Minutes of January 30, 1995 Meeting
The meeting convened at 2:07 p.m. in room 817 Cathedral of Lea=
rning.
UPBC members present were: Nitin Badjatia, Toni Carbo Bearman,=
Jacob
Birnberg, James Cassing, George Chambers, Ronald Gardner, Darlene Har=
ris,
James Holland, Randy Juhl, Peter Koehler, James Maher, Michael Stucka=
rt, Bruce
Williams, Philip Wion, Julius Youngner, and Judith Zimmerman. Also p=
resent
were: Jeffrey Liebmann, William Madden, Jeffrey Masnick, Robert Pack,=
Louis
Tronzo, and Lawrence Weber.
UPBC members not present were: Thomas Anderson, Thomas Detre, =
James
Isaacs, Franklin McCarthy, Glenn Nelson, Jeffrey Romoff, Joan Slezak,=
and Ben
Tuchi.
Approval of Minutes
The minutes of the January 12 meeting were approved.
Status of Federal Relations
Tronzo discussed the impact of the recent change in Congressio=
nal
leadership, particularly the legislation included in the Contract wit=
h America
that proposes to eliminate the federal budget deficit by the year 200=
2. The
impact of the proposed Federal Balanced Budget Amendment alone could =
include a
reduction of $15.9 billion in revenues to the Commonwealth of Pennsyl=
vania.=20
He highlighted other items in the Contract with America that could im=
pact
universities, including Welfare Reform (HR 4), Family/Tax Relief (HR =
11),
National Security (HR 7), Social Security Earnings Tax (HR 8), Capita=
l Gains
Reduction (HR 9), and Unfunded Mandate Reduction (HR 5). He explaine=
d that
proposed tax changes could further reduce Commonwealth revenues. In =
addition,
FY 1995 rescissions levied at the Department of Defense for the costs
associated with the Iraq and Haiti invasions could reduce funding for=
the DOD-
University Research Initiative.
Tronzo explained that the Republican plan calls for $147.9 bil=
lion in
reductions in the federal budget in each of the next five years. At =
present,
$29.3 billion is allocated over a five-year period as spending offset=
s to
programs that fund various higher education initiatives. Among the p=
articular
items being considered as the most likely targets for reduction are t=
he
following:
-- Reduction of the overhead rate on federally sponsored University r=
esearch
reimbursements, which would freeze indirect cost recovery rates at
approximately 90% of current levels ($1.6 billion).
-- Reduction in Medicare Indirect Teaching adjustment to 3% with the
subsequent impact on medical schools ($13.5 billion).
-- Elimination of the Student Loan Interest Subsidy ($9.6 billion). =
The
American Council on Education is conducting a national campaign on th=
is
particular issue.
-- Consolidation (elimination) of various student aid programs, inclu=
ding
Supplemental Grants, Work Study, and Perkins Loans ($2.9 billion).
-- Limit the growth of the National Science Foundation ($350 million)=
, as well
as a recision of FY 1995 funds ($250 million).
-- Elimination of the Advanced Technology Program, which funds joint =
research
and development ventures between the private sector and universities =
($820
million).
-- Reduction of funding for the Arts and Humanities ($531 million).
In response to Cassing's question, Tronzo added that USAID is =
also
likely to be an area of reduction. He added that while more definiti=
ve
information will not be available until Congressional budget hearings=
begin,
the release of the Administration's plan in the next few weeks will i=
dentify
those areas of agreement between the President and Congress. He sugg=
ested
that Pennsylvania, as a state with unified party leadership between t=
he
Governor's Office and legislature, may have some advantage in dealing=
with the
federal government as it tries to push expenditures down to the state=
level.
Zimmerman expressed concern over a Senate non-binding resoluti=
on on the
national history curriculum standards proposed by the NEH and asked w=
hether
this was an academic freedom issue to which the University should res=
pond.=20
Tronzo responded that the Senate action was an item on the Associatio=
n of
American Universities (AAU) agenda for next week. Maher suggested th=
at it
would be appropriate for history departments of AAU institutions to e=
xpress
concerns. In response to Gardner's question, Tronzo replied that sli=
ghtly
more than $10 million of the University's research is defense related=
.
