March University Council Meeting Coverage |
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April 5, 2011,
Volume 57, No. 28
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At the March 30 Council Meeting, President Amy Gutmann welcomed professor Charles Mooney as acting moderator and noted he had recently returned from Tokyo with Penn students. The remarks below were adapted from Ms. Gibson’s presentation. They are followed by a summary of the presentation and panel discussion on Undergraduate Research programs at Penn.
Bonnie Gibson, Vice President, Budget & Management Analysis
Thank you, I’m very pleased to be here for my annual report. If we look at the budget on a consolidated basis including the health system, we are a $6 billion organization. But I’m going to talk only about the University budget excluding the Health System.
University Operating Budget
Our budget is $2.8 billion in the current fiscal year, fiscal 2011. That was about a 4% increase over fiscal 2010’s budget, a little bit more over what we actually spent. The real driver of our budget growth is sponsored research, which was up almost 11% over the fiscal 2010 budget. Also included in that $2.8 billion is over $361 million of funding for capital projects, including Penn Park and the Translational Research Building in the School of Medicine and the Law School’s Golkin Hall among many other projects.
The easy way to think about our revenue budget is in thirds. A third of our revenue comes from tuition and fees, a third comes from sponsored research, direct and indirect, and a third comes from all other sources. One of the things that is important to point out is the 9% from our investment income. It is one of the reasons that we were able to weather the economic downturn so well. It is our curse and our blessing. We are not highly endowed; therefore we were not very dependent on endowment income.
Over half of our FY11 budget expenditures relate to compensation and benefits for faculty and staff. The next largest category at $719 million is current expense. Current expense includes some pretty large ticket items: $58 million of that total is utilities, $27 million is insurance, $56 million is the cost of independent operations, things like the hotels and the Penn Club. So there is a lot more in there than paper clips and copier paper.
Research is driving a lot of our budget growth. Budget to budget, our non-research budget grew by 3%, where our research budget on the compensation side grew by 10%. On the current expense side, our non-research budget grew by 2%, while our research budget grew by 12%, so that really was a driving factor in the growth of our budget from fiscal 2010 to fiscal 2011.
The next way to look at our budget is by who is spending the money. The vast majority of the expenditures, $1.9 billion of the $2.8 billion, are taking place in the schools. Of that total, the School of Medicine is $747 million, Arts and Sciences $353 million and Wharton $296 million. Those 3 schools make up 72% of total school expenditures. $152 million relates to space costs. Of that total, about $125 million is for space utilization in the schools, and could be counted in the school totals.
For fiscal 2011, our total undergraduate charges were $51,944, a 3.9% increase over the prior year. We typically compare ourselves with this group of peer institutions. These are the schools where we see the most overlap of students applying. We are in the lower half of this group. There are about six or seven schools that are within roughly $600 of our total charges. This is the peer group with which we compare ourselves routinely.
Our financial aid budget in fiscal 2011 was $351 million, a 5.7% increase over the prior year, actually over the prior year actual. We saw a 9% increase in undergraduate aid and a 1% increase in graduate and professional aid, but that’s because we saw such a large increase from fiscal 2009 to fiscal 2010, we actually saw a 12% increase in graduate and professional aid in that year, so the second increase was a much smaller one. Graduate stipends increased by 4%, so we spent a significant amount of our assets on financial aid for graduate, professional and undergraduate students.
Total Undergraduate Charges FY2012
Our total current charges are just under $52,000 a year. Only 69% of the cost of a Penn education is actually covered by tuition and fees; the balance is supported by gifts and endowment income. This comes from our statement of activities on our audited financial statements, and I’ve been tracking it now for about 10 years and it has ranged in the 69, 70 and 71% range pretty consistently. At least 57% of our students receive financial aid from either internal or external sources. The average package includes both a grant and a work-study job and is just under $40,000. The grant itself for the average grant-aided freshman is $36,454 and all of our aided freshman have no-loan packages.
A no-loan package doesn’t mean a student can’t take out a loan; it means that a loan is not part of the package. Penn has a commitment to meet full need; we meet that need with grants and work-study. A student may opt to borrow in lieu of a parental contribution or in lieu of a work-study program, but a loan is not part of the Penn package.
