Senate Appropriations Committee holds hearing at University Park

UNIVERSITY PARK, Pa. -- Penn State administrators welcomed members of the state Senate Appropriations Committee, chaired by Senator Jake Corman (R-34), to the University Park campus Sept. 7 for the first of a series of public hearings on the role of the Commonwealth's state-related universities.

As one of Pennsylvania's four state-related universities, Penn State receives state funds but is independently operated. It shares this status with Temple University, the University of Pittsburgh and Lincoln University, each of which also will receive visits from the panel.
 
Corman said the committee wanted to hear testimony from Penn State President Graham Spanier and other University officials on a variety of topics, including the impact of the state budget on the University's operation.
 
"Our goal is to learn more about how the state-related universities operate and their role in our higher education system," Corman said. "Like our other institutions of higher learning, they have been forced to do more with less during these difficult fiscal times – these hearings will give the state-relateds an opportunity to talk about how they are meeting these challenges."
 
During the meeting, Spanier gave the committee a brief overview of Penn State’s financial picture, along with some key benchmarks. "There are more than 4,000 colleges and universities in this nation, but no university replicates Penn State in governance or structure, only a small number resemble us in size and scope, and few have achieved the same measure of success in creating a student-centered university within the context of a major research university," he said.
 
He told the panel that Penn State directly impacts one in two Pennsylvania households through teaching, research and service; serves 96,000 students; employs 24,500 full-time and 22,600 part-time faculty, staff and student employees; has a network of more than half a million living alumni; and each year generates more than $17 billion annually in direct, indirect and induced economic impact for the Commonwealth.
 
In outlining the University's budget, Spanier explained that the University's three main sources of revenue are generated through teaching, patient care and research. The largest source of income in the overall budget is student tuition and fees, followed closely by hospital and clinical revenues generated through the Penn State Hershey Medical Center. Restricted Funds, primarily from sponsored research grants and contracts, account for 16.5 percent.
 
The general funds budget, which is the subset of the total operating budget that encompasses the core academic and teaching-related elements of the University's operations, is supported by three sources of revenue: student tuition and fees which represent 78 percent, the Commonwealth appropriation which is 14 percent, and a few smaller sources that contribute the remaining 7 percent.
 
Spanier explained that the appropriation has failed to keep pace with inflation, having remained flat or decreased over the past several years, which is why tuition and fees have had to increase. While economic pressures have hit state governments nationwide, Penn State is at the bottom of the list in the Big Ten for appropriation per student, by a significant margin. "Even in Pennsylvania, Penn State ranks last in appropriation per student, and we’re losing ground," he said.
 
Spanier also outlined the University's cost-cutting measures undertaken to moderate the financial impact on students and their families. "This year we doubled the annual across-the-board budget cuts for our operating units, as well as implementing targeted expense cuts. We suspended July 1 general salary increases for faculty and staff for the second time in three years. We implemented a new, cost-effective health care plan and expanded energy conservation efforts. We scaled back our investment in capital projects and modified property and liability insurance. And we reduced the number of employees through early retirement, attrition and layoffs," he said.
 
Spanier also spoke about how the University remains an excellent investment for the Commonwealth. "Nationally, Penn State’s graduation rate ranks among the highest for public universities, and Penn State’s University Park Campus has the highest graduation rate of any public university in Pennsylvania," he said. Also, Penn State students are among the most highly regarded in the nation. The Wall Street Journal named Penn State the No. 1 overall institution in the nation for producing the best prepared, most well-rounded graduates who are able to succeed once hired.
 
Penn State research enjoys a strong international reputation. "When President Obama wanted to give a speech on energy innovation, he chose Penn State for the setting. Our faculty members write seminal books in their fields, and their pioneering research transforms lives," he said.
 
The University also ranks among the nation's leaders in industry-sponsored research and development. Penn State’s overall research expenditures topped $800 million in 2011, which ranks among the premier research institutions in the world. Every $1 million in research and development spending generates 36 jobs.
 
Spanier also talked about the University's commitment to service and outreach, not only among its faculty and staff, but among its students as well.
 
In conclusion, Spanier emphasized crucial role the state appropriation plays in the ongoing success of Penn State as the Commonwealth’s only Land-Grant university. "Although multiple sources of revenue support Penn State’s mission of teaching, research and service, it is the state appropriation that moderates the cost of attendance for in-state students, as well as the agricultural research and Cooperative Extension programs that contribute so much to Pennsylvania’s economy," he said.
 
Hank Foley, Penn State vice president for Research, spoke about how Penn State research is balanced among the various disciplines. "Roughly 80 percent of federal research funding to University of Pittsburgh and University of Pennsylvania comes from the NIH (National Institutes of Health) to support their medical schools," Foley said. "Federal research dollars at Penn State is about evenly distributed across the NSF (National Science Foundation), NIH, DoD (Department of Defense) and DoE (Department of Energy). This makes us very different."
 
Foley said this is important because federal support is the largest portion of funding for Penn State research, so to have it diversified helps to ensure the University is able to do both basic and strategic research. He also said it represents funding that is coming from other sources outside of Pennsylvania that ultimately supports jobs and provides a positive economic impact in Pennsylvania.
 
