Administration

Board committee recommends 2015-16 operating budget and tuition, fees

MONACA, Pa. – The Board of Trustees Committee on Finance, Business and Capital Planning today (July 16) recommended a University budget, and tuition and fees schedule, that are reflective of comprehensive and ongoing efforts to control the cost of a Penn State degree. This year’s proposed 1.99 percent base aggregate tuition increase for Pennsylvania residents is the lowest at the University since 1967 and includes no increase for students at eight Penn State Commonwealth Campuses. In addition, the proposed operating budget includes $34.4 million in cost savings for the coming fiscal year.

The budget also implements a University-wide freeze on the student Information Technology Fee, the first time in 20 years that the fee will remain flat. The freeze is part of a new, long-term goal to reduce and eventually eliminate the fee as budget conditions allow.

The proposed budget, and tuition and fees schedule, will be considered by the full board during their meeting on July 17.

“It is our goal to ensure that Pennsylvanians from all walks of life have the opportunity to receive a world-class Penn State education. We are committed to access and affordability, and the recommended operating budget, tuition and fees have been designed with that commitment in mind,” said President Eric Barron. “In addition to the important budget and tuition packages recommended today, my administration continues to pursue practical initiatives to help increase retention and graduation rates while decreasing student borrowing and ultimately the cost of a degree.”

State budget talks continue

The state budget, which includes an annual appropriation for Penn State and other state-related and state-owned institutions of higher education, still is under consideration by the Pennsylvania General Assembly and final action has not been taken.

“Gov. Tom Wolf’s executive budget indicated the restoration of the 2011-12 cuts in state higher education funding will be a priority for his administration, and additional state investment in public higher education also has support in the General Assembly,” Barron said. “We are hopeful that when the Commonwealth’s budget is finalized, we will see the beginning of the restoration of those previous appropriation reductions.”

“In the meantime,” Barron said, “the University must put an operating budget in place and set tuition and fees for the 2015-16 academic year.”

Although there is uncertainty about the final amount of Penn State’s appropriation, the recommended budget proposal assumes a 3 percent increase in the state’s general support appropriation, a conservative estimate based on the lowest increase recommended during recent state budget deliberations. A 3 percent increase would see Penn State’s general support appropriation rise by $6.4 million to $220.5 million, funding that would be used to offset the cost of a Penn State degree for Pennsylvania resident students and their families, and to support some of the University’s planned investments designed to stimulate the economy and promote student career success.

Tuition and fees

Under the plan adopted by the committee, the 2015-16 academic year will see Penn State’s base aggregate tuition rate set at 1.99 percent for Pennsylvania resident students, the lowest increase since 1967. Non-residents will see a 2.84 percent base aggregate increase. If adopted by the full board, these rates will be set for 2015-16, regardless of the outcome of Penn State’s final appropriation.

The proposal includes no increase for students at eight of the University’s 19 undergraduate Commonwealth Campuses (Shenango, Beaver, DuBois, Fayette, Greater Allegheny, Mont Alto, New Kensington and Wilkes-Barre), as originally proposed by Barron in January.

“Penn State continues to be committed to keeping tuition increases at the lowest level possible without compromising academic quality,” Barron said. “Internal reallocations, targeted budget reductions, strong enrollments, and delaying planned additional budget support for investing in Commonwealth and Penn State priorities have allowed us to propose these modest increases.”

The recommended proposal also reflects rates for the remaining undergraduate Commonwealth Campuses that are lower than those proposed in the University’s initial budget plan. Pennsylvania resident students at six Commonwealth Campuses, including Brandywine, Hazleton, Lehigh Valley, Schuylkill, Worthington Scranton and York, and the online World Campus, will see an increase of 0.9 percent in tuition for the year. Resident students at the remaining undergraduate campuses (Abington, Altoona, Berks, Erie and Harrisburg) will see an increase of 1.2 percent. Non-resident students at the undergraduate Commonwealth Campuses will see increases that range from 0 to 2.4 percent.

