PENN STATE'S 2005-06 BUDGET PRIORITIES |
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The University’s proposed budget plan for 2005-06 reflects basic operating cost increases of $77,206,000. On the income side, restoring the University’s appropriation to the 2001-02 level by the Commonwealth would provide $17,634,000. An additional $56,072,000 would come from tuition and fee increases, and $3,500,000 from other income. The budget plan also contains a $10,000,000 appropriation request from the Commonwealth for critically needed support for the College of Medicine. |
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| Details of the University’s proposed budget plan and appropriation request are discussed below. Table 1 summarizes the proposed budget plan for the Educational and General Budget, 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 appropriation request for 2005-06 is summarized by line item in Table 2. | |
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Engineering students get hands-on learning in the foundry circa 1894. Today, one in fifty practicing engineers in the country is a Penn State graduate. |
| BASIC
OPERATING COSTS: |
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| Benefits and Insurances
Rising health care insurance costs continue to create challenges for both employers and employees across the country. Health care costs have escalated dramatically over the last several years — a |
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| This circa 1900 view shows the Obelisk, left, constructed to demonstrate the weathering properties of Pennsylvania building stone, and the Armory, which served the military cadet corps and was also used for social and athletic events. |    |
trend which is expected to continue for the foreseeable future. Penn State is not immune to these dramatic increases. The University is projecting an increase of 15 percent for next year. The employer contribution rate for the State Employees Retirement System will increase, and the number of University employees participating in the |
| TIAA/CREF retirement program will continue to grow. In addition, funding will be required for changes in the social security base. In total, benefits costs are projected to increase by $24,733,000. | ||
| In line with national trends, the University is expecting additional increases in property and liability insurances. A total of $1,500,000 is projected for these cost increases. | ||
| Facilities A total of $11,207,000 is projected for facilities cost increases. Included are funds for the maintenance and operation of new or newly renovated facilities, additional funds for deferred maintenance projects, and the continuation of the University’s capital improvement program. |
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| Projected increases total $5,557,000 for the maintenance and operation of new or newly renovated facilities and for modest fuel and utilities cost increases. This includes operating funds for: the new Smeal Business Building, Food Science Building, Forest Resource Building, and classroom and laboratory renovations at University Park, the Research and Economic Development Center at Penn State Erie; and the Library/Classroom Building at Penn State York. | ||
| Penn State’s physical plant is aging, and deferred maintenance is a critical problem. Between 1996-97 and 2003-04, the University added $1,000,000 per year to the permanent budget for deferred maintenance. This was increased to $2,000,000 per year beginning in 2004-05, and brings the current total permanent budget for these needs to nearly $17 million. More needs to be done, however, to address the maintenance backlog. For 2005-06, additional support of $2,000,000 is included for deferred maintenance. | ||
| Insufficient or inadequate space has become a serious impediment to Penn State’s academic programs. The University lags behind its peers in providing modern laboratory and classroom space for its students, faculty, and staff. Penn State 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 | ||
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The Allentown "branch school," established in 1912, was among Penn State’s first permanent outreach education centers, and offered instruction in applied engineering subjects. Today, Penn State serves nearly 82,000 students at 24 campus locations throughout the Commonwealth. | |
| will not be sufficient to meet the University’s most critical needs. As a result, the University has 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, and to provide for the operating costs of the buildings once they are completed. A total of $3,650,000 is included in the budget for 2005-06. | ||
| Faculty and Staff Salary Adjustments
Comparisons with other Big Ten public universities and 22 public research universities participating in the American Association of Universities Data Exchange (AAUDE) show that Penn State’s average faculty salary levels slipped substantially from 1995-96 to 2000-01. Because of concerns about the |
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| President
George Atherton, front right, and the entire Penn State faculty in 1887. Today,
Penn State offers 446 degree programs with 5,380 full-time and 2,669 part-time faculty members. |
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competitiveness of Penn State’s salaries, theBoard of Trustees adopted a multi-year plan to reduce the gap between Penn State’s faculty salaries and those at peer institutions. |
| As a result, since 2001-02, Penn State’s average faculty salaries have shown improvement in these comparisons. In order to maintain these rankings, the University has made faculty and staff salary increases a priority for 2005-06. | ||