The trends over the past ten years or so show that Penn has pretty much been at or below the average increase in our peer group, with the exception of one year, 2006. Every other year, particularly since 2007, we have been right at the average increase in total charges for our peer institutions. One of the interesting things that I think has happened is that in 2009, Yale was the lowest of the peer institutions and in 2011 Yale was the highest of our peer institutions. So that gives you an idea of what happened as a result of the economic downturn for schools that are particularly dependent on endowment income.
We also compare ourselves to average increases across the entire higher education sector. Penn consistently increases its total charges at a rate at or below all private and substantially below all public institutions.
For 2012, the trustees have approved a 3.9% increase in total charges. That will take our total charges to $53,976. The room and board are based on the average standard room, the room that a freshman is most likely to occupy, a quad double for example; and the freshman meal plan, which is actually one of the more expensive meal plans that someone could take. So it is entirely possibly for someone to pay less than $53,976 or to pay slightly more if they had a single room.
The projected increase in revenue based on this tuition increase and total charges increase is $19 million, however we are planning on increasing our financial aid budget by almost $11 million. So actually 55% of the increase in our total charges is going directly to financial aid, with a 3.9% increase in total charges and a 7.7% increase in financial aid.
2012 will be the second-lowest increase in 43 years; 2010 was the lowest. The last three years have been 3.8% and two increases at 3.9% for total charges.
All of our peer institutions have announced their total charges with the exception of Columbia and NYU, and Columbia will not announce until June. In general, we are continuing in the middle range of our peer institutions. We are probably going to come out on a percentage basis towards the lower half of this grouping. The lowest so far has been Princeton, which came in at 1%. The highest is Dartmouth at 5.9% with Yale at 5.8%. At 3.9%, we really are on the low side of our peer institutions.
The average grant-aided package: Until 2009, we were still packaging loans with financial aid, so the loan began to diminish from fiscal 2002 to fiscal 2009, and was eliminated completely in fiscal 2010. The grant percentage has increased substantially from 2002 grants are up 85% through fiscal 2011.
On average, the parental contribution is one third of total charges for our students who receive financial aid. The parental contribution in fiscal 2011 is $430 lower than it was in fiscal 2010 and is $700 lower than we budgeted for it to be in 2011.
What is really driving the increase in our financial aid is not just the fact that we went no-loan, but the recession. So in 2008, the last year before we began to implement our no-loan program, we had total financial aid expenditures for undergraduates of just about $100 million. We go to 2010, the first year we were fully no-loan, and the impact of no-loan was about $11 million, and in 2011 was $11.6 million. We had estimated that it would be a $12 million expenditure once we were fully implemented, and we actually did a pretty good job of planning what no-loan would cost us.
What we didn’t do a good job of was foreseeing the recession, and that has cost us $19 million in the 2011 financial aid budget. We have calculated that by looking at people who in the past we know would not have qualified for financial aid, but suddenly, as a sophomore or junior, became aid eligible. Or, people for whom we had to use estimated income because their last tax return showed much greater income because there were two working parents, or one parent who had a much better job than the current numbers show. So we think this is a pretty good estimate and it is really a pretty extraordinary number.
Unemployment clearly drives the need that we see. This is a fairly long term, all the way back to 1998, tracking of the national unemployment rate and our number of aided students. The parallels are pretty extraordinary. The shaded area is what we project, so we are using the survey of professional forecasters and what they think is going to happen to unemployment over the next few years. And assuming our relationship holds, we would expect to see some decline in the number of aided students because they no longer have need as the unemployment rate declines.
Between 2008 and fiscal 2011, we added 727 aided students to our financial aid group, that’s a 19% increase in the number of aided students.
Graduate and Professional Tuition & Aid
I also want to talk briefly about graduate and professional tuition and aid. In 2010, we had 3,156 PhD students in nine schools in 52 graduate groups. They are all funded for a period of three-five years; three years in those schools that typically come in with masters degrees, but increasingly we are moving to four and five year funding. Full funding includes the remission of tuition and fees, a stipend and health insurance in each of the funded years. Some schools pay a higher stipend to cover health insurance instead of covering insurance directly, and some schools also cover summer stipends. A 5-year standard funding package in the School of Arts and Sciences Humanities, which is what we use as our metric, for students entering in the fall of 2010, is worth over $260,000 in constant fiscal 2011 dollars.
