Budget plan seeks modest increase from state

UNIVERSITY PARK, Pa. -- The Penn State Board of Trustees' Committee on Finance, Business and Capital Planning today (Sept. 19) recommended for approval a budget plan for 2014-15 that includes a request to the Commonwealth of Pennsylvania to increase appropriations to the University by $14.7 million. This is the first step in the appropriations process and there are many factors that will contribute toward a final University budget to be adopted in July 2014 by the Board of Trustees.

The plan still requires approval from the full Board at Friday's meeting, and they will see the full presentation at that meeting. If the board approves the request and the Commonwealth provides the requested funds, the University's appropriation would increase from $285 million this year to $299.7 million in 2014-15.

"The request to the Commonwealth and our budget planning are driven primarily by our top priority -- keeping tuition increases low," said President Rodney Erickson. "Our plan also is driven by the overarching priority to maintain the quality of our academic programs and provide the high-value education that our students deserve."

If the request is fully funded, the proposed aggregate tuition increase would be 2.85 percent. Undergraduate resident and non-resident student tuition increases at the Commonwealth Campuses would be projected to range from 0 to 2.4 percent. Pennsylvania resident students at University Park would see a 3.49 percent increase and non-resident University Park students would see a 2.99 percent increase.

"These levels of increase reflect our continuing efforts to keep tuition as low as possible despite rising costs," Erickson said.

The requested appropriations increase includes $10.7 million, or a 5 percent increase, to support expense increases in the educational and general budget. This increase would directly offset operating costs that would otherwise impact tuition, Erickson said.

The request also includes $2.8 million to maintain agricultural research and Cooperative Extension services, as well as an increase of 5 percent for both the Pennsylvania College of Technology and the Penn State Milton S. Hershey Medical Center.

Erickson said the University's preliminary budget plan includes a 2.5 percent increase for salary adjustments and related employee benefits to allow Penn State to remain competitive in attracting top faculty and staff. It also includes a 1 percent increase for the President's Excellence Fund for merit, market and equity salary adjustments.

Changes to the University's health care programs will cause costs to rise at a slower rate, and the budget plan provides for inflationary increases in health care costs and additional costs resulting from the Affordable Health Care Act. It also addresses the projected substantial rise in mandated employer contribution rates for the State Employees' Retirement System.

Erickson said the budget plan includes $6 million for strategic initiatives and program commitments such as academic priorities identified in the University's strategic plan. This also includes funding for a limited number of faculty positions and instructional workload adjustments that reflect enrollment changes in the colleges.

An additional $1 million is included in the budget for need-based student aid.

For the 23rd consecutive year, Penn State will implement an internal budget reduction and reallocation program. The 2014-15 budget plan targets $38.2 million in expense reductions through across-the-board givebacks from all administrative and academic units, targeted savings in administrative units and restructuring of the University's post-retirement health care liability. An estimated additional $4.8 million in revenue from indirect cost recovery and investment income also is budgeted.

"Each year our elected officials in Harrisburg have to weigh our request and competing funding priorities in the context of the state's finances," Erickson said. "The appropriation provided to Penn State makes it possible to support the in-state tuition discount and helps make attending a major research university an affordable option for Pennsylvania residents. We are hopeful our partnership with the Commonwealth, which we value tremendously, can be strengthened as Penn State strives to fulfill its commitments as Pennsylvania's land-grant university."

Last Updated January 31, 2014