New budget designed to 'produce a better University'

The University's 1997 operating budget will be $1.128 billion, the Board of Trustees announced. There will be a zero percent increase in expense growth for the budget plan, according to the Executive Director of Budget and Management Analysis Michael Masch. But this system of measuring expense growth excludes transfers from the University Health System to the Medical School. "Having zero expense growth is neither positive or negative," Masch explained. "It is necessary because it has to be done on the spending side, given our revenues." Masch said there was growth in portions of the revenue, with losses in other sections -- leaving the University in a situation similar to last year's. Despite the zero percent increase in expense growth, Masch said the budget produces a better university. He explained that Penn will continue all necessary expenditures and also fund new capital projects including the bookstore, computing, public safety and the Perelman Quad. "Penn will have zero percent expense growth, but definitely not zero percent improvement in the University," Masch said. For the1997 revenue budget, excluding health services, the University two largest contributors are tuition with 30.9 percent and the sponsored programs category that accounts for 27.3 percent. Masch said that for the past several years the University has committed to decreasing the rate of tuition increase. He described Penn as "quite successful" in that aspect of the budget. Also, the University's charges for room and board have not increased since 1995, according to the new plan. "There are determined limits on the rate of revenue growth from year to year," Masch said. "And if sources are not growing fast enough, the only way to fund new initiatives is to become more efficient, reducing costs." Masch said that Penn must become more efficient to improve the University, but their primary objective is not to restructure or out-source. "Restructuring and out-sourcing are two tools in a big efficiency tool kit," he explained. Including Health System funds, the operating budget increased three point five percent from 1996. The consolidated operating budget is $2.169 billion, which is an increase of four and a half percent over the previous year. One aspect of the budget that could eventually become a problem area for the University is the federal government's decrease in indirect cost recovery. The decrease in funds is affecting all Universities throughout the country. Masch said Penn's rate will decrease from 63.5 percent to an effective recovery rate of 61 percent in 1997. The University's 1996 fiscal year ended June 30, but Masch said many records will not be completed until the beginning of September. Results of last year's budget will not be ready for release until near December.