COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES COMMITTEE ON APPROPRIATIONS n re: Budget Request 1984-1985 University of Pennsylvania * * *

Verbatim report of hearing held in Majority Caucus Room Harrisburg, Pennsylvania Tuesday February 28, 1984 11:50 A.M.

ON. MAX PIFVSKY, CHAIRMAN on. Kurt Zwikl, Vice Chairman on. Joseph M. Hoeffel, III, Secretary Dn. H. William DeWeese, Chairman Subcommittee on Capital Budget on. James M. Mclntyre, Chairman Subcommittee Health and Welfare on. Ralph Pratt, Chairman Subcommittee on Education MEMBERS OF COMMITTEE ON APPROPRIATIONS on. Mary Ann Arty Hon. Joseph C. Manmiller on. Gibson Armstrong Hon. Richard A. McClatchy on. Thomas R. Caltagirone Hon. Gerald F. McMonagle on. Italo S. Cappabianca Hon. George Miscevich on. Brian D. Clark Hon. Nicholas B. Moehlmann on. Roy W. Cornell Hon. Howard F. Mowery, Jr. on. Ronald R. Cowell Hon. Frank Pistella on. Alphonso Deal Hon. George F. Pott, Jr. on. Dwight Evans Hon. Carmel Sirianni 3n. Stephen Freind Hon. William J. Stewart an. Allen Kukovich Hon. Ted Stuban m. Joseph Levi, III Hon. Edward A. Wiggins sn. Stephen E. Levin Hon. Peter R. Vroon .SO PRESENT: m. John S. Davies sn. Edwin Johnson >n. Samuel W. Morris >n. Thomas M. Tigue Reported by: Lck Willey, Majority Staff Dorothy M. Malone

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\-\ ummelttown, |—'ennsrq'vania 17036 INDEX itness Page r. Sheldon Hackney, President 8 r. Thomas Langfitt, Vice President for Health r. Robert Marshak, Dean of Veterinary Medicine r. Edward Stemmler, Dean of Medicine elen O'Bannon, Senior Vice President len Stine, Director of Budget Analysis

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i ACTING CHAIRMAN COWELL: The next scheduled witnesses are representatives of the University of Pennsylvania. 3r. Hackney, will you introduce your colleagues, particularly For the benefit of the court reporter. DR. HACKNEY: Let me say how delighted we are to ?e here to talk with you about the University of Pennsylvania ind I will introduce my colleagues. On my far right is Glen Jtine, who is the Director of Budget Analysis. Next to him is ielen O'Bannon, Senior Vice President, whose responsibility j Ls to cover all of our business operations, personnel functions i ind finances. To my immediate right is Tom Langfitt, Vice i President for Health. To my immediate left is Robert Marshak, )ean of Veterinary Medicine, and next to him is Edward Stemmler, )ean of Medicine. We are pleased to be here. We come with the jelief that the University of Pennsylvania plays a very impor­ tant role in the economy and cultural life of the Commonwealth. tfe implore your sympathetic consideration. With that we would Love to respond to questions. ACTING CHAIRMAN COWELL: Questions from the Committee members or staff. REPRESENTATIVE LEVIN: I would like to focus on sage four, University City Science Center and Advanced rechnology Center of Southeastern Pennsylvania. I think the aembers would benefit from your comments about both of these 1 i i I mtities, how you hope all of Pennsylvania will potentially benefit from this. DR. HACKNEY: The University City Science Center Ls a unique organization that was created as a consortium with :he University. It is really a nonprofit organization that louses and incubates new businesses, provides space and service. Lt is an urban center. It is a bit different from similar ventures elsewhere. Also, it is successful.

The University City Science Center is the manager )f the Advanced Technology Center for Southeastern Pennsylvania /hich the University of Pennsylvania is a member as well as )rexel, Temple and several other institutions. I think it is »oing to pay great benefits in the future. Our own research at :he University of Pennsylvania focused so far on computer sensing devices that is enabling computers to learn from their mvironment by sensing what is out there and then reprogramming >r controlling the activity of whatever is controlled by the :omputer in response to what is there in the environment. So it is a very sophisticated way of making robots, if you will, jr making other computer controlled devices much smarter and auch more able to operate in a sophisticated way.

Let me turn now and ask Tom Langfitt, who has been aore involved with the Advanced Technology Center and the Jniversity Science Center than I have to expand a bit on what Lt does for Philadelphia and for the Commonwealth. DR. LANGFITT: The Science Center was developed ibout 20 years ago and was really the first Urban Industrial Research Park established in the United States. There has

i >een many since then. Over the past 20 years, the investment j ias really been enormous. The total capital investment is nov n the neighborhood of about $50 million. And the Science lenter employs about 5,000 people. If you take a look at the »ossibilities of further development in West Philadelphia, we ire probably talking about a total capital investment of a [uarter of a billion dollars and an ultimate employment of ;ome 20,000 people. As President Hackney has indicated, it is i in organization that was established by and supported by some

i i0 institutions of higher education. Not only in the Delaware telley but extending up to Lehigh and this other southeastern 'ennsylvania. So the Science Center was a natural vehicle or developing the Benjamin Franklin Partnership Advanced echnology Center. We at Penn participated very heavily in hat development in the past couple of years. When we received about two and a half million lollars from the state as part of the ten million dollar •verall allocation, but toward that goal of matching we were ible to come up with about $14 million in matching grants, tost of which came from corporations. So we look forward now :o further development of the Science Center, and especially :urther development of the Advanced Technology Center. We 6

Lhink that this is really one of the great things that the

Commonwealth of Pennsylvania has done in recent years for the people of the Commonwealth and the economy of the Commonwealth. tod we are very pleased and proud to be able to participate in this. We are looking forward to even more activity in that area. 3Y REPRESENTATIVE LEVIN: (To Dr. Langfitt)

Q I think you know we are vitally concerned here *ith the declining smokestack industry concept and the fact that all of us, that is Republicans and Democrats alike and rural and urban Legislators are vitally concerned with finding some way to get Pennsylvania back moving as a state. It is /ery apparent from the statistics that we have seen that we ire going to lag behind the national economy in the recovery. Vnd if we don't do something about it, that may very well be i permanent structure with us being in a very unhappy situa­ tion. We have been enticed, and that's the reason the Ben franklin Partnership exists, into investing state moneys with i goal of getting high tech, if that word has any meaning any lore of industry into fruition both in the city and in the jtate. I think that we are very fortunate that Penn exists there it is to be a focal point of that kind of thing.

Following up on that, I am aware that Penn has significant federal research going on. Would you want to :omment on how that might interact with the same kinds of redevelopment with high tech? A Yea, well our research support now, the total research budget for the University, most of which is in federal funds, is about $150 million. Of that about half, a little over half is in the biomedical research, the Medical School, the Veterinary School, Dental School and so on. So in that regard then we are very pleased. We bring in, almost all of this money comes in from out of the state and we bring in a very large amount of money which, of course, creates jobs and creates new ideas through research. In fact, it is that federally supported research base, which we have enjoyed now for quite some time and which continues to grow, that really provides kinds of ideas and the kinds of scientists who are there now to take advantage of the Advanced Technology Center concept, that is to take these basic research ideas, some of the advanced research ideas, translate them through the process of technology transferred into new products. New products then, of course, extend into the economy in creating jobs. So that so-called high tech industry, and we have known this now for 25 years, develops around institutions such as ours. The best examples being the so-called Silicone Valley, which is the semi-con­ ductor industry that has developed around Stanford and, of course, the Route 128 industry that developed from Harvard and MIT, many years ago research Triangle Park in North Carolina.

The Science Center is just that. It is exactly that. And we think that we are just set up in a very good position right now to take off in development of these new Industries based upon a research enterprise.

Q Just one more. Mr. President, you have been at ?enn now for a number of years. You have been coming here on a couple of occasions. How many years have you been coming? DR. HACKNEY: Just three, but I feel like an old land. 3Y REPRESENTATIVE LEVIN: (To Dr. Hackney)

Q Well that should give you enough time to feel part }f the community and part of Penn. What are your plans for the future and what do you see?

A Well, we actually had some very exciting things going on. Some of them are new ventures to deal with :ritical problems that we face. The most critical I suppose :>eing the matter of financial aid for our students. We think Lt is extremely important for us to be able to continue to attract very high quality students despite their economic backgrounds. Our financial aid into which we have put a good jit of unrestricted University money has been strained in recent years because we have been forced to increase tuition Easter than the rate of inflation, and that has began to put pressure on our need blind admission policy. That is our policy of admitting students that we want and then providing whatever aid they find necessary to attend. And that has made it possible for us, of course, to have a very diverse student body.

