June 30, 2011
I am writing to thank all of you for your support and patience these past few months as we have waited for a decision about our appropriation for the fiscal year that begins on Friday. Everything considered, I hope most of you will feel some degree of relief about where we ended up, though we still have challenges ahead.
Even in the midst of a cut in state support of this magnitude there must be some thanks offered. First, we are very pleased to have a state budget and Penn State appropriation completed on time. It has been almost a decade since that last occurred in Pennsylvania. I want to thank the many legislators who supported moderating the size of the cut originally proposed for Penn State. The original $182 million proposed cut would have had more serious impacts on our students and employees.
Most importantly, I want to thank the faculty, staff and all members of our Penn State community for supporting efforts to keep Penn State strong and moving forward. I have seen phenomenal cooperation from everyone at the University across the Commonwealth. Together we have worked through across-the-board and targeted cuts, and have worked jointly to implement the initiatives to emerge from the Core Council process this past year.
Let me summarize where we stand. The House and Senate have enacted a new budget for the Commonwealth of Pennsylvania, and Gov. Corbett is expected to approve it.
In this new budget is a reduction of $68 million for Penn State, an overall decrease of 19.6 percent. This cut is based on a 19 percent reduction in our instructional, agricultural research and Cooperative Extension appropriations; a 5 percent reduction for Penn College; and a 50 percent reduction in support provided to the Penn State Hershey Medical Center. This is the largest cut in state support for the University in our history and takes us back to what our appropriation was in 1995, when our enrollment numbered 19,000 fewer students than it does today. Adjusted for inflation, of course, the purchasing power of our appropriation is only about half of what it was 16 years ago.
One of the promises we made immediately after the governor’s original 52.4 percent appropriation cut was proposed was that Penn State would not put the loss of state support principally on the backs of our students and their families. We intend to keep that promise. The Board of Trustees will meet on July 15, and we will ask for their approval of a balanced budget for the new fiscal year that includes modest tuition increases.
Over the past three months we have identified internal savings of nearly $30 million across the University. Other savings are being generated by the implementation of our new health care benefits program. We have implemented significant energy cost savings, cut funding for our capital improvement program, identified savings for our property and liability insurance, and cut back on funds for new programs. The elimination of our normal salary increase this summer also generates significant savings.
I intend to look for ways to recognize employees during the year ahead for your hard work and for your sacrifices. Additionally, our financial and human resources staffs are working to re-structure employee contributions to health care benefits so that many employees might see no increase or even a decrease in their monthly premium contributions.
Despite our sacrifices and the environment of financial uncertainty, it continues to be a very good time to be part of the Penn State family. Applications to Penn State are higher than for any school in the nation. We will have more than 120,000 applications this year. With almost $800 million in research funding Penn State remains one of the nation's key centers for innovation. The rapid expansion in cutting-edge health care and research taking place at our Hershey Medical Center is saving lives. We educate more returning adult students than any other institution in the state, many of whom have jobs, spouses and families.
Our story of achievement is profound, and our stewardship of taxpayer and tuition resources is commendable.
Penn State will continue to have a positive impact on the state and nation. Thousands of employees like you are making life better for everyone. I feel honored to work with so many talented, dedicated people. Please accept my thanks for all that you do on behalf of this great University.
Graham B. Spanier