Friday, July
10, 2009 Finance and Physical Plant
On Agenda as Section 6, Part C, #5
The Board of Trustees will be
asked to consider and approve Penn State's operating budget
at its meeting on July 10, 2009.
SUMMARY OF THE BUDGET
PLAN
The
downturn in the economy has presented the nation with
unprecedented challenges. Pennsylvania’s financial
difficulties have touched all of our campuses and have been
a serious concern for parents, students, faculty, and staff.
As a result, the University’s 2009-10 operating budget has
been developed in a very conservative manner.
At
this writing, Penn State’s 2009-10 State Appropriation is
under consideration by the General Assembly and final action
has not been taken. As a
result of the uncertainty related to the appropriation
process and the range of alternatives being considered, the
University’s planning has focused on two budget scenarios.
The first scenario (Scenario 1) includes an estimated
reduction in direct state appropriation of 6.0 percent which
is offset by federal stimulus funding. This scenario
is based on Governor Rendell’s March 3, 2009 proposal and
provides a flat level of funding from the Commonwealth.
The second scenario (Scenario 2) is based on the Governor’s
June 26, 2009 proposal which reduces the University’s direct
appropriation by $60.9 million from its original 2008-09
level and eliminates any federal stimulus funding.
Both
scenarios will be presented to the Board of Trustees for
consideration at the July 10, 2009 meeting. In
addition, a recommendation based on the most up-to-date
information available will be made to the Board on the
2009-10 operating budget and corresponding tuition.
The
two budget
plans keep tuition
increases at the lowest possible level without sacrificing
quality.Under Scenario 1, the
tuition rate for lower division Pennsylvania residents at
the University Park campus will increase by 4.5 percent,
while the tuition rate for lower division non-resident
students at University Park will rise 3.7 percent. For
the Commonwealth Campuses, the tuition rate increase for
both lower division resident and non-resident students will
be 3.9 percent.
Under
Scenario 2, the tuition rate for lower division Pennsylvania
residents at the University Park campus will increase by 9.8
percent, while the tuition rate for lower division
non-resident students at University Park will rise 7.9
percent. For the Commonwealth Campuses, the tuition
rate increase for both lower division resident and
non-resident students will be 4.9 percent.
Both
plans include internal
expense reductions of $17.8 million through a 2.0 percent
across-the-board reduction in departmental operating budgets
in the academic and administrative units, and other targeted
administrative cost savings. This will be the
eighteenth consecutive year that the University has had a
program of internal budget reductions and reallocations in
effect. An increase of $3.5 million in non-tuition
income is also projected for 2009-10. In combination,
internal budget reductions and non-tuition income
enhancements total $21.3 million. This is equivalent
to $292 per year in tuition for each student, or 2.3 percent
in avoided tuition increases.
In
view of the current economic environment, salaries for
faculty and staff in 2009-10 will be frozen at current
levels. Funds are included to meet contractual salary
increases for technical service employees included under the
University’s collective bargaining agreement. However,
implementation of the increase will be deferred until
February 2010 as a result of an agreement reached with the
Teamsters on May 22, 2009. In addition, funds also will be
provided to support promotions.
Funds
are allocated for an extremely limited and highly selective
group of strategic investments and to meet existing
commitments. Funds are also
included for increases in health care premiums,
increasing fuel and utilities costs, the maintenance and
operation of new and newly remodeled facilities scheduled to
come on-line in 2009-10, the University’s capital
improvement program, improvements in libraries and
telecommunications, and for need-based student aid.
2009-10 TOTAL OPERATING
BUDGET
Penn
State’s overall operating budget for 2008-09 is $3.6
billion. Under Scenario 1,
the University is proposing changes totaling $98.0 million
in general funds, restricted funds, and auxiliary
enterprises, plus $53.0 million at the Hershey Medical
Center, bringing the total 2009-10 operating budget to
almost $3.8 billion.
Under
Scenario 2, the University is proposing changes totaling
$74.0 million in general funds, restricted funds, and
auxiliary enterprises, plus $53.0 million at the Hershey
Medical
Center, bringing the total 2009-10 operating budget to over
$3.7 billion.
Summaries
of both budget plans are shown on
Table 1.
