President addresses belt tightening as University faces deeper cuts

University Park, Pa. -- Colleges and universities are facing difficult financial decisions stemming from the deepening global economic crisis. In a discussion this week at Faculty Senate (Dec. 9), Penn State President Graham Spanier reassured University community members that Penn State is on solid financial ground.

“Penn State has a strong financial foundation that will see us through the current economic situation,” Spanier said. “The administrative team that oversees finances of the University has historically managed them in a conservative manner, anticipating many of the variables that have hit our economy so hard.”

While the president indicated that a number of measures are being taken to weather the current economic downturn, such as putting some building projects on hold and continued internal budget cuts, he also said that more sacrifices would be necessary. Spanier said he does not anticipate giving salary increases in the coming year and some positions will remain unfilled.

Over the last 18 years, internal budget cuts at the University have resulted in savings of nearly $200 million. Still, tuition at Penn State has continued to rise as state support has dwindled. This fall, Penn State was notified by the Commonwealth that 4.25 percent of its state appropriation would be cut before the end of the fiscal year, amounting to a loss of at least $15 million. On Wednesday (Dec. 10), the University was notified of additional state cuts, bringing the total give back to 6 percent of its state appropriation, or a loss of $21.2 million in the current fiscal year.

The University now receives less than 9 percent of its operating budget from the state. As Pennsylvania cuts back on its investment in public higher education, the burden for paying for a college education is being shifted to students and their families. In turn, the current economic crisis has put a strain on family finances and there is a growing need for financial aid.

Spanier expressed his deep concern for the ability of students to pay for a Penn State education and has indicated the University’s commitment to keeping tuition increases to a minimum. The president said that Penn State plans to work hard to keep tuition to the 4 percent to 5 percent increase that was spelled out in the most recent budget request for 2009-2010, which was approved by the Board of Trustees in September.

This is not the first time Penn State has had money rescinded.  Since 2001, the University has experienced five cuts totaling nearly $43.5 million. With the latest cuts taken into account, that brings the total to $64.7 million. Spanier said this latest rescission is a "serious blow" to the University and budget officers will have to go back to the drawing board to determine where the additional cuts can be made. Penn State also is facing double-digit increases for employee health care benefits, increases for retirement contributions, escalating fuel and utility costs, insurance increases and a growing tab for deferred building maintenance.

"We have always made efforts to contain costs and while we are in relatively good shape at this point, we are facing a number of combined challenges that require everyone to be mindful of our budget situation," Spanier said. "We'd like to preserve flexibility and be able to remain as close to business as usual on a day-to-day basis as possible. These challenges, however, do require some sacrifices."

The president urged faculty and staff to work together through the current economic turmoil to help keep a Penn State education affordable and to keep the University strong and moving forward.

 

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Last Updated August 26, 2009