PhD and research masters tuition will increase by 3.9%, which is the same rate as undergraduates. Professional tuition is set by the individual schools and so far the increases range from 0% to 6% across all our schools.
To give you a brief overview of what PhD funding looks like by school: we have 3,156 PhD students, $135.6 million of expenditures, tuition fees and health insurance make up almost $68 million of that and graduate stipends another $68 million, so it is pretty evenly split between tuition, fees and health and graduate student stipends.
That concludes my report.
Undergraduate Research Programs at Penn
Vice Provost for Education Andy Binns spoke on the importance of undergraduate research at Penn, followed by Peter Struck, faculty director of the Benjamin Franklin Scholars Program and associate professor of classical studies. Dr. Struck described research as a 3-part process; exploration, discovery and finally, publishing the knowledge to share it with the world. The Benjamin Franklin Scholars (BFS) program, which has existed in some form on campus for 50 years, helps students go about their exploration in a purposeful way. He then gave three examples of new initiatives the BFS program will implement in the fall of 2011. The first is BFS Course Design Grants, which will allow for the development of courses on subjects such as sustainability, ideas-in-action and the theme year. The second program is the BFS Summer Opportunity Fellowships, which are international internships with opportunities in China, India, Guatemala, Africa and Europe. The third program is Integrated Studies for single degree College students, which was inspired by the Penn Compact. This will include two required 2-credit courses that would serve as a model of what a liberal arts education is supposed to be, with a built-in residency component. Dr. Struck thanked Dr. Andy Binns and Dr. Dennis DeTurck, dean of the College of Arts and Sciences, and introduced Dr. Harriet Joseph, director of the Center for Undergraduate Research and Fellowships (CURF) and Dr. Wallace Genser, associate director for undergraduate research.
A panel of five graduating seniors spoke on the impact of their research experiences at Penn:
• Spencer Glantz (SEAS’11), a biochemical engineering major and member of the CURF Undergraduate Advisory Board, received funding from the Class of 1971 Holtz Research Fund and the Benjamin Franklin Scholars Program Research Fund. He researches “Differentiation Therapy” as a treatment for acute myelogenous leukemia
• Kristin Hall (C/Wh’11) is an international studies & business/finance major whose studies have taken her to Botswana and Tanzania. She is a University Scholar, Joseph Wharton Scholar, Marshall Scholar, Truman Scholar and winner of the Seltzer Family Digital Media Award, who studies economic development in sub-Saharan Africa. She used her Projects for Peace Award to create YouthBank, a small business incubator that equips disadvantaged youth to become agents of local economic development in the urban slum communities of Nigeria
• Tiffany John-Lewis (C’11), a history major who is involved in the Penn Undergraduate Research Mentorship Program (PURM) and CURF Undergraduate Advisory Board, compiled an annotated bibliography on the African-American diplomat Merze Tate and completed an archive of the work and legacy of Penn alum, William Waddell, a world-renowned veterinary specialist who was the second African-American to graduate from the School of Veterinary Medicine
• GJ Melendez-Torres (NUR/Wh’11) is a healthcare policy/statistics major in the Nursing honors program, who is a University, Benjamin Franklin, Truman and Marshall Scholar who researches the historical health policies of emergency rooms and the problems that affect American healthcare
• Rachel Romeo (C’11), majoring in psychology and linguistics and was the winner of a Thouron Award, a College Alumni Society Research Grant, and a Fulbright. She studies language acquisition and the phonological development of infants.
All the students expressed gratitude for CURF and discussed possible ways of increasing its exposure on campus to attract more students.
Transgender Healthcare Coverage for Faculty and Staff
Prior to adjournment, a joint statement was presented from the Lambda Alliance, a coalition group dedicated to the promotion and representation of the interests of gender and sexual minorities and their allies at Penn, and the Office of the Executive Vice President. The statement described a meeting with EVP Craig Carnaroli and HR VP Jack Heuer on the subject of Transgender Healthcare Coverage for faculty and staff, which student Victor Galli said is on a positive path towards being considered for implementation. |
