DuBois, Pa.— Penn State's Board of Trustees Friday (July 9) approved the University's operating budget for 2010-11. Penn State's $4 billion budget is based on appropriations and federal stimulus money totaling $333.9 million from the Pennsylvania budget.
"Given the state’s financial challenges and the many competing priorities for funding, we are appreciative of the efforts to support higher education and Penn State," said President Graham Spanier in presenting the budget proposal to the board.
The budget sets an increase in tuition of 3.9 percent for Commonwealth Campus students, 4.5 percent for out-of-state students at University Park, and 5.9 percent for resident lower-division undergraduate students at the University Park campus. See http://live.psu.edu/story/47429 for more on tuition.
Spanier noted that in light of the current economy, the University's budget was developed in a very conservative manner, with four priorities: keeping tuition at the lowest possible level without sacrificing quality; reinstating modest faculty and staff salary increases; providing funds for unavoidable cost increases and limited high priority initiatives; and continuing prudent expense management.
The budget includes internal expense reductions of $12 million through a 1-percent, across-the-board reduction in department operating budgets and other targeted administrative savings. When combined with an increase of $2.5 million in non-tuition income, this is equivalent to 1.4 percent in avoided tuition increase.
Tuition and fees comprise the largest portion of University income at 34.2 percent. Hospital and clinical revenues make up 27.5 percent, restricted funds 16.5 percent and auxiliary enterprises 8.5 percent. Commonwealth appropriations represent 7.9 percent of the budget.
The general funds budget increases by $87.8 million over last year. General funds are comprised of education and general, agricultural research, Cooperative Extension, the College of Medicine and the Pennsylvania College of Technology.
Salary increases totaling $30.4 million account for the largest changes in the education and general budget. A salary freeze was instituted for 2009-10, and limited funding was available in the previous two years. Two-percent salary increases will be merit-based, with an additional 1.5 percent available from the President's Excellence Fund to address special merit, market and equity cases.
"It is important that faculty and staff pay increases be reinstated for 2010-11 to maintain the University's competitive position and to help our employees through these challenging times," Spanier said.
The University projects an increase of about $23 million in employee benefits costs, and $11.4 million is dedicated to facilities and maintenance of the University's physical plant. Spanier noted that modern classroom and laboratory space for academic programs at Penn State continues to lag behind the University's peers.
Additional funds will support programs of strategic importance to the University, including $3 million for investments in several degree programs, infectious disease research and the Center for Sustainability. Another $3.8 million is earmarked for other program commitments, including new faculty positions and workload adjustments reflecting enrollment changes, as well as information technology, admissions, counseling services and safety programs. Money also is provided for student aid, and enhancement of libraries' information technology.
Funding for agricultural research and Cooperative Extension, which is not supported by tuition, will remain at 2009-10 levels. After covering salary and benefits adjustments, reductions of nearly $2 million will be required in agricultural research and Cooperative Extension services.
The total budget for the College of Medicine will be $185 million, a $7 million increase. The budget for the Penn State Milton S. Hershey Medical Center was set on July 7 by its Board of Directors at $1.1 billion.
The College of Medicine and Medical Center receive no line item appropriation from the state, but receive state and federal Medicaid Assistance funds estimated at $13.5 million through the Pennsylvania Department of Public Welfare.
The Pennsylvania College of Technology, a subsidiary of Penn State, set its budget at $142 million, an increase of $3.8 million.
"We recognize and share the economic hardships being faced by Pennsylvania, especially by our students and their families," Spanier said. "We also know that our mission and success remain absolutely critical to the future of Pennsylvania. Our vitality is part of the solution to the economic downturn. We simply cannot allow the quality and breadth of our enterprise to be diminished."