Budget 1998-99: President Rodin's Report to the University Council

The goals and strategies that drive the budget are grouped below, and the first four pie charts on this page [ pie 1 | pie 2 | pie 3 | pie 4 ] show how funds are spent, while displays further below [ pie 5 | pie 6 | table 1 | table 2 | graph 1 | graph 2 | graph 3 | graph 4 ] indicate sources of income. Just below: Academic expense is 45% of the total budget. Below right, the series of pies shows (a) that compensation accounts for 54% of expense; (b) that the bulk of spending is done through the schools; and (c) the breakdown by schools. Note: All tables, graphs and charts, and text blocks featuring bullets are from Dr. Rodin's slides. Text blocks in italics have been added from notes.


 

Components of the Consolidated University Budget

  • The Consolidated University budget has two major components--"Academic" and "Health Services."
  • The Academic budget includes:
--Schools (including the School of Medicine)
--Resource Centers [Library, etc.]
--Auxiliary Enterprises
--Central Service Centers
  • The Health Services budget includes all components of UPHS except for the School of Medicine:
--Hospital of the University of Pennsylvania (HUP)
--Presbyterian Medical Center (PMC)
--Pennsylvania Hospital
--Phoenixville Hospital
--Clinical Practices of the University of Pennsylvania (CPUP)
--Clinical Care Associates (CCA)
 

Budget Planning Parameters

   FY 1999  FY 2000
  • Undergrad & Grad Group Tuition
0.045 0.042
  • General Fee
0.045 0.042
  • Residence Fees
0.03 0.014
  • Dining Fees
0 0.035
  • Total undergraduate Charges
0.039 0.037
  • Sponsored Programs: Indirect Cost Recovery Rate
0.595 0.585
  • Spending Rate Under Spending Rule Policy*
0.047 0.047

* 3-year average lagged 1 year


 

Nine Goals of Penn's Agenda for Excellence

  • Attain comprehensive excellence and secure Penn's position as one of world's premier research and teaching universities.
  • Secure greater research funding and new sources of support.
  • Restructure, improve and cut costs of administration.
  • Invest in strategic master's and continuing education programs that can generate revenue.
  • Enhance government and community relations programs essential to Penn's best interests.
  • Increase Penn's international reach and global perspective.
  • Creatively deploy new technologies.
  • Effectively communicate Penn's contributions to the media and the University's various constituencies.
  • Raise the funds required to support Penn's strategic goals.

Six Academic Priorities--Agenda for Excellence

  • Life Sciences, Technology & Policy
  • American & Comparative Democratic & Legal Institutions
  • Management, Leadership & Organizations
  • The Humanities--Meaning in the 21st Century
  • The Urban Agenda--Penn in Philadelphia
  • Information Science, Technology & Society

How the University's Budget Supports the Goals and Priorities of the Agenda for Excellence

  • Provost and Deans work together to develop School budgets that maximize level of resources available for investment in strategic goals and priorities.
  • Executive Vice President and Vice Presidents work together to develop Central Service Center budgets that maximize level of resources available for investment in strategic goals and priorities.
  • Limited central resources--e.g., Subvention, Research Facilities funding, Facilities Renewal Program funding--are directed wherever possible towards investments in the Schools that support their most important goals and priorities and the Agenda for Excellence.

Penn's Financial Planning Approach

  • The University engages in strategic long-term financial planning.
  • New programs, priorities and initiatives are discussed and planned long before they are included in the annual University operating budget.
  • Consultation occurs through the Academic Planning & Budget Committee and in other forums.
  • New initiatives that will be implemented and budgeted in Penn's Fiscal Year 2000 budget have been identified and publicized already--during the current year or prior years.

Examples of Strategic Initiatives in Penn's FY 2000 Budget

  • American/Democratic Institutions--new Political Science faculty appointments
  • Computer and Information Science--new faculty/facilities (IAST II)
  • Management--Huntsman Hall--new facilities to support new approaches to management education
  • Undergraduate Experience: College Houses--Quad Renovation/ Expanded Living Learning Programming
  • Undergraduate Experience: Experimental College/Expanded Freshman Seminars
  • Undergraduate/Graduate Experience: Opening of Perelman Quad (Houston, Irvine, Silfen)
  • Undergraduate Experience: Recreation--Pottruck Health & Fitness Center/ Bower recreation field/Murphy baseball field
  • Quality of Life/Neighborhood Initiatives: Hamilton Square; Westside Common
  • Life Sciences: Opening of BioMedical Research Building (BRB) II-III
  • Undergraduate and graduate financial aid increases
 
 
 

 At right, the sources of revenue for the Academic Budget. A related pie chart, below, shows that only 49% of income is discretionary (from tuition, investment income, and gifts)--but much of it only technically so, Dr. Rodin pointed out. Tuition and fees, the largest slice of the income pie, will rise less in the coming year than they did in the current one, according to the planning parameters (below) being used for preparation of the 1999-2000 budget. Details on tuition and overhead income are farther below, and Penn's endowment is shown here.  

