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Council Coverage

Last Wednesday's Council meeting--the seventh of the year--is the one that the Council Bylaws specifies is to be devoted to the University budget and plans therefore that was the mainstay of the agenda.

President Judith Rodin began the series of extended reports with a description of the current economic climate--a protracted Bear Market--noting that all of Penn's peer group has sustained two consecutive years of losses for the first time since 1974 and it could extend for a third year. This trend has a negative impact on the spendable income. She noted that there is a national trend, a decline in gift-giving to not-for profits. Although Penn has done well both last year and this year, it must see the "writing on the wall." In the post-9/11 world there are additional expenses and regulations.

Penn will have to adapt, she said, to the declining revenue stream, which had been accelerating for many years but has tapered off this year (see below). She noted that for the past five years there has been great growth in the biomedical sciences, whereas now the NIH is cutting back and that will impact Penn and other research institutions.

The funding from the Commonwealth is another area where Penn is getting less than it did in prior years. The Health System provides $65 million in uncompensated care and the $15 million from the Commonwealth which had gone toward that in the past, has been slashed from the budget. Research grants also add costs to Penn since the indirect cost recovery is insufficient to cover the costs of research and all the new regulations.

Dr. Rodin also noted that Penn has invested $230 million in construction and renovation of its facilities in the past few years. There has been an increase in undergraduate student aid and student services as well as technology enhancements and recruitment of outstanding faculty and staff. Insurance costs have risen 25% and Penn is working to manage the costs of benefits; refinancing debt to reduce interest expenses; and instituting energy conservation measures.


Spendable Endowment Income by Fiscal Year ($000)

Bonnie Gibson, the acting executive director of the Office of Budget and Management Analysis, presented the many facets of the budget, (see FY 2003 Budget).

Dr. Neal Nathanson, vice provost for research, discussed the Research Operation and how it has been transformed in the past several years. He said that the Penn faculty has been entrepreneurial, putting Penn in the second highest position in the country, for NIH grant money. He explained that while human subject research accounts for under 15% of the portfolio it is typically a higher risk level based on guidelines. Therefore Penn has significantly increased the staffing and budget in the past five years for the Institutional Review Boards which manage such research. He also noted the transformation concerning animal research. ULAR received accreditation in January of this year and has had a new director since February. Its staff has increased from 1 to 5 since 1999. Dr. Nathanson also stressed how important the research compliance aspect is to the whole effort.

The final presentation was given by Carol Scheman, vice president for government, community and public affairs, who gave examples of how Penn interacts with the City, the Commonwealth and the Federal governments. At the City level, some recent collaborations have been the Knowledge Industry Partnership, the Schuylkill River Gateway Project and the 40th Street branch of the Free Library. Some issues that concern Penn on the Commonwealth level are the governor's budget, the tobacco settlement, and uncompensated care, medical malpractice reform, homeland security and economic development, i.e. Keystone Innovation Zones and Life Sciences Greenhouses. The Federal budget and appropriations as well as homeland security, research funding, and the reauthorization of the Higher Education Assistance Act are some of the issues in Washington

  Page I Don't Want In Search Engines Almanac, Vol. 49, No. 29, April 15, 2003

Page I Don't Want In Search Engines