So we have, we are in the midst of launching a new financial aid plan which I think will be the most sophis­ ticated and most comprehensive in higher education. It will be built, of course, upon the federal program and the state program that is in place now, but will provide, if you will, loan money for other families as well. It is based on the concept of a partnership between the University and the families to enable them to invest in education the way they invest in a major capital purchase, a house for instance, and to pay that back at what we hope will be favorable rates over a longer period of time than is available now.

Q Is that the PEN Plan? A That is the PEN Plan, yes. The other thing that we are also in the midst of doing now is revolutionizing the computer environment on the campus. We are very convinced that computers are here to stay. They are going to be an essential part of the every day working environment in the future. And even that the young people coming along now find themselves very comfortable with computers. So we are facing a multi-year program of significant expenditures every year to make available to faculty and students there personal :omputers and mainframe computers in a network, a distributive letwork, that will allow our research activities and our educational programs to be responsive to this new computer *orld that we are living in.

Another critical problem that we are facing up to low is the need to revitalize our research capacity by renovat­ ing labs and bringing in new laboratory equipment. As you irobably know, even at the best universities auch as at Penn, >est research universities, our laboratories are a bit behind :he state of the art, further behind than industrial labs. We /ant to get them absolutely at the cutting edge so that they lot only can compete for research funds but can produce new uiowledge on which new products and the economy depend in the future. So that is also, I think, a critical need for the future. We have some, I don't want to bore you completely, one, ,going [ think, very exciting thing/on now is in our Dental School thich is facing up to its responsibilities as an educational Leader in a new environment for dentistry in the United States. tad actually slightly shrinking the size of the school in )rder to stay good and installing a new model of dental educa- :ion which will provide much higher quality dental care to the >eople who use the dental clinic in West Philadelphia and also provide dental students with closer supervision from master :eachers and senior dentists. It is an internship or a master jrotege model of dental education. The Veterinary School, I don't have to tell you, s also doing exciting things now. So wherever you look in he University, I think there is a good bit of excitement in rogress. And for that, of course, we need to find sufficient unding to make it all possible.

ACTING CHAIRMAN COWELL: Other questions? Repre- entative Davies. Y REPRESENTATIVE DAVIES: (To Dr. Marshak)

Q To the Dean of the Veterinary School, is there ny research in specific going on right now to try to resolve ome of the problems of our poultry industry, the crisis that t currently is in? Could you enlighten us on that as far as hope to resolve some of the very controversial things that ave developed from that?

A Yes. Penn has been very centrally involved in the hole issue of Avian influenza. It was in April of 1983 that r. Robert Eckrode, who is the head of our poultry laboratory, ade the first diagnosis of Avian influenza in the state. He dentified the first case and interestingly enough, it is the irst case since 1925. In 1925 another Penn poultry pathologist, vin Stubbs, made the first diagnosis of Avian influenza in the nited States.

Since April, in the months that have ensued, appar- ntly over a five month period, the laboratory was able to dentify five to seven new cases or new flocks that were ffected with Avian influenza each month. Then in October, r. Eckrode identified a change in virulence of the virus. He oted that some flocks were now appearing with very nigh ortality. In the past, Avian influenza was not a disease that illed very many birds. It just made them sick or was sub- linical. In October, the virus assumed a new virulent form. hat happened was the birds began to die at the rate of 80 or 0 percent. It was at this time when the United States Depart- ent of Agriculture was notified about this virulent new form hat they got involved and the eradication program began. Dr. ckrode's laboratory now is involved in the clinical surveill- nce of flocks that are not infected with the virus to make ure that early evidence of infection is quickly identified so hat this flock can be destroyed, quarantined. And also, he s involved in the certification of Avian influenza-free flocks hat are wanting to move birds to pullet houses, to layer ouses or slaughter, in other words, the movement of birds. his is going to cost the Federal Government about $64 million o clean up this episode. This doesn't include any of the oney that one could assign to people who are affected, that s»the farmers who lost their birds, and lost their market, ad all this down time.

There is a very sad aspect to this and that is hen this is all over, there is not going to be a single person n the State of Pennsylvania that will be allowed to work with :he Avian influenza virus« The reason for that is that there sn't a single facility in the state that is adequately equipped :o deal with pathogenic agents of that virulence-. But the Avian influenza thing is only one of the •roblems that Pennsylvania animal agriculture faces. As you •robably know, there is a raging rabies epidemic in Pennsyl- ania wildlife. And this is now spilling over into domestic nimals. We had a cow with rabies at New Bolton Center, and t is appearing in the cat population and dogs-. It is very ampant in the raccoon population. There is also a major iroblem been identified in recent years with a disease called .onus Disease of cattle. It is an insidious infection that irobably affects ten percent of the cattle population in 'ennsylvania for which there is no good diagnostic test and or which there is no treatment. And then there is the bovine espiratory disease complex. There is swine tuberculosis. 'here are all the possibilities of introducing foreign agents nto the state such as African swine fever or foot and mouth isease in an age when people travel so extensively and it is ery difficult to control these hearty viruses.

So what we have is a situation where we have a itate that is not really prepared to do the kind of surveillance, o do the early warning epidemic intelligence kind of surveill­ ance that is necessary. And I think we have learned from the ivian influenza outbreak that we cannot afford not to provide in the state and at Penn and at Penn State, the kinds of diagnostic facilities, the kinds of personnel that are needed to catch these problems.

I can further tell you that we have to subsidize, secause there is no choice, we cannot turn down anyone that :omes to us, at the rate of about a half million dollars a fear. Services of the kind that are involved in surveillance md in diagnosis for which we are not compensated. This is a rery serious drain on the school.

Q Are those requested in the request of your budget? A They are indeed.

REPRESENTATIVE DAVIES: Thank you. ACTING CHAIRMAN COWELL: Representative Deal.

\Y REPRESENTATIVE DEAL: (To Dr. Hackney) Q Doctor, how are you doing? A Well so far.

Q First, I want to commend you, I think this is the irst time I have seen a female as part of the team before us. want to commend you. The next time, I hope, there will be a lack in there. The all American team that come before us.

I want to ask you a couple of questions about your edical School. I wanted to know what percentage of them are slack in each of the schools, knowing that we are sorely in leed of doctors in general. When we have so few I wonder how rou are doing? 15

DR. STEMMLER: In the Medical School, it is about

nine percent currently. REPRESENTATIVE DEAL: What about Dental? DR. LANGFITT; About the same, about 10 percent. REPRESENTATIVE DEAL: I know the Veterinary School must be doing great. DR. MARSHAX: It is between nine and 11 percent. BY REPRESENTATIVE DEAL: (To Dr. Hackney)

Q May I ask you a question, Dr. Hackney. With this added cost for young people who are getting an education, are

there ever a time that you find that promising young people are

turned down because they cannot secure funds to go to school?

Their family credit is bad, they are from broken homes, money

just isn't there. Do you ever run into that?

A Not at the undergraduate level yet. We do, for

the first time, begin to see that in the Veterinary School and

perhaps in the Dental School. We are very sensitive to that,

particularly at all levels, but at the undergraduate level we

watch very carefully because our policy is to not let the cost

of the education interfere with the potential students'

ability to come. We do bear more in the last two or three

years cries of anguish, if you will, from parents and students

about the cost of a Penn education. But we don't think that

that is yet actually leading people to turn down our offers of

admission or to leave school at an inappropriate time. But because we are worried about that and because we hear more of worries expressed by our students and families, we are looking very carefully at the PEN Plan, trying to put it in place to anticipate that sort of problem. You might want to comment about the Veterinary School. DR. MARSHAK: Our tuition is extraordinary for veterinary medicine. The median tuition in the United States of all veterinary schools is $2900. Our tuition is $917 6 and is on its way up unless we do well in certain areas. It is leaving our students with, and loan money has dropped at the same time. So that our students are leaving school with debts that range between, well the average is about 35,000, but it goes up to about 80,000, because there are eight or nine years of college involved. Some students who don't get in the first time persist in trying to gain admission a second or even a third time. This shows in the delinquency rate on loan repay­ ments. Veterinary medicine in general, because the tuition is so low in most schools, very low delinquency rate. Penn's vet students1 delinquency rate is almost three times higher than the delinquency rate of students in general in veterinary medicine.

