Strategic Planning Guides Penn State Budget
July 13, 2000
University Park, Pa. – July is budget time at Penn State and today (July 13) the Board of Trustees heard an informational report on how Penn State’s strategic planning guides its budget decisions.

"In contrast to many of our peer institutions, strategic planning and budgeting are closely linked at Penn State," said Rodney A. Erickson, executive vice president and provost. "Budgetary information is factored into the planning process to provide a realistic context for proposed changes and initiatives, and strategic plans are taken into account directly in budget allocation decision.

"Through this process, Penn State has taken aggressive steps for many years to reduce costs and create more effective and efficient ways of operating, while at the same time preserving and enhancing academic quality," he said. "Specifically, the University has eliminated duplication in programs and services, moved resources to the most promising and effective programs, and shifted resources from administrative functions to support teaching, research and service."

Since the 1992-93 academic year, 58 programs have been eliminated or merged. Guided by a University-wide strategic plan for the years 1997 to 2002, each of the 33 major academic and administrative support units review and, if appropriate, revise priorities each year, taking into account student interest, societal and Commonwealth needs, developments in the field of study and faculty expertise.

Last year, the University also adopted a number of strategic performance indicators tied to institutional goals in the strategic plan.

In addition to internal budget reduction and reallocations, based on unit strategic plans, a number of administrative streamlining initiatives are reducing costs. Some examples include the award-winning electronic approval system that enables the University to eliminate hundreds of thousands of paper forms; a new purchasing card that allows the University to consolidate payments and substantially reduce paper-work; and an increase in Web-based applications for admissions – 23 percent of undergraduate applicants were submitted on the Web and 13 percent of graduate applicants this year.

Gary C. Schultz, senior vice president for finance and business/treasurer, reviewed how Penn State is funded, focusing on revenues and expenditures, including costs affecting higher education.

In making comparisons with Big Ten public universities, Schultz noted that Penn State has the lowest state appropriation per student and the highest undergraduate tuition rate in the Big Ten. He also noted that in comparison with public universities in Pennsylvania, Penn State receives the lowest state appropriation per student, well below those of Pitt and Temple, despite the fact that Penn State continues to outpace these universities in enrollment growth.

"In 1976-77 the state appropriation was 54 percent of our General Funds Budget, today it is 33 percent," Schultz said. "During, the same time period, tuition and fees have increased to comprise 60 percent of this budget, compared to 38 percent in 1976."

Overall, he said, funds available to the university per student from state appropriation and tuition – when adjusted for inflation – are not much higher now than in 1970. In fact, the University’s purchasing power per student is virtually the same as it was 30 years ago, despite the increased cost demands of compliance with Americans with Disabilities Act and environmental legislation, major maintenance and technology. In addition, salaries and benefits have increased as a percentage of the budget.

Erickson outlined a number of other factors that have pushed tuition higher.

"We need to offer competitive salaries to attract and retain a high quality faculty and to cover the increasing cost of benefits," he said. He also explained that funds have been budgeted to increase faculty salaries, which have been slipping behind those of peer institutions in recent years, and to continue adding new faculty positions to reduce class size – more than 300 positions have been added in the past three years.

Erickson also noted that the University has invested $4.7 million in new initiatives, such as those in information sciences and technology, the life sciences, material science, environmental studies, and Children, Youth and Families -- fields that meet national and Commonwealth needs. Plans are to add an additional investment of $6.8 million over the next several years.

New technology expenses include the growth in computer labs and computer use – from 16,000 accounts for faculty staff and students in 1990 to 101,000 accounts this year, and from an average of 49,000 e-mail messages per day in 1990 to more than 2 million a day now. In 1995, the Penn State University Libraries subscribed to three electronic databases and now subscribes to more than 300.

"These initiatives are costly, but necessary, elements in our efforts to enhance academic quality and improve access to technology," said Erickson. The need to maintain an aging physical plant and to comply with various unfunded mandates will continue to be other critical factors in Penn State’s planning process for the foreseeable future."

Contact: Christy Rambeau at 814-865-7517 or e-mail at