U. budget improves

Gathering just as Penn's 245th class prepares to depart, the executive committee of the Board of Trustees met last Thursday with a slate full of faculty and financial issues. On the matter of Penn's $2.7 billion endowment -- which had been ridiculed in recent months for being shadowed by its peers -- it appears that the University may be having the last laugh. In the fourth quarter of 2000, Penn was the second best-performing endowment of the 32 peers tracked, according to Trustee Howard Marks, chairman of the investment board. In the first half of 2001, they were still in the top five. "It's nice to be back in the better performing endowments," Marks said. The University's pursuance of value-oriented stocks -- as compared to riskier Internet and so-called "technology" stocks, which have been hard-hit recently -- have allowed this recovery. But Marks warned his fellow trustees not to be too optimistic. "Of course, you'll note that the improvement in this period doesn't compare at all with the underperformance in earlier periods," Marks said. While Harvard and Dartmouth posted endowment returns of 32 percent and 41 percent, respectively, in fiscal year 2000, Penn lost 1.' percent. "We're going to make up our performance, but it won't be through making a lot of money. It'll be through losing a lot less than everybody else." Still, the endowment is up $50 million from a year ago, and the health system posted an excess of revenues over expenses -- essentially profit -- of $50.5 million. "Those positive operating results are in good part due to cost containment programs initiated and implemented during the past few years, and which are now reaching fruition," said Trustee Paul Kelly, chairman of the audit and compliance committee. He added that both University and health system management were looking to "identify and implement" additional cost-saving procedures in the face of rising expenses, such as that for medical malpractice insurance. With regard to academics, Provost Robert Barchi informed the Trustees of the School of Medicine's efforts to improve its research infrastructure. This has resulted in a new Office of Human Research -- which will oversee the development of clinical trials -- and the hiring of additional staff for the Office of Regulatory Affairs. Trustee Natalie Koether, chairwoman of the academic policy committee, presented a resolution that would allow the School of Engineering and Applied Science to appoint "practice professors" -- highly experienced individuals without the typical academic teaching credentials. Practice professors already are permitted in the Graduate School of Fine Arts and the Wharton School, among others, she said. The measure was approved, provided that the number of practice professors does not exceed five percent of the standing Engineering faculty. The Trustees also acknowledged a higher price tag for Levine Hall, which will be the new home for the computer science department. Although it was previously estimated to cost $16.7 million, additional space requirements have bumped that figure up by $4 million. And in order to "encourage the most knowledgeable, capable, and distinguished persons to serve on them," Trustee chairman James Riepe introduced a resolution to have the Boards of Advisors of the Annenberg Center for the Performing Arts and the Institute of Contemporary Art changed to Boards of Overseers.