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Fiscal Year 2006 Budget: Report to University Council

The annual reports by the president, provost and other administrators on the budget and plans for the next academic year were presented to University Council on March 29.

President Amy Gutmann said, “there is always room for improvement” and Penn is building on its strengths. She proudly pointed out that the Trustees had “unanimously and enthusiastically endorsed” the two new financial aid initiatives to increase access to a Penn education regardless of financial constraints (Almanac March 28, 2006).

When the topic of per student endowment came up, it was made clear that Penn is under-endowed compared to its peers, even though it has the 12th largest endowment in higher education, President Gutmann interjected, “we do more with less, just imagine what we could do with more!” She also added that Penn’s endowment has grown substantially over the past several years due to the generosity of alumni and trustees as well as the market gains. The president cited the $14 million gift from George Weiss (Almanac November 15, 2005), which has stimulated other donors to give substantial gifts.

Bonnie Gibson, vice president for budget and management analysis, presented the fiscal year 2006 budget, including the key points and strategic decisions noted below, as well as the consolidated expenditure budget, including the academic and health system components, which totals $4.413 billion.

The majority of Ms. Gibson’s annual presentation focused on the academic budget, excluding the health system, for the current fiscal year which, totals $2.244 billion.

Sponsored Research is up 2.5 percent over FY2005 which Ms. Gibson described as “a victory” given the federal budget climate.

Compared to peer institutions, Penn’s undergraduate tuition and fees for 2006-2007 are in the “tightly banded middle” where there is very little difference in the total charges of the other institutions.

The following are reprinted from Ms. Gibson’s presentation.

FY2006 Budget Key Points

•     Total University revenue budget of $4.479 billion

•     Total University expenditure budget of $4.413 billion

•     Academic Budget of $2.244 billion*

•     5.4% increase in undergraduate charges

•     Federal F&A rate (Indirect Cost Recovery) finalized for FY2005-2008 at 57-57.5%

•     Sponsored Program revenue continues to grow, albeit more slowly than the past:  up 2.5% over FY2005

*   “Academic Budget” equals total University operating budget excluding the Health System

FY2006 Budget Strategic Decisions

•     Consistent with The Penn Compact

      –  Increased undergraduate financial aid and graduate stipends

      –  Established Penn Integrates Knowledge (PIK)

      –  Invested in the campaign by continuing the ramp up in staffing and programming, and by moving the advancement system (ATLAS) forward

      –  Invested in the quality of our academic facilities and student housing

•     Veterinary Medicine Teaching and Research Building (new construction)

•     Lynch Life Sciences Building (new construction, ongoing)

•     Skirkanich Hall (SEAS, new construction, ongoing)

•     Fisher-Bennett Hall (SAS, renovation, ongoing)

•     Student Performing Arts Hub (University Life, renovation)

•     College House Projects: Harnwell, completion of sprinkler projects

•     Budgeted an incremental $1M for the Facilities Renewal Funds

 

 

 

 

 

 

 

FY2006 Financial Aid Budget
($M)

                  FY04         FY05           FY05         FY06      %Change
                  Actual       Budget         Actual       Budget    06B vs. 05A
UG
Student
Aid          $   78.9     $   84.5       $   84.4      $    92.6        9.7%

Grad. &
Prof.
Student
Aid           $ 106.9     $ 116.4       $ 115.8     $  123.5          6.6%

Total
Student
Aid             $ 185.8      $ 200.9        $ 200.2      $  216.1            7.9%

In addition, $34M is included in graduate stipends in the Compensation budget for FY2006.

New Financial Aid Initiatives

•   The University has announced two new initiatives for FY2007

–   Eliminate loans for all socio-economically disadvantaged students with family incomes of $50,000 or less.  Penn is the first research university that funds the majority of its undergraduate financial aid from its operating budget to take this step.

–   Moderate self help/loan increases by providing additional grant aid for rising sophomores, juniors and seniors

•    These initiatives will help ease the financial burden on lower and middle income families and make it clear that Penn is serious in its mission to increase access to all students.

Summary

•    The FY2006 Budget is balanced and aligned with The Penn Compact, with targeted investments in undergraduate and graduate financial aid, the Penn Integrates Knowledge initiative, and the ongoing recruitment and retention of the best faculty and students.

•     FY2006 Challenges

      –  Financial Aid continues to grow faster than the rate of increase in tuition, and is under-endowed

      –  Utility costs increasing rapidly

      –  Major investments in security

•     FY2007 Preview

      –  5.25% increase in Total Charges

      –  Two new financial aid initiatives including the elimination of loans for socio-economically disadvantaged students with family incomes under $50,000 per year.

 

 



 
  Almanac, Vol. 52, No. 28, April 4, 2006

ISSUE HIGHLIGHTS:

Tuesday,
April 4, 2006
Volume 52 Number 28
www.upenn.edu/almanac

 

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