UNIVERSITY PARK, Pa. — Pennsylvania Gov. Josh Shapiro proposed a 5% increase for Pennsylvania’s state-related universities, including Penn State and Pennsylvania College of Technology — to be funded through a new performance-based funding model — during his annual budget address, delivered Feb. 6 in the Capitol Rotunda in Harrisburg. The governor also proposed a 5% funding increase for Penn State Agricultural Research and Extension.
“Regular increases in our general support appropriation are absolutely critical to help us meet rising instructional and operating expenses and contain student costs, as state dollars and student tuition are the primary sources of funding for our education budget,” said Penn State President Neeli Bendapudi. “While this is just the first step in the state’s budget process, I am appreciative of Gov. Shapiro’s proposal to increase funding for the state-related universities, and for his support of performance-based funding as a means to grow the state’s investment in higher education.”
Penn State’s general support appropriation has been held flat at $242.1 million since a 2% increase was implemented for the 2019-20 fiscal year. In real dollars, Penn State’s funding remains at nearly the same level it was in 2000, despite almost 25 years of inflationary cost increases. The University continues in its purposeful work to be as strategic as possible with its available resources, but Bendapudi said increased state support is critical to Penn State’s efforts to innovate and invest in its academic programs, while continuing to provide an accessible and affordable education for Pennsylvania students of all backgrounds and means.
Penn State’s general support funding is used to offset educational costs for Pennsylvania-resident students, allowing the University to offer a significantly discounted in-state tuition rate. As part of its commitment to access and affordability, Penn State significantly amplifies the state’s investment on a per-student basis to save Pennsylvania undergraduates across all campuses an average of $15,000 annually on tuition costs.
Performance-based funding and increased PA State Grants
Shapiro called for Penn State’s general support funding — and all appropriations to publicly funded colleges and universities — to be distributed through performance-based funding formulas. As proposed, public institutions would be rewarded with additional funding for achieving outcomes-based metrics that align with the commonwealth’s economic and workforce development goals.
Bendapudi has been a strong proponent of performance-based funding, calling on state leaders to enact such a funding mechanism in an op-ed that appeared in PennLive last October. In a follow-up op-ed that appeared in PennLive on Feb. 4, Bendapudi again called on the General Assembly to work in collaboration with higher education leaders to define what those metrics should be and pass a performance-based funding bill during the current legislative session.
“Pennsylvania ranks 49th nationally in per-student support for higher education. In the interest of access and affordability for Pennsylvania students, and for the overall strength of our public universities, renewed investment in higher education must be a priority,” Bendapudi said. “At the same time, we’ve heard from legislators who want more transparency for how public institutions spend taxpayer dollars, which is why we voluntarily launched a new accountability website last year. When funding is distributed through a performance-based model — like it is in most states — it ensures that the state and its universities are working together on shared goals for workforce and economic development, positive student outcomes, and accountability and transparency. Institutions are rewarded for reaching predetermined goals, making annual funding much more predictable.
“After seeing performance-based funding work effectively in other states, I am pleased that Gov. Shapiro has formally endorsed this concept here in Pennsylvania. I look forward to working with the governor and General Assembly to develop the metrics and goals that make the most sense for Pennsylvania, our universities, and our students and families.”
Shapiro identified a number of possible performance-based metrics that the state might consider, including enrollment increases; graduation rates; the number of first-generation students who earn degrees; and recruiting and supporting students who complete degrees in fields facing workforce shortages, such as nursing and teaching, and in growing fields that are strategically important to the commonwealth, like advanced manufacturing and biotechnology.
The governor also proposed that the performance-based funding formula be administered through the Pennsylvania Department of Education (PDE), with funding for Penn State and its fellow state-related universities allocated to the department through the commonwealth’s general appropriation (main budget) legislation through a simple majority vote, and disbursed through the PDE. Currently, funding for the state-related universities is determined through a nonpreferred appropriations bill (or bills) that require a two-thirds majority vote of the General Assembly.
Additionally, among Shapiro’s proposed reforms for higher education, the governor’s budget proposal includes increasing the PA State Grant by $1,000, a positive step for Penn State’s in-state students that would help to reduce their overall cost of attendance. Under the governor’s proposal, the maximum grant award would increase from $5,750 to $6,750 beginning in fiscal year 2025-26.
Penn State’s proposed funding by the numbers
In its 2024-25 appropriation request to the commonwealth this past September, Penn State requested general support funding of $368.1 million, representing an increase of $126 million over final 2023-24 funding approved by the state in November. This request was designed to narrow the per-student funding gap that exists between Penn State and Pennsylvania’s other public universities. Penn State’s per-student funding currently ranks last in Pennsylvania, trailing the state’s other public universities by between $3,000 and $3,700 per student. Bendapudi said closing the per-student funding disparity that exists between Penn State and Pennsylvania’s other public institutions remains a top University priority.
The governor’s proposed 2024-25 funding for Penn State is as follows:
- General Support: Shapiro is proposing a new method of funding for state-related universities that would include Penn State and Pennsylvania College of Technology, a special-mission Penn State affiliate focused on applied-technology education. This new method would deliver funding to schools based on performance-based metrics from a single source, which equates to a 5% increase for all state-related universities. General support funding covers core teaching costs in Penn State’s education budget and helps to fund the University’s in-state tuition rate. These dollars also enable Penn State to invest in the quality of its academic programs so that it can attract the state’s top students and prepare them for successful careers in Pennsylvania.
- Agricultural Research and Extension (Land Scrip Fund): $60.6 million, a proposed increase of $2.9 million, or 5%, over 2023-24. Agricultural research and extension programs are not funded by tuition, so appropriation increases are necessary to keep pace with rising costs and to leverage matching federal and county dollars. This funding supports Penn State Extension and the vital research conducted by the College of Agricultural Sciences, benefiting citizens in all 67 Pennsylvania counties. In its 2023-24 appropriation request, the University had sought $61.7 million for the Land Scrip Fund, which supports Penn State Agricultural Research and Extension. Penn State’s request for $2 million to implement the Emerging and Advanced Technology Initiative within the College of Agricultural Sciences was not included in the governor’s budget proposal.
- Penn State Health and the College of Medicine: Proposed level funding from 2023-24. This funding is used for medical assistance to provide access to high-quality health care for citizens with limited finances, specialty disease programs and research.
The governor’s proposed budget did not include line-item funding of $2.35 million for the Invent Penn State initiative, which the University had included in its appropriation request.
Bendapudi is scheduled to appear before the Pennsylvania House Appropriations Committee on Feb. 29 to discuss Penn State’s funding with legislators. The governor’s budget proposal marks the first step in the state’s annual budget-setting process and will require the approval of the General Assembly as lawmakers work toward passage of a final 2024-25 budget package by the end of the current fiscal year on June 30.