A Letter to the Penn State Community from President Graham Spanier

September 03, 2009

As we begin a new academic year I want to take the opportunity to update you on the financial outlook of the University. We are all keenly aware that the economic downturn of the past year has created challenges throughout our nation. Penn State also is feeling the consequences of Pennsylvania's economic downturn. Last year our state appropriation was cut 6 percent, and this year's appropriation has not yet been determined due to the state’s unresolved budget situation.

Still, we have managed to keep the University in sound financial shape. Compared with many of our peers we have a conservative fiscal philosophy that does not significantly depend on endowment income for operating support and does not encourage risky, speculative investment strategies – factors that have led to more dire economic circumstances for many colleges and universities. As a result, Penn State is weathering this financial storm better than most comparable universities.

Your hard work and outstanding efforts on behalf of Penn State also have been of immense help to the University during this past year and have contributed to our stability. I want to express my appreciation to those of you who have taken on more responsibilities and filled voids in University workloads.

In response to the national economic crisis, we have worked together to implement several austere, but necessary, measures. This fiscal year we have reduced operating budgets by 2 percent for all units supported by general funds, instituted a salary freeze for all employees, left many vacant positions unfilled and redoubled our efforts to reduce spending that does not directly support the core missions of the University.

Although each of these efforts required some shared sacrifice, we have sought to protect our students and employees from having to bear the greatest burden during this economic downturn.

-- To help cushion the effect of the salary freeze, the University absorbed the cost for the entire increase in health care premiums and parking fees that our employees would normally assume, and we have maintained all other valuable employee benefits.

-- Our Board of Trustees approved the minimum tuition and fee increases for the current academic year, despite the uncertainty surrounding our state appropriation. Ours was one of the lowest percentage increases in the Big Ten and the lowest in our recent history.

-- Students who expected to receive a Pennsylvania state grant administered through the Pennsylvania Higher Education Assistance Agency (PHEAA) have had their Penn State fall semester tuition bills credited for the estimated grant amount, even though Penn State has had to advance these funds from our reserves.

-- We have minimized layoffs to the degree possible. The layoffs that have been necessary are largely confined to those areas that have experienced a cut in direct state funding. In fact, in each of the past three years, the number of full-time employees at Penn State has increased, largely because of additional funds secured from external sources.

I am aware that some of our employees worry about their jobs and are concerned about the economic stability of the Commonwealth of Pennsylvania. We all realize that there will be challenges in the months to come, depending on the pace of economic recovery in the nation and the state. However, I want to assure you that by every important financial measure Penn State is fiscally sound and highly rated by financial agencies. I also want you to feel secure and confident in the knowledge that we will do everything possible to put people first as we encounter future challenges.

I will close by again reminding you about our Employee Special Assistance Fund, established about a decade ago through private gifts from donors to assist employees in difficult circumstances. The fund has been a life saver for scores of employees and their families who face emergency financial challenges. Those who find themselves in such a circumstance should contact Billie Willits, associate vice president for Human Resources.

I appreciate all that you do for Penn State, in particular your efforts during these difficult economic times. Your hard work and willingness to find new ways to advance the excellence of Penn State has ensured our success despite our challenges. Please feel free to direct any inquires to your budget executive or to president@psu.edu. We will make sure that someone gets back to you. Meanwhile, I wish you much success in this new academic year, which is off to a great start.


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Last Updated September 03, 2009