September 21, 2001
University Park, Pa. – Penn State is seeking a 4.25 percent base state appropriation increase for the 2002-2003 academic year. In addition, the University is asking for a $12 million increase for special appropriations to support information sciences and technology, agricultural research and cooperative extension, the College of Medicine, and the Pennsylvania College of Technology’s workforce development.

The Board of Trustees today (Sept. 21) approved the request for $360,753,000, a $25.94 million increase over the 2001-2002 state appropriation.

“Penn State is the institution of choice for the plurality of the Commonwealth’s most talented students, and a major contributor to workforce development,” according to a report on the state appropriation request. “Penn State is the principal engine of research and technology transfer in Pennsylvania and the major source of university outreach. One in every two Pennsylvania households has someone participating in Penn State programs.”

President Graham B. Spanier explained that it is the University’s practice to bring the budget plan and state appropriation request before the board for review and approval before sending it on to the Commonwealth. Last year’s state appropriation was $334,813,000.

An appropriation increase of $13.94 million is being requested to support basic operating costs. Special emphases are improving faculty and staff salaries, meeting escalating health care costs, and providing support for facilities improvements and deferred maintenance.

To address salary concerns, the budget plan includes a 3.0 percent increase in the salary pool. In addition, the Faculty/Staff Excellence Fund – supported by new tuition income – will be continued for special merit, market, and equity concerns, and the entire President’s Excellence Fund will be designated to recognize top-performing faculty and staff.

 “Penn State’s ability to compete for the best faculty has become a major concern over the past few years,” said Spanier. “In July, we shared some data showing that Penn State's faculty salaries have continued to slip when compared to the Big Ten public institutions and other peer institutions.”

The cost of employee benefits is slated to increase by 15 percent at Penn State. In addition to the general increase in the cost of health care benefits, there has been a steady increase in the number of employees who are choosing TIAA/CREF for their retirement plan. While it has varied over the years, currently the cost of this plan is higher than the state plan.

Rising health care costs have also made it difficult for graduate students to purchase the necessary care for themselves and their families. In an effort to assist those students and enable Penn State to compete at the highest levels for top students, the University plans to enhance medical coverage for graduate assistants, fellows, and their families to a level similar to the coverage provided for faculty and staff. This will cost $7 million, with $3 million coming from research grants and contracts, and $4 million coming from general funds.

The third area of emphasis in the basic operating budget is funding for critical needs in three areas: the maintenance and operation of new or newly renovated facilities; deferred maintenance – Penn State has a backlog of major maintenance projects estimated to be more than $200 million; and the ongoing capital improvement program. 2002-2003 will be the fourth year of a six-year capital improvement program to meet the University’s facilities needs.

To further support these areas of importance, the University will continue its program of internal budget reductions for the 11th consecutive year. This initiative has allowed Penn State to reallocate more than $87 million since 1992-93.

“This internal process will result in $7.64 million in budget recycling across all Penn State locations in 2002-2003,” said Spanier. “The reallocation of $5.64 million will be done within individual units, and $2 million will be reallocated for University-wide operating needs.”

Other expense changes include:

·      University library resources and student computing and telecommunications needs will be supported by a proposed $15 per semester increase in the student information technology fee;

·      Four strategic academic initiatives – life sciences, materials science, environmental studies, and children, youth, and families – will continue to be earmarked for funding priority.

Penn State is also requesting special support for four areas of critical importance to the University and the Commonwealth – information sciences and technology, agricultural research and cooperative extension, the College of Medicine, and the Pennsylvania College of Technology’s workforce development.

The University is requesting a $3.2 million increase in the base allocation for information sciences and technology to keep pace with overwhelming growth in this area. The increase is required to bring the School of Information Sciences and Technology (IST) to the permanent level of funding outlined in the original plans for the school, and will support hiring of needed faculty, developing and delivering IST courses online, and partnering with Pennsylvania businesses, state government, and non-profit organizations.

“Enrollment in the School of IST has grown from 500 two years ago to more than 2,200 this fall, far exceeding expectations,” said Spanier. “We have already begun to find many ways to partner with business, industry, and government through the IST Solutions Institute that is up and running, and the eGovernment Research Education Center that is being planned.”

Agricultural Research and Cooperative Extension is the second area of need. The University is requesting an additional $2.8 million beyond the basic operating costs – $1.3 million for agricultural research and $1.5 million for cooperative extension – which will help restore programming capacity lost in the current year’s budget and support areas of high priority for Pennsylvania’s agricultural community and those benefiting from cooperative extension.

A third area needing special attention is the College of Medicine. Due to the changes in health care nationally, the college – supported primarily by clinical revenues – is requesting $5 million in new base operating support in 2002-2003 to continue the high-quality training programs and level of service to residents of central Pennsylvania. Similar base increase requests for the college are expected over the next several years.

“The College of Medicine is a unique, statewide resource – it is the only academic health center in Pennsylvania not located in an urban area, and it produces the largest number of practicing primary care physicians in the Commonwealth,” said Spanier. “However, it receives only a small share of its operating budget from the state. In fact, the College of Medicine receives a smaller share of its operating budget from Commonwealth appropriations than any similar institution in other states.”

The final special request involves the Pennsylvania College of Technology’s workforce development activities, which was eliminated from last year’s budget. An appropriation of $1 million is sought to assist Penn College in providing educational and training programs that reflect the latest available technology, and allow the college to update and expand specific technical programs to meet increasing demand by the citizens of the Commonwealth.

“We know that all the changes I have described today cannot be supported entirely by an increase in the state appropriation,” Spanier said. “This means that we will also be asking for increases in the rate of tuition to support these much-needed improvements.”

The basic tuition increase for 2002-2003 is proposed to be 5.84 percent, with additional increases of $35 per semester to support the capital improvement program and $35 per semester to support the faculty salary initiative.

“This is obviously a higher increase than we would like, but it will be necessary if we are to maintain our current commitment to providing high-quality education,” added Spanier.

*ptk*

Contact:  Tysen Kendig, Department of Public Information, (814) 865-7517 or tysen@psu.edu.