And this is largely because of the relatively, although very fine appropriation that we get every year, com­ pared to other schools of veterinary medicine, it is' very modest. We have about 35 percent of our basic budget from state appropriation, whereas, the average of all veterinary schools is about 66 percent. That is the reason our tuition keeps going up and up. When you consider what the earning potential is for the graduates of veterinary schools, you soon realize that it is an impossible situation for them. And for the first time now, we have begun to have students whom we very much desire to have accepted in our class decline. We have had something like 30 students last year that declined, a significant portion of them for financial reasons, when they finally faced up after trying so hard to get into veterinary schools to what it would cost them and their families. So for us it is a very serious problem. DR. STEMMLER: Mr. Deal, with respect to the Medical School, I think that we don't see the problems that you pose when the students are in the door. That is, that anyone has to leave because of financial concern. We know that choices are being made before students accept us. Let me just give you a number which I think is a very important number to keep in mind. There are about 35,000 applicants to American medical schools nationally. There are 2500, only 2500 black applicants, to all of the American medical schools. Last year, just as an example, we accepted for admission to our school about 37 and 12 accepted us. So we got one out of three. We know that we are not normally that unattractive to applicants to our school. So that students are obviously making a choice even though we reach out to try to encourage them to enter and we know those choices in great part are economic. DR. HACKNEY: If I could pursue that point a little bit. One of the problems in higher education in general and of society, therefore, is that as we increase the cost of under­ graduate education, it will have a fairly powerful effect on students from poor economic backgrounds. If they have to borrow in order to complete their undergraduate education, they arrive at a point of having a BA in debt and need to earn money in order to pay back that loan, which inhibits them from going on to a career in academia or graduate school that will lead them into engineering or medicine. That is a real problem. It makes it even harder for society to draw into those fields students from minority groups and from economically deprived background. So we are really compounding the problem a bit. And I think we try to lean against that as best we can by pro­ viding more financial aid. Our financial aid budget at Penn is $85 million, roughly. MR. STINE: We will spend this year almost $27 million in undergraduate financial aid, almost $18 million in graduate financial aid. Of that, approximately a third comes to us from the Federal Government or State Government. Almost two-thirds of it comes out of the University's own expenditure base. So in a sense we are putting up almost $17 million of our own money in the undergraduate area alone. And those would not be loan programs. Those would be direct aid to students. So for us it is a very expensive program as well as a major effort that we need to continue for our need blind admission program. And it has been going up at about one and a half times the rate of increased tuition. So if we have been increasing tuition by ten percent, it has been going up, our aid budget at the University, is having to put up, it has been going up about 15 percent a year. BY REPRESENTATIVE DEAL: (To Dr. Hackney) Q Dr. Hackney, doesn't this say something about our system in Pennsylvania if there is a possibility of promising young people will be denied an opportunity to pursue their education because somewhere along the line we have not set education as a top priority in this state or do you disagree with that statement? A No, I would agree with that. I think the Common­ wealth has a marvelous system of higher education because it is quite diverse. There are schools of different kinds, different levels, different specialties within the system, that is, both private and public, large research universities and small colleges, and that is very good. But in general, the Commonwealth does not support that system throughout at the level that I think it should. You can tell that from looking at gross figures. Q How does New York stand as far as their interest in supporting higher education? A You are going to take me out of my field of expertise. My impression is that New York does very well in funding higher education for both students who go to the private colleges and students who go to the public system. They have a far-flung public system, and my impression is it is well supported. Q My last question. We appropriated $200,000 to the University last year, last budget hearing, for affirmative action. A I think Penn did not participate in that program. Q They did not? A No. Q Sorry about that. A I am assuming that is because the Commonwealth thinks we can do that job without the money. So I took that not as a rejection, but as a pat on the back that we are trying to do it on our own. Q I want to thank you, Dr. Hackney. I have been out to the University. I have been impressed with the kind of leadership that you are giving it.

A Thank you, Mr. Deal. Q It is an honor to have an opportunity to ask you a few questions. A It is a pleasure for me. REPRESENTATIVE DEAL: I would have liked to have heard some kind of comment from the female on the staff. We have not been so honored. What is her area? DR. HACKNEY: She is the Senior Vice President and is responsible for all our financial operations, all the personnel functions, all the business functions, all of the physical operations of the University. REPRESENTATIVE DEAL: May I ask her one question? DR. HACKNEY: Certainly. It is your risk. (Laughter.) BY REPRESENTATIVE DEAL: (To Mrs. O'Bannon) Q Since you have had an opportunity to be in government and now you are at the University, do you have any suggestions to offer this body in order that we may help young people pursue their goal in the education field? I guess we all need moneys, but I tend to believe that there are a lot of promising young people who really want to, and because of the economic background of the families and how they keep pursuing education at some universities, it is difficult even if you don't have to work at all. So I am just wondering do you have any suggestions to young people that need more help or should they just get out there and get it from muscle like their grandparents did? A I think there are two suggestions, Representative Deal, that I would make. That is, that the Commonwealth has tended to rely on its loan program under the auspices of PHEAA as its primary mechanism for assisting students with need in higher education. It may want to consider whether at this time that that should not be broadened to scholarship aid at both the undergraduate and graduate levels for indi­ viduals either targeted for need or special situations such as increase in minority enrollment in particular careers, in professional programs. The second suggestion that I would have is that in appropriating funds for higher education, that the General Assembly should look not only at percentage increases across the board, but also at where opportunities for investing in pockets of excellence can leverage greater opportunities for this Commonwealth and for its people. My six months at the University gives me a per­ spective that says we are doing a number of things that help the City of Philadelphia, our adoptive school efforts, that we have taken under President Hackney's leadership. Our participation in the West Philadelphia Partnership. Our participation in the Greater Philadelphia Firs': Corporation Economic Fevitalization. As an institution with 17,000 employees, we are very much involved with the community. And we don't come to the Commonwealth and say, we need money to do that, but that obviously comes out of a broad commitment on the part of the University of public service to the city, the region and the state. It would be my suggestion to you all to look at how universities in this Commonwealth, where there are pockets of excellence and where you can make investments really pay off in addition to the across-the-board increases that are generally appropriate. More targeting as well as the general increases may be able to leverage some real energy such as the Advanced Technology Partnership. DR. HACKNEY: Now you know why it is such a pleasure to have Mrs. O'Rannon with us. ACTING CHAIRMAN COWELL: Representative Morris. BY REPRESENTATIVE MORRIS: (To Dr. Marshak) Q I would like to ask Dr. Marshak one or two leading questions, leading I hope in the right direction, and also make a short statement. Dr. Marshak, where does Pennsylvania stand in state support for its only veterinary school as compared to the other states in the United States? A Except for Tufts, which is the other private school, Tufts University's Veterinary School, which is a new endeavor and with an uncertain future I think because of various financial difficulties in starting a school'in this economic climate. They started it really before the economic upturn. We are at the bottom of the list in terms of the amount of state support relative to our size of student body. To me, the ironical thing is that in every sense our school is functionally a state institution. That is, we do everything that veterinary schools, for our state, that veterinary schools that belong to particular states do for their states. So that is our big problem. We don't really need as much money, we don't need the percentage of assistance from the state that I think other schools of veterinary medicine need and have become accustomed to because they were born as state institutions. But we do need a higher level of support than we are receiving now. That is, our 36 percent compared to a 35 percent compared to a 66 percent average for all other veterinary schools, seems to me, disproportionate. We are more enterprising, because we have had to be, in the private sector to raise a lot of private sector money and we have more research funds that we attract through competition than other schools of veterinary medicine. But we are having a terrible struggle to maintain the school's integrity and academic excellence because of the high tuition and the rela­ tively modest level of state support. Q Do you have statistics on foreign countries, too, such as Canada and European countries? A Well, they are virtually all state owned and probably receive — I know some European countries, I know the western European countries like England, Scotland, Switzerland and Germany, they are entirely state supported. England doesn't do so well by their veterinary schools although they have some wonderful institutions and great universities like Cambridge. But on the European Continent and in Canada, the schools, if you go there, you will find that they are better equipped, generally speaking, and much better supported than schools are in the United States.

Q Doctor, I would like to suggest to the members of the Committee and the staff that they pay very close attention to that portion of this little book here which has to do with the Veterinary School at the University of Pennsylvania. It is the only veterinary school, of course, in Pennsylvania, and it supports Pennsylvania's largest industry.

