THE PENNSYLVANIA STATE UNIVERSITY
2015-16 BUDGET PRESENTATION
PREPARED
FOR THE
GENERAL ASSEMBLY
THE COMMONWEALTH
OF
OF
PENNSYLVANIA
PENN STATE’S 2015-16
APPROPRIATION REQUEST
TABLE OF CONTENTS
Page
Press Release:
Campus tuition freeze part of president’s access and affordability plans .....................................1
Appropriation Request:
Penn State’s 2015-16 Appropriation Request – The Budget Plan ................................................3
Highlights of Penn State’s 2015-16 Budget Plan and Appropriation Request ...........................10
Details of Penn State’s 2015-16 Budget Plan and Appropriation Request .................................11
Table 1 – Summary of Proposed Changes, 2015-16 Budget Plan and
State Appropriation Request ............................................................................................ 16
Table 2 – 2015-16 Appropriation Request..................................................................................17
Exhibits:
Summary of Appropriations – 2001-02 through 2014-15 .......................................................... 18
Total Credit Enrollment – Fall 2014 ........................................................................................... 19
Enrollment by Pennsylvania County of Residence – Fall 2014 .................................................20
Alumni Residing in Pennsylvania – December 2014 .................................................................21
Income Budget – 2014-15 ...........................................................................................................22
Expense Budget – 2014-15 .........................................................................................................23
Organized Research by Fund Source .......................................................................................... 24
PRESS RELEASE: Campus tuition freeze part of president's access and affordability plans
January 16, 2015
UNIVERSITY PARK, Pa. — As part of his initiative to help students and families facing
financial pressures, Penn State President Eric Barron today (Jan. 16) proposed to the Board of
Trustees a freeze of tuition rates for eight of the 19 undergraduate Commonwealth Campuses for
next year, in addition to presenting five other recommendations.
“Our University is committed to access and affordability, so any student in Pennsylvania who is
qualified to receive a Penn State education should be supported to the extent we have that
ability,” Barron said. “This includes putting into practice practical initiatives to help increase
retention and graduation rates while decreasing the cost of a degree and the rate of student
borrowing.”
Under Barron’s plan, tuition would be held flat for Shenango, Beaver, DuBois, Fayette, Greater
Allegheny, Mont Alto, New Kensington and Wilkes-Barre campuses for the 2015-16 academic
year. Additionally, six other Commonwealth Campuses, including Brandywine, Hazleton,
Lehigh Valley, Schuylkill, Worthington Scranton and York, would only see a modest increase of
1.8 percent in tuition for the year. Also proposed is a 2.4 percent increase for remaining
campuses, Abington, Altoona, Berks, Erie and Harrisburg.
“Penn State remains committed to keeping our tuition increases as low as practically possible,
and we are pleased that this year we may favorably impact students at these 14 campuses,”
Barron said. “Penn State’s Commonwealth Campuses provide educational opportunities for a
diverse population of students, many from families with fewer financial resources. The campuses
also serve nontraditional students, and about 60 percent of all students work 22 hours a week on
average.”
The campuses were identified based on factors such as higher percentages of need-based
students, socio-economic and demographic challenges in the surrounding communities and Penn
State’s potential to give relevant career path opportunities to students living in those areas of the
Commonwealth. The University also continues to aggressively pursue opportunities for strategic
reduction of expenditures at all campuses that can benefit our students and their families.
“Having access to a Penn State campus close to home provides a tremendous financial benefit to
our students and families,” said Madlyn Hanes, vice president for Commonwealth Campuses.
“Eighty-five percent of our students are Pennsylvanians. Many come from households of
modest resources and are the first in their family to attend college.”
Penn State is receiving a record amount of applications, and a large percentage of students — 39
percent at Commonwealth Campuses and 21 percent at University Park — are the first in their
families to attend college. Simultaneously, the average student debt has grown from $20,000 a
decade ago to $35,429, and family income continues to have a significant impact on retention
and graduation rates.
