Dear Members of the University Community:
Earlier today, members of our Board of Trustees—acting through the Board’s Executive Committee—convened to approve the University of Pittsburgh’s operating and capital budgets for fiscal year 2021. These approvals confirmed the recommendations of our Planning and Budgeting Committee and follow the passage of the Commonwealth’s appropriation to the University. I am extremely grateful to our leaders in Harrisburg who have voted to maintain their investment in Pitt and, in turn, Pennsylvania’s future, during this difficult period.
These budgets reflect the dramatically different fiscal circumstances we now face amid the COVID-19 pandemic. Although the University is in a strong position to weather the financial disruption of the last several months and the uncertainty to come, like most institutions and households nationwide, we must address fiscal challenges now to ensure our continued strength in the years ahead.
These challenges include a loss of revenue and a growing need for student financial aid. In fiscal year 2020, Pitt sustained approximately $50 million in net costs and lost revenues due to COVID-19. The pandemic has taken an economic toll on our students and their families as well. We anticipate a significant increase in the amount needed to fund financial aid programs—including the Pitt Success program—which are vital to making a world-class Pitt education more accessible and affordable for students most in need.
As we prepare for the new academic year, substantial investments in many core areas of our operations are necessary—including education, research, training and community service opportunities—so that we can continue to deliver on our mission while supporting the safety and well-being of our community members during this pandemic. Fortunately, Pitt is well-positioned to make these investments.
With these fiscal challenges and needed investments in mind, there also remains much uncertainty about the pandemic’s future course and its longer-term economic and financial effects. Responsible planning requires us to mitigate our COVID-19-related losses and maximize our mission-critical investments to the greatest extent possible now in order to preserve our financial strength into the coming years.
Our operating budget for 2021 is set at $2.4 billion, essentially on par with last year’s operating budget. This figure allows us to continue investing in areas that are vital to the continued success of our mission.
Our operating budget:
- Includes a projected research base of $878 million and reflects our institution’s sustained role as a global leader in research and innovation. As Pitt researchers race to unlock the mysteries of preventing and treating COVID-19 infections, this funding has never been more important.
- Does not increase tuition rates and fees for the 2020-2021 academic year. This decision applies to all students at all campuses and schools—undergraduate and graduate—both in-state and out-of-state.
- Does not increase room and board rates across all campuses for the 2020-2021 academic year.
- Fully funds our Pitt Success Program, which aims to make higher education more accessible and affordable for students and their families. This is a commitment that has grown increasingly relevant during these turbulent financial times.
Our operating budget requires that we reduce or limit growth in other expenditures, with measures such as:
- Permanent budget reductions of 3.7% and one-time reductions of 5%, on average, across the University. These reductions enable us to match last year’s budget despite facing continued revenue losses due to COVID-19.
- Holding salary and wages flat for faculty and staff.
- University-wide hiring controls, initiated in April 2020, that will run for the full 2020-2021 academic year.
- Limiting discretionary costs, including nonessential travel, supplies and equipment purchases.
- Presumed participation in voluntary retirement incentive programs—one for faculty and one for staff—that can help reduce personnel costs.
Also approved today: Our capital budget for 2021 is set at approximately $140 million—a reduction of more than 78% compared to our $640 million-plus capital budget in 2020. This reduction represents a strategic pause so that we can deliberately and thoughtfully reconsider our building needs, including how we use spaces for offices, classrooms, residence halls and other student areas. At the same time, this budget will enable us to continue prioritizing essential renovation and preservation projects as well as the health and safety of Pitt students, faculty, staff and visitors.
Later this week, Senior Vice Chancellor and Chief Financial Officer Hari Sastry will share more information on how we can operate more efficiently amid these reductions and restrictions while preserving our capacity to advance strategic goals.
The road ahead will undoubtedly require continued resourcefulness and thoughtfulness at every level of our university. At the same time, our new budgets are a powerful testament to our optimism for the future. Amid unprecedented challenges, Pitt’s mission—leveraging knowledge for society’s gain—has never been more essential.