Weathering Education Cuts

By DIANA MIDDLETON

Pennsylvania Gov. Tom Corbett proposed cuts last month that would slash the state's higher-education budget to $567 million from $1.2 billion, affecting more than a dozen state-run and state-supported universities.

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Terry Clark

John Delaney, dean of the University of Pittsburgh's business school

For the University of Pittsburgh's Katz Graduate School of Business and College of Business Administration, tuition would have to be increased by 40% to break even, although the school doesn't plan to implement such a dramatic increase.

John Delaney, who has been the school's dean since August 2006, spoke with The Wall Street Journal about the budget cuts and how far the school is prepared to go to keep itself afloat. "I think we'll have to really change the way we do things," Mr. Delaney says.

Excerpts:

WSJ: Was the severity of the proposed cuts a big surprise to you?

Mr. Delaney: No one anticipated cuts as deep as [Gov. Corbett] proposed. Everyone was caught off guard. I was surprised at the depth of cuts for education in part because to create jobs, the state depends on the education sector.

WSJ: When there are budget cuts like this, a tuition hike usually follows. What's being considered?

Mr. Delaney: The university assesses all the different schools and revenue sources and then makes a determination about the tuition. At [Katz's] undergraduate level, there's a lot of pressure to deliver a quality education that's affordable. At the graduate level, there's more flexibility with tuition increases, but if you push it up too high, students who are sitting on the fence may decide to enroll somewhere else.

WSJ: Is [the tuition] uncertainty affecting applications?

Mr. Delaney: It hasn't affected the number of applications, but there is a larger portion than normal of applicants who haven't committed [to matriculating] yet. It is very possible that the yield could wind up being lower, either because people won't be able to afford the tuition, or because of the tuition increase, they choose a similarly priced private school instead. At Katz, tuition is always an issue, because we emphasize to prospective students that we are a top value for the money. If a difference in pricing occurs, it makes it harder to maintain that distinction.

WSJ: Is there a silver lining to these cuts?

Mr. Delaney: From a business-school perspective, this puts pressure on us to deliver the same quality at a lower cost, and if that allow us to be more effective and efficient, then that's a benefit. This financial crisis is a problem, but it's also an opportunity to change how we do things, for example using technology for certain class lectures, which would free up more classroom space and increase capacity for other things, like executive education.

WSJ: How are you considering incorporating more technology into the curriculum?

Mr. Delaney: I wouldn't want to put an entire class online, but we could put the lecture part online, so students could watch it before they come to class, where they would talk about the application of what was discussed. I wouldn't want to do an all-online program, however. The investment for that would be very large, and I'm not sure we could compete with schools that have already made that kind of investment, like Indiana University and Syracuse.

WSJ: There's a shortage of Ph.D.-trained faculty for hire at business schools. Will these cuts impact retention?

Mr. Delaney: I've got a number of professors with other job offers, and I'm trying to keep them. ... That's one of the realities right now in business schools. There are strong pressures to increase salaries when there aren't a lot of resources. We've had to raise more private revenue, and we have alumni who've created faculty fellowships. We're also trying to increase the size of the faculty. Some of the funding from that is coming from tuition we've generated from a new master's program in accounting.

WSJ: Do these cuts pose a threat to the program's quality?

Mr. Delaney: If the cuts go too far, there's a danger that we may not have enough money to pay the faculty to teach several sections of a class. That translates to it taking a longer time for students to complete the degree, and that imposes an opportunity cost on them. You may lose top faculty, because competitors are bidding to poach them, and that's when problems occur. Overall quality could slip before you realize it's slipped.

Write to Diana Middleton at diana.middleton@wsj.com