Penn State budget plan seeks modest increase from state

UNIVERSITY PARK, Pa. -- Penn State's Board of Trustees on Sept. 14 approved a budget plan for 2013-14 that includes a request to the Commonwealth of Pennsylvania to provide $10.6 million more than the University will receive in the current fiscal year. If provided, it would bring the University's appropriation to $289.5 million.

President Rodney Erickson said the plan balances three factors: the Commonwealth's ability to support Penn State given the still fragile economic recovery; the University's responsibility to continue to make the case for additional state support as costs rise; and the burden that tuition increases place on students and their families.

"We believe this is a responsible budget," Erickson said. "The appropriation provided by the Commonwealth to Penn State makes it possible to support the in-state tuition discount and helps to make attending a major research university an affordable option for Pennsylvania residents. We are hopeful that our partnership with the Commonwealth, a partnership that we value tremendously, can be strengthened in 2013-14 as Penn State strives to fulfill its commitments as the Commonwealth’s land-grant university.”

The appropriation request includes an increase of $7.5 million, or 3.5 percent, for the University's Educational and General Budget. It also includes an increase of $2.4 million to maintain the level of services provided through programs in Agricultural Research and Cooperative Extension, and inflationary increases of 3.5 percent in support for both the Pennsylvania College of Technology and the Milton S. Hershey Medical Center.

Erickson said the budget plan includes a 2.5 percent base increase for salary adjustments and related employee benefits to allow the University to remain competitive for top faculty and staff. It also includes a 1 percent increase for the President's Excellence Fund for merit, market and equity adjustments.

The budget plan includes funds for expected increases in employee health care costs and employer contributions on behalf of employees enrolled in the State Employees Retirement System. It also includes $6 million for strategic initiatives and other program commitments and an additional $1 million for need-based student aid.

The proposal targets $35 million in expense reductions through a combination of across the board reductions in departmental operating funds, targeted savings in administrative units and a restructuring of the post-retirement health care liability. An estimated $4 million from two major sources of non-tuition revenue -- indirect cost recovery and investment income -- is budgeted.

If the Commonwealth is able to fully fund Penn State's appropriation request, the average undergraduate tuition increase is projected to be 3.3 percent. The increase for Pennsylvania undergraduate students is projected to range from 2.8 percent at Commonwealth Campuses to 3.8 percent at University Park. Out-of-state students would see a 2.8 percent increase at Commonwealth Campuses and 3.3 percent increase at University Park.

"The proposal we are presenting today reflects a balanced budget plan," Erickson said. "This appropriation request is the first step in a lengthy and complex state budgeting process. As is the case with any plan, there are a number of variables that could change. These, in turn, influence how the final budget will look next July."

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Last Updated September 18, 2012