Board committee recommends 2016-17 operating budget and tuition, fees

UPDATE: The Penn State Board of Trustees voted to approve the proposed budget, tuition and fees schedule during its full meeting on July 22 on the University's Wilkes-Barre campus.

LEHMAN, Pa. – The Board of Trustees Committee on Finance, Business and Capital Planning today (July 21) recommended a University budget, and tuition and fees schedule. This year’s proposed 1.76 percent base aggregate tuition increase for undergraduate Pennsylvania residents is among the lowest at the University in 50 years and includes no increase for resident students at eight Penn State Commonwealth Campuses. This follows last year’s action to freeze base tuition for all in-state undergraduate students. The budget, tuition and fees package reflects comprehensive and ongoing efforts to control the cost of a Penn State degree.

“It remains our goal to ensure that all qualified Pennsylvanians from all walks of life have the opportunity to receive a world-class education at Penn State,” said Penn State President Eric Barron. “We are committed to access and affordability. This proposed operating budget balances the need to fund critical priorities and mandated cost increases while keeping the base tuition increase low or at zero for our Pennsylvania undergraduate students.”

The budget includes $19.8 million in recurring cost savings for the coming fiscal year, and extends last year’s freeze on the student Information Technology Fee. The proposed budget, and tuition and fees schedule, will be considered by the full board during its meeting on July 22.

Tuition

Under the plan adopted by the committee, the 2016-17 academic year will see Penn State’s base aggregate tuition rate rise by 1.76 percent for Pennsylvania resident undergraduate students and by 3.17 percent for non-resident undergraduate students. At University Park, lower-division, undergraduate resident students would see a rise of 2.29 percent (about $190 per semester). This is the lowest percentage increase since 1967 and comes on the heels of 2015-16’s action to freeze base tuition for resident undergraduate students University-wide. Non-resident, lower-division undergraduate students will see a proposed increase of 3.39 percent.

In a continuation of ongoing efforts to maintain access and affordability, the proposal includes no increase for resident students at eight of the University’s 19 undergraduate Commonwealth Campuses, including Beaver, DuBois, Fayette, Greater Allegheny, Mont Alto, New Kensington, Shenango and Wilkes-Barre.

“Penn State continues to place the highest priority on keeping tuition increases to the lowest possible level while providing a high-quality educational experience,” Barron said. “Targeted budget reductions and captured cost savings, strong enrollments, and addressing some needs with non-recurring funding, make it possible to propose an aggregate 1.76 percent base tuition increase for Pennsylvania resident undergraduate students.”

The recommended proposal also suggests modest increases for students at Penn State’s remaining Commonwealth Campuses and the World Campus. Resident students at Brandywine, Hazleton, Lehigh Valley, Schuylkill, Worthington Scranton and York, as well as those enrolled in the online World Campus, would see an increase of 1.25 percent. Pennsylvania resident students at five campuses, including Abington, Altoona, Berks, Erie and Harrisburg, will see increases of 1.54 percent. Non-resident undergraduate students at the Commonwealth Campuses would see increases ranging from 1 to 2.25 percent.

Fees

Under the proposed plan:

-- For the second time in as many years, the student Information Technology Fee will be frozen at $252 per semester for full-time students. The freeze is part of a long-term plan to eliminate the fee as a separate cost, with the eventual goal of funding ongoing technology needs from tuition, as is the case with all other services that are integral to the operation of the University.

-- The Student Activities Fee, which is allocated by students to improve the out-of-class experience and educational climate at Penn State, will increase by $1 or $2 per semester, depending on campus location. At University Park the fee will rise by $1, to $96 per semester.

-- The Student Facilities Fee, which provides a funding source for capital projects designed to enhance student activities, fitness and recreation, will rise by $2 at most campuses. At University Park, the fee is rising from $124 to $126 per semester.

Tuition is only one factor

While keeping tuition and fee increases low is a 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). Other factors include the rate of borrowing for each student, and student retention and graduation rates. The University continues to focus on a holistic approach to controlling the cost of a degree as part of the Plan4 Penn State initiative, enacting new programs that focus on these issues.

Operating Budget

In addition to tuition and fees, the committee recommended for approval a $5.1 billion University operating budget for 2016-17. The budget proposal is focused first on delivering the lowest possible tuition increase and adding to the pool of institutional student aid for the neediest students, Barron said.

“To achieve this goal while providing the necessary resources to address the cost increases associated with institutional priorities and mandates, we identified nearly $20 million in expense reductions and reallocations,” Barron said. Penn State has enacted nearly $383 million in cuts to recurring costs since 1992, including this year’s $19.8 million figure. These major initiatives have helped defray costs to students while maintaining and improving the quality of Penn State’s academic programs.

Like many universities, Penn State faces increasing costs for basic energy and facilities maintenance, employee health care and retirement benefits, and modest pay increases to ensure that Penn State can effectively compete with other major universities for the most talented faculty and staff.

The proposed budget includes about $25 million to adequately fund contractual amounts for the labor agreements that apply to Penn State’s technical-service employees and campus health professionals; centrally funded amounts for faculty promotions in the professorial ranks; a 3 percent increase in graduate assistant stipends; and a 2 percent pool to provide merit-based salary adjustments for faculty and staff, and to make equity or market adjustments.

The final proposed budget was developed following the passage of Penn State’s $315.7 million appropriations bill, which included a 2.5 percent increase for Penn State’s general support appropriation (used primarily to offset the cost of tuition for Pennsylvania resident students); Pennsylvania College of Technology in Williamsport; and Penn State Agricultural Research and Extension, and additional funding for the Penn State College of Medicine regional campus at University Park.

“I would like to thank the legislature and governor for their efforts to include additional support for Penn State and Pennsylvania’s other public institutions of higher education in the final budget, with particular thanks to Senate Majority Leader Jake Corman and the leadership of the General Assembly,” Barron said.

This marks the second increase in Penn State’s general support appropriation since 2008, and follows 2011’s across-the-board cuts in funding to higher education in Pennsylvania. Pennsylvania Gov. Tom Wolf has said restoration of those cuts is a priority for his administration. Currently, Penn State’s 2016-17 general support appropriation sits at $230.4 million. A full restoration to 2011 levels would return the University’s general support appropriation to $264.3 million.

While the timeline for full restoration of the cuts has been extended in light of continued revenue challenges at the state level, Barron said the increased investment combined with significant cost-cutting measures and other factors, has allowed Penn State to keep tuition increases to historic lows, even in the face of rising expenses.

“The state’s increased investment in Pennsylvania’s land-grant institution contributes to our ongoing efforts to fulfill our mission of teaching, research and service to the people of the Commonwealth, and to provide support for agriculture, one of the state’s most significant industries,” he said.

Last Updated July 25, 2016