PENN STATE’S 2013-14
APPROPRIATION REQUEST

 

Penn State’s 2013-14

Appropriation Request

 

We are committed to demonstrating the economic benefits that Penn State, as the Commonwealth’s land-grant university with multiple points of access, brings to the people of Pennsylvania.  The appropriation provided by the Commonwealth to Penn State makes it possible to support the in-state tuition discount and operate 19 undergraduate Commonwealth Campuses—two factors that make attending a major research university an affordable option for many Pennsylvania residents.   In addition, the appropriation enables us to move forward on a number of fronts crucial to the economic health and well-being of the state.  Workforce development, energy initiatives, medical advancements, scientific discoveries, creative activity in the fine and performing arts, agricultural research, community outreach, and information technology are just a few of the areas in which Penn State is recognized for its academic excellence and leadership. As Pennsylvania’s sole land-grant institution, we look forward to strengthening our partnership with the state so we can do even more to address our most pressing needs.

 

We are grateful for the work of the General Assembly and the Governor to fully restore Penn State’s 2012-13 appropriation from the original proposal.  Penn State’s budget plan and appropriation request for 2013-14 recognize that the condition of the state’s finances that led to the large proposed cut last year continues to be fragile as the state economy is trying to gain more positive momentum.  The budget plan includes major cost reduction strategies, provides for basic operating increases, and keeps tuition increases as low as possible.  While multiple revenue sources support the University’s three-part mission of teaching, research and public service, it is the state appropriation that supports the cost of attendance for in-state students and the agricultural research and cooperative extension programs that are so integral to Penn State’s land-grant mission.   

 

For fiscal year 2013-14, Penn State seeks an appropriation of $289.5 million, an increase of $10.6 million over the current year appropriation.  Given the Commonwealth's continued fiscal challenges, we are limiting our request to one of the most modest increases in recent history.  We are requesting a base increase that would keep pace with inflation, along with a request that maintains the current level of services provided through our programs in agricultural research and cooperative extension.  A proposed increase of $7.5 million or 3.5 percent is requested to help support the Educational and General budget.  Funds in the amount of $2.4 million are requested through the Agricultural College Land Scrip Fund to support Agricultural Research and Cooperative Extension.  Increased support of $475,000 is included for the Pennsylvania College of Technology.  Additional state and federal medical assistance funding of $229,000 also is included for the Milton S. Hershey Medical Center.

 

The Educational and General portion of the proposed increase will directly offset part of the tuition increase for in-state students.  Operating cost increases include salary adjustments for faculty and staff; increasing costs for health care and retirement, including the escalating employer contribution rate for the Pennsylvania State Employees’ Retirement System (SERS); increasing costs of maintaining and upgrading an aging physical plant; and highly selective academic program initiatives. 

 

Penn State has a long history of using internal budget reductions and reallocations in place of higher tuition increases to fund operating increases.  2013-14 will be the 22nd consecutive year that the University’s academic and administrative departments will be required to identify budget reductions.  This approach has created a culture at Penn State in which expenditures and activities are continuously evaluated to determine if they are mission-critical.  The budget plan includes targeted administrative cost savings, central budget reductions realized by restructuring the health care liability for retirees, and across-the-board expense reductions.  These actions total $35.0 million in lower budgeted expenses for 2013-14 and future years.

 

The state’s support of public higher education promotes access and affordability for Pennsylvania residents.  There is no doubt that tuition continues to be a challenge for many families, and every year we lose talented students due to the cost of a Penn State degree.  We are using every option available to us to minimize the impact of rising tuition, including our current fundraising efforts that are focused in large part on increasing the endowment for student scholarships.  Penn State’s campuses provide affordable access for thousands of Pennsylvanians of modest means to live at home and study for two years and then finish a four-year baccalaureate program at University Park or another campus.  For many students, this is the only path to a world-class education in many high cost technical majors that are not available at any other publicly supported institution in Pennsylvania.  We seek the Commonwealth’s help to keep our tuition increases as low as possible.

