University Council Meeting Coverage	Print Issue
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In accordance with the University Council Bylaws, the April 3 Council meeting included “extended reports by the President, the Provost and other administrators covering budgets and plans for the next academic year.” The remarks below were adapted from the presentations given. There were also two presentations on health benefits for faculty, staff and students, which was one of this year’s focus topics that will be reported on in the next issue of Almanac.

Reports on Budget and Plans for the Next Academic Year

Bonnie Gibson, Vice President, Budget & Management Analysis

University Operating Budget

I’m pleased to be here for my annual presentation. We’ll start out talking about the University’s budget. When we include the health system, we have over a $6 billion dollar budget, but I’m only going to be talking about the University’s portion of that budget, which is $2.96 billion, a little bit less than half of the overall institution budget–including the health system.

I’d like to start out with revenue. When we look at the University’s revenue, the easiest thing to do is to think about it in terms of thirds. It is one-third tuition and fees, one-third research revenue and one-third everything else. Everything else includes gifts, spendable endowment income, transfers across and from other periods—we get money in one year and spend it in the next—everything else makes up the additional third. Let me highlight a figure of 9%, in the everything else third. That’s our spendable investment income—endowment income—it’s very low for an institution of our size.

FY13 RCM Expenditures +1.2% Compared to FY12 Budget

If we look at our expenditures (see chart at left), it breaks down into very few components. Over half of our total expenditures are related to compensation—either salaries or benefits. The next largest segment, current expense, is a little over a quarter of our budget. One of the unusual things about the way the University budgets is that we actually consider capital, that 11%, as part of our operating budget, and then another 11% of our budget is for student aid: undergraduate, graduate and professional aid.

We just looked at how we’re spending the money, current expense, capital and compensation. Where are we spending it in terms of the types of people and the types of groups that are spending that money? Two billion dollars of our just short of $3 billion is being spent in the Schools. Another $160 million are overall space charges. Seventy-four percent, another $119 million of that $160 million relates to space in the Schools. Actually the School expenditures, if we include their space expenditures, are closer to $2.2 billion, as part of the University’s overall budget. The administrative offices—$369 million—is the next largest area. Then we have Business Services, the resource centers and general University. The vast majority, over two-thirds of our expenditures, takes place in the Schools. Our financial aid budget for fiscal 2013 was a total of $406 million. That’s undergraduate aid, graduate and professional aid and graduate stipends. That was an almost 7% increase over the prior year’s expenditures.

Total Undergraduate Charges 2013

I’d like to move now to undergraduate total charges and what was approved by the trustees for the next fiscal year, 2013-2014. Our total charges right now are $56,578. About 70% of the cost of a Penn education is covered by tuition and fees, and this comes from our audited financial statements. The balance is supported by philanthropy—gifts, endowment income–making up that other 30%. Fifty-six percent of our students receive aid from some source, either internal to Penn or external, and the average freshman grant is $39,350. For the incoming students who received aid in fiscal 2013, the average grant was over $39,000. The average net cost for aided student is almost $3,000 less than it was in 2005, in constant 2005 dollars. So, accounting for inflation, the average aided student is paying $3,000 less in 2013 than that same aided student would have been paying in 2005 in constant dollars. Finally, all of our grant-aided students have no-loan packages.

FY13 Peer Institution Undergraduate Total Charges Comparison

Our fiscal 2013 total charges increased as did the average for our group. We compare ourselves to 17 other institutions (see chart at left), with which we have the most overlap, and we’ve been almost exactly on the average since 2007. Significantly our tuition has increased more slowly than public and private averages. This information comes from the annual survey of colleges from the College Board, and it is the average increase in total charges for all privates, all publics, and we put that against the University of Pennsylvania. Penn is consistently far below the average increase for publics, and we are substantially below the average increase for privates in most years. For 2013-2014 we have recommended, and the trustees have approved, a total charge increase of 3.9% to $58,812. That includes tuition, fees, room and board. When we quote total charges, we always quote what we consider to be the average standard room and the freshman meal plan. We quote what we would expect the normal incoming student to have to pay. As students move through into second, third and fourth years, they may choose to have a different dining plan or no dining plan. They may choose to live on campus or off-campus, so those components begin to vary.

