Spanier makes funding case to Senate panel

Penn State President Graham B. Spanier, along with the leaders of Pennsylvania's other state-related universities, appeared before the state Senate Appropriations Committee yesterday (March 3) to make the case for funding for the 2010-11 fiscal year.

Sen. Jake Corman, chair of the Senate Appropriations Committee, acknowledged that the four state-related universities have been good stewards of the state appropriation money they've received. "I think if all parts of government over the last eight years would have been as efficient with the dollars they've gotten from the state government, doing more with less, as you universities have been asked to do, I think the taxpayers would be extremely grateful. I know that you've been asked to be as efficient as absolutely possible with the limited funding that the state has, and I think in most cases you've really stepped up," he said. "All four universities are very important and integral to the workings of this Commonwealth in educating our young people and also as economic drivers."

Corman asked what impact it would have on tuition if state funding should evaporate.

"That would change the character of our institutions. Almost certainly it would turn us into the equivalent of completely private universities," said Spanier. He explained that if Penn State lost the state appropriation, it would have the effect of increasing in-state tuition to the same level as out-of-state tuition. "The gap between in-state and out-of-state tuition currently is about $10,000 per student."

Spanier also stated concerns that a result of losing state funding would be to reduce access to higher education, as fewer students would be able to put together a financial package that would enable them to afford to go to college. "It would put the cost of higher education out of reach for them, and that would affect opportunity, the number of graduates from our universities, and it would have ramifications for the economy of the state as well."

Sen. Jay Costa, minority chair of the Appropriations Committee, asked what the four state-related universities plan to do once the federal stimulus money that is included in both the current budget and the proposed budget for 2010-11 goes away.

"What many people don't realize is that in Pennsylvania, the way the stimulus funds have been used in higher education was to give us money for our operating budget, which has allowed us to operate at a relatively consistent level. Even then we were only able to pull that off at institutions like mine by not giving out any pay raises to any employees; by making across-the-board-cuts in all units; and then millions of dollars of additional cuts," said Spanier. He said a year from now, when the stimulus funding no longer is available, "We could be looking at the greatest financial crisis in the last 100 years."

Spanier cited funding issues that are outside of Penn State's control as contributing factors to the financial situation, including a funding crisis in the State Employee Retirement System (SERS). "We are already projected over the three to four years going ahead to have a deficit of $66 million, which would be our institutional share of the funding gap for SERS. This is based on numbers they have already given us as planning estimates," he said.

Sen. David Argall asked the four presidents about their cost-cutting measures and efficiencies in their operations. In response, Spanier pointed out that in his 15 years as president of Penn State, the University has seen two bond-rating upgrades because of how positively its operations have been judged by the financial community. "We have a lot of ways in which we have become more efficient in terms of our contracts, in terms of how we do renovations, in terms of employee benefits. … There are a lot of things we have done and can continue to do, and if we can be helpful (to the state's efforts), we have expertise in a lot of these issues," he said.

Sen. Lisa Baker asked Spanier specifically about the viability of the University's Commonwealth Campus system, and whether or not any campuses might be in danger of closing. Spanier said that no campus was in danger of closing. "Our campuses are doing very well right now. They've had enrollment increases the last couple of years and they're financially stable." In addition, Spanier pointed out that many Penn State campuses serve location-bound, nontraditional students. "At a couple of our campuses it's even the majority of our students who are outside of that traditional college age. We provide an important service to them and are very committed to keeping that strong," he said.

Another topic of special interest to the committee was Cooperative Extension. Spanier explained that this area of the University is very dependent upon the funding it receives from the state, since there is no tuition to offset insufficient funding from the appropriation. "The proposal from the governor that is currently on the table will result on July 1 in a loss of 54 positions," Spanier said.

"What always surprises me is that members of the Legislature have a pretty good understanding of Cooperative Extension and its importance. I always tell them in my appropriations hearing what the impact will be of the proposal that's on the table. Then, when we eliminate those positions come July 1, I hear from legislators all around the state saying, 'Well, I didn’t think you were going to be eliminating the dairy specialist in my county, or scaling back on the 4-H program in our region.' These are inevitable consequences of the situation that we're in. We provide service through Penn State's Outreach enterprise to one out of every two families in the Commonwealth of Pennsylvania. It's a very important role, and Cooperative Extension is an important part of that."

The hearing, which lasted almost two hours, covered several other topics including tuition, graduation rates, the cost of textbooks, the economic impact Penn State and the other state-related universities have on Pennsylvania, and other issues.

The Legislature will continue its hearings with other recipients of state funding, and will work in the coming months to finalize the state budget by the June 30 deadline.

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Last Updated March 16, 2011