 

A continued strong and healthy partnership with Penn State is an investment in the future of Pennsylvania.  With the support of the Commonwealth, Penn State can continue to provide the leadership, knowledge, and vision that are essential for success in today’s competitive economy.

 

  

Highlights Of Penn State’s
2013-14 Appropriation request

 

Basic Operating Costs

 

¨     Faculty and Staff Salary Adjustments – Maintain competitive faculty and staff salaries.

¨     Benefits – Respond to increasing costs for health care and retirement, particularly with respect to the rapidly escalating employer contribution rate for the State Employees’ Retirement System (SERS) over the next several years. 

¨     Facilities – Provide for facilities cost increases, including increasing fuel and utilities costs, support for the maintenance and operation of new facilities, deferred maintenance and capital improvement.

¨     Strategic Initiatives – Address the most critical strategic academic initiatives.

 

 Appropriation

 

¨     The University is requesting an overall appropriation increase of $10.6 million.  Of this amount, $7.5 million, or a 3.5% increase, is requested in the Educational and General (General Support) line item.  Funds in the amount of $2.4 million are requested to maintain the level of services provided through our programs in Agricultural Research and Cooperative Extension. Increased support of $475,000 is included for the Pennsylvania College of Technology.  Additional State and Federal Medical Assistance funding of $229,000 also is included for the Milton S. Hershey Medical Center.

 

Tuition

 

¨     If the Commonwealth is able to provide the appropriation requested, the University’s tuition increase would be 2.8 percent for Pennsylvania resident students at our Commonwealth Campuses and 3.8 percent at the University Park Campus.

 

 

Details Of Penn State’s 2013-14
Budget Plan and Appropriation Request

 

The University’s proposed budget plan for 2013-14 reflects operating cost increases of $62.0 million.  Table 1 summarizes the proposed budget plan for the Educational and General budget (General Support), Agricultural Research and Cooperative Extension, the College of Medicine at the Milton S. Hershey Medical Center and the Pennsylvania College of Technology.

 

Penn State’s request for an appropriation increase of $10.6 million for 2013-14 is summarized on Table 2.  Details of the University’s proposed budget plan and appropriation request are discussed below.

 

Basic Operating Costs:

 

Faculty and Staff Salary Adjustments

 

The competitiveness of Penn State’s salaries has been a strategic focus in our budget planning for more than a decade.  Limited funding for salary adjustments in recent years, including a salary freeze in 2009-10, has resulted in a decline in our relative standing and competitiveness.

 

It is important that the University be able to maintain its competitive position with respect to faculty and staff compensation.  The budget plan for 2013-14 includes $38.5 million for salary adjustments and related employee benefits.  The plan includes a 2.5 percent increase in the salary pool for merit-based increases, plus a 1.0 percent increase for special merit, market and equity considerations from the President’s Excellence Fund.

 

Benefits and Insurances

 

The University’s 2013-14 budget plan includes projected increases of $33.7 million for benefits cost increases.  This includes increases for health care and retirement.

 

Health care insurance costs are a large and growing component of Penn State’s operating expenses.  The University continues to aggressively pursue efforts to mitigate its health care costs while maintaining a quality program for our employees and graduate assistants. 

 

The mandated employer contribution rates for the State Employees’ Retirement System (SERS) began to rise starting in 2010-11 with costs projected to increase substantially over the next several years before peaking in 2015-16.  The projected increase in the 2013-14 SERS employer contribution is roughly equivalent to a one percent tuition increase in and of itself.

 

The University is projecting an inflationary increase in property and liability insurances for 2013-14. 

 

Facilities

 

A total of $15.5 million is projected for facilities cost increases.  Included are funds for the maintenance and operation of new or newly renovated facilities, fuel and utilities increases, deferred maintenance projects, and the continuation of the University’s capital improvement program. 

 

Projected increases total $8.8 million for the maintenance and operation of new or newly renovated facilities and for projected fuel and utilities cost increases.  This includes operating funds for major building renovations as well as various smaller classroom and laboratory renovation projects.  

