UNIVERSITY PARK, Pa. — After 10 months of collaboration between members of the Pennsylvania General Assembly, Gov. Josh Shapiro, and representatives from higher education, the state’s Performance-Based Funding Council unanimously approved a final report on May 5 containing its recommendation for a new performance-based funding model for Pennsylvania’s state-related universities.
Act 90 of 2024 (SB 1154) established the Performance-Based Funding Council to set forth a recommendation for a new process that utilizes performance-based metrics to distribute funding to Penn State, the University of Pittsburgh, and Temple University.
Through a series of meetings held on university campuses and in Harrisburg earlier this year, the council developed the recommendation, which is intended to increase degree attainment, encourage affordability in higher education, meet state workforce needs, and grow Pennsylvania’s economy.
Penn State President Neeli Bendapudi has been a strong proponent of instituting a performance-based model to grow Pennsylvania’s investment in public higher education and create more clarity, consistency and accountability for higher education funding.
The council’s recommendation
The recommendation, which still needs to be passed by the General Assembly and signed into law by Shapiro, outlines the specific metrics each university would need to meet to earn its portion of proposed new funding. Gov. Shapiro has proposed $60 million for the three schools; however, a final amount will need to be negotiated along with the state budget.
The council’s full recommendation is as follows:
1. Make the council permanent to oversee the performance-based funding model.
2. Apply the performance-based model to new funds and use existing funds as a base allocation.
3. Apply the performance-based funding model beginning in fiscal year 2026-2027, and provide advancement funding in fiscal year 2025-2026.
4. Determine a maximum performance allocation for each university based upon a fixed amount and each university’s share of the total weighted student count, which includes undergraduate enrollments, progression at 60 credits, Pell-eligible students, students from low-matriculating high schools, community college transfers, and high-priority occupation degrees awarded.
5. Determine each university’s performance allocation by evaluating performance based upon four-year graduation rates, six-year graduation rates, six-year Pell-eligible graduation rates, high-priority occupation degree production, and incentivizing college affordability and rewarding improvement.
As part of its report, the council recommended that graduation rates and workforce production look only at in-state students.
The council also recommended that a portion of the funds be set aside to award improvement and affordability bonuses for each university. To determine high-priority occupation degrees and the high-priority rate, the council used the Grow PA Scholarship Grant Program’s Classifications of Instructional Program codes developed by the Pennsylvania Higher Education Assistance Agency. A detailed list of those degrees can be found in the appendix of the council’s final report.
"We are thankful to the council members, legislative staff, and all involved in this collaborative effort who spent considerable time developing this recommendation, which creates a transparent and predictable path forward for future increases to our state appropriation, benefiting all Penn State students,” said Mike Stefan, Penn State vice president for government and community relations. “While the recommendation does not meet all of our goals, we are pleased to see it advance to the General Assembly for further discussion and consideration over the coming months.”
General support funding
Funding received from the new performance-based model would be in addition to Penn State’s annual general support state appropriation, which helps to keep tuition affordable for all Pennsylvania-resident undergraduate students and supports the University’s mission of providing an accessible, world-class education.
In his annual budget address, Shapiro proposed flat general-support funding for all state-related universities, including Penn State, but he did propose the $60 million performance-based funding pool that, if approved by the General Assembly, could lead to the University’s first state funding increase in six years. Penn State’s general support funding last increased in 2019-20. Historically, Penn State’s annual funding remains at nearly the same level it was in 2000, despite a quarter century of inflationary cost increases.
“A primary goal of ours through this process has been to restore fairness in how state dollars are distributed; unfortunately, this goal has not been met,” Stefan said. “Despite demonstrating high success with the proposed metrics, Penn State will continue to receive less funding per student compared to Pennsylvania’s other public universities. We will continue to educate members of the General Assembly about this inequity and advocate for fairness.”
Penn State’s current general support appropriation of $242.1 million, divided equally among approximately 41,800 in-state undergraduates, amounts to about $5,789 per student — funding that Penn State significantly amplifies, with the average in-state undergraduate paying $15,809 less for tuition annually than a nonresident student. In contrast, on a per-in-state-student basis, Temple University receives approximately $10,505 in state funding per student, the University of Pittsburgh receives $9,538 per student, and universities in the Pennsylvania State System of Higher Education receive $9,526 per student. Nationally, in 2023, public institutions received an average of $11,040 in education appropriations per full-time student.
The council will begin drafting legislation to implement its recommended changes for the General Assembly to consider. Work will continue through the state’s annual budget process to adopt the council’s recommendations with the understanding that allocations through the new model will not occur until the 2026-27 budget year. Penn State’s general support funding is expected to be finalized as part of the commonwealth’s 2025-26 budget.