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Penn State’s Commonwealth Campuses provide students the ability to spend two years at one
campus and then transition to another through the University’s 2+2 program. The steady tuition
rate would give many students the financial benefit of paying a lower tuition for two years before
moving to another campus to complete their Penn State degree. Students who choose to remain
at their initial campus may realize additional financial benefits.
Access and affordability is one of the six imperatives outlined by Barron when he took office in
May.
At Friday’s meeting, Barron suggested five other recommendations for creating accessibility for
students, many of which were established by the Penn State Enhanced Education Pathways
Committee, charged by Executive Vice President and Provost Nick Jones. The group was
challenged to explore ways to provide high-quality education at a cost that ensures expanded
access for citizens. The remaining recommendations include:
— Math, English and foreign language preparation for incoming students to assist in their
successful transition from high school to college, while providing students the opportunity to
begin college study at the appropriate level for their intended major.
— Summer school/on campus employment for first- and second-year students to shorten time-todegree and lower overall cost; students will make progress toward degree while working on
campus or in the community.
— Expanding the Student Transitional Experiences Program (STEP II)to provide financial,
academic and social support for students who change campuses to ensure satisfactory academic
progress.
— Increased emphasis on financial literacy and well-being to improve student and family
understanding of the cost of an education, its benefits, and the long-term consequences of debt.
— Increasing institutional support for the Provost Awards scholarship program by $5 million in
summer-fall 2015. The program, implemented in 2013, uses an allocation of central funds to
provide initial financial aid awards of $4,000 per student and annual renewals through
graduation. After committing $20 million each of the first two years, Penn State will increase the
amount to $25 million.
Additionally, Penn State has partnered with the Raise.me program to offer micro-scholarships to
students in five key public high schools in the city of Philadelphia and the nearby area. The
program allows students to earn scholarship support toward their tuition at Penn State by
achieving various success factors while still in high school, including achieving high grades in
core coursework, taking honors courses or advanced placement, participating in leadership roles
and studying world languages.
For a full look at President Barron’s presentation to the Board of Trustees,
visit http://www.psu.edu/ur/2014/President_Report_BOT_1_16_2015.PDF.
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PENN STATE’S 2015-16
APPROPRIATION REQUEST
The Commonwealth’s investment in Penn State’s appropriation is an investment that transforms
lives, promotes upward economic mobility, and provides the Commonwealth with citizens who
have the knowledge and skills to drive economic growth and innovation. Penn State, with its
twenty four campuses and cooperative extension programs that serve every county, is in an
unparalleled position to advance the priorities of Pennsylvania’s residents and elected officials.
As Penn State’s 18th President, I am committed to creating and implementing new ways to
leverage the partnership between the Commonwealth and Penn State to stimulate economic
development in Pennsylvania and to ensure the career success of our students.
The Budget Plan
Penn State is not satisfied with simply addressing normal operating increases though the
appropriation request. Penn State’s multiple campuses, agricultural research and cooperative
extension programs, and other outreach activities have the potential to bring economic vitality to
communities all across the Commonwealth. We propose to do much more.
In addition to addressing the normal operating increases, Penn State’s budget plan and
appropriation request for fiscal year 2015-16 proposes an investment in the Penn StateCommonwealth partnership with a strategic goal of transforming Pennsylvania’s economy.
With focused investment, the partnership between Penn State and the Commonwealth has
extraordinary potential to stimulate the economy in ways that will launch our students and others
into successful careers in new companies that, with adequate investment, would be attracted to
Pennsylvania and also in startup companies based on the commercialization of intellectual
property generated by Penn State’s researchers.
Penn State’s proposed 2015-16 budget plan and appropriation request reflects basic operating
cost increases of $53.5 million. This increase would be considerably more if not for the internal
reallocations and targeted costs savings of $34.4 million that are also reflected in the plan.
The revenue to fund the $53.5 million of operating cost increases would be composed of three
sources: modest tuition and fee increases, additional non-tuition income from investment
returns and indirect cost recovery, and our request for increased investment from the state.
