Committee recommends 2014-15 University budget

SCHUYLKILL HAVEN, Pa. – Penn State’s Board of Trustees Committee on Finance, Business and Capital Planning today (July 10) recommended for approval a $4.6 billion University operating budget for 2014-15. The budget includes a $289.7 million appropriation from the Commonwealth of Pennsylvania, representing level funding for Penn State’s general support appropriation.

The full board is scheduled to vote on the proposal Friday.

“Demand for a Penn State education continues to be high. Applications have remained strong and our first year class for this academic year is shaping up to be larger than last year’s entering class. It is our goal to keep a Penn State education within reach for Pennsylvania’s citizens.  Achieving this goal is dependent, in part, upon our continued partnership with the Commonwealth and our state support,” said Penn State President Eric Barron.

Barron said the top priority for the budget is to hold tuition increases to a low level while maintaining Penn State’s quality of education. The budget sets an aggregate base tuition increase of 2.73 percent, the second-lowest percentage increase since 1967.

“We are committed to doing everything possible to ensure that access to a Penn State degree is within the financial reach of the citizens of the Commonwealth, without sacrificing the quality of our programs,” Barron said. “We appreciate the Commonwealth’s support in a challenging fiscal climate. As Pennsylvania’s economy improves, it is my hope that we can demonstrate that an additional investment in Penn State will yield economic gains for every citizen of the Commonwealth.”

More than $31 million in targeted expense reductions were incorporated into the budget before tuition increases were considered. The budget funds only the most critical increases for operating expenses, energy costs, modest salary adjustments and capital improvements necessary for Penn State to remain competitive on a global scale and maintain academic quality.

University officials noted that it will be important to increase funding for deferred maintenance as the University’s facilities continue to age. He also has appointed a Heath Care Advisory Committee focused on maintaining the high quality of employee benefits while working to mitigate continued growth in costs, and is pursing strategies to increase need-based student aid and decrease student debt.

The 2014-15 budget for Penn College, a wholly owned subsidiary of Penn State based in Williamsport, Pa., will see an increase of $5.2 million, including a $2 million appropriation increase to help address instructional capacity concerns and other high priority needs. This will bring its total budget to $153 million. Including this year’s increase the Commonwealth’s total appropriation to Penn College is $17.58 million.

Medical assistance funds appropriated to the Penn State Hershey Medical Center through the Pennsylvania Department of Public Welfare total $11.8 million, level with last year’s funding. When combined with the Penn State College of Medicine, the budget for the entire medical center operation for 2014-15 is $1.7 billion.

The Commonwealth provided flat funding of $46.2 million for agricultural research and Cooperative Extension, programs that provide critical support for Pennsylvania’s principal industry. Because these activities are not supplemented with tuition, appropriations increases are necessary to keep pace with rising costs. The flat funding provided by the Commonwealth means a shortfall in the College of Agricultural Sciences of about $1.9 million.

Trustee Mark Dambly announced at the committee meeting that the committee has asked the University to "backstop the $1.9 million shortfall with one-year temporary funding" so as not to put the burden of making cuts onto an incoming dean. The University announced on July 2 that Richard Roush will be the new dean of the College of Agricultural Sciences effective Oct. 1.

Despite the challenges posed by tight budgets in challenging economic times, Barron said Penn State remains strong. The University, he said, will continue on its trajectory as one of the top public research universities in the nation and the world.

“We are committed to demonstrating the economic benefits that Penn State, as the state’s land grant research institution with multiple points of access, brings to the Commonwealth,” Barron said. “We also are committed to responsible stewardship of taxpayer and tuition dollars.”

More information on the 2014-15 budget is available at http://budget.psu.edu/BOTJuly/JulyBoard.aspx.

Last Updated July 14, 2014