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Commonwealth of Pennsylvania House of Representatives Appropriations Committee Hearing Budget Hearing

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Commonwealth of Pennsylvania House of Representatives Appropriations Committee Hearing Budget Hearing COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES APPROPRIATIONS COMMITTEE HEARING BUDGET HEARING STATE CAPITOL MAJORITY CAUCUS ROOM HARRISBURG, PENNSYLVANIA TUESDAY, FEBRUARY 27, 2007, 9:00 A.M. VOLUME I OF V PRESENTATION BY STATE-RELATED UNIVERSITIES BEFORE: HONORABLE DWIGHT EVANS, CHAIRMAN HONORABLE MARIO J. CIVERA, JR., CHAIRMAN HONORABLE STEPHEN E. BARRAR HONORABLE STEVEN W. CAPPELLI HONORABLE H. SCOTT CONKLIN HONORABLE CRAIG A. DALLY HONORABLE GORDON R. DENLINGER HONORABLE BRIAN L. ELLIS HONORABLE DAN B. FRANKEL HONORABLE WILLIAM F. KELLER HONORABLE THADDEUS KIRKLAND HONORABLE BRYAN R. LENTZ HONORABLE TIM MAHONEY HONORABLE KATHY M. MANDERINO HONORABLE MICHAEL P. McGEEHAN HONORABLE FRED McILHATTAN HONORABLE DAVID R. MILLARD HONORABLE RON MILLER HONORABLE JOHN MYERS HONORABLE CHERELLE L. PARKER HONORABLE JOSEPH A. PETRARCA HONORABLE SCOTT A. PETRI HONORABLE SEAN M. RAMALEY 2 1 BEFORE: (cont'd.) HONORABLE DAVE REED 2 HONORABLE DANTE SANTONI, JR. HONORABLE MARIO M. SCAVELLO 3 HONORABLE JOSHUA D. SHAPIRO HONORABLE JOHN J. SIPTROTH 4 HONORABLE KATIE TRUE HONORABLE GREGORY S. VITALI 5 HONORABLE JAKE WHEATLEY, JR. 6 ALSO PRESENT: 7 MIRIAM FOX EDWARD NOLAN 8 9 JEAN M. DAVIS, REPORTER NOTARY PUBLIC 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 I N D E X 2 TESTIFIERS 3 NAME PAGE 4 DR. IVORY V. NELSON 5 5 DR. MARK NORDENBERG 6 6 DR. GRAHAM SPANIER 7 7 DR. ANN WEAVER HART 9 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 1 CHAIRMAN EVANS: Good morning. The hour of 9 2 o'clock having arrived, we will begin. The House 3 Appropriations Committee will now reconvene with the 4 State-relateds all together. 5 So basically, the general rule is that we 6 want to get members to the questions right away, so no 7 presentations will be given. But I am going to start 8 off with the Republican Chairman of the Appropriations 9 Committee, Representative Mario Civera. 10 REPRESENTATIVE CIVERA: Thank you, Mr. 11 Chairman. 12 Welcome, everybody. At least we are here the 13 next day, and no snow today. 14 I just want to be brief with the questions, I 15 mean, nothing in-depth. What I could see and over the 16 years the State-related universities have done a very 17 good job, and the moneys that you request from the 18 State are not always given there, and the levels that 19 you request are not there either, even that. So 20 explain to us and to the committee how you are able to 21 keep the tuitions to a point where they are so people 22 can afford them and what you are basically doing 23 overall as far as keeping your costs down so that it 24 is not passed on to the student with high tuition 25 costs and that type of thing. So if you could just 5 1 give us an over brief of that. 2 DR. NELSON: Good morning. Ivory Nelson, 3 Lincoln University. 4 Well, what we do primarily is to take a look 5 at what our priorities are. We all probably do a 6 strategic plan of some sort. We identify what it is 7 that we need to do, and we practice good business 8 practices in terms of how we operate the university. 9 So we make our choices and our decisions such that we 10 line up what it is we need, and those things that we 11 can't afford in a particular year, we don't do it, and 12 so that is kind of a general way we do it. 13 In my particular case, I have to be 14 especially careful in the fact that my populous that I 15 serve comes from homes less than $50,000. So I always 16 have to think about, where is my price point in terms 17 of charging these young people in order for them to 18 get a quality education, but yet allowing them the 19 opportunity so that they can participate in the 20 American dream. So I have a special situation in 21 trying to keep my tuition at a point at which I can 22 operate, take care of all of the other things that I 23 need to do, and then attract them to our university. 