Furthermore, agriculture in Pennsylvania is different from the steel industry or any other industry. It is made up of a lot of small family farms and the cash flow earnings of those farmers is not all that great in the vernacular term; certainly only average. The large animal veterinarians, who do the field work for the farmers of Pennsylvania, are not rich alumni in any sense of the word. They do not make the kind of money that doctors and lawyers make for example. This school does a tremendous arrfount of the agriculture industry, and I certainly hope you will think these things over very carefully and give them all the support you can. A Thank you. ACTING CHAIRMAN COWELL: Are there any other questions? Representative Johnson. BY REPRESENTATIVE JOHNSON: (To Dr. Hackney) Q Just approximately, what percentage of the undergraduate students that apply or are qualified are admitted? A Of the undergraduate students? Q That make application or are qualified for admission? A We have, roughly, 11,000 applications for 2,000 positions in the class and we admit slightly over 45 percent of those. Q What percentage of the qualified applicants are admitted to the Veterinary School? DR. MARSHAK: About one in seven. BY REPRESENTATION JOHNSON: (To Dr. Marshak) Q If they do not get admitted to our school, what are their opportunities of being admitted to another veter­ inary school if they are residents of Pennsylvania? A Very limited. Some of them go to these fly-by- night schools in the Caribbean and so on. Very limited access to other schools because they are state owned and they tend to take mostly their own residents. Q Well, I would urge the same thing as Representative Morris, if our residents do not get admitted to our veterinary school, their chances of becoming a veterinary is extremely remote. I must urge you to give consideration to the veterinary school. A Thank you. ACTING CHAIRMAN COWELL: Thank you, Representative. Other questions? Representative Tigue. BY REPRESENTATIVE TIGUE: (To Dr. Stemmler) Q Just jumping to the Medical School, and we will get back to your college, I suggest that I ask you the ques­ tions, doctor. Are there any studies or has anyone looked at the idea of funding medical education from the state or governmental level and have some type of effect on cost containment or medical services? A Let me see if I can deal with the thrust of your question. Probably the most elaborate study that was to enable setting public policy on financing medical education was by the institute of medicine several years ago and it was commissioned by the United States Congress to try to get some order out of who had the responsibility. Whether it is the public body, private sector, student, his or herself. The study really became almost a useless document in that the economic conditions all across the country changed. There were many more physicians and the Congress actually could not fund that segment of the allocated cost that was asserted by the study to be borne by the Congress. But there has been a study and we could certainly make that available to you if you would like to examine it. Now, you asked a different question though to my colleague, Dr. Leon. Q Yes. A And that is should medical students get a free education. I can say that I believe, and I think my colleagues in the medical education, believe that they should not. That students do have a responsibility to bear an appro­ priate segment of the total cost of education. I think that has been a general pattern throughout higher education in most states in this country although not uniformly. But certainly in medicine there is an agreement that students ought to bear their share. We also believe that the public should bear a share of that support in that production of physicians does result in a public benefit generally speaking. So that I would not take the position that you asked Dr. Leon, that is, should they get a free ride and then as a condition to that in a sense, weave them into a social system that expects free services or some other structured form of service. Q Thank you, Doctor. Getting back to the Veterinary School for a minute. What percentage of your students are from Pennsylvania? DR. MARSHAK: About 70 percent and about 72 per­ cent of the practicing veterinarians in the state are graduates of our school. BY REPRESENTATIVE TIGUE: (To Dr. Marshak) Q I noticed.that in the report. Thank you. As far as the Veterinary School how many other private veterinary schools are there in the United States? A How many, there are 27 now. Q Private? A No, no, excuse me, just one other at Tufts. Q That's the one you mentioned? A That's the newest one. Q I just wanted a clarification. A Just one. Q So all other are state owned? A State owned. REPRESENTATIVE TIGUE: Thank you. ACTING CHAIRMAN COWELL: Any other questions? Representative Deal. BY REPRESENTATIVE DEAL: Q How many students can you take in the Veterinary School? A We can squeeze in 109 per class. Q If you get your requested appropriation what would that mean? A Whether we would increase it or not? Q Yes. A We could not increase it. That is absolutely all we can take. It is a very — it is like medical education, and if you want to come down I would be happy to show you our physical facilities and the number of laboratory benches we have for students, the classrooms, the hospital, they couldn't take it. We are already one of the larger veterinary schools in the United States. We are probably about the fifth or sixth largest. ACTING CHAIRMAN COWELL: Helen, while you were responding to questions, I couldn't help but think that you were here many times before. It's the first time folks did not come to beat on you. (Laughter.) MRS. O'BANNON: It is much quieter this time. Normally there are 95 pickets and about seven hours of ques­ tions . BY ACTING CHAIRMAN COWELL: (To Dr. Hackney) Q Doctor, just a couple of follow-up questions. On the PEN Plan, that would be funded with an endowment fund or what will the source of the loan dollars be? A We are still looking for sources. We hope either through some sort of a tax exempt issue or perhaps through some sort of borrowings from a bank or an end use of somu of our own funds, we should be able to make loan funds available. Q So the loan rate obviously would depend upon the source of the funds? A That is right. That is not yet set but we think we can do it through any other sources at a rate that is more favorable than what an individual family could obtain by walking into their local bank. Q Finally, on another student aid issue, you detail in your prepared statement the loss of federal-state moneys, PHEAA moneys and BEOG or PEL moneys. I am particularly in­ terested in the PHEAA money. Have you been able to determine the real impact on students. Obviously, there are fewer student aid dollars, PHEAA dollars, in this case, that are available. Is it a function of the general pool of students getting fewer dollars because we have not made adjustments to the need analysis formula or are lots of students or families getting totally bumped out of the system? MR. STINE: It is both, but the largest drop in the PHEAA money is actually coming from the students being bumped out of the system as the level of need base stayed the same and the income in the United States rises higher. I think it is important to note — BY ACTING CHAIRMAN COWELL: (To Mr. Stine) Q It is not on any regular basis adjusted to that growth income? A Right. It now costs $15,000 a year for a student to attend the University of Pennsylvania. So that we reach families with $30,000 worth of income, that is still not a great deal of income to support a kid coming to the University. So that has been the primary reason for its dropping out. It has also been that we have had somewhat fewer students eligible for aid, but not at the lowest levels. Those have been stable. With the new, relatively new needs analysis that has now been imposed on loan applicants as well, what has been the impact of that on your students or prospective students? A Well, the biggest problem that we face, and this is one of the reasons for establishing the PEN Plan has been GSL money, guaranteed student loan money has been subjected to a needs analysis formula. The reason why our aid funds have been going up at about one and a half times, our own internal aid funds have been going up at about one and a half times the rate of tuition increase, is primarily to substitute univer­ sity funds for those funds that we have been losing in the private sector. We have not been able to totally do that for GSL money. The PEN Plan is really one of the hopes to substitute for those kinds of funds. I think it was really designed with the fear or we began to plan with the fear that there would be a needs analysis on GSL and it is coming to that ACTING CHAIRMAN COWELL: Our Higher Education Committee and some other members of the full Committee had a chance to visit with you folks not too many weeks ago. We were looking primarily at the Ben Franklin Partnership, but several of your associates made our visit very enjoyable and I think very informative. So again, thank you for your help with that. Do we have any other questions? (No response.) Thank you again. DR. HACKNEY: Thank you very much. (Whereupon at 1:00 P.M. the hearing was concluded.) (Prepared statement of Dr. Hackney, University of Pennsylvania, is as follows:) "The University of Pennsylvania has played a vital role in the life of the Commonwealth of Pennsylvania for more than two centuries. It has educated significant parts of the business and professional leadership of the Commonwealth; it has maintained the largest research and development capacity in the state; and it has engaged in numerous programs of service to the Commonwealth and its people. The Commonwealth in turn has provided the University with an annual appropriation that has helped to make .these benefits possible. Given today's economic circumstances, it is more important than ever that this interdependent rela- tionship be maintained and enhanced. "It has become generally recognized that educated manpower and a strong research base are essential to economic recovery and progress in any state or region that hopes to prosper in today's rapidly changing economic and industrial environment. Replacement of vanished jobs will require the best efforts of industry, government, labor and the research universities, an effort recognized by Governor Thornburgh and the General Assembly in establishing the Ben Franklin Partner­ ship. The University of Pennsylvania is making major contri­ butions to that effort and others which we will describe later. It seeks the Commonwealth's help to expand that effort. "For the 1983-84 fiscal year the University is re­ ceiving a Commonwealth appropriation of $23,704,000, an increase of $812,000 or 3.6 percent over the previous year. The University is most appreciative of this continued vote of confidence by the Commonwealth, and understands that it came at. a time of severe fiscal constraints. This moderately increased State aid was invaluable in the effort to sustain the Schools of Medicine, Veterinary Medicine and Dental Medicine, to meet continuing enrollment growth in the Wharton and Engineering schools, and to continue strengthening the School of Nursing. It was also indispensable in planning for a balanced University budget for 1983-84, the ninth consecutive one. "For 1984-85 the University foresees a number of challenges and needs that will demand a substantial increase in revenues from all sources, including another tuition increase. The University asks the Commonwealth to assume a small share of these rising costs, through an appropriation of $27,109,000 for Fiscal 1985. This would represent an increase of $3,405,000 or 14.4 percent over the current fiscal year's appropriation. The request is broken down as follows: Item Request % Increase General Maintenance $12,898,000 10 (Instruction, Financial Aid) Medical Instruction 3,532,000 9 Dental Clinics 820,000 9 Veterinary Instruction 7,149,000 26.7 New Bolton Center 1,807,000 15.8 Food and Animal Clinics 903,000 15.8 TOTAL $27,109,000 14.4 "The Governor's recommended appropriation for the University is $24,988,000, an increase of 5.4 percent. "As the Commonwealth goes in search of stable new industries, it should be recognized the University of Pennsylvania is itself a sizable and permanent industry. With 17,600 employees it is the largest non-governmental employer in Southeastern Pennsylvania—larger than any utility company, retail chain, diversified manufacturer, transportation agency, energy company, insurance company, or bank in the region. In 1983 it paid $318.8 million in wages (the vast majority of this to residents of Pennsylvania) and employees in turn paid $13.2 million in city wage taxes and $6.8 million in state income taxes on their earnings. "The economies of the region and the Commonwealth will benefit in this fiscal year from projected expenditures of $689 million in operating funds by the University and its Hospital. The University attracts much of this money from outside the state. Sponsored programs, principally in research, brought in $121.5 million, including $102 million in federal funds, in the last fiscal year. In addition, the University through its development program generated private gift commit­ ments last year of $53.8 million, mostly from out of state. Actual receipts on private commitments came to $49.1 million, the highest in history despite the recession. In addition, because the University is one of the pre-eminent educational institutions in the nation, it attracts many out-of-state students who pay tuition here. "Beyond the operating expenditures of $689 million projected for the current year, the University spends additional millions on building and renovation projects which provide significant employment for the depressed construction industry of Southeastern Pennsylvania. For example, the ongoing renova­ tion of the historic Quandrangle 'dormitories has cost about $8.7 million thus far and is less than half finished. In the medical area, the University since 1978 has spent more than $100 million on new facilities and recently announced plans for another new building at the Hospital of the University of Pennsylvania which will cost an estimated $96 million. None of these projects involve State appropriations. "These sums reverberate through the Pennsylvania economy, creating additional jobs and income. In addition, the University has helped to create separate entities that add further economic activity: "University City Science Center, founded upon the University's initiative in 1964, today houses 75 organizations employing 5,000 people with an aggregate payroll of $100 million. The Center's nine buildings in West Philadelphia represent a capital investment of $45 million and a tenth, costing $25 million, is planned. The nonprofit Science Center is owned by 28 universities, colleges, and professional health institutions. In this urban research park, new enterprises (more than 38 of them thus far) are encouraged to get started, and the Center's own research staff, in collaboration with faculty of member institutions, conducts programs in basic research, project evaluations, training, community development, program planning, and management. "The Advanced Technology Center of Southeastern Pennsylvania has been established at University City Science Center by Pennsylvania, Drexel, and Temple universities with the aid of a $250,000 grant from the State's Ben Franklin Partnership. For the current fiscal year the Advanced Technology Center will have $2.35 million in State funds and about $14 million raised from corporations, the participating universities, and other private sources. Its purpose is to create new technologies that can revitalize existing indus­ tries, develop new industries, and create new jobs. In 1983-84 the Center is sponsoring cooperative research and development on sensor technologies, human adaptability in space, and advanced biomedical technologies, This University's share of state funding for the ATC amounts to some $670,000 in the current year. "The Pennsylvania Small Business Development Center (SBDC) program, coordinated by the Wharton Entrepreneurial Center of the University of Pennsylvania, is creating jobs at a time of otherwise shrinking employment, according to a study by Chase Econometrics. The study found that businesses counseled by the SBDC established 8,750 new jobs between September 1, 1979, and December 31, 1982, and that these generated a secondary growth of 5,750 jobs for a total of 14,500. It estimated that in 1983 these 14,500 jobs will contribute $255 million to personal income in Pennsylvania and $44 million in federal, state, and local taxes. The Pennsyl­ vania Small Business Development Center is a management assis­ tance program funded by the Small Business Administration, the Pennsylvania Department of Commerce, and academic institutions around the State. SBDC staff offer business owners and prospective owners free management and technical counseling in i such areas as accounting, loan packaging, strategic planning, j I marketing, and financial planning. The SBDC network currently ; I functions out of 13 colleges and universities and covers 63 J

