ANOTHER YEAR OF SIGNIFICANT PROGRESS . . . AND THE PROMISE OF MORE TO COME

A message to the campus community

from

Chancellor Mark A. Nordenberg

June 30, 1999

Within a matter of months, the life of this University, founded in 1787, will have extended across two complete centuries and parts of two others. For me – and, I am sure, for everyone now positioned to facilitate further Pitt progress – that span of institutional life and the record of accomplishments encompassed by it are, at once, both humbling and inspiring. Most simply put, our challenge, and our responsibility, is to do honor to the legacy of our predecessors by building effectively on it.

A Rich Legacy and Continuing Commitment to High Achievement and Meaningful Contributions.

This month's issue of Pitt Magazine contains an article entitled "25 Ways Pitt Has Changed the World." Not intended to be comprehensive, the author's list of "quirky discoveries and bold innovation" briefly describes the direct links between our University and events ranging from the publication of the first American novel, to the flight of the first heavier-than-air craft, to the desegregation of the Sugar Bowl, to the identification and synthesis of vitamin C, to the launching of the genetic revolution, to the development of the nerf ball. It is light-hearted, but instructive, reading for everyone who is interested in where we have been and where we are going.

Over the course of our proud history, wonderful things have happened in every corner of each of our campuses. Members of the "Pitt family" – alumni, faculty, staff, students and friends – also have had a positive impact in every corner of the world. The accomplishments of our predecessors, and of some who still work among us, should stimulate our own ambitions. Few people, after all, have the chance to build upon a legacy as rich as ours.

Because I do believe so strongly in the power of positive examples from here "at home," I was particularly pleased when Dr. Thomas Starzl agreed to deliver the University's last commencement address of the 1900's. Shortly before that ceremony, he was recognized in the popular literature as one of the world's most influential figures of the last 1,000 years. In the scientific journals, he was identified as the single most cited author in the broad field of clinical medicine between 1981 and 1998. In fact, with 26,456 citations to his credit, he left the competition far behind.

To his many patients and their loved ones, Dr. Starzl is viewed, first and foremost, as a lifesaver. To his closest colleagues, he is known as a person who has combined extraordinary talent with an enormous capacity for hard work to advance a noble cause. He also always has been quick to thank the University for creating an environment in which he could pursue his high goals. During the course of this past year, many others within the University community, true to our traditions, took advantage of that same environment to craft their own inspiring examples of high achievement.

Among other accomplishments, faculty members won Sloan Research Fellowships (four of 100 awarded nationally, in fact) and Fulbrights and Guggenheims. They received special forms of recognition from the state, the federal government and foreign countries. They were awarded honorary degrees. They were recognized by, and elected to the highest offices in, academic and professional societies. They taught and advised and discovered and presented and performed and wrote in ways that contributed to the general good and brought further recognition to the University.

Our students won National Science Foundation Fellowships and both Goldwater and Udall Scholarships. They earned national recognition as inventors and innovators. Our undergraduate teams were among the country's best in competitions ranging from high-level mathematics to policy debate to bridge building. Graduate students won national awards for their research, for the quality of their dissertations and (for the second year in a row) for playwriting.

Outstanding Examples of Progress from a Single Month.

In an institution of this size and quality, one of the happy challenges of life is just keeping up with all of the good things that are happening. In fact, some sense of our overall momentum is conveyed by the headlines of just this month. June stereotypically is viewed as a "sleepy period" in the academic world – a characterization that, we know, is demonstrably false. Examples of June 1999 developments evidencing the broad-ranging progress of our University include the following.

* An Emerging Oakland Renaissance. (June 3) The beginning of June brought final approval from the City for the construction of the "multi-purpose academic center" and the second phase of our Bouquet Gardens residence halls. Along with the long-awaited convocation center and the renovation of the Masonic Temple and other capital initiatives, these projects signal that we have arrived at the early stages of the most ambitious program of facilities development in at least a quarter century. These projects all advance the objectives of the ten-year facilities plan, developed just over two years ago, and have counterparts on each of the regional campuses.