The change in total charges results in $20.6 million of incremental revenue to the University. $15.6 million of that is in tuition, but we immediately take $7 million of that $15.6 million and put it towards financial aid, and we’re increasing the financial aid budget by $9 million, compared to what we’re projecting to spend this year. The rate of increase in the financial aid budget will exceed the rate of increase in total charges.

This is the fifth consecutive year that the University has held the total charge increase under 4%, and that takes on some additional weight when we consider that there were times when total charges were increasing by double digits. We have, even in the past decade, increased as high as 6%. We have stayed under 4% for five consecutive years.

Financial Aid

Let’s talk about Penn’s affordability and accessibility in constant 2005 dollars. We take the total undergraduate cost of attendance at Penn; within that is the average net cost for aided freshman, and we take that in constant 2005 dollars through to fiscal 2013. We’re actually at $16,560 in 2013. In 2005, that was $19,440. That’s the net cost of attendance for the average aided student. Even if we ignore inflation and just look at what the costs were in a given year and what they were in 2013, we have an average net cost that is lower in 2013 than it was in 2007 again, ignoring inflation.

Another thing that I think is very interesting is our grant distribution. Sixty-one percent of all of our undergraduates and 63% of all of our aided freshman got grants of at least $35,000 a year. This is a significant number, and the number of students getting small grants is extremely low. Most of our aided students are getting fairly significant grants and are having the net cost of attendance under $20,000. The growth and aid expenditures since 2002 has been nothing short of exponential. We were at $65 million in 2002, $101 million in 2007, and we expect to be at $188 million for 2014. Right now, for 2013, we’re projecting our expenditures at $179 million.

Graduate and Professional Tuition and Aid

I’d like to move beyond undergraduate total charges and talk a little bit about graduate and professional tuition and aid. Just as a quick overview, we have over 3,000 PhD students. They are in nine different schools, 53 graduate groups. Almost all of them are fully funded for five years. Those that are funded for fewer years typically come in with a graduate degree and don’t spend a full five years. Full funding includes tuition remission, fees, a stipend and health insurance in each of the funded years. The five-year standard funding package for someone in the Humanities/Arts & Sciences is worth over $300,000 in fiscal 2013 dollars. Graduate and professional tuition increases do not necessarily increase at the same rate as undergraduate total charges, but PhD tuition and the research master’s tuition will increase this year at the same 3.9% rate. Professional tuition continues to be set by the individual schools based on their markets, and this year the increases range from 0% to 4.8%.

This is an overview: we have a total of 3,032 students, we spend $148 million on those students, and it’s split almost half and half between tuition fees and health insurance and stipends.

Update on the College House System

Martin Redman, Executive Director, College Houses & Academic Services

College Houses and Academic Services

As most of you know, the College House system was started in the 1998-99 Academic Year in its current iteration, so while this is about the College House system, it’s important that everyone understands that we are just a small part of the number of partners that are involved, from our great partners in Residential Services, who actually maintain the facilities and assign the students to our Dining Services, and certainly Health Centers and SIS and all the other student-support network groups here on campus. College Houses can’t exist without the support of those folks and hope we give them support as well.

Fundamentally, one of the features of the College House structure is the engagement of faculty and residents. We have 33 faculty members who reside with the students in the 11 college houses; 11 of those are Faculty Masters; the others serve as House Fellows. Their primary function is to engage with the students. That could be anything from Dean Dennis DeTurck in Riepe offering his cooking nights, which is a great way to get students into his apartment and then to engage in conversations around math or personal issues. Additionally, we have 11 House Deans, one for each house, about 206 undergraduate and graduate students who are employed by us in residences, RAs or GAs, and, students who choose to participate in paid and unpaid positions within the houses as café managers, managers of other social activities, academic events and program coordinators.

Overall, we’re trying to accomplish four major tasks: one is to help students adjust to and engage in the academic life of the University, not just in the classroom, but where they live. We are about academics here in the College Houses. We help the large institution to try and create smaller, more intimate communities. Students connect with friends and create relationships, develop and explore other ideas, options and opportunities. We’re also about social interaction—getting students to engage. College Houses really are about engagement—not just living in the building, but attempting to get students to actively engage in their community both on and off-campus, in leadership opportunities.