STATE APPROPRIATION
AND FEDERAL STIMULUS
FUNDS
Scenario 1:
In
Scenario 1, Penn State’s estimated total
appropriation for 2009-10 is $318.1 million. This
represents a reduction of $20.3 million, or 6.0 percent,
from the University’s original 2008-09 appropriation (see
Table 2). It is anticipated that the University’s
previous Educational and General, Recruitment and Retention
of Disadvantaged Students, Agricultural Research and
Cooperative Extension line items will be combined under a
single line item entitled “General Support” and that a
separate line item will be retained for the Pennsylvania
College of Technology.
Through
funds available to the Commonwealth of Pennsylvania via the
American Recovery and Reinvestment Act of 2009 (ARRA), Penn
State would receive $20.3 million in federal stimulus funds
for 2009-10. These funds would offset the reductions
for the University’s direct state appropriation.
The
General Support line items for the direct state
appropriation and federal stimulus funds have been allocated
in combination to reflect the University’s 2008-09 line-item
distribution.
Following
the approach initiated four years ago, the line-item
appropriations for the College of Medicine at the Milton S.
Hershey Medical Center will not be included in Penn State’s
appropriation bill. Instead, State and Federal Medical
Assistance funds estimated at $13.5 million, representing a
6.0 percent reduction of $864,000, will be directed to the
Milton S. Hershey Medical Center through the Pennsylvania
Department of Public Welfare. Stimulus funding will
not be provided to offset the reduction of medical
assistance funds for the Hershey Medical Center.
Scenario 2:
Scenario
2 reflects the plans that Governor Rendell announced on June
26, 2009 to reduce Penn State’s direct appropriation to
$277.5 million, a decrease of $60.9 million or 18.0 percent,
from the University’s original appropriation of $338.4
million in 2008-09. The Governor also announced the
State-Related Universities, including Penn State,
had been excluded from the Commonwealth’s application for
federal stimulus funds. Under this scenario, medical
assistance funds directed to the Milton S. Hershey Medical
Center through the Pennsylvania Department of Public Welfare
will also be cut by $864,000, or 6.0 percent.
THE
GENERAL FUNDS
BUDGET
The
components of the general funds budget include: the
Educational and General budget, which supports most of the
University’s basic teaching, research, and public service
programs; the budgets for Agricultural Research and
Cooperative Extension, the College of Medicine at the Milton
S. Hershey Medical Center; and the Pennsylvania College of
Technology. The sections that follow focus on the
changes for these areas.
TABLE 2 SUMMARY OF ESTIMATED 2009-10 STATE
APPROPRIATION
AND FEDERAL STIMULUS FUNDS
2008-09
2009-10
Federal
Initial
Appropriation
Stimulus
2009-10
Line Items
Appropriation
Changes
Funds
Total
General Support
$
0
$
304,450,000
$
19,433,000
$
323,883,000
Educational and General:
Educational and General
$267,451,000
(267,451,000)
0
0
Recruitment and Retention of
Disadvantaged Students
454,000
(454,000)
0
0
Sub-Total - Educational & General
267,905,000
(267,905,000)
0
0
Agricultural Research
Cooperative Extension
Agricultural Research
25,594,000
(25,594,000)
0
0
Cooperative Extension
30,384,000
(30,384,000)
0
0
Sub-Total - Ag Research
& Cooperative Extension
55,978,000
(55,978,000)
0
0
Pennsylvania College
of Technology(a)
14,492,000
(869,000)
869,000
14,492,000
TOTAL APPROPRIATION
$
338,375,000
$
(20,302,000)
$
20,302,000
$
338,375,000
(a) Reflects the combination of the
Operations and Debt Service line items.
Note: An estimated $13,543,000 from State and Federal Medical
Assistance funds will be available to the Milton S. Hershey
Medical Center for 2009-10. These funds will be provided through
the Pennsylvania Department of Public Welfare.
