June 8, 1994 UPBC MEETING MINUTES The meeting convened at 10:10 a.m. in the Smith Hall Lounge, Greensburg Campus. UPBC members present were: Thomas Anderson, Toni Carbo Bearman, Jacob Birnberg, George Chambers, Ronald Gardner, James Holland, Randy Juhl, Peter Koehler, Franklin McCarthy, Dennis McNair, Sharon Nelson-Le Gall, Mark Nordenberg, Jack Ochs, Ben Tuchi, Philip Wion, and Judith Zimmerman. Also present were: Michael Gaber, Rhonda Gross, Oval Jaynes, Jeffrey Liebmann, Jeffrey Masnick, Robert Pack, and Lawrence Weber. UPBC members not present were: Nitin Badjatia, Thomas Detre, Darlene Harris, Carol Kenderes, Michael Kurela, Richard Nelson, Jeffrey Romoff, and Julius Youngner. Approval of Minutes The UPBC approved the May 20 minutes. Nordenberg discussed the significance of holding a UPBC meeting at the Greensburg campus. He made reference to the emphasis that the Planning and Budgeting System places on the special concerns of the regional campuses. Update of Strategic Issues Subcommittee Ochs provided a chronology of Subcommittee activities, grouping issues for possible examination into four categories -- financial, organizational, instructional delivery, and new initiatives. In examining institutional data and financial ratios of peer institutions, the Subcommittee noted three important concerns. -- Universities are becoming more dependent on federal research funding, which is highly variable and relatively inflexible, and less dependent on state appropriations. The sustainability of federal research funds is questionable, forcing institutions to determine their level of commitment to tenure-stream faculty and facilities for research. -- Personnel growth at the University has continued in recent years, in spite of economic conditions. The Subcommittee has requested information detailing the location of this growth and how the growth may be related to outputs. -- Auxiliary revenues at many institutions have grown more slowly than tuition and fee revenues. As important components of the educational enterprise, discussions should occur about the pricing of auxiliary services and the magnitude of targeted surpluses or deficits they should be assigned. Koehler stressed the importance of the growth in personnel and the need to examine the basic relationships between personnel and operating expenditure budgets. He called for peer comparisons and examinations relevant to institutional mission and goals. Bearman agreed that increased data, examination of current personnel practices, and analysis of the potential impact of information technology on staff functions would be helpful. Masnick and Gross cited recent benchmarking efforts to assess process efficiency and the need to develop improved program review processes. McCarthy emphasized the importance of making the budget process rational and eliminating reallocations outside of normal channels. Zimmerman questioned whether any redistribution of budgets would be viewed as fair. Ochs responded that resentment arises from units not having the necessary discretion to use allocated resources. He cited the need to improve relationships between academic and administrative units and the need to make service units more accountable through having to earn their revenues. Birnberg recommended more autonomy for units with additional responsibility. He questioned existing disincentives to budget reductions and the need for units to budget all expenditure items, such as space. Members discussed the need to revisit the long-term budget projections produced in December 1993. Ochs and Bearman recommended reproducing the report taking into account changes occurring in the FY 1994 and FY 1995 budgets. Gross suggested examining scenarios based on various budget assumptions. Wion agreed that several key strategic variables, such as tuition and enrollment, will be discussed in the next several months. Pack cited the potential impact of the three UPBC task force reports (indirect cost, fringe benefits, and summer session) and the need to make similar fundamental changes to the University's operations in FY 1995. McCarthy expressed concern over the growing proportion of transfer expenditures, which represent operating funds used for capital purposes. Gross suggested that the data need to be carefully examined. Anderson cited many capital projects that will increase the drain on operating funds without returning equivalent revenues. He cautioned that the University is committing to projects without necessary long-range criteria and sufficient funding. In summarizing the discussion, Nordenberg suggested that the UPBC may want to express its general concern regarding the need to exercise caution in proceeding with new administrative hires and capital expenditures given uncertainties regarding the University's future financial situation. Nelson- Le Gall added that the UPBC should receive regular feedback from the Chancellor, especially when subsequent actions deviate from its recommendations. Birnberg moved that the Provost should draft an appropriate statement expressing the sentiments of UPBC members regarding institutional accountability. McCarthy seconded. The motion was approved unanimously. Status of Long-Range Planning Nordenberg reported that the academic plans from units in the Provost's area are under review by the Provost's Office staff who are writing responses. Provost's area strategic issues and planning principles are under discussion and documents are being drafted that incorporate input from the Provost's area PBC, the Provost's Advisory Committee on Undergraduate Programs, and the University Council on Graduate Study. Masnick reported that the plans of the health sciences schools are being circulated among schools and that a final Senior Vice Chancellor area plan will be written by the end of July. Gross reported that administrative area plans have been submitted and that drafts for Business and Finance and for the Chancellor's areas would be prepared by early August. Ochs asked whether the Senior Vice Chancellor plans would have associated long-range budgets that would reconcile planning goals with University finances. Juhl suggested that more time would be necessary to develop budgets. Gross agreed that budget development should occur after submission of long-range plans. Pack cited the need to develop a sense of competitive priorities, distinguishing between budget augmentations and reallocations. He discussed the need to analyze current unit budgets and bring them into line with long-range planning aspirations. Birnberg and Koehler expressed concern that the University cannot excel in every field and that guidance is needed to deal with trends, such as those related to student demographics. Ochs moved that the UPBC request that prior to submitting long- range plans to the Board of Trustees in October, Senior Vice Chancellors submit associated budget projections indicating areas of expansion and contraction and including broad capital needs. Birnberg