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A Penn State Strategic Priority: Stimulating Pennsylvania’s Economy and
Student Career Success
As the Commonwealth’s land grant research university, Penn State proposes a state investment
in a methodical and specific plan to promote student career success and to create jobs through
economic development. It is an imperative that Penn State consciously and purposefully seek
ways to increase the value of our intellectual capabilities to serve the state, the nation and the
world. We have identified three targeted areas that can generate substantial economic activity.
1. Investment in Technology Commercialization and Entrepreneurial
Education: Entrepreneurs-in-Residence (EiR)
Our proposed Commonwealth-Penn State entrepreneurial partnership is a plan to expand our
current efforts to promote the career success of our students and to create jobs through economic
development and innovation. Penn State is a discovery engine, but we are not content to leave
the considerable intellectual property we generate on the laboratory bench. As part of a
comprehensive approach to improve our technology commercialization efforts, we would like to
build, with the support of the Commonwealth, an Entrepreneurs-in-Residence program that
recruits seasoned entrepreneurs into our faculty ranks at Penn State colleges and campuses. The
EiRs would work with faculty, staff and students to facilitate, not only the development of
discovery and knowledge creation into companies, but also to provide unparalleled educational
opportunities for our students at all levels. Our objective is, quite simply, a deliberate culture
transformation that promotes the transition from invention and creativity to the marketplace,
while simultaneously ensuring student success.
Penn State requests an additional investment of $1.8 million from the Commonwealth to support
this agenda. This will allow for the recruitment of eight Entrepreneurs-in-Residence for the first
phase of this program. These EiRs will be funded to colleges and campuses based on requests
through a competitive proposal process that will require cost sharing from the submitting units.
Elevating entrepreneurial engagement of students and faculty will require additional investment
in the Offices of Technology Management, Sponsored Programs and General Counsel. We
request an additional $600,000 to recruit and support new personnel who will provide critical
support to guide and enhance transformation of Penn State ideas into products and jobs. New
positions required include an experienced attorney specializing in intellectual property and two
additional licensing officers, or their equivalent.
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2. Investment in Student Success: Engineering, Business, and Nursing
Education
We have identified in this year’s budget request three disciplines where investment is needed to
enhance Penn State’s ability to continue to contribute not only to student success but also
workforce needs in the Commonwealth. These are Engineering, Business, and Nursing. While
we are committed to student career success in all fields, these three fields are where our
aspiration coincides with key work force opportunities and needs in the Commonwealth. In
order to assure that elements of student success are imbedded in all curricular components,
strategic investment in our faculty is necessary.
The College of Engineering and the Smeal College of Business are both in need of new
permanent budget lines to fund investment in full-time faculty in both the tenure and non-tenure
tracks to respond both to the rising demand from undergraduate students in these fields as well as
the opportunities that exist to provide expanded high-quality graduate education at the masters
level and beyond, both residential and online through our highly regarded World Campus.
While Penn State has for many years responded to this emerging demand through allocation of
temporary resources for fixed-term faculty, the need to make some of these hires permanent to
better serve our students is compelling. Graduates from both colleges will contribute directly to
the advancement of the State’s economy through their post-graduation career activity. Faculty
are also central to our knowledge-creation/discovery enterprise, which is at the core of our
commercialization agenda.
The College of Nursing is also in need of investment in its full-time faculty to respond to high,
and increasing, demand for nursing graduates throughout the Commonwealth. As the nursing
program is offered at multiple campuses of the university, this investment will have a profound
impact across the state. The U.S. is projected to experience a shortage of Registered Nurses
(RNs) that is expected to intensify as Baby Boomers age and the need for health care grows.
Adding to the need for registered nurses is the launch of the ACA which will provide access to
health insurance for 32 million Americans who were previously uncovered. The Bureau of Labor
Statistics projects the total number of job openings nationwide for nurses due to growth and
replacements to be 1.05 million by 2022. Further, the need for advanced practice nurses (those
prepared as nurse practitioners, clinical nurse specialists, nurse midwives, and nurse anesthetists)
is also projected to increase in response to three challenges: increased demand for care from an
aging population, the passage of the ACA and a stalled growth in physician supply. Nurse
practitioners (NPs) play a critical role in extending access to primary care, especially in rural
settings. If we are to achieve the goal of a patient centered, high quality, seamless and affordable
health care delivery system, the future of health care must include the provision of communitybased episodic care and chronic care management led by nurses. While the number of graduates
of NP programs has grown dramatically over the last several years, we have not produced an
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adequate supply to address the upcoming need. Pennsylvania is an exemplar of this increasing
challenge, but Penn State’s newest College is poised, with the right investment, to respond
strongly and effectively.
