Minutes of November 11, 1994 Meeting

The meeting convened at 2:03 p.m. in room 2428 Cathedral of Learning.

UPBC members present were: Thomas Anderson, Nitin Badjatia, Toni Carbo Bearman, Jacob Birnberg, George Chambers, Thomas Detre, Ronald Gardner, Darlene Harris, James Holland, James Isaacs, Randy Juhl, Peter Koehler, James Maher, Franklin McCarthy, Sharon Nelson-Le Gall, Joan Slezak, James Stuckart, Ben Tuchi, Philip Wion, Bruce Williams, Julius Youngner, and Judith Zimmerman. Also present were: Bruce Hutchinson, William Laird, Jeffrey Liebmann, William Madden, Jeffrey Masnick, Robert Pack, Paul Stieman, and Lawrence Weber. UPBC members not present were: Jeffrey Romoff.

Approval of Minutes and General Announcements

The minutes of the October 27 meeting were approved. Maher distributed a memo from Tuchi announcing that the Athletics Department has secured commitments for sufficient funds through cash gifts, pledges, and ticket revenues to finance Phases 1 and 2 of the Pitt Stadium renovation project. Anderson and Birnberg expressed concern that the submission of information on the Athletics Department called for in the UPBC resolution regarding this project has not occurred. Maher explained that the memo was not intended as a full report and that Tuchi will be asked to supply more information at a future meeting.

Maher informed members of a proposal from Blue Cross/Blue Shield that would create an exclusive agreement with the University that would give the University $5 million each year for the next three years and still provide four levels of service. He asked members to inform themselves of this discussion, which is likely to be an emotional one for current subscribers to the HealthAmerica option. Maher stressed the importance of this decision and the need to allocate sufficient time for careful discussion. The role of UPBC members who sit on the Senate Benefits and Welfare Committee and the Medical Rate Review Committee was discussed. Koehler suggested that UPBC members on these committees may be able to provide a unique institution-wide perspective. Maher asked any interested UPBC member not currently on one of these committees to express their willingness to serve.

Telecommunications Issues

Stieman reviewed questions submitted by UPBC members prior to the meeting. In response to Juhl's question, he indicated that the only formal benchmarks available on Telecommunications' performance are those in industry. He explained that the University compares favorably with those ratios available and in comparisons with individual institutions that have occurred. Bearman asked what was an appropriate level of surplus revenue generated from user fees over operational costs. Stieman responded that a target of 7.0 to 7.5% is set to cover long-term capital expenditures not covered by debt service and that excess surplus would likely be returned to the General University Fund.

Bearman discussed the various charges imposed by Telecommunications on units. She expressed concern that while set charges have stayed at $9.25 per month, other charges have been added, such as those for audix and telephone directory listings. Bearman also asked about infrastructure costs associated with new construction. Stieman replied that new building costs include those expenditures that prepare a facility for telecommunications capability. Tuchi added that Telecommunications' rates do not carry charges for wiring and other infrastructure that is interior to a building.

In response to Anderson's question, Stieman replied that the University currently has 18,500 telephone lines and 17,000 sets. If the institution decided to buy its own phones, other telecommunications charges would have to increase. Anderson asked how the University could assess future options. Maher suggested that rate shifting may not be the best way to operate services. Birnberg called for establishing basic rules, but allowing units to make informed decisions. He suggested that such discussions of cost drivers versus University policy will be addressed by the task force examining University services. Wion added that Computing and Information Services is one specific area currently being examined by the Attribution Methodology Subcommittee.

FY 1996 Parameters

Koehler redistributed the most recent draft budget parameters for FY 1996. Chambers asked about the Subcommittee's confidence in the 6% increase in appropriations. Koehler responded that the figure represents a combination of challenge grant funds and appropriations increase and that receiving a lower amount may require raising the proposed tuition rate increase of 3.5%. Birnberg suggested that the UPBC receive a legislative update based on the outcome of the gubernatorial election. Koehler added that changes at the federal level may also affect indirect costs and the volume of grant funds.

Tuchi cautioned that resistance to rising tuition rates is increasing, noting a particular aversion among Trustees to tuition increases. Pack responded that the draft parameters try to address the issue proactively, shifting the burden away from students and their parents. Tuchi emphasized the need to convince legislators of the importance of various goals and projects, such as the Bellefield Hall renovation and the acquisition or construction of new student housing.

Maher cautioned that an expected shortfall in fall 1994 tuition revenues of approximately $2 million may render FY 1996 projections unrealistic. He emphasized the need to regularize scholarships, stating that the Enrollment Management Committee is on track to provide recommendations in the next two months. Bearman suggested that units failing to meet enrollment projections should receive a different percentage budget cut or a smaller increase in operating expenditures.

Maher stated that he is meeting with units, discussing planning directions and alternative budget strategies such as the identification of new revenue sources. Anderson expressed concern that criteria guiding reduction decisions must take account of the fact that it is faculty who generate revenues and that cuts in faculty may also reduce revenues. Wion called for discussing the need to adjust the size of programs, rather than budget cuts alone. Maher stressed the importance of maintaining central programs during periods of fluctuation and addressing truly unhealthy programs appropriately.

The meeting adjourned at 4:25 p.m.