How Pitt Has Cut Costs
The University of Pittsburgh has made dramatic progress in its drive to ever-higher quality—in academic excellence, pathbreaking research, community outreach, and all other aspects of this major public research university—even as it has controlled its expenses by creating efficiencies, cutting costs, raising revenues from federal research grants and private fundraising, and tightening its overall budget.
For full details, see 2012 University of Pittsburgh Cost Containment Efforts report (PDF).
In addition, Pitt continues to be a primary driver of the Western Pennsylvania economy.
All this has been accomplished in spite of continuing dwindling state support—the University now receives less than 10 percent of its budget from the state versus more than 30 percent in the mid-1970s.
Pitt has done the best it could in the face of state budgets that have severely eroded the Commonwealth’s original commitment to the University since it became state-related.
How have we accomplished so much with so little?
- Channeled Spending Program and Strategic Purchasing: The University consolidated suppliers and negotiated better pricing and volume discounts resulting in cumulative savings of $78 million over the past four years. Prospectively, a new contract for scientific supplies will save the University approximately $7 million over the next five years.
- Budget Cuts: The steady erosion of state support has resulted in three University budget reductions of $43 million over the past three years. The reductions included a salary freeze in FY 2010 for all staff and faculty (including senior executives whose salaries also were frozen in FY 2009).
- Postretirement Medical Benefits: The University has redesigned its postretirement medical benefits program to increase eligibility requirements and cap University contributions. Cumulative savings over the past four years was over $30 million.
- Contract Negotiation: Facilities Management purchases electricity and natural gas from various energy suppliers through pricing agreements that vary in length depending on market conditions. For electricity purchases, the market is closely monitored, and when rates are favorable, competitive pricing is obtained for various periods of time. Recently, while rates were trending downward, a five-year contract was locked in for the purchase of electricity from January 2012 through December 31, 2016. The new five-year fixed-price contract is projected to save the University $17 million over the next five years when compared with the prior contract.
- Energy Conservation: Through energy conservation initiatives, the University achieved recurring utilities savings of $2.2 million in FY 2011 and cumulative savings of $8 million over the past four years.
- IT and Telecommunications: Through various improvements in IT and telecommunications strategy and sourcing, the University has saved $7.2 million over the past four years.
- Employee Benefits: The University extended the employee vesting period for its defined contribution plan, saving more than $7 million over the past four years.
- Electronic Reporting: Through the electronic distribution of departmental budget reports, student bills, pay checks, and other departmental reports, the University saves more than $1.6 million annually through reduced paper usage, postage, printing, and labor costs.
- Library Savings: Through the consolidation of library locations, position eliminations, hiring freezes, and database subscription savings, the University Library System has saved $1.7 million over the past four years.
- Increased Productivity: Since 1996, the Facilities Management Division grew by only seven employees despite managing 140 capital projects per year during the past 16 years, compared with 40 projects per year during the four years prior to that. Also in that time period, they managed an additional 2.4 million square feet of property. In 1998, in the Research Accounting Department, each grant processor handled $12 million in research grants. Today, each processor handles $43 million in grants.
- Administrative Restructuring: The University has
realigned resources to meet academic needs through administrative
restructuring, which saved costs and personnel.
- The administration of the College of General Studies has been moved into the School of Arts and Sciences.
- Major administrative restructuring has occurred in the School of Dental Medicine and at the Bradford Campus.
- The School of Information Sciences programs are now overseen by a school-wide council.
- Reduced Number of Low-Enrollment Courses: Schools review course enrollments and cancel low-enrollment courses unless there is a compelling programmatic reason for offering those courses. Between Fall 2007 and Fall 2010, for example, Arts and Sciences reduced the number of low enrollment sections by more than 20 percent.
- Programmatic Consolidation and Elimination: Schools realign resources to meet student demand. As resources are directed away from programs with low student demand, they are either consolidated or formally removed from the course catalog. As a result of this process, 53 academic programs have been eliminated over the past 12 years.
1-Minute Video Series
A Decade of Challenge (PDF)
Economic Impact Report (PDF)
The Company We Keep (PDF)