Df the 67 counties. j i "The Philadelphia Association for Clinical Trials | (PACT) serves manufacturers of pharmaceuticals and medical devices through the design, organization, and execution of \ clinical trials and other studies. PACT, an independent non­ profit corporation, draws upon the wealth of medical centers, j academic institutions, and major hospitals in the Philadelphia area to provide industries large and small with the services of ; specialized investigators. Its chairman is Dr. Thomas W. i Langfitt, Vice President for Health Affairs of the University i af Pennsylvania. '•. i i "The Philadelphia Export Network (PEN) was established in 1981 to respond to the city's need for economic | i stimulation, to its lag in exports, and to the need for in- j creased port activity. Wharton School students assist small • and medium-sized businesses that desire to export but lack experience. The Network is directed by a Wharton professor, flans H.B. Koehler. Other participants are the Philadelphia Port Corporation, the City of Philadelphia, and the U.S. Department of Commerce. j "This University is one of four participating in j the State-funded Pennsylvania Register of International Skills and Expertise (PennRISE), a computer data base of faculty I nembers having international expertise who can be tapped by j i msinessmen and others needing guidance about specific overseas | I situations. The purpose is to support the State Department of ! Commerce's efforts to increase the Pennsylvania export busi- j

i less and to encourage foreign investments in the state. '• "Persons who hold Ph.D.'s in the humanities ard tho i social, biological, and physical sciences and who wish to j i switch to careers in business are finding success through the Jniversity's Alternative Careers program. Last summer 41 ' 'h.D.'s came to the campus for intensive instruction in tccounting, finance, statistics, economics, management, and , larketing. They also received career counseling and had inter- | riews with recruiters from more than 35 corporations. The )rogram is demonstrating that individuals with Ph.D.'s in cer- :ain areas of academia can be prepared for productive careers .n private business. As certain colleges contract in size, :his form of assistance will be increasingly important to their "acuity members. "National and world leaders in business, finance, [overnment, and academia come to Pennsylvania to participate in j inferences and symposia on major economic issues. A Wharton/ \ •eliance Symposium last summer dealt with 'Removing Obstacles

:o Economic Growth.' In December of 1982 the University was j lost to more than 400 persons at the largest conference thus :ar on relationships in science and technology between J i niversities and corporations. Sponsored by this University | nd seven other major research universities, 'Partners in the i esearch Enterprise' attracted presidents of top universities, ' fficers of major corporations, and public officials including j i he Governor of Pennsylvania, State cabinet officers, and tip ! i ayor of Philadelphia. j

"This University is administering a State-wide rogram, funded by the U.S. Office of Education, to stimulate j nternational educational and foreign-language instruction at ennsylvania institutions of higher education. The University j I ill serve the State's colleges and universities, ten each ; ear, as a source of information and expertise, while each nstitutiona and its faculty identify their needs and determine j i he most appropriate innovations. In June of 1984 teams from ach institution will meet at Penn for five days to review and erfect their respective plans, to be implemented the following i all. The June session will culminate in a one-day conference j n 'Education and International Business: Toward Cooperation uring the Rest of the Century,' bringing together educators ith government planners and representatives of Pennsylvania usiness and industry. ! "In an effort to increase the flow of federal funds i o Pennsylvania, the University in the past year established a i ermanent presence in Washington. Our newly appointed irector of federal relations, David J. Morse, is monitoring i ! i -F £-

i ederal programs and seeking out opportunities for support in ligher education, science, and the medical field. Mr. Morse j reviously held positions in Washington concerned with educa- j j ion, the arts, and the humanities. ; "But it is the human capital created by the I niversity that is more significant than the monetary benefits t brings to the State. The University is for the Commonwealth source of highly trained and educated manpower in a broad I ange of both traditional and newly developing disciplines. I n ]981-82, for example, the University awarded more than a j hird of the degrees in the State in dental medicine, nearly a i ixth of the State's M.D. degrees, all of the degrees in j eterinary medicine, and 30 percent of the master's degrees in ursing. It granted a fourth of the master's degrees and 0 percent of the doctoral degrees in banking and finance. In conomics it conferred a fourth of the master's degrees arid 69 ercent of the doctorates. "The University also was responsible for a large hare of the Commonwealth's advanced education in scientific nd technological disciplines in 1981-82. In biochemistry, >ioengineering, and biomedical engineering it awarded a third if the bachelor's degrees, a sixth of the master's degrees, and third of the Ph.D.'s. In computer and information science, ystems engineering, and operations research, it granted 32 ercent of the master's degrees and 44 percent of the doctoral i legrees.

