdens it placed on our students, particularly since Penn State and Pitt already are the two most expensive public universities in the country;

• Implementing a salary freeze for many employees for the remainder of this year, with very modest increases to come in the new calendar year—a real concern since, with another recent salary freeze and changes to some of our benefits plans, our comparative compensation position already has deteriorated, and we do compete for talented faculty and staff with the best universities in the country;

• Dramatically reducing our planned investments in deferred maintenance, even though we have spent the last 15 years contending with what had seemed to be an almost unmanageable backlog and know that postponement often leads to more costly future repairs;

• Cutting back on the investments in academic and student life initiatives that have propelled Pitt to its current level of prominence and also cutting back on such central resources as library acquisitions that not only distinguish a research university but that often also are a resource for the broader community;

• Eliminating some of our established “seed investments” in research that have regularly provided the foundation for promising projects that subsequently attract outside support—for the good of the involved faculty, the University, and the region;

• Assigning additional budget reduction responsibilities to our academic and administrative units, recognizing that those managing at that level will know best how to make cuts while doing the least damage to current programs and future prospects; and

• In direct response to reductions to more focused appropriations, cutting back on special outreach programs that we have conducted for the state, with its support, for many years, including such programs as the special needs clinic in our School of Dental Medicine, services provided by Western Psychiatric Institute and Clinic to teens at risk of suicide and other citizens in need, and our Graduate School of Public Health’s statewide training program for public health practitioners. Such programs had been supported by targeted appropriations that were dramatically reduced in the current state budget, even though much of the funding actually came from federal sources.

Moving Forward

This past budget, we were told, was driven by math. Put most simply, there was a huge state budget deficit to close, time was short, and those in charge essentially needed to make cuts wherever they could find the money. But this is a new budget-building year. Hopefully it can be a year in which more careful thought can be given to long-term consequences in charting the paths that we will be traveling together.

As Pitt has demonstrated on many occasions, when collective sacrifices are required, we stand ready to do our fair share. But the 22 percent reduction in state support that we endured was dramatically disproportionate in a budget that cut overall state spending by 4 percent.

Even more important, though, is what those numbers say about our sense of direction for this state that we call home. Without question, the numbers represent a retreat from the collective commitment to the education of the next generation of Pennsylvanians that was so visibly on display when Pitt was made a state-related university. They represent a dramatic reduction in support for institutions that are among the Commonwealth’s most significant generators of new ideas and technologies, even as we move further into a highly competitive century in which success will largely be defined by innovation. And at a time when the entire country has become increasingly desperate for employment growth, they represent a retreat from the very institutions that have proven to be most effective in generating 21st -century jobs.

We are grateful for the opportunity to have this early discussion and look forward to working with you to develop a more promising approach for the future of Pennsylvania and its people.