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In the end, a combination of forces--inflation, hubris, competition, the Chivas Regal effect, perhaps even conspiracy--drove up Penn's tuition. In comparable dollars, says former president Meyerson, a year at Penn today costs about twice what it did in 1970. Yet from 1970 through 1994, government figures show, median family income in constant dollars increased only 10%. In more recent years it has actually fallen below the 1986 figure. Taken together, these trends make tuition a very painful prospect for any parent whose kid has just been accepted by Penn or, for that matter, Harvard, Yale or Princeton.
Should parents be outraged?
"No," Meyerson says. The education offered by the top schools, he argues, is much better, with more courses, bigger libraries, more sophisticated research laboratories. As a nation, he says, "we have the best educational pattern in the world...But having said that, there's no reason why we cannot have a better ratio of benefits to costs."
Which still leaves the question, Where does all that money go?
The single most coveted stream of money at Penn is tuition because unlike federal grants, it is entirely "fungible"--it can be spent anywhere within the university on anything. It gets mixed with other fungible streams, like investment income, to the point where trying to follow the tuition trail becomes about as easy as tracking a particular cup of water through a faucet. It is almost impossible to say exactly what tuition pays for and what it doesn't, other than to say that it constitutes the major portion of the university's general fund and that anything paid for from the general fund is thus paid for in part by tuition.
Like any other university its size, Penn is a dauntingly complex entity. It had more than $1 billion in revenue last year, even without including income from its vast hospital complex. Its two biggest sources of revenue were research grants--$300 million, mostly from the Federal Government--and tuition and fees, which totaled $320.1 million after payouts for financial aid. In turn, Penn educates 18,000 full-time students (9,571 of them undergraduates) and supports about 15,821 employees plus a temporary work force of 7,146.
Measuring Penn's overall health turns out to be a tricky matter. The numbers it reports to the IRS are very different from those it discloses in its annual reports to the university community. Its latest federal tax return shows Penn finishing fiscal 1995, which ended last June 30, with an apparent surplus of revenue over expenses totaling $182.8 million, which is more than its undergraduates paid in tuition. But its annual report for the same period, compiled under a different set of accounting rules, shows a surplus of $63.4 million--which then, through the miracle of university accounting, disappears to yield a kind of deficit.