U. plans $25 million budget deficit

The University plans to run a $25 million deficit in the coming fiscal year, making this the second year in a row that the University has budgeted a deficit after 17 years of balanced budgets, University officials announced yesterday. "Things are extremely tight right now," Budget Director Stephen Golding said yesterday. The University is currently running a $19.5 million deficit necessitated by the state legislature's refusal last year to grant the University any funding after it had appropriated more than $37 million the year before. Administrators are hoping that large portions of both deficits can be erased by the restoration of state funding. Otherwise, the University could be faced with a total two-year shortfall of almost $45 million. Nearly 75 percent of next year's proposed deficit -- $18.5 million -- can be attributed to the anticipated lack of state funding for the University's Veterinary School. But Golding said that the remaining $6.5 million of the deficit could be saved if all of the University's schools can balance their budgets by July. Five schools, including three of the University's four undergraduate schools, failed to balance their budgets as of Monday, Golding said. Golding added that he thinks most of the schools will be able to balance their budgets by the end of the current fiscal year and that the final 1993-94 fiscal year budgeted deficit could be reduced to $18.5 million. "At this point it is up to the schools," Provost Michael Aiken said. "It is conceivable that some schools, particularly the undergraduate schools with their large financial aid burdens, may have some trouble." Aiken said that administrators are concerned about continuing to run a deficit but that the only other alternative would be to reduce the Vet School to "a shadow of its current self." Aiken and Golding briefed faculty and staff on the new budget at an open forum in the Lauder-Fisher Hall Amphitheater yesterday. A briefing will be held for students in the amphitheater today at noon. President Sheldon Hackney, who attended a similar budget briefing last year, was not at yesterday's session. The budget seeks to maintain the academic mission of the University, administrators said, by protecting both educational and research initiatives, but they admit it will be a "very tough year." "Putting together the budget for the 1994 fiscal year has the most difficult [budgeting] task since I've been provost," Aiken said yesterday. Undergraduate tuition and fees are budgeted to increase at 5.9 percent, the same rate of increase as last year. This would raise undergraduate tuition and fees by $1,000 to approximately $17,838. The cost of residential living will increase an average of 4.2 percent which includes a $70 charge to support hard wiring of University residences for cable televison and voice and data transmision. Students living in wired rooms will pay an additional $70 beyond this figure to cover installation and service. The University is investing a one-time cost of $8 million in the project to wire the residences and to provide e-mail accounts for all students and faculty. The budget also insures a "competitive" faculty salary structure, with an average faculty and staff salary increase of two and a half percent above inflation. The University has also budgeted $4 million in order to comply with new federal accounting standard on health care benefits for University retirees. The University also will remain committed to need-blind undregraduate admissions by spending $37 million on student aid, an increase of 12 percent over the current fiscal year. Aiken said the University will also try to honor the pact made with Philadelphia Mayor Ed Rendell to provide 500 Mayor's Scholarships to Philadelphia students despite the ruling on the Mayor's Scholarship case which stated the University is only required to provide 125 scholarships at a given time. The University will continue to devote financial resources and staff to endowment building beyond the end of the ongoing $1 billion capital campaign which is currently at $944 million and is expected to reach the $1 billion goal in June. Nearly 80 percent of the current fiscal year's $19.5 million deficit is the result of the Vet School's loss of $16.5 million, or 40 percent of its operating budget, in state funding cuts. Despite continued lobbying of the state legislature for restoration of this funding, the University has seen no state money thus far. And although the University had requested over $42 million for next fiscal year, last month Gov. Robert Casey recommended that the University receive no money. The University received no funding for the current fiscal year after Casey made a similar recommendation to the legislature in February 1992. The University budget is based on the assumption that the state will not fund the University, Aiken and Golding said. University administrators said they are hopeful that some funding for the current fiscal year will be restored and that the state legislature will then decide to grant all or part of the University's funding request for next fiscal year. A bill that passed the State Senate in late January would, if enacted, restore $36.3 million to the University for the current fiscal year. The bill is currently before the State House of Representatives, and no action is expected on the bill until later this month or early April, House officials said earlier this week. This would relieve much of the funding pressure on the University, administrators said yesterday. The University Trustees will vote on the proposed budget in their annual March meeting on Friday at 2:30 p.m. in the Faculty Club.

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