By Annemarie Mountz, Penn State
DUNMORE – Penn State’s Board of Trustees recently approved a $4.26 billion University operating budget for 2012-13. The budget includes a $279 million appropriation from the Commonwealth of Pennsylvania, representing no change from 2011-12.
“Through the support of many members of the House and Senate who value the partnership between the Commonwealth and the state’s public and state-related higher education institutions, the proposed $64.2 million cut to Penn State’s General Support line has been fully restored,” said Penn State President Rodney Erickson. “I would like to publicly thank the governor and members of the General Assembly who coalesced to support public higher education.”
Agricultural research and Cooperative Extension have received flat appropriations of $44.7 million. Because these activities are not supplemented with tuition, inflationary costs will require additional program reductions.
“Dean McPheron and his leadership team in the College of Agricultural Sciences have worked tirelessly to adjust to the $10.5 million in reduced support from the Commonwealth in 2011-12. Stable funding from the state included in the 2012-13 budget will require additional program reductions in these two line items to free up the necessary funds for inflationary increases for salaries and benefits,” Erickson said.
The 2012-13 budget for Penn College, a wholly owned subsidiary of Penn State based in Williamsport, will see a decrease of $2.9 million as a result of expense reductions and lower than expected research expenditures. This will bring its total budget to $138 million. The Commonwealth’s appropriation to Penn College remains at the 2011-12 level of $13.6 million.
The overall appropriation is equal to 1995 levels, when the University educated 20,000 fewer students. Erickson said the increase in the number of students being educated, combined with the slow pace of the economic recovery, continues to present challenges. In addition, the University is facing unavoidable increases in major cost-drivers, such as employee health care, retirement contributions and energy.
To meet those challenges, Penn State has continued its cost-cutting initiatives, which over the last two decades have trimmed $232.7 million in recurring costs from the University’s operating budget. Most recently more than $20 million was identified in recurring cost savings for the University through the Core Council process. The Core Council, a group of 13 administrators and faculty, was charged with enhancing efficiency, reducing redundancy and exploring opportunities for new revenue generation across the University.
“Through the hard work of those involved in assembling this plan, and the contributions and support of everyone in the Penn State community, I am able to present a budget to you today that is balanced, provides for basic operating cost increases, and holds the tuition increases to an amount that is less than the change in the Consumer Price Index and represents the lowest rate of tuition increase since 1967,” said Erickson.
The budget sets an aggregate lower-division undergraduate tuition increase of 2.4 percent, or an average of $393 per academic year. Tuition will increase 1.9 percent for resident and non-resident lower-division students at Commonwealth Campuses; 2.4 percent for non-resident, lower-division University Park students; and 2.9 percent for resident lower-division University Park students. This modest tuition increase was enabled by aggressive expense control and continued strong enrollments across the University. See http://live.psu.edu/story/60359 for more on tuition.
The operating budget plan is guided by several priorities. “Chief among those priorities was to keep tuition increases at the lowest possible level,” Erickson told trustees.
Erickson said $28 million in budget reductions and targeted expense cuts were incorporated into the budget plan before tuition increases were considered. “These budget reductions are not one-time expense cuts; they are cuts in recurring costs that lower budgeted expenses for this year and future years,” he said.
Erickson’s budget presentation to the Board of Trustees will be posted to http://budget.psu.edu/ in the near future.