Penn State requests an additional $3.5 million (Engineering $2.0M, Business $720K, Nursing
$780K) from the Commonwealth to support investments in these programs. While Penn State
has invested considerable internal resources in them to date, we have not been able to keep up
with the resource needs that have resulted from the rapidly increasing demand. Of all our
programs, these three arguably will have the most direct positive benefit on the economic
development of the Commonwealth as graduates are employed in these priority areas.
Complementing this request for operating support, we will seek to open discussions about
obtaining a special capital appropriation for the project authorized by the Commonwealth in
section (4)(ix)(V) of the “Capital Budget Project Itemization Act of 2013-14” for state-of-the art
research and teaching space for the College of Engineering as well as the project included in the
Proposed Capital Budget Request for 2015-16 to expand and renew the Health and Human
Development East Building that houses the College of Nursing.
3. Strategic Investment in Support of Commonwealth Priorities
Penn State is at the forefront of cutting-edge research in a number of areas that have direct
relevance to economic development opportunities for the Commonwealth. We have identified
two in this budget request where direct support from the state will be instrumental in our, and
therefore we believe the Commonwealth’s success. These are the Institute for Natural Gas
Research and the Institute for CyberScience.
Institute for Natural Gas Research (INGaR)
Bringing together one of the largest contingents of natural gas experts in the United States, Penn
State has established an Institute for Natural Gas Research (INGaR), which is expected to
provide much-needed study into this important form of energy. Working closely with industry,
and state and federal government partners, members of INGaR will conduct independent and
rigorous scientific research in the broad area of natural gas. Through the institute, researchers
and students will develop interdisciplinary approaches to study the complex processes involved
in natural gas exploration, production, transmission, storage, processing, combustion,
infrastructure and water transport, usage and impact. While the prospects for shale gas
production are promising, particularly in Pennsylvania, there remains considerable uncertainty
regarding various aspects of this resource and its overall impact, including environmental
concerns. A major goal of the institute is to support the ongoing development of a natural gasbased economy that will allow the country eventually to consume a predominantly domestic
supply of gas for many years to come.
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INGaR is a collaborative effort between two of Penn State’s colleges: Earth and Mineral
Sciences and Engineering. Currently, more than 50 faculty members in various departments at
Penn State have significant research interests and active research programs in natural gas and
related areas. Over the next several years, 12 new faculty members will be hired to further
strengthen key areas and produce the needed joint information and knowledge that will solve
some of the complex challenges related to the exploration and use of natural gas. Initial hires will
be focused in key enabling areas that strategically complement existing expertise, including:
Drilling engineering, well completions, smart well technologies; exploration geophysics,
sedimentary basin evolution; water supply and water quality; geostatistics, reservoir
characterization and petrophysics; combustion; gas separations; integrated reservoir engineering;
petrophysics; surface facilities engineering; energy systems optimization; and catalysis for
methane conversion. Faculty appointments will be made in the following departments: Energy
and Mineral Engineering, and Geosciences, in the College of Earth and Mineral Sciences; and
Civil and Environmental Engineering, Mechanical and Nuclear Engineering, and Chemical
Engineering in the College of Engineering.
Institute for CyberScience (ICS)
The problems targeted by ICS, in collaboration with other Penn State institutes, include a range
of focus areas not only of relevance to the Commonwealth but also to the national and global
landscape, including infectious diseases, global energy needs, personalized therapies and
materials design. Some of these problems may eventually be solved with virtual worlds where
viruses can emerge, multiply and evolve; programs for real-time personalized therapies; and
tailored nanoscale materials that can be designed and created. One area of critical importance is
in data management and mining, which can aid in model discovery and simulation-based data
collection from observatories viewing watersheds, ocean systems or any biologically complex
population. The institute targets high-impact, large-scale research tied to improving life on Earth
through the environment, biological sciences and innovation.
