Minutes of February 9, 1995 Meeting

       The meeting convened at 10:06 a.m. in room 817 Cathedral of Learning.

       UPBC members present were: Thomas Anderson, Toni Carbo Bearman, James
Cassing, Ronald Gardner, James Holland, Randy Juhl, Peter Koehler, James
Maher, Franklin McCarthy, Glenn Nelson, Joan Slezak, Michael Stuckart, Ben
Tuchi, Philip Wion, and Julius Youngner.  Also present were: Herbert Chesler,
Joseph Gil, Darlene Lewis, Jeffrey Liebmann, William Madden, Jeffrey Masnick,
Robert Pack, and Lawrence Weber.
       UPBC members not present were: Nitin Badjatia, Jacob Birnberg, George
Chambers, Thomas Detre, Darlene Harris, James Isaacs, Jeffrey Romoff, Bruce
Williams, and Judith Zimmerman.

Approval of Minutes

       The minutes of the January 30 meeting were approved.

Process for Reviewing New Academic Planning Proposals

       Pack discussed a proposed process for reviewing academic planning
proposals, which would replace the old PRMS procedure.  This process is part
of a larger Provost's Office initiative that will include regular and ongoing
academic program review.  As proposed, the role of the UPBC in the new process
is to review proposals that change the fundamental nature of a unit (i.e.
alters its mission or establishes, merges, or terminates departments or
centers) or that require significant additional expenditures of University
funds.  Other proposals would be considered part of routine management and the
UPBC would generally receive notification of decisions.  Pack stated that the
proposed process would give units the necessary flexibility to reallocate
resources to achieve their goals as articulated in unit long-range plans. 
Members were asked to review the draft for action at the next UPBC meeting.

FY 1996 Budget Parameters

       Koehler distributed two revised draft FY 1996 operating budget parameter
documents prepared by the FY 1996 Parameters Subcommittee.  The first scenario
(draft 9A) assumes that the University will receive a 3.5% increase in
Commonwealth appropriations and that tuition will increase 3.5% in FY 1996. 
The second scenario (draft 9B), prepared at the request of the Board of
Trustees, assumes the same increase in appropriations, but no tuition increase
for FY 1996.  Koehler explained that both scenarios address only the
Educational and General portion of the University budget.
       A basic philosophy behind the two scenarios, Koehler explained, is the
need to reduce the University's overall compensation base.  He stressed the
importance of removing vacancy provisions (funds not expended as a result of
leaving a position vacant for some period) and salary savings (elimination of
vacated positions or replacement of people earning higher salaries with people
earning lower salaries) from the annual salary increase base.  These actions
might eliminate from $6.4 to $7.4 million from the University's total
compensation budget, which is currently in excess of $250 million.
       Maher emphasized that the external scrutiny facing all universities
evidences the need for an enlightened job classification policy that empowers
employees to take on new responsibilities when positions are eliminated.  Wion
pointed out that in FY 1994, the University compensation budget was $18
million under budget, but that other areas were $17 million over budget.  He
supported the idea that approximately one-third of that amount could be
recovered and reallocated, if sufficient policy changes occurred.  Bearman
expressed concern that such an assumption does not take account of various
factors, such as the often low differential between senior and junior
salaries, the costs of fulfilling summer teaching responsibilities, the costs
of searches, start-up costs for new faculty, and the costs associated with
moving new employees to Pittsburgh.
       Maher called for a more rational tuition policy, which would set net
tuition targets and hold units responsible for achieving them.  Maher also
suggested a strategy in which the University would cap the number of tenure
stream lines a unit has, but then would provide an appropriate budget and let
the unit manage its resources subject to an annual review of outcomes.  Only
reducing the number of tenure stream lines will provide the flexibility needed
to adequately support University programs.  Juhl questioned whether such a
strategy was too passive and whether more resource decisions must be made by
the Provost and Senior Vice Chancellor for the Health Sciences.  Pack
responded that the decision to fill or not to fill vacancies over time is a
very active process for reallocating resources.  Wion stated that such a
strategy underscores the need for planning that takes long-term advantage of
opportunities while maintaining acceptable levels of salary increases.
       Koehler explained that other similarities between the two budget
parameter scenarios include fringe benefits savings (both due to last year's
changes in medical insurance and recommendations of the Task Force on Fringe
Benefits) and a reduction in Mandatory Transfers designated to fund the
proposed FY 1996 capital budget.  Aside from the elimination of any tuition
increase, other differences between the two scenarios include: a 0.5%
reduction in the proposed salary increase (with subsequent base salary and
fringe benefit cost reductions); elimination of the $1.25 million placeholder
for program enhancements; elimination of the increase in other operating
expenses; and a further reduction in the FY 1996 capital budget.  Pack
explained that the likely FY 1996 budget will lie somewhere between the two
       Anderson expressed concern over the exclusion of non-Educational and
General budget items, such as Auxiliaries, Sponsored Research, the University
of Pittsburgh Applied Research Center, the School of Medicine, and the
University of Pittsburgh Medical Center.  Madden explained that the net hard
money impact of these areas on the University budget is not significant in
that most involve revolving funds or activities that are expected to break
even financially.  He added that, in many cases, the revenues in these areas
are designated or restricted and cannot be used to offset other University
expenses.  Bearman stated that, regardless of whether or not they impact the
E&G budget, decisions should be made regarding the expected level of revenues
generated by the auxiliary enterprises.  Bearman asked whether keeping the
library acquisitions line item separate from the Library System budget was
appropriate.  Wion responded that the Subcommittee had discussed this issue.

Planning Activities in Institutional Advancement

       Weber stated that in recent years, the Institutional Advancement budget
has been reduced by 9% and 9-10 staff positions have been eliminated.  Last
year, departments planned for a 3% reduction.  Part of this reduction actually
occurred and the remaining funds were reallocated based on planning
priorities.  Weber stated that Institutional Advancement will likely use this
same process this year, with the goal of eliminating no staff positions
directly involved in fund raising.  He stressed that planning for
Institutional Advancement must address many external issues that other units
do not face.  He added that budget enhancements generally result in large
returns, noting that direct fund raising expenditures remains constant at
approximately 14% of revenues.
       In response to Bearman's question, Weber stated that Institutional
Advancement has articulated five-year planning priorities in a very
collaborative process.  The major unknown factor affecting long-range
planning, however, is whether or not the University will launch a major
capital campaign, which will require an $8-$12 million additional investment
in Institutional Advancement to raise between $200 million and $400 million. 
In response to Koehler's question, Weber stated that the University has the
potential to increase its fund raising capacity, particularly voluntary
support from individual donors.  In the coming months, Weber explained that he
is visiting four institutions similar to the University with histories of very
successful fund raising.
Compensation and Classification Study

       Lewis summarized activities to date on the study that was initiated in
1994 because of the recognition that the University may not be competitive in
some job classifications, the impacts of changing workforce characteristics
(technological advances, expanded services), and the perceived need to update
the 1987 University pay plan.  Lewis explained that the study will likely
recommend the addition of approximately 40 new job classes to the current list
of 145 and development of benchmarking activities for approximately 100 job
classifications.  In addition to the job survey conducted in spring 1994, data
are currently being collected on average pay and salary ranges from comparable
local, regional, and national educational and for-profit institutions. 
Departments will soon be asked to review their current staffing and proposed
new classifications in order to identify staff whose positions match new
classes, as well as to solicit additional suggestions for new classifications. 
Lewis stated that final recommendations should come before UPBC and senior
staff this summer.  Maher stressed the need to examine not only salary, but
also total compensation.

       The meeting adjourned at 12:05 p.m.