"Professions concerned with the design of the mvironment draw many of their members from the University of 'ennsylvania. In this State, in 1981-82, this University iwarded more than two-thirds of the master's degrees and all >f the Ph.D.'s both in architecture and in city, community, md regional planning.

"Many of these advanced graduates remain in 'ennsylvania. Among the University's 50,000 alumni living in . i 'ennsylvania are leaders in science, medicine, law, engineer- .ng, government, and other professions vital to the economic ind social health of the Commonwealth.

''An Evolving Uniyersity "Historically, the origins of the University of 'ennsylvania (1740) were roughly concurrent with those of the Commonwealth of Pennsyulania and the United States of America. benjamin Franklin, founder of the University, and nine others tssociated with the University early in its history signed the )eclaration of Independence. Seven signed the Constitution and :wenty-one were members of the Continental Congress. Penn, :hough not the oldest institution of higher education in America, /as the first to be designated a university (1779).

"Both before and after that distinction was con- lerred by the General Assembly, this University showed the way lor much of what has become today's higher education in America. Lts curriculum in colonial days was the first in this country :o combine instruction in modern languages, physics, mathe- natics and economics with the classics. Other examples of the pioneering academic spirit include: first medical school in ;he country (1765); first department of botany (1768); first Law lectures (1790); first university-owned teaching hospital '1874); first collegiate school of business (1881); first veterinary school in a university medical center (1884); first student union building (1896); first graduate school of nedicine (1917); first all-electronic digital computer (ENIAC, | L946) and first computer courses. "In short, our illustrious predecessors kept this Jniversity in the forefront of nearly all aspects of higher education, and it has remained there. Recently, Prof. Lawrence Clein, the 'father of econometrics,' was honored with the Nobel 3rize. In biology, Dr. Andrew Binns and colleagues have succeeded in inserting new genetic information into plants; Ln veterinary medicine, Dr. Ralph Brinster has performed a similar feat in mice. In physics and chemistry, Dr. Alan leeger (no longer with the University) and Dr. Alan MacDiarmid iave developed the first plastic battery; patent rights have )een sold, and the product is now being developed for commercial lse by companies in the United States, Europe, and Japan. "The University of Pennsylvania is thus both 'ancient' and modern. The challenge before us today is to keep

j t modern—to carry forward the tradition of innovation that as brought the University to its present eminence. This is ot an easy task, and in today's economy it is necessarily j i i n expensive one. "In 1981 the University acquired a new President nd Provost and, with the concurrence of its Trustees, began a roadly participatory re-examination of its mission, values, nd purpose. The result was a statement by the President, j i Choosing Penn's Future,' early in 1983. It called for renewed : mphasis on (1) Undergraduate Education, (2) Excellence in j esearch, and (3) Student Aid and Financial Assistance. This j as followed by a companion document, 'Building Penn's Future,' j hich defined specific priorities and the probable costs of chieving them. Among them are: (1) a substantial increase in he number of endowed professorships; (2) upgrading facilities eeded for research and scholarship; (3) increased student inancial aid; (4) improving facilities and services that ffect the quality of University life; and (5) providing upport for continuing innovation in such areas as plant cience, computer science, bioengineering, and international anagement and culture. To achieve these goals over the next hree years the University will have to raise more than $100 illion in private outside funds. "The challenges before the University in the next everal years ahead may be summarized as follows: "Control increases in tuition. The current 11 ercent rise is undesirably high, but no higher than at peer nstitutions or than the national average for private universi- ! ies. The University of Pennsylvania, lacking an endowment | i omparable to those at peer institutions, is dependent on uition revenue for 53 percent of its unrestricted income. Al | he same time it must allocate increasing amounts of its own esources for student aid in order to attract the quality and i iversity of student body that characterize this institution. j i here is an urgent need for new student aid resources, and for j i new mechanism that would enable students and their families i o distribute the cost of their education over a longer period • f time. Such a mechanism, called the 'Penn Plan,1 is being j >ut into place for students entering in the Fall of 1984. It 'ill offer students and their families a choice of options for inancing their education over a period of 10 years or more, ogether with a prepayment plan and the regular need-based inancial aid for those who qualify. "Increase resources for research and graduate ducation. Federal funds for research have declined or at least eveled off in the past year and enrollment of graduate students, ho need to participate in research, is fallirg in some dis- iplines. In order to retain the best faculty and attract the iest graduate students, increased funding for research support nd graduate-student aid is urgently needed. "Re-equip teaching and research laboratories, and lake computers a key element of learning and scholarship in til disciplines. The computer and related new equipment have •evolutionized both theory and practice in disciplines ranging j :rom biochemistry to religious studies, and they will permeate

:he 'real world' in which today's students will live and work. \ i .t is vital that our students be equipped to function in this rorld, and that they find at this University the facilities ;hey will need to prepare themselves. "Strengthen the University libraries. The fniversity's collection of three million volumes constitutes :he largest research library in the Commonwealth and is heavily ised by both University and non-University seekers of knowledge.] 'he startling increase in cost of books and periodicals, far >eyond the general rate of inflation, and the well-known explosion of knowledge' make it impossible for this and other •esearch libraries to own every item their clients might desire. ]he Library, while continuing to add to its print collection, .s rapidly developing capacities in other media, such as licroforms and particularly computer-based links with other •esearch libraries. This process needs to be accelerated. "Improve the quality of campus life. The historic Quadrangle dormitories, which lend the University much of its esidential character, are being preserved and renewed, but mch remains to be done. New and renewed facilities for ithletics and recreation are needed; the Franklin Field itadium, also historic, requires major repairs to preserve its isefulness. The internationally renowned Music Department •equires a suitable concert hall. And a new center or system :or helping students negotiate the procedures of this large and :omplex institution should be established.

"Control and if possible reduce basic operating :osts. The University has made some progress on this front; :or example, usage of purchased steam, for both heating and :ooling, declined nearly 16 percent last year, partly because >f the mild winter but also because of a concerted energy- :onservation program. Favorable contracts have been negotiated j lith companies supplying telephone and computer services, with \ >rojected savings running into the millions over a period of rears. But much, again, remains to be done. A centralized, :omputer-controlled system will further reduce electrical :onsumption on campus, and is expected to pay for itself in :hree years. In this instance, as in others, it is necessary tc lake short-term capital expenditures in order to realize savings >ver the longer term.

"The University is not asking the Commonwealth to leet all or any of these capital needs. They are cited as an .llustration of why the increasing costs of continuing to build i great private university outrun the current rate of infla- :ion, and probably always will. Given the tradition of i innovation and excellence that we have inherited, we can do no less; and we trust that the Commonwealth will share our concern.

"The University's line-item requests are further ! delineated as follows: i i "General Maintenance^' For this general area the University requests $12,898,000 for 1984-85, an increase of $1,170,000 or ten percent over the appropriation for the j current year. The Governor recommended a 4.0 percent increase, j rhis budget line would, if the General Assembly concurs, j subsume the former lines designated Instruction and Student i ^id. In reality, the appropriations under those two lines I

i have come to be devoted to nearly a single purpose: the main­ tenance of both a faculty and a student body of the very highest quality. The two components are mutually interactive— ' >ood students stimulate good faculty, and vice versa. The General Maintenance allocation helps the University to attract both the best faculty and the best students. "In the case of faculty, the problem is dual-edged. En some currently booming fields, e.g. computer science and management, the University cannot pay enough, in competition with private industry, to induce young scholars to remain in academia and become the teachers of the next generation—we are 'eating our seed corn,' as some sage described the process. Conversely, in the arts and humanities, which have the duty of preserving and transmitting our cultural values, faculties generally are at full strength and there is not enough money to add younger scholars who are eager to teach in their fields. tfe also face the problem of attracting and retaining the most outstanding natural scientists, economists, and social scientists to follow in the footsteps of those who have given this University its national and international eminence.

"For all of these reasons, it is vital that the General Maintenance appropriation, and its Instruction compon­ ent, be continued and increased, to take account of both rising salaries offered by major universities and the need to j recruit new young scholars into the teaching and research I nission of the University. J "Student financial aid also is a subject of growing :oncern as tuition rises, government support is uncertain, and students find the expense of attending this University in- :reasingly difficult to manage. Over the past four years, the )ffice of Student Financial Aid reports federal and state jrant program awards to students here have declined by >1,490,000 (15.3%). The Student Aid line item has not in- ;reased in ten years.

"The University has been able, over the past two fears, to increase overall student aid resources by almost 40 jercent. In part this was accomplished by an increase in mrestricted undergraduate aid funds from $12.5 million in - , !

