Penn State and other Pennsylvania public universities are slated for the most dramatic appropriation cut in the history of American higher education, based on the Commonwealth of Pennsylvania's budget proposal released today (March 8) by Gov. Tom Corbett.
The budget cuts Penn State's appropriation by 52.4 percent, a devastating reduction of $182 million. This includes a 50 percent cut in Penn State's educational appropriation, a 50 percent cut in its Agricultural Research and Cooperative Extension appropriations, the loss of all federal stimulus dollars, a reduction for the Pennsylvania College of Technology, and the total elimination of medical assistance funding for the Penn State Hershey Medical Center.
The proposed appropriation represents the most severe funding cut in Penn State's 157-year history and suggests a redefinition of Penn State's role as Pennsylvania's land-grant institution.
"A funding gap this large is going to fundamentally change the way we operate, from the number of students we can educate, to the tuition we must charge, to the programs we offer and the services we can provide, to the number of employees and the research we undertake," said President Graham Spanier.
According to university officials, a cut of this magnitude jeopardizes the University's mission of providing access and opportunity to students at 24 campuses. It would undermine support of the Commonwealth's agricultural industry and force a complete redefinition of the state's Cooperative Extension Service and the agricultural research upon which it depends. It would affect the University's ability to sustain dozens of programs that support economic development in the Commonwealth.
The University currently receives less than 8 percent of its annual operating budget from the state, a figure that has eroded significantly over the last two decades. Under the governor's proposal, that figure will fall to 4 percent.
This budget proposal comes on the heels of a decade of stagnant state appropriations that in some years also were reduced again through mid-year rescissions.
Cuts in higher education budgets are being proposed in many states, but never has a single institution's budget been slated for a reduction of more than 50 percent in a given year. The University would have a matter of only a few weeks to manage such a catastrophic cut.
"A reduction of this magnitude would necessitate massive budget cuts, layoffs and tuition increases, with a devastating effect on many students, employees and their families," said Al Horvath, senior vice president for Finance and Business. "While we have for many months been planning for a potential state funding cut, we could not have envisioned one so damaging to the future of the University and the Commonwealth."
University officials report that no one in state government reached out to them with any advance notice of such a possibility, nor was there any prior discussion about the potential impact of such a cut.
Penn State has mobilized a team of University leaders to look at operational cuts. "We must consider the welfare of our students and the quality of their education, not to mention our long-term funding stability," said Steve Garban, chairman of Penn State's Board of Trustees. "As we work to handle a potential funding cut, we'll be guided by our goals of quality and access, and we'll seek to avoid having our students and their families shoulder this entire burden through increased tuition -- although tuition will rise."
"We are eager to explore with elected officials whether they support this proposal and whether they see this as the first step toward the complete elimination of public higher education in Pennsylvania," said John Surma, CEO of US Steel, who serves as vice chair of Penn State's Board of Trustees and chair of its Budget Subcommittee.
Administrators plan to deal with the cuts as equitably as possible, but significant downsizing in academic and administrative units will be under consideration. Scaling back plans for critical facility needs, such as major maintenance and capital improvements, will be undertaken; changes to the University's health care programs will be revisited to create additional savings; salary increases for employees will likely again be frozen; and more across-the-board budget reductions for academic and administrative units will have to be instituted.
"We are committed to finding every possible way to reduce expenses and maintain quality," added Spanier. "We face difficult choices and this will be an extremely challenging year -- one that quite possibly will change the face of higher education in the Commonwealth."
The governor's budget proposal is the first step in the appropriation process. Penn State will continue to press its case for support with the General Assembly and the governor over the next several weeks.
"I want to thank Penn Staters for their continued support and for all of their efforts that allow Penn State to be the most student-centered research university in the nation," added Spanier. "I deeply appreciate the commitment we feel from our 96,000 students, our 47,000 faculty and staff, and our 514,000 alumni. I vow to challenge the level of this reduction aggressively and welcome the support that is already pouring in."