Government Affairs Update

Federal Relations

107th Congress Organization--Pennsylvania Delegation Update: Congressman Chaka Fattah (D-PA), who represents West Philadelphia, has been appointed to the powerful House Appropriations Committee. Mr. Fattah has pledged to make investment in education his priority on the Committee, which controls $600 billion in discretionary spending. Mr. Fattah has previously served on the Education and Workforce, Government Reform, House Administration, Ethics, and Small Business Committees.

Congressman James Greenwood (R-PA), who represents Bucks County, will chair the Subcommittee on Oversight and Investigations of the House Energy and Commerce Committee. This is the committee that would oversee any future Congressional action on gene therapy.

Bush Administration Update: This week, President Bush will address a joint session of Congress to present an outline for his budget request. The full budget proposal will be released in April.

Ann Ruffo Phelps will serve as President Bush's top adviser on health care policy. Phelps was formerly a senior staff member for Senator Bill Frist (R-TN). She worked closely with the University when Senator Frist held hearings on gene therapy in the Science, Technology, and Space Subcommittee of the Senate Committee on Commerce, Science, and Transportation.

Commonwealth Relations

On February 6, 2001, Governor Ridge released his proposed FY 2001-02 budget for the Commonwealth. The Governor is proposing a total of $41,671,000 for the University, a 1.9 percent increase over the current fiscal year. The proposed funding is broken down into five line items--$35,826,000 for the Veterinary School, $4,034,000 for the Medical School, $632,000 for Cardiovascular Studies, $938,000 for the Dental Clinics and $241,000 for the University Museum. The funding for the Vet School represents a 3 percent increase, the same increase being recommended for the primary line item (E&G) of the state-related universities. The Medical School, Dental Clinics and the University Museum are funded at the same level as FY 2001. Cardiovascular Studies funding is reduced by $250,000, with the Governor removing dollars which had been added by the General Assembly in last year's budget.

The Governor also announced his recommendation that $90 million in tobacco settlement monies be used to fund the development of three "Regional Biotechnology Research Centers". These centers, also known as "Life Science Greenhouses", will be located in the Philadelphia area, Pittsburgh area and Central Pennsylvania. The greenhouses would be set up as non-profit corporations that would link the region's research universities and the for-profit sector with a focus on research in biotechnology, bioinformatics and other related fields. The state funding would be one time support taken from tobacco settlement dollars already received by the Commonwealth. Successful applicants would be required to provide some type of financial or "substantially equivalent" contribution to support the research being done at the centers on an ongoing basis.

In other higher education funding areas, the Governor proposed a 7 percent increase for PHEAA student grants. The Governor recommended the continuation of the Higher Education Equipment Grant program at last year's level of $6.0 million. Last year Penn received approximately $290,000 through this program. Also included is $1 million in the Engineering Equipment Grant program (no increase). Penn received approximately $60,000 from this matching program last year. The budget recommends $5.5 million in higher education technology grants to provide for competitive grants focused on "innovative approaches to community-based networking and for curriculum development for information sciences and technology programs." The Governor also recommended $8.2 million for the continuation of the Sci-Tech and Technology Scholarship Program. This program offers scholarship support to Pennsylvania students majoring in science or technology-related fields who agree to work for Pennsylvania business following graduation.

The proposed budget also recommends $8 million in funding for the continuation of higher education graduation incentive grants. These grants are available to any institution graduating more than 40 percent of its students within four years. Finally, the budget includes $3 million in support to reduce the costs to colleges and universities of borrowing money to install dormitory sprinklers.

The Governor also proposed the merger of the Pennsylvania Technology Investment Authority (PTIA) and the Ben Franklin Partnership Program into the Ben Franklin Technology Investment Authority. The PTIA research portion of the authority funding has been increased to $14 million. This funding will be used to continue efforts to promote university technology-based research and facilitate commercialization of new technologies. Recently, PTIA provided a $10.5 million three-year grant to support a Center for Nanotechnology co-directed by Penn and Drexel faculty.

