Council
Coverage
Last Wednesday's
Council meeting--the seventh of the year--is the one
that the Council Bylaws specifies is to be devoted to
the University budget and plans therefore that was the
mainstay of the agenda.
President Judith
Rodin began the series of extended reports with a description
of the current economic climate--a protracted Bear Market--noting
that all of Penn's peer group has sustained two consecutive
years of losses for the first time since 1974 and it
could extend for a third year. This trend has a negative
impact on the spendable income. She noted that there
is a national trend, a decline in gift-giving to not-for
profits. Although Penn has done well both last year and
this year, it must see the "writing on the wall." In
the post-9/11 world there are additional expenses and
regulations.
Penn will have
to adapt, she said, to the declining revenue stream,
which had been accelerating for many years but has tapered
off this year (see below). She noted that for the past
five years there has been great growth in the biomedical
sciences, whereas now the NIH is cutting back and that
will impact Penn and other research institutions.
The funding from
the Commonwealth is another area where Penn is getting
less than it did in prior years. The Health System provides
$65 million in uncompensated care and the $15 million
from the Commonwealth which had gone toward that in the
past, has been slashed from the budget. Research grants
also add costs to Penn since the indirect cost recovery
is insufficient to cover the costs of research and all
the new regulations.
Dr. Rodin also
noted that Penn has invested $230 million in construction
and renovation of its facilities in the past few years.
There has been an increase in undergraduate student aid
and student services as well as technology enhancements
and recruitment of outstanding faculty and staff. Insurance
costs have risen 25% and Penn is working to manage the
costs of benefits; refinancing debt to reduce interest
expenses; and instituting energy conservation measures.
Spendable
Endowment Income by Fiscal Year ($000)
Bonnie Gibson,
the acting executive director of the Office of Budget
and Management Analysis, presented the many facets of
the budget, (see FY
2003 Budget).
Dr. Neal Nathanson,
vice provost for research, discussed the Research Operation
and how it has been transformed in the past several years.
He said that the Penn faculty has been entrepreneurial,
putting Penn in the second highest position in the country,
for NIH grant money. He explained that while human subject
research accounts for under 15% of the portfolio it is
typically a higher risk level based on guidelines. Therefore
Penn has significantly increased the staffing and budget
in the past five years for the Institutional Review Boards
which manage such research. He also noted the transformation
concerning animal research. ULAR received accreditation
in January of this year and has had a new director since
February. Its staff has increased from 1 to 5 since 1999.
Dr. Nathanson also stressed how important the research
compliance aspect is to the whole effort.
The final presentation
was given by Carol Scheman, vice president for government,
community and public affairs, who gave examples of how
Penn interacts with the City, the Commonwealth and the
Federal governments. At the City level, some recent collaborations
have been the Knowledge Industry Partnership, the Schuylkill
River Gateway Project and the 40th Street branch of the
Free Library. Some issues that concern Penn on the Commonwealth
level are the governor's budget, the tobacco settlement,
and uncompensated care, medical malpractice reform, homeland
security and economic development, i.e. Keystone Innovation
Zones and Life Sciences Greenhouses. The Federal budget
and appropriations as well as homeland security, research
funding, and the reauthorization of the Higher Education
Assistance Act are some of the issues in Washington