Health Sciences Planning Process
Masnick described the long-range planning process being used b=
y the
Health Science schools. In 1994, the schools developed and approved =
through
their Planning and Budgeting Committees (PBCs) long-range plans that =
were then
submitted to the Senior Vice Chancellor. The plans were integrated, =
reviewed,
and approved by the Health Sciences PBC and the Senior Vice Chancello=
r and
submitted to the Chancellor in September. Following preparation of a=
long-
term budget context, each school was asked to prepare a five-year bud=
get plan.=20
These budget plans have been reviewed and approved by the PBC of each=
school
and are now being compiled into an overall five-year budget plan for =
the
Health Sciences.
Soon, a subcommittee of the Health Sciences PBC will be establ=
ished to
develop a budget reduction model for future years. For the FY 1996 b=
udget
process, it was determined that any necessary reductions will be base=
d on
differential cuts in hard money support rather than any form of acros=
s-the-
board reductions. Schools have been asked to identify cuts they woul=
d make
for their differential share of a potential 2% reduction in the overa=
ll budget
of the Schools of the Health Sciences. Budget increases and realloca=
tions
would then be designated using the priorities established in the plan=
ning
process. Once the final University budget parameters are set, each s=
chool
will prepare an FY 1996 budget for submission to the Senior Vice Chan=
cellor,
which will undergo the same review process used for the long-range pl=
an.
Wion expressed concern that the Health Sciences were using a b=
udget
reduction model that was different from the Provost's area in that un=
its are
not forced to prioritize and make contingency plans, thus making inst=
itutional
long-range planning more difficult. Juhl responded that external fac=
tors,
such as the effort to privatize Medicare, could have impacts on the H=
ealth
Sciences too large for such a reduction model to consider. He added =
that
because Health Science school funding sources are so broad, long-rang=
e
planning is especially difficult. Maher emphasized that the most imp=
ortant
aspect of current efforts is the ranking of programs in priority orde=
r. He
added that planning in the Health Sciences must be particularly flexi=
ble and
sensitive to unit needs because of the heavy tie to the delivery of c=
linical
services.
Masnick stressed the need to appreciate how Health Science sch=
ools are
funded. Planning must allow for large cuts from external sources and=
the
UPMC, which remains in a downsizing mode. At the same time, new prog=
rams will
grow within the managed care environment. Birnberg discussed the con=
vergence
of a zero-based budget approach, rising from the bottom-up, and budge=
t based
cuts, determined from the top-down. He stated that such a model requ=
ires
overview to recognize synergies. Maher also emphasized that availabl=
e funds
=66rom central reallocation pools must go to visible, high priority a=
reas and
that coordinating similar activities may generate savings. He cited =
recent
efforts by Koehler to reduce certain offerings without losing track o=
f
students' need for discipline specific applications. Birnberg also e=
mphasized
the need to work smarter =FE by attaching names to savings, finding m=
ore
effective uses for existing resources, and not simply eliminating pos=
itions.
Schedule of UPBC Budgeting Activities
Pack proposed the following schedule for UPBC participation in=
upcoming
budgeting activities.
March 1 UPBC makes preliminary recommendation on FY 1996 budget=
parameters
May 1 Senior Vice Chancellors and Vice Chancellors reporting =
to the
Chancellor forward long-range plans and FY 1996 budgets to th=
e UPBC
May 1-31 UPBC reviews plans and makes recommendations to the Cha=
ncellor
June 1 The Chancellor adopts final FY 1996 budget parameters
June 15 Chancellor allocates FY 1996 budget
Wion suggested including further review of the long-range budget proj=
ections
as a context for long-range planning. Maher agreed, adding that the =
FY 1996
budget submissions will include discussions of the long-term directio=
ns of
each unit. Wion also recommended, based on discussions held by the S=
enate
Budget Policies Committee, that the evaluation of the Planning and Bu=
dgeting
System originally scheduled for completion by March 31, 1995 be postp=
oned
until fall 1995. Members accepted this recommendation.
The meeting adjourned at 4:06 p.m.