In addition, the Governor announced a Brain Gain Initiative designed to retain young people (particularly highly educated and skilled university/college students) in Pennsylvania. Gov. Ridge's proposal includes a $10 million budget initiative with three key "Brain Gain" components:

  • A "Stay Invent the Future" marketing campaign to showcase Pennsylvania to its young people;
  • A "Stay Invent the Future Internship Corps"--a private-sector and community campaign linking companies and young people together, coordinated through Team Pennsylvania; and
  • Regional "Brain Gain" funding opportunities to ignite local initiatives to address the "Brain Gain" issue. Team Pennsylvania--a public/private partnership consisting of Pennsylvania business leaders, senior government officials, and community- and economic-development specialists will be at the forefront of the Governor's new "Brain Gain" initiative.

The University is scheduled to defend its appropriation request before the House Appropriations Committee on February 28. Following budget hearings, the General Assembly will begin the process of crafting a final budget, including approval of the non-preferred appropriations for Penn.

City and Community Relations

FY02 City Operating and Capital Budget--On January 23, the Mayor presented his budget proposal for the City of Philadelphia to City Council. Mayor Street proposed an Operating Budget of $2.95 billion and a five-year Capital Program of $541 million ($89.6 million for FY02). The Mayor outlined four main funding priorities reflected in both budgets: improving Philadelphia's public schools, strengthening Philadelphia's neighborhoods, improving children's programs, and supporting strategic economic development initiatives.

During the Mayor's annual budget presentation, he emphasized that the national economic slowdown is reflected in the budget's revenue projections and assumptions. The plan projects that revenue growth will be moderate, averaging between 2%-3% over the next five years. Inflation during this same period is projected at 2.5%. These growth estimates are considerably lower than the revenue growth of approximately 4.7% the City enjoyed in FY00 and even lower than the 3.5% growth in the Wage Tax during the first half of FY01. Further, it is projected that the tax base will grow by an average of 2.7% annually between FY01 and FY06. Because of these trends, the City is expected to continue many cost cutting and fiscal restraint measures utilized in previous years. While the City experienced an unprecedented fund balance in FY01 of $295.1 million, the City is predicting operating deficits in the coming years. The FY02 budget continues the moderate decreases in the Wage and Business Privilege Taxes started in FY96.

The Mayor announced that he will present a financing package to City Council this Spring to implement his Neighborhood Transformation Initiative (NTI). NTI will be a $250 million dollar issuance of "Blight Remediation Bonds" by the Redevelopment Authority on behalf of the City over the next five years. In support of this plan, the City will direct more than $50 million in operating department support to arrest deterioration and restore vibrancy in neighborhoods across the City. The Mayor proposes to spend:

  • $6.5 million to undertake baseline cleaning of approximately 31,000 vacant lots;
  • $3.5 million to remove 8,700 dangerous, dead street trees;
  • $10 million has been allocated to the Managing Director's Office for neighborhood stabilization activities;
  • Additional funds have been allocated to institute a maintenance program to keep lots reasonably clear of debris.

Mayor's Annual Address to the Greater Philadelphia Chamber of Commerce Membership: In addtion to the announcement of the New Economy Development Alliance (Almanac February 13), the Mayor also announced the appointment of Peter Longstreth as the next President of the Philadelphia Industrial Development Corporation (PIDC). PIDC is a joint venture with City government and the business community and serves as one of the key economic development engines in the City and region. He also charged Commerce Director Jim Cuorato, Managing Director Joe Martz, and City Solicitor Ken Trujillo with the responsibility to review all City regulations, fees, licensing requirements, and other impediments to doing business with the City. They will also explore ways the City can better take advantage of technology to improve the efficiency of the delivery of services, particularly to our small businesses.

--Carol R. Scheman, Vice President for Government, Community and Public Affairs

Almanac, Vol. 47, No. 24, February 27, 2001