Tuition rates for lower division students at University Park will increase by 2.72 percent for Pennsylvania residents and 2.99 percent for non-residents. These increases are among the lowest in decades at the University.

Tuition: only one factor

While keeping tuition and fee increases low is a key priority, Barron stressed that these costs are just two among several important factors that have a great influence on the final cost of a Penn State degree.

Among these factors are the length of time it takes a student to graduate (a student who spends an extra semester or year at Penn State pays far more for the same degree than peers who graduate on time), the rate of borrowing for each student, and student retention and graduation rates.

Barron announced in January an access and affordability initiative designed to address these factors from a University-wide perspective by offering innovative summer programs with employment; a series of programs to reduce the time to degree for transfer students, additional scholarship programs; a focus on reducing student borrowing through financial literacy; and tailored advising to keep students on track to timely graduation.

Operating budget

In addition to tuition and fees, the Committee on Finance, Business and Capital Planning recommended for approval a $4.9 billion University operating budget for 2015-16. The budget assumes a $295.8 million state appropriation for Penn State, again based on a conservative, anticipated increase of 3 percent in the University’s general support appropriation.

This total includes $220.5 million for general support, up from $214.1 million in 2014-15, funding that is used to reduce the cost of tuition for Pennsylvania residents. The total also includes $17.6 million for the Pennsylvania College of Technology, $46.2 million for Agricultural Research and Cooperative Extension, and an estimated amount of $11.4 million for the Milton S. Hershey Medical Center from state and federal assistance.

Penn State has enacted more than $360 million in cuts to recurring costs since 1992 as state appropriations for Penn State and other public and land-grant institutions have continued to decline. These savings include $34.4 million in budget reductions and estimate adjustments in this year’s budget alone.

The recommended budget proposal was guided by several priorities:

-- Keep tuition increases low or flat;

-- Stimulate Pennsylvania’s economy and student career success to build on the momentum of the announcement of Invent Penn State and the $30 million start-up investment;

-- Identify expense reductions and moderate other spending priorities in light of anticipated increases in the cost of benefits and health insurance;

-- Fund operating cost increases and selective strategic initiatives with special focus on access and affordability;

-- Invest in deferred maintenance for Penn State’s large and diverse physical plant; and

-- Maintain competitive compensation to attract and retain the most talented faculty and staff, who provide the foundation for the quality of Penn State’s academic programs.

The budget includes about $22 million to provide faculty and staff with compensation increases up to 2 percent to be distributed based on merit, for faculty and staff to keep up with inflation, and also to fund contractual obligations such as Social Security and retirement contributions. An additional 1.0 percent will be used to address market, equity and exceptional merit, and to provide faculty promotional increments and related benefits.

If the general support appropriation from the Commonwealth is more or less than 3 percent, the Committee on Finance, Business and Capital planning has recommended a resolution that would authorize university officials to effect an operating budget that includes specific investments, and a revised budget will be prepared and reviewed with the Board of Trustees at the earliest opportunity.

If the final general support appropriation increases by more than 3 percent, the additional funding would be used in priority order to support the initiatives designed to stimulate Pennsylvania’s economy and promote student career success as outlined in the 2015-16 state appropriation request and to increase funding for critical deferred maintenance on Penn State’s campuses, among other priorities, such as the gradual phase-out of the Information Technology Fee. An increase of less than three percent would result in a corresponding decrease in the aforementioned economic stimulus and student career success initiatives.

“Demand for a Penn State education continues to be high. Applications have remained strong and our first-year class for this academic year is outstanding,” said Barron. “It’s 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. 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.”

The full recommended operating budget and tuition/fee schedule is available at http://www.budget.psu.edu/BOTJuly/JulyBoard.aspx. To view a copy of the president's report to the committee, visit http://www.psu.edu/ur/newsdocuments/Budget_Report_July_2015.pdf. These documents will be updated as required depending on the outcome of the state budget process.

Last Updated December 18, 2015