University Park

State releases appropriation funding to Penn State

Now six months into the fiscal year, the Pennsylvania Legislature approved and Gov. Ed Rendell on Dec. 17, signed legislation granting Penn State and the Commonwealth's other three state-related Universities their appropriations for the 2009-10 fiscal year. The measure will release to Penn State about $334 million in funding, including federal stimulus funding in the amount of about $16 million. The base amount of Penn State's appropriation is $318 million.

"We are glad that the impasse is over and express our thanks to the Legislature for its support and for showing that higher education in Pennsylvania is an important investment," said Penn State President Graham B. Spanier.

The University has been functioning without any state appropriation since July 1 due to the state's budget gridlock. While Pennsylvania passed a $27.8 billion budget in October after a 101-day delay, that budget did not include funding for Penn State and other state-related institutions that are considered "non-preferred" during the appropriations process. As a nonpreferred appropriation, Penn State is not included in the regular budget document and funding must be approved through separate legislation by two-thirds vote in the House and Senate.

Now more than one-third of the way into the current fiscal year, Penn State has had to cover expenses by dipping into the University's reserves and by constraining its spending. Penn State also covered about $28 million in PHEAA tuition grants that was held up by the budget stalemate, so that students who were expecting those grants were able to continue their educations without interruption. That figure represents grants for 18,000 Penn State students from low and moderate incomes.

There are two primary sources of funding for Penn State's instructional budget -- one is tuition and the other is the state appropriation. Cuts in appropriations can be made up only with tuition increases. Since 2000, the University has experienced five rescissions in funding from the state, forcing Penn State to absorb more than $38 million in unexpected cuts.

To deal with the continuing cuts to funding, Penn State has been actively working to reduce costs, including a salary freeze for all faculty and staff, and these efforts stretch far beyond the current economic crisis. The University has been engaged in cost-cutting measures for almost two decades. Over the past 18 years, Penn State has reduced or reallocated $190.7 million from departmental operating budgets through internal expense reductions. For 2009-10 alone, that figure is $17.8 million.

Last Updated February 17, 2010

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