Affordability drives search for cost savings and 1% reduction in budgets

October 14, 2019

UNIVERSITY PARK, Pa — In the upcoming faculty/staff Town Hall meeting (Tuesday, Oct. 15), leaders of the University plan to address a variety of topics related to how Penn State will evolve to meet future demands, including changing demographics, uncertain funding, the public need for more financial transparency, and the necessity to remain affordable and accessible to Pennsylvanians.

University officials have for many decades identified cost savings and efficiencies that have not only avoided tuition increases, but also allowed Penn State to reduce expenses and focus on various targeted areas of opportunity. In fact, since 2014 (the year Eric Barron became president), the University has implemented $197 million in reductions to recurring costs. Despite these efforts — which have included offering a voluntary retirement program; restructuring the University benefits programs; moving to a new health care plan administrator; increasing recoveries from auxiliary units and World Campus; and reorganizing a number of units — the University still faces difficult fiscal realities.

“Today, Penn State receives as much money from the state as we did in 2002. Inflation and the need to serve more students, as well as the need to retain the quality for which Penn State is known, continue to be challenges that we must address head on,” said Nick Jones, executive vice president and provost. “There are only two primary sources of funding for the educational mission of this University: tuition and our appropriation from the commonwealth. In our last budget cycle, we challenged ourselves to find $36 million in cost savings to keep Pennsylvania resident tuition at last year’s levels — for the third consecutive year. Each of us has a personal responsibility to help the University keep education accessible to every Pennsylvanian. We are a public university with a land-grant mission.”

Jones explained that a portion of the $36 million challenge created by level tuition rates has been identified in an across-the-board reduction of 1% from unit budgets University-wide. Units are being asked to find 1% savings that can be returned to the central budget. 

“I understand that there are difficult choices to be made in this 1% reduction from units. It is not an easy task, but it is a necessary one that I believe we can accomplish together,” Jones said. “The bottom line is that our Board of Trustees and the current administration are working hard to keep a Penn State education within reach of families and students, and to also remain good stewards of our resources.”

Jones also said that he believes difficult choices now can strengthen the University, position it competitively for the future, and allow it to remain connected with its land-grant mission of access and affordability.

Other topics to be discussed in Tuesday’s Town Hall include recommendations from a Budget Task Force that will change the University’s budgeting approach within every unit; the July 2020 implementation of SIMBA (System for Integrated Management, Budgeting and Accounting); the Resource Optimization Initiative (ROI) that is occurring in units across the University; and other University efforts to maximize the return on every dollar spent.

The Town Hall meeting is scheduled for 2 p.m., Tuesday, Oct. 15, in 112 Kern Building on the University Park campus. The event will be livestreamed to all campuses. More information can be found here.

Last Updated September 04, 2020