Penn State's Board of Trustees on July 14 approved a total operating budget of $2.15 billion for the 2000 -2001 academic year beginning this month.
This is an increase of $76.5 million over the previous year that reflects priorities to sustain Penn State's academic leadership and the quality of education. The 2000-2001 budget also includes an additional $429 million that reflects the operations of The Milton S. Hershey Medical Center, which are again part of the total Penn State budget.
"We have given priority in this year's budget to sustaining Penn State's academic leadership, and competitive salary increases are a special concern for us at this time," said President Graham B. Spanier in his presentation to the board. "We also will continue to support the School of Information Sciences and Technology and to invest in the interdisciplinary initiatives in life sciences, environmental studies, materials science, and children, youth, and families -- all areas of special importance to the future of Pennsylvania."
The quality of education is another focus in this year's budget, said Spanier.
"We will be adding a modest number of new faculty positions to help reduce average class size; improvements in library and information technology resources will be supported to keep up with expanding demands in these areas; and we also will enhance student activities and support services at all campuses."
In addition, he said, "the capital improvement program begun last year will be continued to provide for deferred maintenance, renovations and high priority new buildings, needs that are extremely important to our students and faculty."
Resources to achieve these objectives -- as well as to address the University's basic operating needs -- include the state appropriation of nearly $332 million, which is a 4.2 percent increase in funding over 1999-2000 or an increase of $13.3 million. The appropriation also includes $4.5 million for the School of Information Sciences and Technology that was previously funded through the Pennsylvania Department of Education, and $2 million designated for Penn College. The state appropriation makes up 15.4 percent of Penn State's total operating budget.
Resources also include tuition and fees of $550 million, or 28.4 percent of the total budget.
"The largest change in the general funds portion of the budget is for salary adjustments," Spanier said. "This reflects both the people-intensive nature of the University's work and the special priority we are giving to salary increases this year."
Penn State faculty salaries have slipped in comparison with other peer institutions in recent years. During the current year, the faculty salary increases of the Big Ten universities are expected to exceed 5 percent. Penn State plans an increase of 3.5 percent for merit-based increases and for market, equity and compression considerations. In addition, Spanier plans to direct an additional $3.3 million to salaries from the President's Excellence Fund to supplement the salary increase for special cases, bringing the total budgeted for salary increases to $20.7 million.
"These increases will bring us to within about one-half of 1 percent of our peers," he said. "We are not likely to lose much further ground under the proposed budget, but increasing faculty salaries to more competitive levels will continue to be a major challenge for us."
Spanier also outlined expenditures in several other areas of the General Funds Budget as follows:
Employee Benefit Cost Increases: Benefit cost increases for the coming year are projected to be just under $7 million, including increases of $3.8 million for health care, $1.8 million in the TIAA/CREF retirement program, $3.2 million in required contributions for retirement and Social Security related to salary increases, and an additional $300,000 to continue improvements in the health plan for graduate students.
As a result of recent federal legislation, Penn State students and the University are exempt from FICA taxes, resulting in a savings of $2.2 million. These savings are being reallocated to support graduate student health plan improvements, new graduate fellowships and other improvements in support of graduate education and research.
Facilities Cost Increases: The University is currently budgeting $2.9 million for maintenance and operation of new or newly remodeled facilities, including the classroom addition to Thomas Building and the renovation of the White Building as well as facilities at other campus locations.
Because of construction cost increases and pressing facility needs, the University is adding an additional $80 million to its five-year $100 million capital plan. The costs associated with this additional investment in facilities will be $4 million in the current year.
Information Sciences and Technology: The base funding for the School of Information Sciences and Technology is $4.5 million. This year these funds are a line item in the state appropriation giving the University the necessary funding stability to hire faculty and deploy the school's programs at locations across Pennsylvania.
Spanier told the trustees that in this year's budget, "we have made salaries a top priority and been able to address critical operating needs, support key academic initiatives and enhance student services. We have done so through our continuing commitment to good stewardship, emphasizing the efficient and effective use of the resources available to Penn State."