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 scenarios. 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.