This year, and in the past several years, we’ve been trying to understand where we are. I liken ourselves to being in our teenage years, and we’re trying to figure out what we want to be when we grow up. The original structure of the College Houses was that each house would have a significant population of all four years of classes of students. As those of you who have been in the residence halls here probably know, we have many facilities that are traditional double loaded corridors, share a room with a roommate, community bath with 17 of your closest friends, to some very nice apartment buildings in the high rises, and some nice suites in some of our low-rise facilities.

A fundamental principle of housing here is that students have the ultimate choice. I think most of you know that first-year students here are not required to live on campus; it is a choice. We capture over 99% of them, but it’s still a choice. We have predominantly first-year houses, Hill, the three buildings in the Quad: Fisher, Ware and Riepe, as well as King’s Court-English—90% of the population of 2,230 students are first-year students. We then have the more traditional four-year houses, that tend to be smaller communities in general, ranging from 178 to 300 students, and they break down in that particular percentage, even spread of students across the board. Then we have what I would term upper-class housing, which are three high-rise facilities, each house about 800 students. We only have two high rises in that group that house first-year students: Harrison and Harnwell. Rodin does not have any first-year students.

The other fascinating part is that we started to explore data sets concerning House Ethnicity Composition. We looked at the CHAS student population by their self-identified ethnicity or international status against all Penn undergraduates; we are doing fairly well in retaining a higher percentage in the houses as opposed to the undergraduate population. The only place where we have a fairly significant difference of roughly 10% is in the Caucasian population, in terms of more of them tend to choose to live off-campus rather than on-campus. Certainly this is an area that we tend to explore and try to understand, but we are also very proud of the diversity that is represented within the Houses.

It’s time for us to start assessing what we do and how we do it to see if we’re on the mark. This is the first fall that we’ve tried to amass an assessment of data of what kind of programs we have offered. I know it is under-reported in terms of the number of activities, because the programs really didn’t start until the school year had begun. In overall aggregate numbers community-building type activities constitute 65% of the programs including social events, floor events, birthday celebrations, as opposed to education which has some kind of academic content, whether that’s a lecturette or an exercise around diversity issues, sexual assault, LGBT issues, that constitutes 36% of the programs. But most important, we had over 42,000 students attend the programs through the course of the fall term and over 2,200 programs with about 19 people attending each event. Certainly these numbers express the wealth of activity. Senior staff, which is composed of the faculty masters, the fellows and house dean presented or represented the planning for 25% of those 2,200 programs. Certainly the student staff, the vast majority and the residents could be from Hall Council to other organizations within the house. With that, we wanted the opportunity to share with you the academic components of the houses, broken down by the three house types.

Summary of Housing Presentations by House Deans

April Herring discussed helping first-year students make the transition to student housing. She elaborated on the interactions encouraged between faculty and students, which help build a stronger community inside and outside Penn. The key to success is social and academic integration. Faculty interaction, tutoring, paper doctors and other programs to assist students with their work and give them a sense of what Penn has to offer academically and socially is a key part of the housing experience. Research support is also available to demonstrate for students the resources that are available to them.

Christopher Donovan focused on the uniqueness of low-rise Houses: Gregory, DuBois and Stouffer in particular. Because of their small sizes, House Deans and Faculty Masters can get to know everyone in the house. Often students spend all four years in the Houses. He went on to describe the large manager board that runs programming in those Houses. Some of these programs can result in students receiving credit for participating, thus encouraging learning experiences outside of a conventional classroom. As students spend time within these programs, they begin to develop and implement their own programs, becoming more comfortable in leadership roles.

Ryan Keytack then spoke about the larger College Houses: Harrison, Harnwell and Rodin. In order to make for a more social environment, smaller governing structures and communities throughout the houses are encouraged to interact with one another. “The Sophomore Surge” constitutes a set of programs to make connections and attempt to bring sophomores together. He described other events that complement those programs. He then discussed three efforts being used to engage the students as they move through their three years at Rodin House; The Academic Mentors who help support second year students; the Rodin Art Collective which helps students to connect to faculty masters creating and implementing functions and programs; and the Seniors Program-workshops that support seniors through the thesis process.