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Strategic Budget Advisory Committee (SBAC)
Strategic Budget Advisory Committee

Deep Concern Expressed Over Rendell's Planned Cuts to University Funds

Penn State Live - July 01, 2009

University Park, Pa. — In introducing a new round of potential state budget cuts for 2009-10, Gov. Ed Rendell proposed last week what could be devastating cuts in the Commonwealth's appropriation to Penn State.

Rendell has proposed reducing Penn State's appropriation by a total of more than $60 million. This includes making permanent a 6 percent cut of $20 million implemented as a mid-year rescission in the 2008-09 year and an additional 13.8 percent, or $40 million, from his initial proposal in February.

In addition, Rendell has proposed to remove Penn State and the other three state-related universities (University of Pittsburgh, Temple University, and Lincoln University) from eligibility for the federal "stabilization funds" for public higher education that are part of a U.S. stimulus package known as the American Recovery and Reinvestment Act. Rendell had proposed earlier this year to provide those funds to Penn State to temporarily offset the planned $20 million initial cut in the University's appropriation.

All told, the governor's proposed reductions would set the University back to its appropriation level in 1996. Penn State would go from the current year's initial appropriation of $338 million to $278 million in 2009-10.

Since 2001, Penn State has already experienced five cuts in appropriations totaling more than $45 million. The consequences of the enormous cuts that have been proposed would be either dramatic changes in the character of Penn State and the way it operates or a massive tuition increase for students. Also of significant concern to the University is how these cuts would impact the University's relationship with state government and the benefits Penn State brings to the Commonwealth.

"While news of these proposed cuts is troubling, the discussion at this time is between the governor and the state Legislature, which must come to some agreement on a number of budget issues," said Penn State President Graham Spanier. "We realize the state is facing some serious fiscal challenges, but to cut funding for institutions like Penn State is really a step in the wrong direction."

The state Legislature must pass a budget for the Commonwealth that will be signed by the governor before Penn State's appropriation is finalized. The new fiscal year begins today without an approved budget.

In removing the state-related universities from eligibility for stabilization funds, Rendell has declared that they are not public universities, contrary to their missions and history of state support. Penn State is Pennsylvania's sole land-grant institution and carries out multiple missions in service to the state and its citizens. Its character as a public institution has been supported by 154 years of history, legislative action and legal documents. The law providing the federal stimulus funds notes that the intent of the money is to shield students at colleges and universities supported by state tax dollars from unusually large tuition hikes due to fiscal pressures the economy is placing on state budgets.

In a letter to the U.S. Department of Education, Spanier asks officials there to look closely at Pennsylvania's stimulus funding application and to examine its exclusion of Penn State from the funding formula.

Penn State was founded in 1855 as a publicly supported agriculture college and broadened its mission in 1862 with the passage of the Morrill-Land Grant Act. In 1863, Gov. Andrew Curtin signed into law Penn State's designation as the Commonwealth's sole land-grant institution, giving the University a three-part mission of teaching, research and public service and pledging the state's support for carrying out the provisions of the Morrill Act. From its beginnings, Penn State has been considered by the Commonwealth to be "an instrumentality of the state." As with appropriations, the designation for stabilization funds requires the state Legislature's approval.