The University of Pennsylvania has been affected by the economy, but not enough to force it to retreat on any of its major initiatives, including its plan to offer loan-free packages to all undergraduates eligible for financial aid.

“[Students] should only see a stronger Penn and a more affordable Penn,” the university’s president Amy Gutmann said in a recent interview with the Business Journal.

Gutmann said Penn has made cutbacks, including freezing her salary and the salaries of her executive team; limiting salary increases for staff and faculty making more than $80,000; and putting on hold 12 capital projects costing $30 million because the financing for them wasn’t completely in place.

At the same time, she said, it has avoided massive layoffs; has recruited some high-profile faculty, most notably at the Wharton School, where it has added 30 people, including eight in finance; and is continuing work on a medical research center, a cancer therapy center and a park, which have a total cost of more than $500 million.

“Everything we’ve done has been with an eye to increasing our strategic strength … including making our campus more vibrant and strengthening ourselves academically,” Gutmann said.

One reason Penn has been able to hold the line as much as it has is the performance of its investments. The university had budgeted a 24 percent decline for its endowment, which was $6.2 billion on June 30, 2008, but it actually fell by less than 20 percent, Gutmann said.

Harvard University, in contrast, was expecting a 30 percent decline in its endowment in the fiscal year just ended, according to an article published in the Wall Street Journal in late June.

Penn also doesn’t rely on its endowment as much as some other Ivy League schools. Its endowment provides from 8 percent to 9 percent of its operating budget, Gutmann said.

Harvard, meanwhile, counts on its endowment, the largest in the country at $29 billion in early February, to fund a third of its operations, according to an article in the New York Times.

Of course, a big reason Penn depends less upon its endowment for operating money than its peer schools is that its endowment is relatively small.

That has turned out to be a plus in the present slump, because it has given Penn a financial mindset that comes in handy in tough times.

“We have prided ourselves on doing more with less,” Gutmann said.

That starts at the top. Gutmann said freezing her salary and the salaries of the university’s other top officials this fiscal year will save about $1 million.

In addition to severely trimming raises for people making more than $80,000, Penn essentially froze reclassifications and promotions that would boost salaries, requiring them to be approved by an executive vice president.

Penn didn’t, however, go back on the financial aid policy it initially announced in December 2007. This year, for the first time in the university’s history, every undergraduate receiving financial aid from Penn will get it in the form of grants rather than loans. That, Gutmann said, will boost the amount Penn spends on financial aid to $137 million from $90 million.

Penn also upped the stipends it pays to graduate students in its School of Arts and Sciences by 3 percent, meaning it has upped them by 61 percent over the last four years.

“These are graduate students who will be the next generation of faculty,” Gutmann said. “They can’t look forward to making … mega-millions; they shouldn’t have to take out big loans to come to Penn.”

Although Penn hasn’t had what Gutmann called “massive layoffs,” she said she couldn’t promise that it would be able to get through the downturn with no layoffs.

She also said that, even with the hiring being done by some of Penn’s schools, she expects the number of people the university employs, which is slightly more than 16,000, according to its Web site, will decrease slightly by attrition.

Gutmann does expect three signature projects Penn is working on to be completed on time.

The most expensive is the Anne and Jerome Fisher Translational Research Center, which will have 400,000 square feet and is slated to cost $330 million and open next summer.

Next is the $140 million, 75,000-square-foot Roberts Proton Therapy Center, which is being constructed on the former site of Convention Hall and will open this fall.

The centers will be connected to the Ruth and Raymond Perelman Center for Advanced Medicine, a 500,000-square-foot outpatient facility that cost $302 million to build and opened last fall.

Much less expensive, but equally visible is Penn Park, which will have four athletic fields, tennis courts and a multilevel pedestrian walk on 24 acres from Walnut Street to South Street east of the elevated CXS Corp. railroad tracks.

The park, which will be open to public use, is slated to cost $40 million and be open by 2011.

PIDC is happy to have entered into an agreement with the University of Pennsylvania on its long term development of portions of the former Civic Center site, adjacent to the Hospital of the University of Pennsylvania."

The Philadelphia Industrial Development Corporation (PIDC), is a private, not-for-profit corporation created in 1958 by the Greater Philadelphia Chamber of Commerce and the Commerce Department of the City of Philadelphia to promote economic development and job creation throughout the City.  PIDC provides financing programs and real estate products to business and developer client groups in all neighborhoods of Philadelphia.

For further information on PIDC contact Peter S. Longstreth, President, Philadelphia Industrial Development Corporation, 2600 Centre Square West, 1500 Market St., Philadelphia, PA 19102-2126, phone (215) 496-8181.