Penn State's 2011-12 budget plan seeks 5 percent increase from state

University Park, Pa. -- The Board of Trustees today (Sept. 17) approved a fiscal plan for Penn State that asks the Commonwealth to provide a supplemental 5 percent increase, or $17.2 million, over last year's level of support. If provided, it would bring the University's state appropriation to a total of $364.2 million.

President Graham Spanier explained that Penn State will receive $333.9 million from the state in 2010-11, which combines a base state appropriation of $318.1 million and $15.8 million of federal stimulus funds from the American Recovery and Reinvestment Act. The federal stimulus dollars were meant to help public institutions stabilize their funding and keep tuition increases as low as possible. Stimulus funding for higher education will be halted after this year.

The $333.9 million combined with an additional $13.1 million in state and federal medical assistance funding to be directed to the Milton S. Hershey Medical Center in 2010-11 amounts to $347 million from the state. That $347 million was the starting point for the University's 2011-12 request, Spanier told trustees.

Spanier said that of the $17.2 million increase requested for 2011-12, $12.8 million will go to support the Educational and General Budget. Programs in Agricultural Research and Cooperative Extension are slated to receive $3.1 million of the additional request and enhanced support of $691,000 is sought for the Pennsylvania College of Technology. Additional state and federal medical assistance funding of $657,000 for the Hershey Medical Center also is included in the increase request.

"In our request, we attempt to balance three factors: the Commonwealth's ability to support us; our responsibility to continue to make the case for additional state support in light of the increased costs of fulfilling our mission; and the growing burden that tuition increases place on our students and their families," Spanier said.

If the state is able to fund the University's appropriation request fully, the tuition increase for Pennsylvania resident students would be 2.9 percent at Commonwealth Campuses and 4.9 percent at University Park. Out-of-state students would experience a 2.9 percent tuition increase at campuses and a 3.5 percent increase at University Park.

For the 20th consecutive year, Penn State targets millions in expense reductions. In this current fiscal plan, $17.3 million in cutbacks is identified, including $7.3 million as the result of a 1 percent across-the-board reduction in departmental operating funds. An additional $10 million in targeted administrative cost savings also will be identified.

The 2011-12 fiscal blueprint also includes $37.2 million for salary adjustments and related employee benefits; $34.8 million for employee benefits cost increases, such as health care insurance, retirement and social security; and $11.6 million for facilities costs increases including deferred maintenance, fuel and utilities, and capital improvements.

An additional $9 million is designated for initiatives such as academic priorities indentified in the University's strategic plan and to cover increased costs in areas such as research administration, information technology services and safety and security programs.

Spanier explained that while the current proposal reflects a balanced budget plan, a number of variables could change the bottom line, which in turn would impact what the University must charge in tuition.

"First among the unknowns is our appropriation from the Commonwealth," Spanier said. "Another variable is our ability to maintain projected enrollment levels and finally, we have limited control over many mandatory expenses such as health care costs, retirement contributions, fuel and utility costs, insurance and deferred maintenance.

"We have only two primary sources of support for our educational program, legislative appropriation and tuition," he said. "We will continue to strive to cut costs where we can, provide the quality education for which we are known, and produce research that benefits society."

Spanier said he and other University leaders remain hopeful that Pennsylvania can support Penn State at the level it needs in order to best serve its students and residents of the state.

Last Updated March 17, 2011