Trustees set budget for 1997 fiscal year

Operating expenses see no increase from last yeatr's budget The University's 1997 operating budget will be $1.128 billion, the Board of Trustees announced in late July. There will be no 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. 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 Book Store, computing, public safety and the Perelman Quadrangle. "Penn will have zero percent expense growth, but definitely not zero percent improvement in the University," Masch said. Excluding health services, the University's two largest sources of revenue 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 the University must become more efficient, but the primary objective is not to restructure or outsource. Including Health System funds, the University's operating budget increased 3.5 percent from 1996. The consolidated operating budget is $2.169 billion, an increase of 4.5 percent over the previous year. One aspect of the budget that could eventually become a problem 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.