Minutes of January 12, 1995 Meeting The meeting convened at 10:09 a.m. in room 817 Cathedral of Learning. UPBC members present were: Toni Carbo Bearman, Jacob Birnberg, James Cassing, Darlene Harris, James Holland, James Isaacs, Peter Koehler, James Maher, Franklin McCarthy, Michael Stuckart, Ben Tuchi, and Philip Wion. Also present were: Ann Dykstra, Jeffrey Liebmann, William Madden, Jeffrey Masnick, Robert Pack, and Lawrence Weber. UPBC members not present were: Thomas Anderson, Nitin Badjatia, George Chambers, Thomas Detre, Ronald Gardner, Randy Juhl, Glenn Nelson, Jeffrey Romoff, Joan Slezak, Bruce Williams, Julius Youngner, and Judith Zimmerman. Approval of Minutes The minutes of the December 22 meeting were approved. Maher stated that the Task Force on "Make or Buy" Decisions was being formed this week and would begin working soon. FY 1995 Enrollment Shortfall Maher reported that an unexpected enrollment shortfall has created a deficit situation this year. Tuchi added that the impact of the shortfall could be as large as $3 million and that the total FY 1995 deficit may be as high as $5.7 million. He stated that possible areas in which to address this deficit include: health insurance premium recovery; graduate and undergraduate scholarships; construction project delays; and unexpected revenues in areas such as over recovery of fringe benefits. He cited the need for improved financial information systems and more effective financial action plans. In response to McCarthy's question, Tuchi replied that the University has little flexibility at this point in the fiscal year to address unexpected deficits, except in Plant Funds. He added that, despite the current situation, the general financial condition of the University relative to other institutions of higher education is good. Wion requested more detail, such as that available from the Controller's quarterly reports, on the possible $5.7 million FY 1995 deficit given past efforts to budget conservatively and the realization of a surplus in compensation funds in FY 1994. Tuchi responded that, in addition to revenue shortfalls, the University was also experiencing increases in expenditures and increases in accounting entries, such as the staff early retirement plan. Tuchi added that information on a possible bond issue will be available in February and that without a bond issue, many planned capital projects will not occur as scheduled. In response to Harris's question, Maher explained that faculty salary compression increases are not driving the deficit as these funds were held back in July. In response to Bearman, Tuchi replied that the University relies on Plant Funds to support the operating budget and that the contribution last year was $1.3-$1.9 million. Pack cautioned that many assumptions made about the FY 1996 budget are already inaccurate. For example, the proposed FY 1996 tuition increase does not account for the FY 1995 tuition shortfall and the increasing resistance among Trustees to any tuition increase. Koehler agreed that more assessment of real fluctuations in the budget during the year and their effect on budget parameters must occur. He emphasized that this examination should be at the institutional and not the unit level. Pack added that the need exists for a policy to reduce the budgets of units that fail to meet income targets. Maher stressed the importance of revenue enhancements as a real money incentive for units to fund new initiatives. Tuchi expressed concern that the tracking of financial problems may be too slow to be of effective use. He emphasized that the only resources with significant impact on the operating budget are space and people. Wion agreed that personnel data tracking must improve if the University is to plan effectively. In response to Bearman's question, Tuchi stated that Information Architecture Project recommendations will be presented to Executive Staff soon. He added that savings can be realized, but only after some initial expenditures, such as up to $1.3 million on new Human Resource systems. Maher stressed the importance of the concept of "net" tuition. He stated that decision makers must be acutely aware of the financial implications of their decisions. He specifically cited the need for information to assess real space needs. Maher stated that in an environment of distributed decision making, responsibility must also be distributed. Revised University Mission Statement Pack presented a revised University Mission Statement, prepared after the review of the current statement (approved in 1976) by the Board of Trustees last fall. He explained that there was interest in submitting the revised statement for Board consideration at its February meeting. Members discussed the contents, specifically the bulleted items referring to undergraduate and graduate education. Pack explained that the contents were consistent with the Chancellor's vision and goals as articulated in "The University of Pittsburgh: 1993 and Beyond". After editorial changes, the draft statement reads as follows: The University of Pittsburgh, founded in 1787, is one of the oldest institutions of higher education in the United States. The quality resources of the University provide an important local asset for the intellectual, economic, and social enrichment of Pennsylvania, while the national and international prestige of the University enhances the prominence of Pennsylvania throughout the world. As one of the nation's distinguished comprehensive public universities, the University's mission is to: -- provide high-quality undergraduate programs in the arts and sciences and professional fields, with emphasis upon those of special benefit to the citizens of Pennsylvania; -- offer superior graduate and professional programs that respond to the needs of Pennsylvania, as well as to the broader needs of national and world society; -- engage in research, artistic, and scholarly activities that advance learning through the extension of the frontiers of knowledge; -- cooperate with industrial and governmental institutions to transfer knowledge in science, technology, and health care; -- offer continuing education programs adapted to the personal enrichment, professional upgrading, and career advancement interests and needs of adults; and -- make available to local communities and public agencies the expertise of the University in ways consistent with the primary teaching and research functions that contribute to the social, intellectual, and economic development of the Commonwealth, the nation, and the world. The trustees, faculty, staff, students, and administration of the University are dedicated to achieving this mission, to which they pledge their individual and collective efforts, determined that the University shall remain among the most distinguished institutions of higher education in the world. Bearman moved that the UPBC accept the revised University Mission Statement with the editorial changes. Wion seconded. The motion was approved unanimously. Activities of the Provost's Area Planning and Budgeting Committee Pack reported that the Provost's Area Planning and Budgeting Committee will soon begin to review the long-range plans of the units that report to the Provost. The Committee will divide into four subcommittees that will review the plans of the arts and sciences, professional schools, regional campuses, and centers/libraries. Upon receipt of the unit budget plans, the subcommittees will lead detailed discussions with the entire Committee. A final meeting will provide the Provost with the Committee's perceptions, priorities, and issues for further consideration. The timing of this input will allow the Provost to incorporate it into his draft plan, which is due to be submitted to the Chancellor on April 15. Members expressed concern that the UPBC may not get sufficient time to review the plans of the Senior Vice Chancellors and the Vice Chancellors who report to the Chancellor. Maher explained that the budget process does not allow for more review time, given the deadlines faced by the Board of Trustees and the need to address unforeseen issues. He suggested that the FY 1996 Parameters Subcommittee examine the schedule of University planning and budgeting activities and suggest ways to maximize UPBC review and input. Pack added that the charge of the Parameters Subcommittee should be expanded each year to follow the University budget from initial planning stages to Board approval to a review of changes in the final budget. Wion suggested that the Subcommittee present a recommended timetable and process for UPBC review and approval at its next meeting. The meeting adjourned at 12:04 p.m. \enddata{text822, 0}