1981-82 to $17.2 million in the current year. Graduate and professional student aid also was increased significantly. "But Pennsylvania residents, over the past two

i /ears, have had to meet an additional $1,400 of their annual j aeed through a loan and/or term-time job, raising their se li­ ne lp requirement to $2,700. For out-of-state students the j i average self-help has risen about $1,700 to $3,400. Aid pro- j /ided by the Pennsylvania Higher Education Assistance Agency ! I (PHEAA) declined again this year, to $1,050,000 from $1,230,000! i Last year and from a high of $1.7 million in 1979-80. Most j students assisted by PHEAA need additional aid from University • funds. j "Despite these circumstances and unfavorable ' i iemographic trends, it is remarkable that the number of appli- ! :ations for the freshman class entering next fall has reached i record high. A class of the normal size of 2,100 matricu- Lated, and their quality remains high, with average test scores in the 94th percentile nationally. "The University's ability to recruit such high- ! i :aliber students from all social and economic groups requires j | jnremitting financial and recruiting efforts. More than half : i Df our students—about 12,000—require financial aid in order j i :o attend this University. Whether this tradition of heter- j i Dgeneity combined with academic excellence can continue depends an a number of factors, including a recognition by the Common- Ii I wealth of the value of this kind of student body to the State.

"Medical Instruction: The University requests for

i Medical Instruction an increase of nine percent or $292,000 j j which would produce a total of $3,532,000 in 1984-85 for this j item. The increase of $124,000 or four percent for the currentj year is most welcome evidence of concern by the Commonwealth, ' as is the Governor's recommended increase of $227,000 or seven | percent for 1984-85. J i "In spite of the increase for Medical Instruction, j the school again was forced to raise its tuition and fees for the current academic year, by ten percent to $11,610, which makes it one of the more expensive medical schools in the j country. National trends have affected applications to the School of Medicine, which for the last entering class stood at 5,739 compared to 6,501 two years ago. Even so, there was no difficulty in filling the entering class of 160 students with people of exceptionally high quality. "The School of Medicine offers to students a dis- i tinguished faculty, highly productive in terms of research, and an opportunity to tailor much of their medical education to their own interests. Most of them, however, must assume a j heavy burden of debt to complete their studies, and this inevitably discourages some highly talented students from attending this great medical school, the first in the country, and forces them to go elsewhere for their medical education. (

I i i "The School of Medicine continues to be one of the j nation's major centers of biomedical research and a pioneer in I i the development of new medical technologies, working with th^ ! School of Engineering and other scientists on campus, tha :: may i i lead to important new industries in Pennsylvania. In fiscal year 1982, for example, the School ranked fifth in research j grants from the National Institutes of Health, ahead of such j i institutions as Harvard, the University of California at Los ! Angeles, Duke University, and the University of Chicago. NIH j awarded the School $40.4 million in research grants in that year and $44.2 million for all purposes including training. Research support in dollars awarded from all sources came to j $60,850,000 in 1982-83. That, ominously, was no increase over the previous year, despite inflation. Any further lack of i growth, or actual reduction, could undermine the school's | i ability to retain the outstanding investigators and teachers wnd.i j have given the School its present eminence. ! ! "Stabilization in research funding, the gradual j decline in applications for admission, and still-rising costs ' which result in still-rising tuition make continuing and increasing Commonwealth support for Medical Instruction essen- : tial to the enduring strength of this internationally respected medical institution in Pennsylvania. "Dental Clinics: The University requests for support of its dental clinics in 1984-85 an appropriation of $820,000, an increase of $68,000 of nine percent over the current year. The Governor's recommendation was for an increase of $53,000 or seven percent. "The clinics of the School of Dental Medicine pro­ vide quality care each year for some 18,000 people, inany of | them persons of low income who cannot afford to pay even the j reduced fees that are charged. The clinics thus operate at a deficit that is currently estimated at $1.5 million.

"One result of this deficit is constantly rising j i tuition and fees for dental students, which increased 11.5 j i i percent to $14,800 this year for first-year students, after a j ] rise of 12 percent last year and 15 percent the previous year, j These costs are among the highest in the nation, and more than i twice those of the State's other dental schools. For an I unmarried first-year dental student, total one-year costs are now about $27,800, including room, board, tuition, fees, and the purchase of professional instruments. Graduates entering practice are facing increasing debt—typically around $65,000— at high interest rates. "The School has maintained a strong faculty, deeply engaged in both basic and applied research, that attracts more support for research—almost seven million dollars last year—than any dental school in the country. New knowledge thus acquired better equips the Schools' students to practice the most modern dentistry and benefits the patients in the clinics. ! "Through its contribution to the dental clinics the| i Commonwealth helps to assure a continuing flow of new dentists j trained in the most advanced dental science and techniques; it also helps to supply the highest quality of care to many ci ! those least able to afford it. j i i "School of Veterinary Medicine: The University of j Pennsylvania requests for the three items benefiting the School of Veterinary Medicine a total appropriation of $9,859,000. j

This would be an increase of $1,875 million or 23.5 percent. \ "Pennsylvania animal agriculture, including dairy, swine, beef, and poultry farming, generates annual sales in ; i excess of two billion dollars. The overall agribusiness , I industry in the State accounts for nearly $25 billion in sales and employs 900,000 people. The health of this industry and its anmials is heavily dependent on the University of Penn­ sylvania School of Veterinary Medicine and the services of its graduates, who comprise 72 percent of the veterinary practi­ tioners in the State. "Expansion of the nation's food supply to accommo- ; date both a growing population and the export market, requires j more efficient use of existing resources; farm land is con­ stantly being lost to development. To a great extent this expansion will depend on more effective control of animal j diseases and new biological technologies that are being 30

! developed by Pennsylvania's Veterinary School. The School's jioneering research, both basic and clinical, and its training )f new veterinarians, are vital to the preservation and I idvancement of the State's animal industry. ! "In addition to the obvious agricultural benefits provided this State by the Veterinary School, there are signi- '. ricant direct contributions to human medicine. At the Univer­ sity of Pennsylvania, these contributions are even more pro- lounced than at veterinary schools that developed at land jrant universities. Pennsylvania's School of Veterinary ledicine was an 'offspring' of the University's Medical School, i fhere a continuing close relationship has contributed to the Veterinary School's standing as the world's foremost center for I :omparative medicine. While the veterinary medical profes- <• ;ion's contributions to the diagnosis, treatment, prevention ind control of various animal diseases are well known, the ' jublic is generally unaware of its accomplishments in human [ lealth matters. For example, veterinarians were the first to ! liscover filterable viruses, slow viruses, tumor viruses, the i i i :ause of the viral encephalitides, Salmonella, Brucella (the ;ause of undulant fever in humans), mycoplasma as pathogenic igents, and the first trypanosome—caused disease. They also leveloped tuberculin, tetanus toxoid, the first tumor vaccine, :he first live-virus vaccine, the first pinning techniques in j iracture reduction, and the first hip replacement prosthesis. . i 57

Veterinarians also provided the first proof of insect-borne disease and devised the first spinal anesthesia and the first electrocardiogram and cardiac catheterization. Today, Veterinary School Professor Ralph Brinster's laboratory is the world's leading center for research in mammalian genetic engineering. "As a private institution, the Pennsylvania School of Veterinary Medicine has long operated under severe constraints. Except for Pennsylvania and two smaller veter­ inary schools, all American schools of veterinary medicine j | are state-owned and receive from state appropriations more i significant portions of their budgets for operations as well as construction funds for classrooms, laboratories, and clinical facilities. While Pennsylvania's Veterinary School receives 30 percent of its support from the Commonwealth, Cornell's Veterinary School receives 55 percent and the University of California Veterinary School receives 65 percent from their respective states. The Pennsylvania School performs for Pennsylvania all the services that other schools deliver to their states, but at far less cost to taxpayers. While the School has enjoyed increasing Commonwealth support, it still requires a substantial subsidy from general University funds. "Despite severe cutbacks and other stringent measures, including a 30 percent increase in tuition over the 58

t two years, the School continues to face formidable ancial difficulties. An increase of $307,000 was appro- ated for 1983-84 against a request of $1,900,000. There no provision in the appropriation for an annual debt vice for the new Veterinary Medical Teaching Hospital, nor the costs ($560,000) associated with normal inflation. sonnel costs have risen nearly nine percent, due mainly an unexpectedly large increase in the cost of employee efits, and contract revenue from other states that send dents to the School has continued to decline. "Our students have been financially crippled by large, consecutive tuition increases, coupled with a nificant actual decrease in sources of financial aid. , if the School is to remain solvent in 1984-85, another tion increase (at least ten percent) will be needed. To id this, we ask for an offsetting item of $325,000 as part our appropriation increase. This item is particularly al, since, for the first time ever, Pennsylvania students ered places in the first year class have withdrawn solely financial reasons, i.e. the excessive tuition of $9,176. out-of-state, non-contract students, tuition is now ,500. The median tuition (1983-84) at American veterinary ools is $2,900. This represents a loss to the Commonwealth some exceptionally gifted veterinary doctors. The blem of new graduates entering practice, particularly farm -J 7