24 So there is no big secret about how we do 25 this; it is just simply we prioritize. We do 6 1 everything that we possibly can to do cost 2 containments, and we operate that way. 3 CHAIRMAN CIVERA: Thank you. 4 DR. NORDENBERG: In some ways this question 5 is like a trip down memory lane for me. When I moved 6 into the Pitt Chancellor's office in 1995, the first 7 thing that we did at the request of our board was to 8 bring in a consultant from what was then one of the 9 Big Five accounting firms, I think, to take a look at 10 all of our operations to see whether there were ways 11 in which we could improve. The answer to that 12 question, of course, was yes, but I really remember 13 his general reaction when he said, boy, there isn't 14 much low-hanging fruit here compared to what you find 15 in other institutions. 16 We have over time really moved forward with a 17 broad range of cost-cutting initiatives. Some of them 18 are detailed, beginning on page 14 in our budget 19 request, and include things now like channeled 20 spending programs, Internet procurement, targeted 21 outsourcing. But I think it is true of all of the 22 institutions here at the table that we do struggle, 23 and we really struggle in terms of the two things that 24 you identified in your question. That is, there is an 25 expectation that we are going to provide high levels 7 1 of quality, and there also is an expectation that we 2 will advance the accessibility mission by keeping 3 tuition rates under control. That is a challenge when 4 State funding isn't what, not only what we might 5 expect but is not up to the levels that are received 6 by competitor universities, because we do operate in a 7 competitive environment ourselves. 8 I know that at Pitt, and I think the same is 9 true for Penn State and I presume for Temple and 10 Lincoln as well, the percentage of our total budget 11 represented by the Commonwealth appropriation has 12 decreased dramatically over time. It was about a 13 third when I joined the Pitt faculty in the 14 mid-seventies. It was 19 percent when I became the 15 interim Chancellor in 1995, and it is about 11 percent 16 today, and when you look at the universities with 17 which we are competing, that number would typically be 18 two or three times that large. So it is a challenge, 19 but we work hard to meet that challenge for our 20 students and for the Commonwealth. 21 DR. SPANIER: I'll just add that I think it's 22 true for all of us that we have two principal sources 23 of income for our educational programs, tuition and 24 legislative appropriation, with tuition being the 25 greater source of income for us now. 8 1 So putting the budget together requires us to 2 create a balance between the relative contributions of 3 the tuition and the appropriation. When the 4 appropriation is on the low end, as was proposed by 5 the Governor this year at 2 percent on our education 6 in general lines, it puts more pressure on the tuition 7 side, and for all of us right now, we are very 8 sensitive to the high cost of tuition for our students 9 in Pennsylvania. 10 Eighty percent of our students at Penn State 11 receive some form of financial assistance, and this 12 creates a scenario where the average debt at 13 graduation this past year was $23,500. Now, for some 14 people graduating in certain areas where they will 15 start in a high-paying job, that may not seem 16 burdensome, but for other people, it can scare them 17 away a little bit, and that is just an average. Some 18 people, half of the people, are above that amount. So 19 we do worry about the increase in the cost of tuition, 20 and we try very hard to keep it down. 21 The third variable in the formula is internal 22 reallocation, where we go through a process of finding 23 ways to trim our budgets to be efficient. Every year 24 we recycle a certain portion of our budget to deal 25 with salary increases, rising costs of health care, 9 1 our utilities, insurance, and other things that we 2 simply must attend to. 3 DR. HART: Being the last--- Oh, I am sorry. 4 CHAIRMAN EVANS: I just want to make sure 5 that for the first time, members, we have a brand new 6 President. This is your first time coming. 7 DR. HART: It is. Thank you. 8 CHAIRMAN EVANS: So I want to officially 9 welcome you. 10 DR. HART: Thank you, Representative. 11 CHAIRMAN EVANS: The gentlemen know us 12 already, and they like us. And I don't mean to take 13 them for granted, but I sincerely want to welcome you.
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