Among the noteworthy features of our progress on these projects has been the level of community support that we are enjoying. Obviously, we will continue to encounter differing views, but we have worked hard to accentuate areas of agreement and to minimize contention. By creating more on-campus living opportunities for our undergraduates, for example, we are responding to what has been the most pressing concern of our neighbors, while also advancing our own cause. And the emerging possibilities for a revitalized Forbes Avenue business district and "gateway" to our campus – built around such "anchor facilities" as the soon-to-be-completed Carlow Science Center, the new CVS Pharmacy, the recently re-opened Wyndham Hotel, the Forbes Tower Building (housing both our School of Health and Rehabilitation Sciences and the executive offices of the UPMC Health System), our planned multi-purpose academic center, and the Bouquet Gardens residence halls – should be exciting for anyone who has a long-term interest in the attractiveness and vitality of Oakland.

* International Outreach. (June 3) Earlier in the academic year, we celebrated the University's selection as one of ten "European Union Centers" to be located at North American universities. That selection reflected our broad strengths in international teaching and research and our more particular strengths in West European studies. And in early June, we hosted the annual conference of the European Community Studies Association. That program drew more than 400 scholars from throughout this country and across the Atlantic, as well as the European Union's Ambassador and other important representatives of the European Commission. Given the events unfolding in Europe at that point in time, it also drew special attention to the University of Pittsburgh and its role in fostering trans-Atlantic understandings and cooperation.

* Undergraduate Excellence. (June 7) Early in the month, we were able to announce that, for the fourth straight year, the academic quality of the entering class on the Oakland campus has dramatically improved, making this the best freshman class in our history. Nearly 30% of the students who have paid deposits for next fall's entering class are in the top 10% of their high school graduating classes, and 55% are in the top 20% -- up from 19% and 43%, respectively, for the freshman class that entered in the fall of 1995. This year's Oakland freshmen also have an average combined SAT score of 1163 -- 24 points higher than just four years ago.

The academic credentials of these entering students reflect the emphasis that the University has been placing on the quality of our undergraduate programs. The level of our commitment to instructional excellence always has been unique for a major research university. We are constantly attempting to build on that existing strength -- most recently through the work of the Advisory Council on Instructional Excellence, among other initiatives. Those efforts have been supplemented by recent investments in technology enhancements, recreational facilities, residence hall programming, the counseling and placement functions, and cultural and service outreach programs.

It is unlikely that any cultural outreach program has had such a quick and dramatic impact as our PITT ARTS Program. In a single year, the number of organized student programs sponsored grew from 27 to 79, and the number of participants in those programs increased from 800 to 2,600. A new feature of the program – free student admission to the Carnegie Museums and to the Phipps Conservatory and Botanical Gardens – attracted nearly 11,000 participants, and residence hall programming drew over 1,100 student participants. This program has visibly advanced the theme that "the City is our campus" and has provided the foundation for a new "emerging audience consortium" that involves nearly all of the area's arts and cultural organizations.

The dramatic increase in the number of incoming students eligible for the Honors College is perhaps the strongest evidence of our growing attractiveness within the marketplace of potential students, with an 82% increase over the last four years. This year, 618 students -- a full 20% of the freshman class -- are Honors College-eligible, compared to 340, or 14%, in 1995. These, obviously, are the students who have the broadest range of college options available to them. Particularly given our ambitions, it is extremely encouraging that we are attracting these very top students in such dramatically increasing numbers. Among other things, their presence elevates the learning environment for all of our students. And the strength of our undergraduate programs is a key factor in our overall institutional reputation.

* Research With a "Real World" Impact. (June 8) In what could be one of the most important innovations in steel making in the past 30 years, Professors Anthony J. DeArdo and C. Isaac Garcia, faculty members from our School of Engineering, announced their development of a process for the manufacture of "green steel" – a lead-free alternative to the free- machining steel commonly used throughout the world. Not only is the resulting product more environmentally friendly, but it is easier to cut and shape, allowing cutting machines to work faster and resulting in less wear and tear to cutting surfaces.

Through the efforts of the Offices of Technology Management and Legal Counsel, the University has signed a technology licensing agreement with an international consortium of steel producers and manufacturers to commercialize the technology. These companies already have invested in the development and testing of the product. In addition to its scientific significance, then, the development has economic implications for a $1 billion market for these steels -- a market in which both our faculty inventors and the University expect to participate over time.

* Partnering for Regional Economic Growth. (June 9) The very next day, the University also participated in the unveiling of the "Pittsburgh Digital Greenhouse" – described by Governor Ridge as a unique partnership bringing together three major international corporations, three leading Pennsylvania universities, the Pittsburgh Regional Alliance (PRA), and the Commonwealth of Pennsylvania "to make Southwestern Pennsylvania a worldwide leader in the development of the next-generation system-on-a-chip technology." Our success in the years ahead will depend upon our ability to compete and to collaborate with equal effectiveness, depending upon the circumstances. In this case, our partners include CMU and Penn State, and Sony Electronics, Oki Electric and Cadence Design Systems, as well as the Commonwealth and the PRA, and cooperation is the key.