TABLE 1
TOTAL UNIVERSITY BUDGET
SUMMARY OF
2009-10 CHANGES
2008-09
2009-10
Adjusted Budget
Changes
Budget
General Funds:
Educational and General
$
1,478,592,000
$
41,284,000
$
1,519,876,000
Agricultural Research
27,955,000
(4,607,000)
23,348,000
Cooperative Extension
31,781,000
(5,469,000)
26,312,000
Sub -Total
1,538,328,000
31,208,000
1,569,536,000
College of Medicine
89,230,000
4,714,000
93,944,000
Pennsylvania College of Technology
94,114,000
(2,913,000)
91,201,000
Total - General Funds
1,721,672,000
33,009,000
1,754,681,000
Federal Funds - Agriculture
19,995,000
0
19,995,000
Restricted Funds:
Educational and General
468,500,000
23,424,000
491,924,000
Agricultural Research
28,820,000
1,441,000
30,261,000
Cooperative Extension
15,340,000
767,000
16,107,000
College of Medicine
76,000,000
0
76,000,000
Pennsylvania College of Technology
22,423,000
567,000
22,990,000
Total - Restricted Funds
611,083,000
26,199,000
637,282,000
Auxiliary Enterprises:
Educational and General
296,792,000
13,456,000
310,248,000
College of Medicine
3,899,000
164,000
4,063,000
Pennsylvania College of Technology
22,503,000
1,275,000
23,778,000
Total - Auxiliary Enterprises
323,194,000
14,895,000
338,089,000
TOTAL
$
2,675,944,000
$
74,103,000
$
2,750,047,000
The Milton S. Hershey Medical Center
939,265,000
52,958,000
992,223,000
TOTAL UNIVERSITY
$
3,615,209,000
$
127,061,000
$
3,742,270,000
Scenario 2
TABLE 2
SUMMARY OF ESTIMATED 2009-10 STATE APPROPRIATION
AND FEDERAL STIMULUS FUNDS
2008-09
2009-10
Federal
Initial
Appropriation
Stimulus
2009-10
Line Items:
Appropriation
Changes
Funds
Total
General Support
$
0
$
265,583,000
$
0
$
265,583,000
Educational and General:
Educational and General
$267,451,000
(267,451,000)
0
0
Recruitment and Retention of
Disadvantaged Students
454,000
(454,000)
0
0
Sub-Total - Educational & General
267,905,000
(267,905,000)
0
0
Agricultural Research &
Cooperative Extension
Agricultural Research
25,594,000
(25,594,000)
0
0
Cooperative Extension
30,384,000
(30,384,000)
0
0
Sub-Total - Ag Research
& Cooperative Extension
55,978,000
(55,978,000)
0
0
Pennsylvania College
of Technology(a)
14,492,000
(2,608,000)
0
11,884,000
TOTAL APPROPRIATION
$
338,375,000
$
(60,908,000)
$
0
$
277,467,000
(a)
Reflects the combination of the Operations and Debt
Service line items.
Note: An estimated $13,543,000 from State and Federal
Medical Assistance funds will be available to the Milton
S. Hershey Medical Center for 2009-10. These funds will
be provided through the Pennsylvania Department of
Public Welfare.
EDUCATIONAL AND GENERAL BUDGET
EDUCATIONAL AND
GENERAL EXPENSE CHANGES
Expense
changes for the 2009-10 Educational and General portion of the
University=s
general funds operating budget are described below and
summarized inTable 3.
SALARY ADJUSTMENTS
In 2000, the Board of Trustees adopted a multi-year plan to make
Penn State’s faculty salaries, which had been falling
dramatically against other universities nationally, more
competitive relative to our peer institutions in the Big Ten and
the Association of American Universities. This plan proved
successful and showed steady improvement in our rankings through
2005-06. Limited funding for salary adjustments in the
2006-07 and 2007-08 budgets resulted in some decline in our
rankings, while our 2008-09 salary increase program enabled us
to maintain our relative position. Information regarding
Penn State’s faculty salary rankings can be found in Tab B of
this document.
As a result of the current economic downturn, salaries for faculty
and staff in 2009-10 will be frozen at current levels.
Funds are included in the budget plan to meet a 3.0 percent wage
increase for technical service employees included under the
University’s collective bargaining agreement. It should be
noted that the technical service employees recently ratified a
one-year extension of the agreement through June 30, 2011, which
includes a deferral of the scheduled July 1, 2009 wage increase
to February 15, 2010. Funds are also provided in the
budget for promotions and other existing commitments.
In total, the 2009-10 budget includes $2,919,000 for salary
adjustments and related benefits.
