Penn State leaders share updates on key University efforts, initiatives

UNIVERSITY PARK, Pa. — In advance of the July meeting of Penn State’s Board of Trustees, University leaders are sharing updates on key University initiatives and efforts related to enrollment, the Commonwealth Campuses, budget and tuition, state funding, and the new budget model.

Budget and tuition

At the board’s July 20-21 meeting at Penn State Behrend, University leaders will present a two-year budget asking for the trustees’ approval. After years of passing incremental, one-year budgets, Penn State has implemented a two-year, data-driven budget model that is designed to enhance predictability, improve the strategic allocation of University resources, and better control costs in support of access and affordability.

As part of the two-year budget process, the board also will approve tuition and fees schedules for both the 2023-24 and 2024-25 academic years, a change that will help students and families with their own budgeting and financial planning.

“As we work to finalize our budgets for the next two fiscal years, we are committed to cost reduction, fiscal responsibility, and revenue growth,” said Sara Thorndike, senior vice president for Finance and Business/treasurer. “The work we have done up until now through our hiring freeze, revamped budget allocation model, and other cost-reduction initiatives will allow us to bring to the board a two-year fiscal plan that includes progressively lower deficits. We also expect to end the current fiscal year with a smaller deficit than originally projected because of the actions taken across the University to control spending and enhance revenues, and we remain on track for a balanced budget by fiscal year 2025-26.”

As the University continues to focus on cost control and balancing the budget, Justin Schwartz, Penn State executive vice president and provost, said that Penn State remains committed to offering students the highest quality educational experiences and advancing the priorities of the research enterprise.  

Thorndike also noted that while tuition schedules are still being finalized, the University is focused on keeping any tuition increases as low as possible, in line with Penn State’s decade-long commitment to controlling student costs. Since 2012, Penn State’s tuition increases have remained below the rate of inflation, highlighted by three consecutive years of tuition freezes for Pennsylvania resident undergraduates from 2018-19 to 2020-21.

State funding

State support is a key component of efforts to keep tuition costs low, and Penn State is continuing to advocate in Harrisburg for increased state funding. The University’s general support appropriation, which helps to fund the discounted in-state tuition rate for Pennsylvania resident students, is currently $242.1 million and has not increased since the 2019-20 fiscal year.  

Pennsylvania Gov. Josh Shapiro proposed an increase in Penn State’s 2023-24 general support appropriation. Penn State has requested a historic funding increase, which is intended to close the per-student funding gap that exists between Penn State and the commonwealth’s other public universities. Penn State’s state funding ranks last in Pennsylvania on a per-student basis, trailing the state’s other public institutions by between $2,600 and $3,400 per student. Penn State receives approximately $5,600 in support per Pennsylvania resident student compared to Temple University at $8,275; the Pennsylvania State System of Higher Education schools at $8,378; and the University of Pittsburgh at $9,049.

Penn State’s funding ranks far below the national average of more than $10,200 per student in 2022, and Pennsylvania currently ranks 49th among the 50 states in per-student funding for public higher education. Outside of Pennsylvania, Penn State’s per-student state support is significantly less than fellow Big Ten peers such as Maryland ($30,316 per in-state student), Ohio State ($10,003), and Wisconsin ($21,237) — despite educating more students than any of those institutions.

Penn State’s funding will require the approval of the General Assembly and the governor as lawmakers work to pass a final state budget by the commonwealth’s June 30 deadline.

Budget allocation model

The University’s transition to a two-year budget this July is supported by the creation and implementation of a new budget allocation model for fiscal years 2023-24 and 2024-25. The data-driven model uses current information such as student credit hours, student headcount, and research productivity, among other variables to determine the annual base budget allocation — primarily from tuition and state funding — for each Penn State unit, college and campus.

While this type of budget model is similar to other peer Research 1 universities, Penn State’s is customized to the unique needs of the institution and provides flexibility for strategic investments in mission-critical areas. To reflect the unique attributes of Penn State, the model also takes into consideration the unique elements of Penn State’s interdisciplinary research focus and collaboration.