Rod Erickson, Penn State executive vice president and provost, explained the importance of the University's Commonwealth Campus system to the state and its residents. "The campuses provide access to a quality Penn State education close to home, and they contribute significantly to the economic and cultural vitality of the communities and regions they serve," he said.
 
Erickson said 90 percent of Commonwealth Campus students are Pennsylvania residents, and 40 percent of them are among the first generation in their families to attend college. "Penn State’s founding mission of providing access and opportunity still prevails today," he said.
 
That access extends to another group of students who cannot be served easily by other colleges and universities – location-bound students, many of whom are adult-learners, who balance the demands of work and family with their personal and professional goals for higher education. Erickson said that adult learners make up 25 percent of the population of Penn State's undergraduate degree students at the campuses, and many more enroll in continuing education programs offered by the campuses. "Last year, continuing education credit and noncredit enrollments totaled more than 75,000. In this way, we are meeting the needs of adult learners who are seeking professional certification and credentials relevant to the workplace," he said.
 
Erickson also told the panel that more than 60 percent of all Penn State students start at a Commonwealth Campus, and that the campuses receive a growing number of students transferring from other Pennsylvania colleges and universities to complete their baccalaureate degrees. "Last year, 75 percent of all transfer students applied directly to one of our Commonwealth Campuses. Many of these students take advantage of the program-to-program articulations that our campuses have developed with Pennsylvania colleges and universities – in particular with area community colleges – where the respective faculties and staff work together to advise students on curricular and course expectations," Erickson said. "Overall, our Commonwealth Campuses are playing an increasingly significant role in Pennsylvania’s higher education community."
 
Erickson also said the campuses are part of the economic vitality of the communities they serve. "They spark major economic impact – nearly $2 billion annually in direct, indirect and induced economic impact for Pennsylvania. More than 11,000 jobs are directly or indirectly attributable to the Commonwealth Campuses," he said.
 
To conclude the hearing, Craig Weidemann, vice president for Outreach, and Bruce McPheron, dean of the College of Agricultural Sciences, addressed the Senate panel together on the importance of Outreach and the Land-Grant mission at Penn State.
 
"We have a culture of applying our science, evidence-based interventions and discoveries to address issues in communities, companies, farms, schools, and local government. Additionally, the outreach work of our faculty deeply informs and impacts the teaching and research conducted across all academic departments, demonstrating true reciprocity between Penn State and its communities," said Weidemann. He told the panel of the broad and deep impact Penn State's outreach activities have across the Commonwealth. "We serve more than 5 million people, have over 50 percent of our faculty participating in outreach programs, work with over 1,000 companies, and reach thousands of children and adults through Extension," he said.
 
Weidemann cited the many ways in which Penn State serves the people of Pennsylvania, through its 24 campuses, Cooperative Extension educators in all 67 counties, Hershey Medical Center and its affiliate locations, the Applied Research lab's four locations in Pennsylvania, the Greater Philadelphia Innovation Cluster (GPIC) at the Philadelphia Navy Yard, the new Penn State Center: Engaging Pittsburgh, service sites such as the Justice and Safety Institute, Small Business Development Center, PennTAP and continuing education delivery locations.
 
"Through our relationship with the Commonwealth and the 150 years of continuous support, Penn State touches one out of every two households in Pennsylvania. And with WPSU delivery channels and the World Campus reach, Penn State can impact every single household in Pennsylvania," he said. "As Dr. Spanier has noted, there are many schools that perform Outreach work, but no other school has the size, scope and impact across the state that Penn State does in Pennsylvania."
 
McPheron discussed the impact the budget cuts have had on his college, and particularly the agricultural research and Extension functions, which are not funded by tuition dollars. "We have been proactive in the college in understanding the implications of pressures on public funding. In 2009, realizing that our budget would be flat for two successive years and that federal stimulus dollars would disappear at the end of those two years, we initiated steps to reduce our operating expenses to accommodate those changes. These budget reductions were conducted in parallel with planning processes to ensure that our cuts were as strategic as possible," he said. However, even though the college exceeded its targeted budget reductions, it was not enough to account for the 19 percent reduction in ag research and extension funding in the current appropriation. To meet the fiscal challenges caused by the appropriation cut, the college has engaged in restructuring. "We are reducing our workforce dramatically. In addition to attrition and a voluntary retirement program, layoffs will result in a 25 percent reduction of our personnel resources in the span of two years. We are examining our farms and facilities for further efficiencies; and we are restructuring our Cooperative Extension presence across the state."
 
These reductions are being made at the same time the college is being asked by its stakeholders – the businesses and citizens of Pennsylvania – for new information about how to keep food safe, combat invading pests and understand what Marcellus Shale means to communities and individuals. "The Commonwealth, the nation and the world need the product of our work," McPheron told the panel. "The budget pressures we face are reaching a tipping point. The work we do is not duplicative of the investments by the private sector. We fill a huge gap that truly does represent an investment in the public good."
Contacts: 
Last Updated September 13, 2011