Penn State Intercom......January 24, 2002

Second state budget
freeze hits University

A second freeze in the state appropriation was announced last week, meaning Penn State will lose more than a total of $10 million in funds this year.

With state revenues likely to be $600 million below forecast by the end of the fiscal year, another 2 percent freeze was announced last Friday by Gov. Mark Schweiker — on top of a 1 percent freeze announced by former Gov. Tom Ridge in November.
President Graham B. Spanier said the loss in funds will be difficult for the University and require even further belt-tightening, but will not signal a mid-year tuition increase nor will it result in a hiring freeze by the University.

“This will slow down our work, but I remain optimistic that Penn State will continue to serve students and the Commonwealth of Pennsylvania well,” Spanier said. “A decade ago the Commonwealth cut our budget by an even larger amount during the middle of the fiscal year and yet, look at the amazing progress that we made during the 1990s.”

“Penn State will rely on the academic colleges and other budgetary units to decide how they will reallocate funds to best manage this additional cut,” he said. Hiring for some positions will likely be delayed. There will be less travel, and some purchases will undoubtedly be postponed to manage the shortfall.

University officials anticipated an additional freeze was likely, given the shortfall in projections for state revenue for this year.
Pennsylvania isn’t the only state with mid-year cuts, with a number of other states making similar or even larger cuts in funding to their public institutions in recent months. At the start of the fiscal year, Penn State was slated to receive $334.8 million from the Commonwealth, but is now likely to receive closer to $324.8 million.

Other state-related universities and state programs also were targeted with the latest budget freeze.

President Spanier and other University officials are scheduled to go to Harrisburg in February to make the case for next year’s budget.

The Commonwealth had increased Penn State’s budget by just $2.8 million when the fiscal year began on July 1, leaving tuition to cover the bulk of increased University costs. The additional cuts from the state will continue to put pressure on student tuition costs.

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