mimal practice, with overwhelming debt burdens, continues to rorsen. Some of our students now leave the School with debt urdens as high as $80,000. "Owing to the school's chronic financial distress, j re have been unable to address very serious facility main- • enance problems at New Bolton Center. There is near desperate j i teed for another water tower to meet the essential requirements »f our large animal hospital, research buildings, dormitories, md animal housing units. Our high voltage electrical lines i ire in dangerous condition and our sewage treatment plant is IOW inadequate to deal with our wastes. The cost of these and >ther pressing projects totals $1,297,000, an amount we must i torrow in order to forestall a crippling breakdown in essential lervices. The debt service on this amount, beginning in 1984-85, rill be $260,000 annually. "Through cutbacks in personnel and programs and :hrough cost containment policies and procedures, the Veterinary Ichool is making strenuous efforts to help itself. And coin- :ident with the School's hundredth birthday in 1984, the fniversity's Trustees have authorized a five-year Second Cen- :ury Fund Campaign, aimed at raising $41.5 million for endow- lent and capital projects from the private sector. However, :ven if the Second Century Fund Campaign succeeds, it will not significantly improve the School's fiscal status before 988-1990. ]

"Veterinary Instruction: For 1983-84 the Assembly [ranted an increase for veterinary instruction of four percent j >r $217,000. The University requests for 1984-85 an increase >f 26.7 percent or $1,505,000 for a total request of 17,149,000 for veterinary instruction. This compares with an .ncrease of $395,000 or seven percent recommended by the j lovemor. "A great proportion of the School's recent increase .n instructional costs is attributable to the opening of the j lew Veterinary Medical Teaching Hospital in the University's I i icademic Health Center in West Philadelphia. The new facility ilready is returning rich rewards in improved clinical instruc- ;ion and patient care. It has, however, imposed on the School tdditional costs of about $1.5 million a year in operating ixpense and debt service. A Commonwealth loan for the hos- >ital's construction is repayable at the rate of approximately i •560,000 a year; the requested increase for veterinary instruc- :ion would cover a portion of that, and would help to compensate i :or the constantly rising other costs of veterinary instruction.! "The new hospital is a facility of extraordinary sophistication, incorporating the most advanced biomedical j squipinent and technology, and providing a near-perfect setting :or the integration of teaching, research, and patient care. "Veterinary medical care and instruction are in- lerently costly because they must deal with many different 61

species. Commonwealth support at an adequate level is vital to he preservation of this essential function in Pennsylvania. "New Bolton Center: For the Veterinary School's •ural campus, New Bolton Center, the University requests an j ippropriation of $1,807,000, an increase of $247,000 or 15.8 >ercent. The Governor proposed an adjustment of $109,000 or | seven percent. "New Bolton Center, near Kennett Square in Chester lounty, embraces nearly one thousand acres and more than seventy buildings, including barns, stables, and farm facili- :ies to house and care for cattle, horses, and other domestic j inimals. The animal population at the Center includes more i :han 500 cattle, 100 horses, a herd of swine, beef cattle, a ilock of sheep, and a herd of goats. "The Center also includes a clinic and hospital for arge animals, research laboratories, an orthopedic and re- labilitation center, a poultry diagnostic clinic, and dormitory tnd conference facilities. All of these capital investments tave been financed without State aid, through private funding; :hey are in effect a gift by generous donors and by the Uni­ versity to the State's animal industry. i "The primary missions of the School at New Bolton Jenter are teaching, research and service. Students are "egularly assigned to New Bolton Center on a rotating basis. Hiile in residence, they work in the clinics and laboratories 62

and accompany members of the clinical staff on professional

m i :alls to farms in the area, thus gaining field experience in i ;he diagnosis, control, and treatment of disease. Continuing ?ducation for practicing veterinarians, an innovation when it ?as introduced at Pennsylvania, enables them to remain current m the latest techniques. "The large animal hospital at New Bolton treated h,443 patients in 1982-83; about an equal number were seen by :he clinical staff on field visits. The Center also is the site of intensive research activity on animal reproduction and lutrition, control of animal diseases, leukemia, and zoonoses [diseases transmissible from animals to man). Basic dis- :overies resulting from investigations at New Bolton Center ire leading to improved health not only of animals, but of uimans as well. "In its Centennial fund-raising Campaign the School fill seek to add to the hospital facilities at New Bolton Center a contagious disease isolation unit, expected to cost J4,449,000, and an intensive care unit, already funded, costing 51,456,000. Thus, the latest advances in medical knowledge will :ontinue to be made available to Pennsylvania's animal owners, tnd to its veterinary students. These and other new facilities, :o be financed entirely through private contributions, will ;reatly enhance the quality and volume of services to Penn­ sylvania farmers and breeders. i

"Unfortunately, the costs of such advanced treat- lent procedures, which are comparable to those for human >atients, are beyond the means of many J.arge**ar,imal owners., >articularly farmers, who are not protected by Blue Cross pr inalogous coverages. Thus, the hospital services at New Bolton Center continue to operate at a deficit. For this reason, and :o ensure a continued thorough education for students in j Large-animal medicine, the University requests a renewed ; i ipward adjustment of Commonwealth support for New Bolton Center.j "Food and Animal Clinics and Services: For this .tern, currently at $780,000, the University and the School request an increase of $123,000 or 15.8 percent, for an item :otal of $903,000. The Governor's budget calls for an increase >f $31,000 or four percent.

"The Veterinary School's Food Animal Program en- :ompasses five interrelated areas—the Food Animal In-Patient Jlinics, the Poultry Diagnostic Laboratory, the Field Service >r Ambulatory Clinic, the Section of Nutrition, and the Lnimal Health Economics Unit (AHEU). The latter activity is i program intended to improve the efficiency of food-animal >roduction, in part through studies to detect declines in letabolism and reproduction in particular strains of animals >efore clinical disease signs become manifest.

"AHEU also has established new health care delivery lystems which provide special services to veterinarians and to 64

lairy, beef, sheep, swine, and poultry farms. Its activities ire being coordinated with organizations outside the University such as the Bureau of Animal Industries, the Pennsylvania )epartment of Agriculture, the Animal Industries Liaison Committee, and the Pennsylvania Veterinary Medical Association. "Clinicians of the Food Animal In-patient Clinics, ;he Field Service and the Poultry Diagnostic Laboratory, all >ased at New Bolton Center, help to maintain the School's outstanding reputation in maintaining the health of food inimals, as regards both injuries and disease. The Section of Jutrition is constantly working to develop improved ways of ;reating and preventing nutritional and metabolic diseases. "An Early Warning Epidemic Intelligence service to investigate and solve disease outbreaks and to minimize ;conomic losses to Pennsylvania's livestock farmers, poultrymen ind horse breeders is available on short notice. Clinicians, jathologists, epidemiologists, nutritionists, and laboratory iiagnosticians are often called upon to deal with undiagnosed outbreaks of disease in the field (the initial isolation of :he avian influenza virus was made at New Bolton Center). Such requests are never refused, but they drain the School's finances and compromise its in-house programs. "All of these functions are nourished and sustained >y the Commonwealth's support of the Food and Animal Clinics and Services, and Pennsylvania's animal agriculture is the stronger for them. We trust that this support will continue, and grow. "Conclusion "The University of Pennsylvania has defined its ! priorities and chosen its objectives for the future. It is aiming high, as always, and it recognizes that arduous efforts (/ill be the price of continuing excellence. It is prepared to nake these efforts, and it invites the Commonwealth to join in i preserving and advancing the unique Pennsylvania institution j that this University is. "The University also is eager to contribute to Lhe growth of high technology industry as a means of revitaliz­ ing the economy of Pennsylvania. With a research and develop- nent capacity unmatched in the Commonwealth, a school of nanagement of international stature, outstanding schools of angineering, medicine, and nursing, and the State's only School af Veterinary Medicine, this University is playing a signifi­ cant role in restoring the economic fortunes of its home state. "The historic and fruitful partnership between the Commonwealth and the University has yielded many benefits to Doth, and will continue to do so. As the University strives to meet new challenges by expanding its sources of private, corporate, and government support, it trusts that the Commonwealth will remain a significant factors in the contin- 66

uing vitality of this valuable Pennsylvania resource."

I hereby certify that the proceedings and evidence taken by me in the within matter are fully and accurately indicated in my notes and that this is a true and correct transcript of same.

i

Dorothy if. Ma lone 135 S. Landis Street Hummelstown, Penna. 17036