 

Penn State’s physical plant is aging, and deferred maintenance continues to create a critical need.  Currently the University has permanently budgeted approximately $31.5 million toward capital renewal.  More needs to be done, however, to ensure the continued viability of important academic and research facilities.  For 2013-14, additional support of $3.0 million is included for deferred maintenance.

 

Penn State continues to trail its peers in providing modern laboratory and classroom space for its academic programs.  Even with the new facilities constructed over the last several years, Penn State still has among the lowest overall space per full-time-equivalent (FTE) student of any public university in the Big Ten.  While capital funds received from the Commonwealth are greatly appreciated, they are not sufficient to meet all of the University’s most critical needs.  As a result, the University established an ongoing general funds budget to support the capital improvement program.  These funds enable the University to incur debt for building renovations and construction.  A total of $3.7 million is included in the budget plan for 2013-14.

 

 Strategic Initiatives and Other Program Needs

 

The budget plan includes a total of $6.0 million for strategic initiatives and other program needs at University Park and other campuses.  Funding in the amount of $4.0 million is provided to support investments in high priority academic initiatives identified in the University’s strategic plan. 

 

A total of $2.0 million is included for other program commitments.  This amount includes funding for a limited number of faculty positions and instructional workload adjustments that reflect enrollment changes in the colleges.  Also included are funds for an expanded student orientation program which will extend this valuable student and parent experience from one to two days.

 

Libraries, Computing and Telecommunications

 

A total of $1.1 million is included in the plan for libraries, computing and telecommunications.  These funds will help to maintain library resources, which are essential to the quality of the University’s academic programs, and help the University keep pace with rapidly expanding student computing and telecommunications needs.  A proposed $4 per-semester increase in the student information technology fee will provide the needed funds.

 

Internal Budget Reductions and Other Cost Savings Initiatives

 

The budget plan is targeting $35.0 million of expense reductions.  This includes $7.5 million through a 1.0 percent across-the-board reduction in departmental operating funds from the academic and administrative units.  In addition, $27.5 million of central budget reductions and targeted administrative cost savings are included.  This will be the 22nd consecutive year that Penn State has had a program of internal budget reductions and reallocations in effect.

 

Need-Based Student Aid

 

Because the University must increase tuition to generate the necessary funds to meet its strategic goals, it is imperative that additional need-based student aid also be provided.  This will help the University meet its continuing goal that any student from the Commonwealth will be able to attend Penn State through a combination of institutional, federal, state, and private philanthropic support. 

A total of $1.0 million is included in the 2013-14 budget plan for need-based student aid.  These funds will be used to leverage additional private donations for student support.


Income Changes:

 

The University’s budget plan includes projected income increases of $62.0 million for 2013-14.  This amount includes $46.2 million from projected tuition and fees rate increases for students at all locations. 

 

The University is requesting an appropriation increase of $10.6 million (See Table 2).  Of this amount, $7.5 million, or a 3.5% increase, is requested for the Educational and General (General Support) line item and $475,000 is requested for the Pennsylvania College of Technology through Penn State’s direct state appropriation.  Funds in the amount of $2.4 million are included to maintain the level of services in Agricultural Research and Cooperative Extension through the Agricultural College Land Scrip Fund.  An additional $229,000 also is requested in the State and Federal Medical Assistance funding provided to the Milton S. Hershey Medical Center through the Pennsylvania Department of Public Welfare.

 

The University is projecting an additional $5.5 million in other income primarily from increases in the facilities and administration cost recovery from grants and contracts and additional investment income.

 

If the Commonwealth is able to provide the appropriation requested, the University’s tuition increase would be 2.8 percent for Pennsylvania resident students at our Commonwealth Campuses and 3.8 percent at the University Park Campus.

