Trustees get budget update at meeting

"Unfavorable investment market conditions" produced a loss of $40 million in investments in financial year 1998, Executive Vice President John Fry told the University Board of Trustees Friday. In 1997, by contrast, the University experienced a gain from investments of $142 million. The losses come amid three straight years of 20 percent plus gains in the Dow Jones Industrial Average. Major U.S. market indices were up anywhere from 17.4 percent for the American Stock Exchange to 44.4 percent for Dow Transports. Although the University experienced an overall $9.8 million increase in net assets over the first six months of fiscal year 1998, Fry admitted that Penn saw a $168 million increase in assets over the same period last year. The University's net assets total approximately $400 million and constitute "everything the University owns," including land, buildings and endowment, Vice President for Finance Kathryn Engebretson said. The financial report came at the Board of Trustees' final meeting, signaling the end of two packed days of committee sessions and presentations. The Board also approved approximately 20 resolutions, the majority of which were administrative and faculty appointments. In highlighting more positive budgetary data, University Comptroller Kenneth Campbell noted that none of the 12 undergraduate and graduate schools have "significantly deviated" from their prescribed budgets for 1998. The School of Arts and Sciences' $1 million deficit is not seen as a "deviation," since the School budgeted for the deficit in this year's plan, according to Engebretson. She added that the University is "ahead of budget" in research funding and contributions. And Campbell projected a surplus of $3.6 million in University funds at the close of the fiscal year. Although the major problem facing the Board of Trustees last year was securing funds to subsidize the $1 billion price tag of the Agenda for Excellence, Board of Trustees Chairperson Roy Vagelos said fundraising officials have made "wonderful progress." The Office of Development has received approximately $180 million in pledges to fund Agenda priorities, according to Trustee Russell Palmer. He added that the Office is in the process of locating additional sources of funding for student financial aid, after raising 78 percent of its $20 million goal for 1998. The call for increased funding for aid comes at a time when Princeton University, followed by both Yale and Stanford universities, revamped its student financial aid system to provide substantial benefits to lower and middle-income families. Vagelos said the Trustees are committed to strengthening aid packages and will discuss the issue at a meeting scheduled for next month. But he stressed that "[Penn's financial aid] packages have always been competitive if you look across the board." The Trustees also approved a newly-restructured deal to outsource University facilities management to the Dallas-based Trammell Crow Co. After the Board initially approved the deal in November, concerns over a 1997 Internal Revenue Service law spurred administrators to revise the agreement and institute a one-year preliminary agreement with a stipulation for a nine-year extension. The deal also defers Trammell Crow's $26 million payment to Penn until after the IRS issues its stamp of approval. The IRS law -- passed last year -- included a passage that could jeopardize the tax-exempt status of the University buildings that will be run by Trammell Crow. Administrators anticipate a private ruling on the restructured contract within the next several months. Vagelos said the Trustees were comfortable with the new arrangements with the company, adding that he had no idea why the IRS law was not considered during preliminary negotiations. But while the meetings themselves were characterized by overall agreement, Trustees arriving at the Faculty Club Friday were met with signs of dissent. As the Trustees made their way to the facility from the Kelly Writers House, they were followed by over 70 protesters with signs proclaiming vending a "Penn tradition." The protesters -- consisting of students, staff and vendors -- claimed that University officials reneged on compromises they made with vendor and consumer groups at a February 9 meeting with Philadelphia Councilwoman Janine Blackwell. Blackwell submitted the ordinance, which was heavily based on Penn's version, to City Council February 12. Although the University sent Blackwell its initial vending ordinance proposal in May, dissent among concerned parties led to a number of delays. Members of the Penn Consumer Alliance were granted an opportunity to voice their frustrations over the administration's questionable negotiation practices at a meeting of Trustees' External Affairs Committee last Thursday. Although vending was not on the agenda, administrators opened up a discussion on the issue which lasted nearly half an hour. Trustee Adele Schaeffer encouraged both sides to "engage in further discussion." But according to University City Vendors Alliance spokesperson Scott Goldstein, point-counterpoint exchanges have proved largely ineffective. "We tried to do this quietly over the table, but it didn't work," he said.