Following ongoing conversations with unit, college and campus leaders this spring as budget leaders worked to develop their budgets, the president, executive vice president and provost, and vice president for Commonwealth Campuses are directing strategic funds toward specific unit needs and University priorities, including support for student success, teaching and research. These funds and subvention will help account for varied costs of instruction and specialized needs in certain programs across the University, in ways the model isn’t able to capture, to make sure appropriate support is available.

According to Thorndike, the new model — developed by a working group of faculty, staff and administrators in 2022 — was designed to be an adaptable tool to help Penn State leaders to look ahead to make budget-planning decisions that support unit and University priorities like student success, research and the land-grant mission.

The University has been focused on putting systems and processes in place to enable a transparent and sustainable approach to budgeting that meets students’ needs and continues to support its mission, vision and values.

This effort stems from a 2019 Strategic Budget Task Force report that recommended a new allocation model and a multi-year budget cycle. To support this work, Penn State unified its budget and finance operations in summer 2022.

“For many years, Penn State has been focused on efforts to reduce costs and promote access and affordability for students and their families,” Thorndike said. “As higher education continues to evolve and we face new challenges, the University remains committed to enhancing our approach for allocating financial resources and appropriately stewarding those resources.”

The model will continue to evolve as University leaders work through and analyze data, and in fall 2023, the new model will be rerun with new data to support budget planning for future fiscal years. The Budget Allocation Working Group also continues to prepare to rerun the model this fall and to discuss future enhancements to the model and data management and process improvement efforts.

Enrollment and campuses

As Penn State and other colleges and universities grapple with the continued decline in the number of high school graduates, the University is focused on growing its enrollment across its Commonwealth Campuses.

“Coming out of the pandemic, we have seen a decline in students considering college, and many enrolled students took a break due to mental health or personal issues, so we do see opportunities for growth, especially at our Commonwealth Campuses,” said Matt Melvin, vice president for enrollment management.

To help foster enrollment growth across all campuses, Melvin said the University is moving to a more integrated approach to serving and retaining students. As prospective students and their families consider college and ultimately Penn State, Melvin said Penn State must make sure it understands student aspirations and expectations. Penn State also must offer a consistent, unified pre-enrollment experience as students navigate the complex decision-making process.

Melvin said a firm understanding of students’ desires will allow Penn State to draw on its vast portfolio of academic programs and student engagement opportunities to connect individual students with the right major and campus to meet their needs.

“The big advantage of Penn State is that we’ve got 19 undergraduate campuses across the state, and 96% of Pennsylvania residents live within 30 miles of a Penn State campus,” he said. “That gives Penn State an unmatched ability to offer an affordable, world-class education to residents, while also boosting local and regional economies by helping to address local workforce needs. In addition, given the importance students and families place on outcomes, the power of the Penn State alumni base and their support is a source of tremendous strength.”

Melvin said the University’s efforts to grow its enrollment extend beyond attracting and retaining traditional-aged college students, including international students, adult learners, community college transfers, and individuals who may have started college but didn’t finish their degree.

To achieve this, Penn State has emphasized a data-centric, research-based approach to its enrollment management and student recruitment efforts.

The Office of the Vice President for Commonwealth Campuses has worked in conjunction with campus leaders to develop a new regional strategy for the Beaver, Fayette, Greater Allegheny, New Kensington and Shenango campuses to recruit, retain and support students living in western Pennsylvania who aspire to attend Penn State. The campuses also share some administrative infrastructure, such as human resources, financial and business services, and information technology, and their admissions culture has become more collaborative to serve the region.

“The beautiful thing about this is that campuses are being more efficient about how they’re deploying limited resources, all while offering more programs that align with the workforce needs of this region of Pennsylvania,” Melvin said. “The Commonwealth Campuses also provide excellent choices to students who can select a campus location and experience that fits their needs. This allows students to stay close to home, earn a world-class degree from Penn State, and find a good job in the local community upon graduation.”