| The budget plan for 2005 06 includes $29,046,000 for faculty and staff salary adjustments and related employee benefits. The plan includes a 2.0 percent increase in the salary pool for merit-based increases, plus some additional funds for special merit, market and equity considerations from the President’s Excellence Fund and the Faculty/Staff Excellence Fund. | ||
| Strategic Initiatives and Other
Program Needs The budget plan includes a total of $9,876,000 for strategic initiatives and other program needs. Funding in the amount of $6,268,000 is included in the 2005-06 budget for strategic investments at both University Park and other campus locations. Funding for these investments will result from the tuition differentials approved by the Board of Trustees in July 2002. A portion of these funds at University Park will be used to reduce the student/faculty ratio and/or to convert fixed-term faculty appointments to standing positions in selected academic programs. Additional support will be provided for K-12 educational partnerships and programs in the fine and performing arts, humanities and social sciences. Enhancement funds also will be provided for World Campus and resident instruction blended learning opportunities, development activities, student services, and student recreation programs. At other campus locations, these funds will be used for the highest priority needs identified by each campus. A total of $3,608,000 is included for other program commitments. This amount includes funding for new faculty positions and for instructional workload adjustments that reflect |
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This photo of students making ice cream at the Penn State Creamery dates from the early 1900s. The University in 1892 offered the nation's first collegiate-grade instruction in ice cream making. | |
| enrollment changes in the colleges. In addition, funds will be provided for high priority academic needs and for other support services such as research administration, information technology services, and the university-wide parking and transportation plan. | ||
| Libraries, Computing and Telecommunications
The budget plan includes a total of $2,000,000 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 $15 per semester increase in the student information technology fee will provide the needed funds. |
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| Internal Budget Reductions and
Reallocations For 2005-06, Penn State will continue a program of internal budget reductions and reallocations based on the University’s strategic planning process. This will be the fourteenth consecutive year that this process has been in effect. A total of $6,562,000 will be reallocated within each college, campus, and support unit to |
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| U.S. President Dwight Eisenhower, right, visits his brother Milton, at Penn State in 1953. Milton Eisenhower was President of the University from 1950-56. |    |
meet the highest priority needs identified in
their strategic plans. Cost Savings/Enhanced Income Initiatives Since 1992-93,
the University has recycled over $127 million from departmental operating
budgets. These funds have been reallocated to help offset cost increases and to provide critically |
| needed support for academic programs. Over the years, this has resulted in a significant shift of funds from non-academic to academic functions. The University has systematically eliminated or merged existing academic programs as it has added new ones. In addition, Penn State has one of the most effective continuous quality improvement programs of any university in the country. Nevertheless, the University is committed to finding new ways to reduce costs and enhance income from sources other than tuition. | ||
| In September 2002, the University established a Cost Savings Task Force to explore opportunities for additional cost savings that will not adversely affect the academic quality of the institution. In total for the 2003-04 and 2004-05 budget years, the Task Force identified $20,961,000 in annual savings and non-tuition income enhancements. This is equivalent to $327 per student per year, or 3.8 percent in avoided tuition increases over the two-year period. | ||
| For 2005-06, the University has established targets of $2,433,000 in costs savings and $3,500,000 in non-tuition income beyond the on-going internal budget reduction and reallocation program. . | ||
| 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 is to help meet |
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| the University’s goal to ensure that any student from the Commonwealth will be able to attend Penn State through a combination of institutional, federal, state and private philanthropic support. |    |
Wearing blue or green beanies, or dinks, was still a custom for Penn State freshmen in the 1950s. |
| A total of $1,200,000 is included in the 2005-06 budget plan for need-based student aid. These funds will be used to leverage additional private donations for student support through the Trustee Scholarship Program. This represents the fourth year that funds have been included in the budget for this purpose. | ||
| The Penn State Agricultural Experiment Station, among the first scientific centers of its kind, was established with federal funds in 1887. Today, the results of Penn State’s agricultural research are disseminated through Cooperative Extension offices in each of Pennsyl-vania’s 67 counties. |    |
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