The features making this region especially attractive for an initiative of this type include the strong and complementary research strengths found in the three universities, the existence of 300 software and 100 engineering companies in the region and the fact that the three involved universities graduate more than 1,100 students each year in electrical engineering and computer science. We never would have reached this point without leadership efforts from faculty members within the School of Engineering and the Department of Computer Science . . . and we still have a long way to travel. However, in a very real sense, our strength and vitality is tied to the economic health of the region, and this project affords one opportunity for us to provide a public service while advancing our own interest in regional economic strength.

* The Move to New Athletic Facilities. (June 18) In a June ceremony attracting national attention, the University celebrated a major off-the-field victory with our principal partners -- the Pittsburgh Steelers, the City of Pittsburgh and the Commonwealth of Pennsylvania -- in breaking ground for Pittsburgh's new football stadium. The University's proud football traditions will get a big and well-targeted boost from a "New Game in a New Home" beginning in 2001. Throughout its storied history, including our football "glory years," Pitt Stadium never emerged as a game day site attracting the kind of crowds that the performance of our teams merited. The move to the North Shore will position us to offer something unique in the world of sport – top-flight college football in a fan-friendly facility that will set the standard even for professional sports and in what is destined to become one of the most exciting areas in one of the country's great cities.

By giving us something special to offer to recruits, players, long- term supporters and potential new fans, the move will simultaneously position our football program to more effectively compete on the field and advance a number of other important University interests. It offers a wonderful opportunity to put our athletic program on firmer financial footing -- something that is especially critical today, given the significant expansion of non-revenue sports in all universities in recent years. With the acreage that we can re-claim, it also provides us with a unique opportunity to more functionally and more aesthetically develop the Oakland campus. In fact, there probably is nothing within the "realm of the possible" that could better position us to further enhance the quality of campus life.

* Historic Philanthropic Support. (June 22) Early last week, we announced the largest cash gift ever received by the University from individuals (as opposed to foundations and corporations) -- $10 million from alumnus John Petersen and his wife Gertrude. That lead gift will support construction of the new convocation and events center that will now bear their name. Mr. Petersen, a business school graduate, is the retired president and chief executive officer of the Erie Insurance Group. He is highly respected in his industry and also has been actively involved in a wide range of community affairs. The Petersens have been among the University's most loyal and generous supporters, endowing undergraduate scholarships in the past. With this historic gift, they underscored their commitment to the University and their confidence in its current direction.

The receipt of their gift also has significance because of what it, particularly when grouped with other signs of progress, says about the current state of our overall development effort. As noted, this was the largest cash gift ever received by the University from individuals. This past year also brought both the largest foundation gift and the second largest foundation gift ever received by the University. In fact, the foundation commitments received by the University in the last two years exceed the total foundation commitments received during the capital campaign conducted from the late 1980's through the early 1990's.

Speaking more broadly, though the "books" will not formally close for a few weeks, we already know this will have been another record-setting year in terms of the total voluntary support received by the University. In the past four years, annual voluntary support (measured in dollars actually received) will have increased from $39.4 million to about $62.5 million, a jump of nearly 60%. We also now have reached a pace of $100 million per year, in terms of combined gifts and pledges, which is a fundraising first for us.

* Record Revenues. (June 25) Late last week, the Board of Trustees approved a budget for Fiscal Year 2000. It includes projected revenues in excess of $1 billion – the first time that milestone has been passed in Pitt's 212-year history. The sheer size of the budget provides clear evidence of both the scope of our activity and our place as one of the region's key economic engines. The growth in our revenue streams over the last four years can be attributed principally to increases in enrollment, state support, research grants and private giving and reflects strong institutional momentum. That growth permits continuing investments in the people, programs and facilities that will propel the University to even higher levels of achievement in the years ahead.

* A Positive Financial Assessment. (June 25) On the same day our Trustees met, Moody's Investors Service issued a release announcing that it had raised the University's bond rating to a level equal to the rating of the Commonwealth itself. As some of you will recall, this action follows an earlier upgrade of our rating by Moody's and an unusual "double bump" upward by Standard and Poor's just two years ago. This "Pitt trend" stands in sharp contrast to the current circumstances faced by a number of fine universities, where bond ratings have been lowered – often because of financial strains traceable to university-owned and operated health systems.

