1. Understanding the Pitt Budget Evaluating Your Investment An overview for Pitt parents and students. May 15, 2012

2. Where the Money Comes From Where it Goes Budget Primer, Fiscal Year 2012 General Fund–Supports Education Money comes primarily from: Tuition Commonwealth appropriation Investment income Sales, services, other Pays for: Teaching Maintenance & facilities Administrative support Institutional financial aid Student services Auxiliaries Self-supporting auxiliary units pay the full cost of operations, including capital investments and maintenance, and receive no taxpayer or tuition monies. Self-Supporting Services: Student housing Food services Bookstores Parking Donated and Research Funds (Restricted) Money comes primarily from: Grant funding for specific research projects Gifts and endowment pay out generally for restricted use by a designated donor Pays for: Some scholarships and fellowships Salaries and benefits for some faculty Research programs, centers School of Medicine Division (SOMD) Money primarily comes from: Tuition from medical students SOMD state funding UPMC support Pays for: Teaching SOMD administration and operations Institutional financial aid Why Research, Endowment, and Gift Dollars Can’t be Used to Reduce Tuition Sources of Revenue

3. How Pitt Spends its General Fund Budget Primer, Fiscal Year 2012 The proposed budget cut would be a 30% reduction in the appropriation to the General Fund and would force a tuition increase. 62 cents of each dollar goes to academic activities Teaching Academic Support Student Services 14 cents of each dollar goes to financial aid Additional aid is awarded through individual schools, not through the general fund. 12 cents of each dollar goes toward institutional support Administration, budget, accounting,and finance Public safety Central human resource services Central information technology Legal services and compliance 10 cents of each dollar goes to facilities operation and maintenance Facility upkeep and maintenance Utilities 2 cents of each dollar goes to public service Community outreach programs

4. Declining State Support Drives Up Tuition Budget Primer, Fiscal Year 2012 There is an inverse correlation between state appropriation levels and tuition levels. Mid-1970s: Commonwealth appropriation was more than 30 percent of the University’s total budget. Mid-1990s: Commonwealth appropriation was about 20 percent of the University’s total budget. FY 2013: If the Governor’s proposal succeeds, Commonwealth appropriation will be about 5 percent of the University’s total budget --the lowest level of support (adjusting for inflation) since Pitt became state-related. Cumulative two-year cuts in state support will result in well over $100 million being slashed from our education budget. School of Arts and Sciences Tuition Rates

5. Keeping Pitt Affordable: Financial Aid Budget Primer, Fiscal Year 2012 Financial Aid increases from Pitt have been in the double digits for 6 of the last 10 years. In 2010-2011, more than $215 million in total financial aid was given to Pitt undergraduate students. This amount included state, federal, private aid and loans and Pitt institutional aid (not including scholarships awarded by the schools). Institutional undergraduate financial aid has grown much more quickly in percentage terms than tuition, and has well outpaced inflation. During the past five years, need-based aid awarded on the Pittsburgh campus has increased 64.3% or more than 2.5 times the rate of tuition increases. Pitt serves a large number of low-income federal Pell Grant recipients. In 2010 the Pittsburgh campus enrolled a higher fraction of first-time freshmen Pell grant recipients than the other three top research universities in PA. Increases in Pitt Institutional Financial Aid Academic YearFinancial Aid Millions % Increase By Year 2001-2002$15.112.7% 2002-2003$18.019.2% 2003-2004$19.810.0% 2004-2005$21.16.6% 2005-2006$22.98.5% 2006-2007$23.31.7% 2007-2008$27.015.9% 2008-2009$33.122.6% 2009-2010$36.911.5% 2010-2011$38.64.6% Pittsburgh Campus Only

6. Why Costs are Rising Budget Primer, Fiscal Year 2012 Pitt has faced substantial cost increases in key areas of support to our mission, such as libraries, information technology, and compliance obligations. Increasing costs of operations include public safety initiatives, utility expenditures, and debt service as well as the costs of products and services that Pitt purchases. Because Pitt provides research-based educational programs of the highest caliber, we must invest in state-of-the-art laboratories for student instruction and new technology to support excellence in education. As with all businesses and institutions in the U. S., our health care costs have continued to rise--by $23 million in the past 5 years.