Table 1
Summary of Proposed Changes
2013-14 Budget Plan and State Appropriation Request
($ in thousands)
EXPENSE CHANGES: Educational
and
General
Ag. Research
&
Coop. Ext.
College
of
Medicine
PA
College of
Technology
Total
Basic Operating Costs:
Salary Adjustments $34,227 $903 $1,070 $2,295 $38,495
Benefits & Insurances 30,350 1,480 428 1,468 33,726
Facilities 15,254 250 15,504
Strategic Initiatives 
and Other Program Needs 6,000 6,000
Libraries, Computing
and Telecommunications 641 430 1,071
Internal Budget Reductions (34,994) (34,994)
Need-Based Student Aid 1,000 1,000
Student Activities 525 525
Student Facilities 697 697
         
TOTAL EXPENSE CHANGES $53,700 $2,383 $2,178 $3,763 $62,024
INCOME CHANGES:
Tuition & Fees 42,206 $700 $3,288 $46,194
Other Income 4,000 1,478 5,478
Requested Appropriation Increase* 7,494 2,383   475 10,352
TOTAL INCOME CHANGES $53,700 $2,383 $2,178 $3,763 $62,024
* The University is also requesting an additional increase of $229,000 in the State and Federal Medical Assistance funding provided to the Milton S. Hershey Medical Center through the Pennsylvania Department of Public Welfare.  Penn State's overall request for additional Commonwealth support for 2013-14 totals $10,581,000.
Table 2
2013-14 Appropriation Request
($ in thousands)
Direct State Appropriation:

2012-13
Appropriation
Projected
Increases
2013-14
Requested
Appropriation
Percent
Increases
General Support $214,110 $7,494 $221,604 3.5%
Pennsylvania College of Technology 13,584 475 14,059 3.5%
Total Direct State Appropriation 227,694 7,969 235,663 3.5%
Agricultural College Land Scrip Funds: 44,737   2,383   47,120 5.3%
PA Department of Public Welfare:
M.S. Hershey Medical Center
Medical Assistance Funding 6,536 229 6,765 3.5%
TOTAL $278,967 $10,581 $289,548 3.8%

Exhibits

Fall 2012
Total Credit Enrollment

Pennsylvania map labeled with Penn State Campuses



Total Credit Enrollment by Location
University Park 45 351 Mont Alto 1 107
Abington 3 516 New Kensington 715
Altoona 3 863 Schuylkill 867
Beaver 759 Shenango 578
Berks 2 747 Wilkes-Barre 647
Brandywine 1 581 Worthington Scranton 1 234
DuBois 705 York 1 208
Erie 4 149
Fayette 867 College of Medicine 792
Great Valley 604 Dickinson School of Law* 601
Greater Allegheny 635 PA College of Technology  5 671
Harrisburg 4 376 World Campus 11 984
Hazleton 1 060
Lehigh Valley 945 Total  96 562

*Includes University Park and Carlisle locations




Enrollment By Pennsylvania County of Residence
Fall 2012
Total - 65,188

Pennsylvania map by county



Enrollment By Pennsylvania County of Residence
Adams 484 Delaware 2723 Montgomery 4453
Allegheny 4136 Elk 280 Montour 154
Armstrong 316 Erie 2095 Northampton 1344
Beaver 810 Fayette 788 Northumberland 450
Bedford 151 Forest 11 Perry 170
Berks 2264 Franklin 787 Philadelphia 3678
Blair 1523 Fulton 57 Pike 262
Bradford 312 Greene 91 Potter 66
Bucks 3515 Huntingdon 335 Schuylkill 1087
Butler 725 Indiana 205 Snyder 245
Cambria 460 Jefferson 303 Somerset 159
Cameron 24 Juniata 128 Sullivan 50
Carbon 256 Lackawanna 1498 Susquehanna 182
Centre 4372 Lancaster 2026 Tioga 174
Chester 2903 Lawrence 231 Union 283
Clarion 80 Lebanon 702 Venango 120
Clearfield 702 Lehigh 1476 Warren 167
Clinton 282 Luzerne 1552 Washington 648
Columbia 274 Lycoming 1664 Wayne 352
Crawford 295 McKean 159 Westmoreland 1460
Cumberland 1507 Mercer 686 Wyoming 158
Dauphin 2346 Mifflin 378 York 2511
Monroe 707 Unknown County 396









