Spanier to lawmakers: Lack of funds for higher ed is hurting the state

Harrisburg, Pa. -- Penn State President Graham Spanier joined the leaders of Pennsylvania's three other state-related universities in Harrisburg Tuesday (Feb. 23) to answer questions from legislators and ask the lawmakers to invest more fully in higher education.

The four institutions – Penn State, the University of Pittsburgh, Temple University and Lincoln University — combined bring more than $1.5 billion a year in research dollars into the state, educate more than 150,000 students and contribute substantially to Pennsylvania's economy, according to the schools' leaders. Penn State alone generates more than $17 billion annually in overall economic impact and supports more than 67,000 jobs, according to a recent independent study.

But university leaders say the state needs to boost its support if the institutions are to continue to deliver for the state, as well as for students and their families.
"There has been no increase in support of state-related institutions in a decade and … this has created a substantial deficit that we have had to make up with tuition or cuts," Spanier said. "Our successes may make it easy for the Legislature to believe we can land on our feet if we receive less funding, but for educational purposes we have only two sources of funding — tuition and legislative appropriation."

This year, Penn State requested $360.9 million from the state, an increase of 3.9 percent, or $13.5 million, over 2009-10 figures. University officials believe the request is modest, just enough to help cover expected increases in several significant areas. However, in his 2010-11 budget plan revealed this month, Gov. Ed Rendell proposed flat funding for Penn State with a base appropriation of $318 million, plus $15.8 million in federal stimulus funding.

One significant expense looming for both the University and the state is a massive hike beginning this year in pension payments to the State Employees' Retirement System, which currently has nearly $4 billion in underfunded liabilities. Those liabilities will continue to grow. Spanier called the SERS financial issue "significant for the coming year and potentially catastrophic for the future."

"We are talking about tens of millions of dollars. It will be the single largest challenge in our history just to plug that gap," Spanier told lawmakers. "Combined with the potential disappearance of stimulus money after next year, we are looking at real challenges."

Spanier explained that Gov. Rendell's proposed funding for next year is only level because of the infusion of federal stimulus dollars. Without that funding, Penn State is actually facing a 6 percent reduction in its base funding. He expressed his deep concern that when the stimulus funding disappears after next year, the 6 percent reduction could become permanent.

"We need to have that base funding restored. We'd like to be able to have that issue addressed," he said.

Rep. Richard Stevenson, R-PA 8th, asked what stresses the agricultural community was under because of the funding situation. Spanier indicated that Penn State cannot continue to meet expectations with no increase in state support for agriculture, as is proposed by Gov. Rendell.

"If there is no increase in funding there is no way to support Cooperative Extension or agricultural research at the current level," Spanier said. "We will have to have a reduction of another 54 positions in extension service. We cannot continue all of these services."

As an example of initiatives that Penn State has taken on with no additional funding from the Commonwealth, Spanier told lawmakers that the University redeployed 40 employees to focus on the Marcellus Shale, believed to be a major source of natural gas in the state and a potential boon for landowners.

"We would not take tuition money to support agricultural research and cooperative extension, which benefits all of Pennsylvania," he said. "That would be totally unfair and unreasonable to our students." As Pennsylvania's No. 1 industry, Spanier said supporting agriculture should be a high priority for legislators.

All of the university leaders said they understood the difficult economic realities faced by the Commonwealth, but investing more in higher education would result in more economic activity and a better educated workforce — two things that could provide stability and help the state recover more quickly from the economic downturn.
The four state-related university leaders are scheduled to appear before the state Senate Appropriations Committee for a similar session at 10 a.m. Wednesday, March 3.
 

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Last Updated November 18, 2010