EMPLOYEE SHARE
OF BENEFITS AND PARKING
Since
salary increases will not be provided for faculty and staff in
2009-10, the budget includes funds to cover the employee
contributions to health premiums for the increase that would
have otherwise been implemented in January 2010. Funds
also will be budgeted to offset the increases in the parking
fees for faculty and staff planned for July 1, 2009. In
total, $3,925,000 is included in the 2009-10 budget to cover
these additional expenses.
BENEFITS
For
2009-10, the cost of the University=s
benefits program will increase by $20,684,000 under Scenario 1.
If it is necessary to implement Scenario 2, the increase in the
benefits program will be budgeted at $18,488,000. These
changes include:
1. Health
Insurances -- $16,586,000 or $15,086,000
Rising health care insurance costs continue to create challenges
for both employers and employees across the country -- a trend
which is expected to persist for the foreseeable future.
The University is projecting an increase of $16,586,000, or 12.0
percent, in health care costs for 2009-10. The full amount
of the projected increase is budgeted in Scenario 1.
Under Scenario 2, the University will budget $15,086,000 for
health care cost increases. Employees will be asked to
cover the remaining $1,500,000 through an increase in the
co-payments for health care services.
Penn State continues to aggressively pursue efforts to mitigate
its health care cost increases. On January 1, 2008, the
University entered into a ten-year agreement with Highmark Blue
Shield. As part of this agreement, Highmark is the
exclusive administrator of all health plans offered to Penn
State=s
employees, retirees, and their dependents, allowing the
University to offer a comprehensive benefits plan across its
geographically diverse locations. This partnership with
Highmark provides a joint focus, involving the Hershey Medical
Center, the College of Medicine, the College of Health and Human
Development and the Mount Nittany Medical Center, on the
development of wellness and disease management programs which
will provide savings that will enable Penn State to reduce
annual health care cost increases in future years.
2.
Retirement -- $4,098,000 or $3,402,000
Penn State has received information
from the State Employees’ Retirement System (SERS) that the
University’s 2009-10 employer contribution rate will continue at
essentially current levels. Actuarial projections continue
to show the rates for SERS increasing significantly in future
years, particularly in the face of the uncertainty which
surrounds the financial markets. This is a major area of
concern for Penn State, and the University continues to monitor
the situation closely. In Scenario 1, the University has
included additional funds of $4,098,000 in the 2009-10 budget in
anticipation of a future spike in the employer contribution
rate. In Scenario 2, the funds provided will be reduced by
$696,000 to $3,402,000.
FACILITIES AND
MAINTENANCE COST
INCREASES
1. Maintenance
and Operation of New Facilities -- $778,000
A total of $778,000 will be budgeted for the maintenance and
operation of new or newly remodeled facilities scheduled to come
on-line in 2009-10. Operating funds for projects at
University Park include renovation projects for James Building
and North Frear Building as well as various laboratory and
classroom renovations. Funds also are included for the
Misciagna Arts Center at Penn State Altoona; support for the new
Penn State Lehigh Valley Campus; and the Metzger Admissions and
Alumni Center at Penn State Erie.
2.
Fuel and Utilities Cost Increases
-- $5,808,000
Global and national events have had a dramatic impact on energy
costs, and trends in the marketplace indicate that significant
increases will continue in the future. Funds in the amount
of $5,808,000 are included in the 2009-10 budget for projected
increases in fuel and utilities costs at all campuses.
3.
Capital Improvement Program -- $2,695,000
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 $2,695,000 is included in the
budget for 2009-10. The current economic situation has
forced the University to reduce the funding originally planned
for the program by $1 million.
4. Deferred Maintenance --
$2,000,000
Penn State=s
physical plant is aging, and deferred maintenance continues to
be a strategic challenge. During this decade, more square
footage will reach the 35-year threshold, where major
maintenance is required, than at any time in the University=s
history. Currently, the University has permanently
budgeted approximately $24,500,000 for deferred maintenance.
More needs to be done, however, to address the maintenance
backlog. For 2009-10, additional support of $2,000,000 is
included for deferred maintenance at University Park and the
Commonwealth Campuses. This allocation reflects a
reduction of $1 million in the amount originally planned for
deferred maintenance.