In explaining its rating upgrade, Moody's referred generally to "the University's improving credit fundamentals, featuring well-established student demand coupled with national research reputation; large financial base led by growing endowment resources; manageable debt load; and satisfactory operations." It also made specific and positive reference to our recently restructured relationship with the UPMC Health System.

This move into what Moody's describes as its "High-grade bond class" will be of tangible economic benefit to the University as we move forward with an ambitious capital projects agenda. It also is a reassuring, independent assessment that we are managing our business affairs well and are being effective stewards of our resources.

Financial Strength as Essential to Continuing Progress.

In fact, few of our recent achievements would have been possible, nor could we be as optimistic about the future, in the absence of focused efforts to reclaim and sustain our economic strength. Less than four years ago, when I moved into this office, our budget was built around a University-wide salary freeze. By the middle of that year, we had provided some modest relief to our lowest paid employees. But that, of course, was just a first step.

In the months and years that have followed, we have tirelessly pursued strategies both to enhance revenue and to reduce costs. The cost-reduction path has not always been easy, and our successes have depended upon widespread cooperation, grounded in a sense of commitment to our shared enterprise. But together we have charted a course that has produced greater cost effectiveness and efficiency.

We also have increased our revenue streams. Increased enrollment has generated additional tuition dollars. As noted above, private support for the University has increased by 60% over the course of the last four years. Research funding has increased by 27% during that same period, and we will pass the $300 million mark in annual sponsored project support during the next fiscal year.

This year, in particular, we also will benefit from an unusually large increase in Commonwealth support -- for which we owe both Governor Ridge and the members of the Legislature a deep debt of gratitude. Our total appropriation of $167.6 million represents an increase of over 5.9%. Appropriation increases during the preceding four years had ranged from 0.88% to 3.28% and had averaged 2.38%. This year's appropriation includes a 3% increase to our base allocation, a special addition of $4.5 million for laboratories and equipment and some smaller, and even more focused, allocations. This, of course, is in addition to the five-year $138 million capital projects commitment made by the Governor last year. As has been true since 1966, when the University became state-related, Commonwealth support remains absolutely essential to our efforts to support our people, to advance our programs and to create and maintain attractive and up-to-date facilities.

The Budget for Fiscal Year 2000.

The budget approved by the Board for the next fiscal year positions us to make further investments that are essential to our current competitiveness and our future strength. These include investments in academic program and student life enhancements; more complete funding of the research development fund (which has been grossly underfunded, according to its own "charter," since it was created); budget increases to offset the skyrocketing costs of journal acquisitions; and additional funding for such areas as the campus police, institutional advancement and technology transfer. The budget also provides funds for necessary debt service as we continue to implement our ten-year facilities plan.

An especially high priority for me, throughout our planning for the next fiscal year, was doing everything we responsibly could to create a larger budgetary allocation for faculty and staff salary increases. In fact, one very real incentive in my active pursuit of a somewhat larger salary increase pool was my belief that it would position us to distribute salary dollars in ways that would better advance the twin goals of institutional strength and individual fairness than has been true in the past. The salary pool components for Fiscal Year 2000, then, will be: 1.5 % as a salary maintenance component for employees whose performance has been satisfactory; 2.0% to be allocated to the responsibility centers and distributed, as appropriate in each center, on the basis of merit, market and equity; and 0.5% to be released by me to the senior officers of the University to address unit-level market and equity disparities.

Looking Ahead and Moving Forward.

As some of you know, one of my favorite quotes comes from the epilogue to Pitt: The Story of the University of Pittsburgh, 1787- 1987. There, the late Robert Alberts, the bicentennial biographer of our University, offers his conclusion that Pitt's story is "essentially a success story – a happy chronicle of a sound and worthwhile accomplishment."

The successes of the past year have added measurably to our existing storehouse of institutional accomplishments. The progress we have made in recent months is a credit to the commitment and hard work of literally countless people. As we begin moving toward a new "school year," I want to thank each of you for what you have contributed to our progress. If we sustain our collective effort, more good things almost certainly will follow, and there will be cause for celebration again this time next summer. Our affiliations with Pitt are a source of very special opportunities, and it is heartening to know that so many people are working so hard to take full advantage of them.

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