Penn State Intercom......February 15, 2001

State budget proposal falls
short of University needs

By Annemarie Mountz
Public Information

The proposed state budget for fiscal year 2001-02 that Gov. Tom Ridge presented to state lawmakers on Feb. 6 includes an overall increase of slightly more than $2 million for the University. The governor's proposed appropriation of $334 million is an increase of just .62 percent over the current appropriation of $331.9 million. Were this budget to be approved by the Legislature, it would be the University's smallest appropriation increase during Ridge's tenure.

The figure is well below the 4.25 percent base state appropriation increase sought by the University. In addition, the University is asking for a $16 million increase for special appropriations to support the College of Medicine, the School of Information Sciences and Technology and environmental compliance.

"The process is very preliminary at this stage," said Gary C. Schultz, senior vice president for finance and business/treasurer. "It's really the first round. We still have to prepare to make our case to the state Legislature later this month for the needs of Penn State, its faculty, staff and students."

Ridge's proposal removes $7.5 million in funding that was added to Penn State's appropriation last year, including $2 million for workforce development initiatives at Penn College and $5 million in program funding for advances in areas such as the life sciences, environmental sciences, materials science, and children, youth and families. The budget that remains is then proposed to be incremented by 3 percent. The net effect is an overall increase of less than one percent.

One bright spot on the higher education front is an increase to the Pennsylvania Higher Education Assistance Agency (PHEAA). The agency would receive $403 million, a $17 million increase. The appropriation includes a $22 million increase for PHEAA's ongoing Grants to Students Program. In addition, Ridge's budget would provide $3 million for the first year of a five-year program to subsidize bonds that the state's colleges and universities issue to finance the installation of sprinklers and fire-suppression systems in student residence halls, and Ridge proposes a
33 percent increase in a graduation incentive program for schools that have a high rate of graduating students in four years or less. Penn State does not qualify for any of these funds.

The University's requested budget increase would be used primarily to support basic operating costs. Special emphases are improving faculty and staff salaries, meeting escalating health-care costs and providing support for facilities improvements and deferred maintenance; $13.8 million has been requested for these costs.

"The competitiveness of Penn State's faculty salaries is a concern," said President Graham B. Spanier. "Penn State salaries have continued to slip when compared to the Big Ten public institutions and to regional peer institutions."

The University's budget proposal included a 3.5 percent increase in the salary pool and additional funds for special merit. Funding such a plan would be extremely difficult under the governor's budget plan.

The third area of emphasis in the basic operating budget is funding for critical needs in three areas: the maintenance and operation of new or newly renovated facilities; deferred maintenance -- the University has a backlog of major maintenance projects estimated to be more than $192 million; and the ongoing capital improvement program. Fiscal year 2001-02 will be the third year of a six-year capital improvement program to meet the University's facilities needs.

In other expense changes, Spanier said that "We will continue our program of internal budget reductions that is part of our strategic planning process. This is the 10th consecutive year for internal budget reductions, resulting in a total of 12 percent recycling of our departmental operating budgets."

Spanier will have the chance to make a case for the University's budget needs during the Senate budget hearings Feb. 26 and the House budget hearings Feb. 27. These hearings provide legislators with an opportunity to review the specifics of each request.

At the conclusion of the hearings, a general appropriation bill is introduced in the General Assembly for discussion and debate. Once the House and Senate each pass the same version of the bill, it is sent to Ridge for his signature. The state's fiscal year begins July 1, but the Ridge administration historically has completed this process ahead of that deadline.