STRATEGIC INITIATIVES
Funding in the amount of $3,000,000 is
included in the 2009-10 budget for a small number of initiatives
that are of strategic importance to the University. A portion
of these funds will support modest investments in Forensic
Science, teacher education, the School of Architecture and
Landscape Architecture, and the Security and Risk Analysis
degree program. Enhancement funds also will be provided
for high priority needs in a limited number of academic programs
and for the Huck Institutes of the Life Sciences.
LIBRARIES AND
INFORMATION TECHNOLOGY
A total of $1,225,000 is included in the budget for libraries
and information technology. These funds will help the
University keep pace with rapidly expanding and changing student
computing, telecommunications, and information resource needs.
This funding will be provided through an $8 per semester
increase in the student information technology fee at all
campuses.
OTHER PROGRAM
COMMITMENTS
A total of $4,249,000 is included for
other program commitments. Of this amount, $2,049,000 will
be provided for high priority academic needs. In addition,
$200,000 will be allocated for instructional workload
adjustments that reflect enrollment changes in the colleges and
$2,000,000 will be allocated for other support services,
including information technology services, environmental health
and safety programs, research protection requirements, and the
university-wide parking and transportation plans.
BUDGET REDUCTIONS
AND COST SAVINGS
INITIATIVES
For 2009-10, the budget includes internal expense reductions
totaling $17,817,000. This includes $15,020,000 through a
2.0 percent across-the-board reduction in department operating
funds from the academic and administrative units. In
addition, administrative cost savings of $2,797,000 have been
identified, exceeding the initial target by $797,000. The
savings reflect additional budget reductions in University
Outreach, increased administrative charges for auxiliary
enterprises, physical plant service reductions, and energy and
environment-related savings initiatives.
This is the eighteenth consecutive year that the University has
had a program of internal budget reductions and reallocations in
effect. An increase of $3,500,000 in non-tuition income is
also projected for 2009-10. In combination, internal
budget reductions and non-tuition income enhancements total
$21,317,000. This is equivalent
to $292 per student, or 2.3 percent in avoided tuition increases
for 2009-10.
FUTURE CONTINGENCIES
Historically, Penn State has
taken a conservative approach in developing its operating
budget. It is important for Penn State to preserve as much
flexibility as possible in its budget planning in light of the
volatility that continues to exist with the economy in general.
In Scenario 1, funds in the amount of $14,663,000 have been
included in the 2009-10 budget plan to position the University
against future contingencies and unanticipated financial
pressures.
The entire $14,663,000 will be
eliminated from the budget plan under Scenario 2.
STUDENT ACTIVITIES
An additional $179,000 will
result from a $2 per-semester increase in the Student Activities
Fee at University Park. The fees charged at the other
campuses will not change from the 2008-09 level. Student
Activities Fees are used to support student activities and
programs at the generating campuses. The proposed increase
for University Park will be directed toward support of legal aid
services for students. Student Activities Fee charges by
campus can be found on Schedule 3 in Tab E of this document.
These fees are recommended by students themselves via a
student-government process.
STUDENT FACILITIES
A total of $3,815,000 is included in the budget for the Student
Facilities Fee, resulting from an increase of $50 per semester
in the student facilities fee for the University Park campus.
The increase will bring the fee to $100 per semester as approved
by the Board of Trustees in May 2008. An additional
$604,000 is included in the budget for fee increases ranging
from $25 to $75 per semester at the Penn State Altoona,
Hazleton, Lehigh Valley, and New Kensington campuses.
Funds from the fee will be used to support capital projects
designated to enhance student activities, fitness and
recreation. A summary of the Student Facilities Fee
charges for each campus can be found on Schedule 4 in Tab E of
this document.
NEED-BASED
STUDENT AID
As the University implements tuition increases to provide
necessary funds to meet its strategic goals, it is imperative
that the amount of need-based student aid also be increased.
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 $1,000,000 is included in the 2009-10 budget for
need-based student aid. These funds will be used to
leverage additional private donations for student support.
GRANTS-IN-AID
RELATED TO TUITION
RATE INCREASES
In
Scenario 1, a total of $4,537,000 is included in the 2009-10
budget for increased costs of grants-in-aid, which are related
to the tuition rate increases, primarily for graduate
assistants, fellowships, employees, and dependents. The
higher tuition increase in Scenario 2 will result in a total of
$8,407,000 for tuition-related grants-in-aid.