Alumni Residing in Pennsylvania
As of December 31, 2012


Map showing Alumni residing in Pennsylvania by county
Alumni Residing in Pennsylvania by County
Adams 2250 Delaware 12438 Montgomery 24689
Allegheny 26961 Elk 2104 Montour 945
Armstrong 1251 Erie 8677 Northampton 5287
Beaver 3948 Fayette 4433 Northumberland 3539
Bedford 1361  Forest 102 Perry 1441
Berks 11144 Franklin 3658 Philadelphia 13880
Blair 8961 Fulton 381 Pike 546
Bradford 1892 Greene 438 Potter 537
Bucks 16706 Huntingdon 1985 Schuylkill 6239
Butler 4474 Indiana 1567 Snyder 1387
Cambria 3557 Jefferson 1577 Somerset 1180
Cameron 216 Juniata 668 Sullivan 365
Carbon 1315 Lackawanna 6775 Susquehanna 940
Centre 18799 Lancaster 12116 Tioga 1689
Chester 16209 Lawrence 1597 Union 2049
Clarion 656 Lebanon 4027 Venango 787
Clearfield 4141 Lehigh 8252 Warren 912
Clinton 2195 Luzerne 8921 Washington 3813
Columbia 2261 Lycoming 10602 Wayne 1367
Crawford 1739 McKean 849 Westmoreland 9400
Cumberland 11814 Mercer 3581 Wyoming 769
Dauphin 13013 Mifflin 1873 York 12623
Monroe 1841 Unknown County 8378






2012-13
Income Budget
(Dollars in Thousands)

Total Operating Budget General Funds Budget (Excluding HY & Penn College)
Pennsylvania map by county Pennsylvania map by county
2012-13 Income Budget (Dollars in Thousands)
Tuition & Fees $1 478 354 Tuition & Fees $1 368 397
State Appropriation 272 431 State Appropriation 243 396
Agric. Federal Funds 21 262 Agric. Federal Funds - 
Auxiliary Enterprises 362 081 Auxiliary Enterprises - 
Restricted Funds 662 849 Restricted Funds -
Other Income 202 191 Other Income          129 987
Hospital/Clinic*      1 265 596
               
Total $4 264 764 Total $1 741 780
*Includes $6,536,000 in State and Federal Medical Assistance Funds, provided by the Pennsylvania Department of Public Welfare.






2012-13
Expense Budget
(Dollars in Thousands)

Total Operating Budget General Funds Budget (Excluding HY & Penn College)
Pennsylvania map by county Pennsylvania map by county
2012-13 Expense Budget (Dollars in Thousands)
Instruction $746199 Instruction $659966
Research 576620 Research 63454
Public Service 119271 Public Service 44513
Academic Support 375798 Academic Support 348513
Institutional Support 344428 Institutional Support 287293
Student Services 114277 Student Services 109954
Student Aid 50525 Student Aid 48291
Physical Plant 211512 Physical Plant      179796
Auxiliary Enterprises 362081
Hospital/Clinic 1265596
Penn College 98457
                   
Total $4264764 Total $1741780





Organized Research by
Fund Source


Chart showing Organized Research by fund source
Organized Research by Fund Source
2012 Amount Percent of Total
green from graph Sponsored Grants and Contracts $636,949,000 78.9
black from graph Federal Appropriation - Agricultural Research 8,698,000 1.1
gray from graph University Funds 125,618,000 15.6
blue from graph State Appropriation
       - Agricultural Research 20,454,000 2.5
       - Organized Research* 15,783,000 1.9
Total $807,502,000 100.0

*Prior to 1990-91, the appropriation for Research was a separate line item. Beginning in 1990-91, it was
combined into the Educational and General (E&G) Appropriation.  The Research Appropriation for 1990-91
through the current year has been estimated using the percentage increase or decrease in the E&G Appropriation.