seconded. The motion was approved unanimously. Proposed Field House Renovation Project Jaynes discussed the impact of Title IX gender equity requirements relative to the Fitzgerald Field House, a facility built before the proliferation of womens' sports in recent decades. He stated that the University is one of many institutions facing legal action by the Department of Education Office of Civil Rights (OCR), which mandates filing an assurance program within the next year. The University must be in total compliance with the regulations by September 1997. Jaynes explained that a current requirement of such an assurance program is the need to provide equivalent facilities for male and female athletic teams, including locker rooms and offices. Projected renovation costs total $775,000, including $620,000 for construction, $63,000 for furnishings, $30,000 for architectural and engineering fees, and $62,000 for contingencies. Included in the proposed renovations are several that would increase the space provided to womens' sports and upgrade areas with serious facilities problems, including the following: -- renovate the existing mens' basketball locker room (ground floor); -- create a new womens' basketball locker room (first floor); -- renovate the mens' and womens' basketball locker rooms (mezzanine); -- refurbish wrestling offices (mezzanine); -- refurbish existing womens' basketball offices for use by womens' volleyball (second floor); -- refurbish existing swim team offices (second floor); -- renovate existing racquetball court for use by gymnastics and other varsity team offices (second floor); -- refinish main basketball court; and -- improve the weight room. Nelson-Le Gall asked whether the consideration was given to reducing mens' rather than increasing womens' facilities. Jaynes responded that the renovations to the ground floor locker rooms would reduce mens' lockers by 40%. Nelson-Le Gall requested differentiation between proposed renovations that were needed to meet OCR requirements and those that were merely desirable changes. Birnberg agreed, asking whether refinishing the basketball court was related to the gender equity issue. Jaynes replied that while certain renovations were not specifically linked to OCR requirements, the entire project was integrally linked and that certain areas had not been upgraded for many years. Nordenberg suggested that the proposal be rewritten, identifying those items directly related to Title IX compliance. Birnberg asked what was the highest capital priority of the Athletics Department. Jaynes replied that the University must improve the football program in order to generate increased revenues, thus making the renovations to Pitt Stadium critical. He added that the threat of lawsuits and loss of federal funding leaves the University no choice but to address gender equity issues. Jaynes explained that the OCR requirements are still under discussion and that assurance criteria may also include proportionality, that is, that the proportion of female athletes must equal that of the general student population. As 28% of the current University athletes are female compared to 50% of the student body, compliance with this criteria could create a large problem. Jaynes explained that the proposed renovations would be funded by debt service and private giving. The debt service would be funded from a surcharge on basketball tickets totalling $90,000 per year. Ochs asked how fund raising efforts are coordinated with the Office of Institutional Advancement. Jaynes responded that joint efforts relative to annual giving, endowment, and capital funding exist. He stressed that fund raising for athletics detracts nothing from and possibly enhances the total University capacity for voluntary support. Anderson expressed concern about the need for a total picture of the needs and capital commitments to athletics capital projects. He emphasized that projects related to intramurals, Title IX, the convocation center, Pitt Stadium, Trees Hall, and basketball renovations affect the ability of the Athletics Department to offset its existing operating deficits. Ochs asked whether increases in ticket prices might not be used to reduce the operating deficit in athletics and fund capital projects solely through gifts. Jaynes replied that gift giving at the University for athletics is below average among its peers. Juhl asked whether the Department has considered "pay to play" policies or practice plan arrangements for its coaches. Jaynes replied that the University lacks an adequate student recreation program funded from student fees and that the coaches' contracts include the University receiving a proportion of their outside earnings. FY 1995 Capital Projects Gross distributed summaries of capital project proposals submitted by units for FY 1995 and the priority ranking of recommended projects submitted by senior officers. Included among the recommended projects are: $20,638,400 for unfunded projects exceeding $50,000; $74,331,000 million for funded projects exceeding $50,000; $500,000 for projects totalling less than $50,000; and $10,406,000 for preservation projects. Gross requested action on the recommendations prior to the June 30 Board of Trustees meeting. Wion noted that the $8,000,000 Magellan Telescope Project, included among the funded projects, was listed among the capital projects of the Chancellor's Office rather than in FAS under the Provost. Koehler stated that a report produced by the PBC of the Department of Physics and Astronomy endorsed the proposal as a scientific project and indicated that the Department would change its faculty hiring priorities accordingly should the project be approved. However, the report clearly indicated that finances associated with the project were far beyond the Department's ability. He added that the project was also beyond the funding ability of FAS and would require special funding from the Chancellor's Office. Koehler indicated that FAS has many basic problems requiring higher funding priority. Wion suggested that a rationale for this project would be welcomed by the UPBC given the magnitude of the funding involved. Holland added that it is common when funding large pieces of equipment to submit grants for peer review. Koehler replied that the project, which has been proposed by the Carnegie Foundation, has not received the same level of peer review that a federally-funded proposal typically receives. He added, however, that this manner of funding large-scale projects like telescopes is becoming more common. Koehler recognized Nordenberg's tremendous contribution to the work of the UPBC, praising his efforts to provide a greater sense of purpose and organization, as well as a clearer voice in University communications. Koehler moved that the UPBC applaud Nordenberg and express its gratitude for everything he has done in the past year. Nelson-Le Gall seconded. The motion was approved unanimously. The meeting adjourned at 3:45 p.m.