 

 Tuition (above and below)

In the early 80s Penn's tuition & fee increase figure spiked to 15.9%, then took a jagged but largely downward path to arrive at this year's increase figure of 4.2%. This makes Penn's increase the lowest of the Ivies that have so far reported their increases for 1999-2000.

 

Peer Institution Undergraduate Charges Comparison

1999-2000 Total

% Change vs. 1998-99

Tuition & Fees

Room & Board

Brown $32,280 3.9% $25,186 7,094
Harvard 32,164 3.3% 24,407 7,757
Chicago 32,069 3.7% 24,234 7,835
Georgetown 31,988 3.6% 23,295 8,693
Dartmouth 31,983 3.8% 24,774 7,209
Yale 31,940 2.9% 24,500 7,440
M.I.T. 31,900 3.6% 25,000 6,900
Duke 31,839 3.2% 24,751 7,088
Cornell (End.) 31,675 4.1% 23,848 7,827
Princeton 31,599 3.5% 24,630 6,969
Penn 31,592 3.7% 24,230 7,362
Johns Hopkins 31,530 3.9% 23,660 7,870
Washington U. 31,357 5.5% 23,634 7,723
Stanford 31,095 4.1% 23,214 7,881
Northwestern 30,413 4.2% 23,566 6,847

Note: Columbia has not yet announced student charges.

Research Overhead Recovery (below) [ graph 1 | graph 2 | graph 4 ]

When a research grant is funded, it comes in two parts: the direct support of the work, plus a percentage called "indirect cost recovery," to pay for the rise in overhead costs such as electricity, maintenance, and the like. As shown in the Budget Planning Parameters at the top of the page, the base rate is expected to decrease from 59.5% in the current year to 58.5% in 1999-2000. At Council, Dr. Peter Freyd asked if it is true that the University actually loses money on some sponsored research and Dr. Rodin replied that this is so. She said efforts are being made in Washington to rectify this.

 

 

 

Endowment

Penn ranks high among the nation's major institutions, President Rodin showed at Council with the first of the two tables below. But, moving to the second table, she said the endowment per student is the figure that presents a challenge. Income on investments is one of the discretionary slices in the revenue pie chart [here]. In the Budget Planning Parameters [shown here], the Spending Rule Policy set by Trustees permits spending each year from endowment earnings an amount equal to 4.7% of the three-year average market value of the endowment, lagged one year.

Top Twenty Endowments as of June 30, 1998

#

Institution

Assets ($000)

1 Harvard University $13,019,736
2 Texas System, University of 7,647,309
3 Yale University 6,624,449
4 Princeton University 5,582,800
5 Emory University 5,104,801
6 Stanford University 4,559,066
7 California, University of 3,787,884
8 M.I.T. 3,678,127
9 The Texas A&M University System and Foundations 3,531,517
10 Washington University 3,445,743
11 Columbia University 3,425,992
12 Penn 3,059,401
13 Rice University 2,790,627
14 Cornell University 2,527,871
15 Northwestern University 2,397,715
16 Chicago, University of 2,359,358
17 Michigan, University of 2,303,054
18 Notre Dame, University of 1,766,176
19 Vanderbilt University 1,539,242
20 Dartmouth College 1,519,708

Peer Institution Endowment/Student Among Top 20 Endowments

as of June 30, 1998

Institution

Assets ($000)

($/Student)

Princeton 5,582,800 875,321
Harvard 13,019,736 727,522
Yale 6,624,449 612,015
M.I.T. 3,678,127 377,980
Stanford 4,559,066 348,579
Washington U 3,445,743 346,028
Dartmouth 1,519,708 292,815
Chicago 2,359,358 209,181
Columbia 3,425,992 188,791
Northwestern 2,397,715 159,221
Penn 3,059,401 155,941
Cornell 2,527,871 134,877

 

Dr. Rodin's coda:

How Penn is Achieving its Goals in Light of Serious Fiscal Constraints

  • Efficiency: Both in Central Service Centers and in administration of Schools
  • Development: Ambitious, successful, focused fundraising in support of goals and priorities of the Agenda for Excellence
  • University/Private Sector Partnerships: Getting others to spend their money to do things Penn needs so that our own resources can be spent on core academic priorities

More on Budget: The University's budget year begins July 1. The budget for FY2000 will be reviewed and approved by the Trustees at their June 18 Stated Meeting. Copies of the FY2000 budget will be available from the Budget Office (898-6651) after the meeting.


Almanac, Vol. 45, No. 31, May 4, 1999

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