TABLE 3 EDUCATIONAL AND GENERAL OPERATING BUDGET
2009-10 EXPENSE CHANGES
Salary Adjustments
Scenario 1
Scenario 2
1. Salary Increases
$
2,517,000
$
2,517,000
2. Benefits Related to Salary Increases
402,000
402,000
Sub-Total - Salary Adjustments
2,919,000
2,919,000
Employee Share of Benefits & Parking Rate Increase
3,925,000
3,925,000
Benefits
1. Employee Health Insurances
16,586,000
15,086,000
2. Retirement
4,098,000
3,402,000
Sub-Total - Benefits
20,684,000
18,488,000
Property and Liability Insurances
9,000
9,000
Facilities and Maintenance
1. Maintenance and Operation of New Facilities
778,000
778,000
2. Fuel and Utilities
5,808,000
5,808,000
3. Capital Improvement Program
2,695,000
2,695,000
4. Deferred Maintenance
2,000,000
2,000,000
Sub-Total - Facilities and Maintenance
11,281,000
11,281,000
Strategic Initiatives
3,000,000
3,000,000
Libraries and Information Technology
1,225,000
1,225,000
Other Program Commitments
4,249,000
4,249,000
Internal Budget Reductions and
Cost Savings Initiatives
(17,817,000)
(17,817,000)
Future Contingencies
14,663,000
0
Student Activities
179,000
179,000
Student Facilities
4,419,000
4,419,000
Need-Based Student Aid
1,000,000
1,000,000
Grants-In-Aid
4,537,000
8,407,000
TOTAL EXPENSE CHANGES
$
54,273,000
$
41,284,000
EDUCATIONAL AND
GENERAL
INCOME CHANGES
Income changes of $54,273,000 in Scenario 1 support the 2009-10
Educational and General budget. Income changes in Scenario
2 are $41,284,000. These changes are described below and
summarized inTable 4.
STATE
APPROPRIATION AND FEDERAL
STIMULUS
FUNDS
For the Educational and General (E&G) portion of the budget, a
reduction in direct state appropriation support is offset by
federal stimulus funds resulting in no change in the amount
available for 2009-10 over the University’s 2008-09 initial E&G
appropriation in Scenario 1.
In Scenario 2, the E&G
appropriation is reduced by $48,224,000 from the initial 2008-09
appropriation level and no federal stimulus funds are provided.
TUITION
Tuition rate schedules for
resident and non-resident students by student level and by
campus are shown on Schedule 1 in Tab E of this document for
both Scenarios 1 and 2.
Based on the recommendations of the Tuition Task Force adopted
by the Board of Trustees in July 2002, tuition increases for
non-resident students are set at 1.5 times the increases for
resident students, reflecting more appropriately the increases
in the actual costs of instruction. For University Park
students, where the current differential is 1.8 to 1 between
non-resident and resident tuition, this will result in
percentage increases that are less for non-resident students
than those for resident students. For most campuses, where
the current differential is approximately 1.5 to 1, the
percentage increases will be similar to those for resident
students.
Scenario 1:
For resident lower division
students, the tuition increase for 2009-10 will be $295 per
semester at University Park, $226 per semester at Erie,
Harrisburg, Altoona, and Berks, and $217 per semester at other
Penn State campuses.
For non-resident lower division students, the tuition
increase for 2009-10 will be $443 per semester at University
Park, $346 per semester at Erie, Harrisburg, Altoona, and Berks,
and $331 per semester at other Penn State campuses.
Scenario 2:
For resident lower division
students, the tuition increase for 2009-10 will be $640 per
semester at University Park, $284 per semester at Erie,
Harrisburg, Altoona, and Berks, and $272 per semester at other
Penn State campuses.
For non-resident lower division students, the tuition
increase for 2009-10 will be $960 per semester at University
Park, $434 per semester at Erie, Harrisburg, Altoona, and Berks,
and $415 per semester at other Penn State campuses.
The tuition rate changes in
Scenario 1 will generate an additional $42,045,000 in tuition
income for 2009-10, while the tuition rate changes in Scenario 2
will generate an additional $77,280,000. Additional
tuition income of $4,941,000 also will be budgeted as a result
of enrollment growth experienced at University Park over the
past three academic years, for a total of $46,986,000 in
Scenario 1 and $82,221,000 in Scenario 2.