7. How Pitt is Cutting Costs Budget Primer, Fiscal Year 2012 Pitt Cut $178 Million in Cumulative Costs in Just the Last 4 Years By: Streamlining purchasing practices, consolidating vendors, renegotiating contracts saving $78 million. Making changes to benefits and retirement plan resulting in a savings of $40.5 million. Instituting a salary freeze (2010) and salary increase delay (2012) yielding a savings of $19 million. Focusing on energy conservation for a savings of $8 million. Increasing efficiency in the schools and units resulting in a savings of $32.9 million. Guiding Principles of Cost-Cutting Reinvest in Core Strengths of the University Focus Resources on Core Mission Achieve Efficiency Without Compromising Excellence Manage Resources to Enhance Student Experience Reduce Cost, Complexity of Administrative Operations Use Best Technology to Contain Costs/Increase Efficiency

8. Pitt Ranks as Best Value Your Return on Investment (Figures from Fiscal Year 2012) Even In the face of declining state support, the University continues to be recognized nationally as a “best value.” Kiplinger’s ranked Pitt in the top tier of the 100 four-year institutions it identified nationally that “deliver a stellar education at an affordable price.” Pitt was also ranked the best value in Pennsylvania. US News ranked Pitt 6 th among all publics for best value. The calculation is based on academic quality and the net cost of attendance. Pitt was Pennsylvania's only public institution in the Princeton Review’s 2011 list of 50 “best value” public colleges and universities.

9. Quality of Experience Ranks High at Pitt Your Return on Investment (Figures from Fiscal Year 2012) For the second straight year, Pitt was ranked in the Princeton Review’s top 20 for “best quality of life” and “happiest students.” The Princeton Review states that students at the University of Pittsburgh applaud “Brilliant professors doing fantastic things in their field.... Pitt provides all the resources of a large research university but also retains a small college atmosphere with its Honors College to provide the best opportunities for its students.” In a 2011 survey of undergraduate students at Pitt: –97% of Pitt students responded that they would choose Pitt again –93% said their experience at Pitt exceeded expectations –96% said Pitt was intellectually stimulating and challenging –95% were pleased with Pitt overall and 91% with their social experience

10. Pitt is Competitive in Graduation and Placement Rates Your Return on Investment (Figures from Fiscal Year 2012) Graduation Of the approximately 2,000 4-year colleges and universities nationally, Pitt is in the top 15% in four-year graduation rates and in the top 10% in six-year graduation rates. In the 2010 Chronicle of Higher Education’s report on four-year universities, Pitt had the 5 th highest increase in its graduation rate from 2003-2008. Placement Placement rates have increased from 82% in 1996 to 90% in 2010. Starting in 2012, a career coach will provide individualized assistance and support to each recent graduate actively seeking employment. 2011 Pitt Career Fair

11. Pitt Students Show Greater Satisfaction With Educational Opportunities Your Return on Investment (Figures from Fiscal Year 2012) In a recent survey of student satisfaction at participating AAU universities (the Association of American Universities comprised of the leading public and private research universities in North America) Pitt ranked: 1 st in Educational Enrichment Opportunities 2 nd in Research Opportunities 2 nd in Internship Opportunities

12. Pitt Students Report More Personalized Attention Your Return on Investment (Figures from Fiscal Year 2012) In a recent survey of student satisfaction at participating AAU universities (the Association of American Universities comprised of the leading public and private research universities in North America) Pitt ranked: 1 st in Access to Faculty 1 st in Academic Advising 3 rd in Access to Small Classes 3 rd in the Percent of Seniors who know two or more faculty well enough to ask for a letter of recommendation

13. Why Keep Pitt Public? Pennsylvania Needs a Public Pitt For access to a “stellar education at an affordable price.” Without a public Pitt, there would be: Higher Tuition –Comparable private universities have tuition about three times the price of Pitt’s current in-state tuition. Fewer PA Residents –Currently, 75% of Pitt students are in-state. –Only 30% of students are in-state at comparable private institutions. Fewer Low and Middle-Income Students –Pitt has 50% more Pell Grant recipients than the two top private research institutions in PA combined. –71% of Pitt students apply for need-based aid compared with 56% at comparable private institutions.