SAS deficit lower than expected

But the School of Arts and Sciences is still $2.9 million in the red for fiscal year '98. For the fourth straight year, School of Arts and Sciences administrators will be seeing red when they look at the financial records of the largest of the University's 12 schools. For fiscal year 1998, which ends June 30 of this year, SAS will have a $2.9 million deficit, less than 2 percent of SAS' total budget of $220 million. And for fiscal year 1999, the school will be $4.5 million in the red, according to preliminary projections. But the 1998 figure is significantly less than the $4.7 million the school had initially budgeted to lose, SAS Vice Dean for Finance and Administration Michael Mandl said. "We've done better than the budget," he said. Mandl, who came to Penn from Duke University earlier this year, said he could not point to any one particular expense that caused the deficit. "It's essentially revenues not equalling expenses," he said. SAS Dean Samuel Preston, who took the school's helm in January, maintained that the school is doing all it can to avoid making spending cuts to meet the shortfall. "We are trying to manage the affairs of the school as efficiently as we can," he said. "When we've gone as far as we can down that road, we'll make the decision then whether to sacrifice educational quality or maintain a small deficit." SAS has been running a deficit since the 1996 fiscal year, when it was $1.9 million in the hole. Last year's deficit was only $700,000, significantly smaller than this year's sum. "It is slightly higher -- but then again, nothing higher than expected," Mandl said. Mandl said SAS' need to allocate increasing percentages of its revenues for undergraduate financial aid, as well as the school's large share of the funding for the $80 million Roy and Diana Vagelos Laboratories of the Institute for Advanced Science and Technology accounted for the larger deficit. "The reason you can point to -- this year versus last -- is the IAST coming on line," he said. "Help from the administration didn't cover full costs." He added that the creation of a $900,000 Center for Judaic Studies on campus next year would contribute to the deficit for the upcoming fiscal year, which begins on July 1. However, both Preston and Mandl pointed out that in past years the actual budget deficits were less than their original projections. The $1.8 million difference between the projected and final budget deficits was made up largely by two unexpected sources of revenue: $1 million in savings on salary and benefits for faculty members and staff and higher program revenue from the Office of International Programs. Though he referred to the current deficit as "a manageable number," College of Arts and Sciences Dean Richard Beeman said SAS is currently in a "mode of retrenchment." "What we really must do is make difficult choices in where we invest," he said. "We have to be sharp-minded, but occasionally hard-hearted." For administrators, many of the tough choices will come in faculty hiring and building construction, two of the budget's largest expenditures. After a sharp decline beginning in the mid-1970s, the number of SAS faculty members has recently remained steady at 460, a number administrators plan to maintain. "Our hope is that the faculty size will not be affected," Mandl said. Preston said each of the 25 academic departments will submit requests later this month for authorization to recruit new faculty members. SAS officials will make decisions at a retreat over the summer. He added that in order to keep SAS' total faculty at its current size, some departments will not receive permission to hire new faculty other than to fill spaces left by retirements or professors leaving for other schools. The English Department was one of several not granted permission to hire new faculty members last year, but department Chairperson Wendy Steiner said she hopes she will not see a repeat of the one-year moratorium. "If this were to continue, this would be very bad for English," she said. "I obviously hope they'll try to take something out of something else." Last year the Political Science Department -- now targeted by the University for a large number of faculty appointments over the next few years -- was denied two of its three authorization requests. Political Science Department Chairperson Ian Lustick said that while last year he was told that the budget deficit -- along with the absence of a permanent SAS dean -- resulted in the deans' decision. But he said he is not "getting the signals" about "serious financial constraints" this year and does not expect that to be an issue in the recruitment of new faculty in the fall. Administrators also recognized that some capital projects -- including buildings for various academic departments -- might suffer due to budgetary constraints. "We have more facilities needs than we can fill in the short term," Mandl said. "We're going to have to carefully prioritize here." Preston said "it is conceivable that we won't be able to make all of the investments we'd like," adding that fundraising for a new Psychology Department facility -- which has been under discussion since 1993 -- would not begin for at least a year. The new research facility in the works for the Biology Department should not suffer, however. Mandl estimates that one-third to one-half of the estimated $40 million cost will be funded with private donations, with the rest financed over a 20-year period. In the meantime, SAS officials have a number of plans to trim waste from their spending rolls. Preston said he is targeting "money that we are spending that is an advantage neither for teaching or for research." He cited plans to eliminate several $40,000 lectureships and shut down the Physics Department's Tandem Accelerator Laboratory -- which costs SAS $250,000 a year in maintenance alone -- as ways to streamline the budget. Beeman framed the issue as a matter of changing with the times. "It used to be that a school of arts and sciences used to say we can teach anything and invest in everything," he said. "Today, no school can be excellent in everything."

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