INFORMATION TECHNOLOGY
FEE
An $8 increase in the current $222 per semester information
technology fee will help support the rapidly expanding
information and technology needs of Penn State students.
This will generate $1,225,000 in additional income for 2009-10.
STUDENT
ACTIVITIES FEE
An additional $179,000 will result from a $2 per semester
increase in the Student Activities Fee at University Park.
There will be no increase in the Student Activities Fee at the
other campuses.
STUDENT
FACILITIES FEE
A total of $4,419,000 will be available as a result of an
increase of $50 per semester in the Student Facilities Fee for
the University Park campus and increases ranging from $25 to $75
per semester for students at the Penn State Altoona, Hazleton,
Lehigh Valley, and New Kensington campuses.
FACILITIES AND
ADMINISTRATION COST
RECOVERY
Over the past several years, the University has made a
significant effort to better track and more fully account for
costs in support of sponsored research activities. As a
result of this initiative, additional income in the amount of
$3,500,000 will be available from increased facilities and
administration cost recovery from grants and contracts in
2009-10.
TRANSFER TO THE
COLLEGE OF MEDICINE
A total of $2,000,000 will be transferred from the Educational
and General budget to support employee benefits costs for the
College of Medicine.
TABLE 4 EDUCATIONAL AND
GENERAL OPERATING BUDGET 2009-10 INCOME CHANGES
Scenario 1
Scenario 2
State Appropriation & Federal Stimulus Funds
$
0
$
(48,224,000)
Tuition
46,986,000
82,221,000
Information Technology Fee
1,225,000
1,225,000
Student Activities Fee
179,000
179,000
Student Facilties Fee
4,419,000
4,419,000
Facilities and Administration Cost Recovery
3,500,000
3,500,000
Other Income
(36,000)
(36,000)
Transfer to College of Medicine
(2,000,000)
(2,000,000)
TOTAL INCOME CHANGES
$
54,273,000
$
41,284,000
AGRICULTURAL RESEARCH
AND COOPERATIVE EXTENSION
Expense and income changes for the Agricultural Research and
Cooperative Extension budgets are summarized in
Table 5.
The budgets support salaries, benefits, and operating costs
for each program. As part of the Commonwealth=s
matching agreement with the Federal Government, benefits for
any salaries paid from Agricultural Federal Funds also are
supported by the budgets.
AGRICULTURAL
RESEARCH
Under Scenario 1, appropriation
support and federal stimulus funds for Agricultural Research
will not change from the 2008-09 initial appropriation
level. Under Scenario 2, appropriation support will be
reduced by $4,607,000 and no stimulus funds will be
provided.
On
the expense side, changes include $42,000 for salary
adjustments and related benefits, $465,000 to cover benefits
increases for Agricultural Research personnel, $109,000 to
cover the employee share of health care cost increases and a
reduction of $616,000 in program funds under Scenario 1 and
a reduction of $5,223,000 under Scenario 2.
COOPERATIVE EXTENSION Appropriation support and federal
stimulus funds for Cooperative Extension will not change
from the 2008-09 initial appropriation level under Scenario
1. Under Scenario 2, appropriation support will be
reduced by $5,469,000 and no stimulus funds will be
provided.
On the expense side, changes
include $4,000 for salary adjustments and related benefits,
$588,000 to cover benefits increases for Cooperative
Extension personnel, $137,000 to cover the employee share of
health care cost increases, and a reduction of $729,000 in
program funds under Scenario 1 and a reduction of $6,198,000
under Scenario 2.
SUMMARY
In combination, appropriation support and federal stimulus
funds for Agricultural Research and Cooperative Extension
will not change from the 2008-09 initial appropriation level
under Scenario 1. Under Scenario 2, appropriation
support will be reduced by $10,076,000 for these programs.
On the expense side, reductions totaling $1,345,000 in
program funds will be required under Scenario 1 and
reductions of $11,421,000 will be required under Scenario 2.
TABLE 5
AGRICULTURAL RESEARCH AND COOPERATIVE EXTENSION 2009-10
CHANGES