Budget is based on estimated 5 percent cut in state funding
Hazleton, Pa. - With Penn State's appropriation from the Commonwealth of Pennsylvania still pending approval in the state legislature, the University's Board of Trustees today (July 11) moved forward on a 2003-04 operating budget plan of slightly more than $2.55 billion. The budget reflects an estimated 5 percent decrease in state funding.
This would be the second consecutive year that Penn State would have its appropriation reduced, with total cuts over that period reaching $45 million.
"Penn State understands the economic situation faced by the state. We are willing to do our part," said Penn State President Graham B. Spanier. "At the same time, we remain committed to providing the high quality of education that our students and their families have come to expect."
The proposed 2003-04 state appropriation of $306.4 million constitutes a record-low 12 percent of the University's overall budget, and is the equivalent of the University's 1998-99 appropriation level.
The budget includes a 9.8 percent basic tuition increase to help offset rising costs and the further loss of state funding. Tuition now covers about 69 percent of Penn State's educational costs.
Few new University-wide initiatives could be accommodated in the new budget. It does, however, include additional funds for escalating health care and other insurance costs ($17 million), facilities needs ($15.7 million) and modest salary adjustments for all employees and graduate assistants ($25.1 million). Health care costs are increasing dramatically nationwide, as are the costs of property and liability insurances.
The budget continues the multi-year commitment to support the School of Information Sciences and Technology and planned support for three interdisciplinary academic program initiatives of strategic importance to the Commonwealth: environmental studies, materials science, and children, youth and families -- a total of $2.1 million. An increase in the student information technology fee will provide critically needed funds for improvements in libraries and information technology, totaling an additional $2 million.
The full Penn State budget may be accessed at http://www.budget.psu.edu
Aggressive cost savings initiatives have helped support these budgetary priorities. Of the $14.4 million in savings and non-tuition income enhancements recommended by the Cost Savings Task Force in May, $3.2 million in selective budget reductions have been identified through program mergers or closures, cuts in outreach activities and administrative streamlining. In addition, $8.3 million will be recycled from all University academic and administrative support units and central reserves, and $2.9 million in additional income will be gained from increased facilities and administration cost recovery on research grants and projects in the coming year.
The savings from the Task Force's recommendations is equivalent to $200 per year for each full-time student, and translates to a 2.7 percent reduction in the tuition increase that would otherwise have been necessary.
"Penn State has been a leader in cost-cutting initiatives and has trimmed more than $96 million from its budget over the past decade. It has justifiably earned its reputation as one of the most efficient universities in the nation," said Rodney A. Erickson, executive vice president and provost of the University and co-chair of the Cost Savings Task Force. "We will continue these efforts. There is no ending date for the work of the task force."
Penn State's operating budget is funded by seven sources of revenue, the largest in 2003-04 being tuition and fees (33.8 percent). Other income sources include: hospital and clinical operations (21.8 percent); restricted funding (17.1 percent); state appropriation (12 percent); auxiliary enterprises (9.6 percent); federal agricultural support (0.7 percent); and other sources (5 percent).
Should the final appropriation differ from the proposed amount, the University will present a revised budget to the Board of Trustees for approval at the appropriate time.