ICS is the coordinating unit for multidisciplinary computational science research at Penn State
and organized under the Office of the Vice President for Research. The institute is affiliated with
the Colleges of Agricultural Sciences, the Smeal College of Business, Earth and Mineral
Sciences, Engineering, Health and Human Development, Information Sciences and Technology,
The Liberal Arts, the Eberly College of Science, Great Valley School of Graduate and
Professional Studies and the University Libraries. Also associated with the institute are
prominent University units including the Applied Research Laboratory, Huck Institutes of the
Life Sciences, Materials Research Institute, Social Science Research Institute and Penn State
Institute of Energy and the Environment. Information Technology Services, which provides the
information technology tools and infrastructure necessary to carry out the University's mission, is
also a key player in the Institute.
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ICS will develop and provide the state-of-the art shared cyber infrastructure (CI) that includes
the full suite of hardware, software, data, services and technical support that meet specific
requirements of the communities of research they will serve. CI-cores will be developed within
the shared systems along four well-differentiated key areas of strengths and opportunities. The
first three CI-cores include: (1) earth systems CI, focused at the intersection of climate,
environment, hydrology, and earth sciences, (2) life sciences CI, targeting a range of research
from plant, animal, and human genomics to disease, interventions and population scale studies;
and (3) networks and security, including a broad array of defense related applications. A fourth
(4) computational science and engineering CI-core will support the computing and data needs of
projects that lie beyond the scope of the first three CI-cores; new CI-cores will evolve when
critical mass is attained in novel research domains.
Penn State requests an investment of $2.0 million ($1.0M INGaR; $1.0M ICS) to help build and
complement capacity in these Institutes. Both INGaR and ICS have extraordinary potential for
both direct and indirect impact on Pennsylvania’s economic development. We seek partnership
with the Commonwealth in investing in the faculty and other resources necessary for the success
of these ventures. Faculty will be instrumental in not only the critical research necessary in
these emerging multidisciplinary fields, but also in educating the next generation of professionals
needed to support growth in related industries in Pennsylvania, while fundamental infrastructure
investment helps position Penn State strategically to compete for additional external funding
resources, both nationally and globally.
Agricultural Research and Cooperative Extension
The 2015-16 budget plan proposes a $3.2 million increase in the state’s investment in
Agricultural Research and Cooperative Extension. $2.2 million of the requested amount would
need to be used for the inflationary cost of salaries and benefits. The additional $1.0 million in
program funds would be used to provide cost-effective critical assistance to Pennsylvania’s
agriculture sector to operationalize new federal food safety regulations.
The Food Safety Modernization Act (FSMA) was passed into law and will be enacted in the near
future. It enables the FDA to focus more on preventing food safety problems rather than relying
primarily on reacting to problems as they occur. This law provides the FDA with enforcement
authority. The new regulations emanating from the law will have an impact on all of our fruit
and vegetable producers, brokers, and packing facilities. There is a section of the law that will
also impact the feed industry and it applies to facilities that manufacture, process, pack or hold
animal food.
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After increased operating costs are addressed, additional programming funds would be used to
hire faculty positions in the area of food safety and extension educators to work with the
agricultural industry to operationalize cutting edge food safety practices.
Cost Containment and Internal Reallocations
The annual cost increases for an institution with the size and scope of Penn State far exceed the
amount of new funds derived from a moderate tuition increase. Therefore, we must continue on
the path of aggressive cost containment and internal reallocations to balance the budget rather
than pass along all of the cost increases to our students. Our budget plan includes funds made
available in the operating budget from restructuring our post-retirement health care liability,
funds set aside in anticipation of the spike in the State Employees’ Retirement System employer
contribution rate, and other targeted administrative budget reallocations. We also hope to see a
decrease in the estimate for the incremental cost of health care when new information becomes
available about the impact of changes to our plan design including the introduction in 2014 of a
high-deductible health care plan.
Concluding Remarks
We would like to have ongoing conversations with the Commonwealth about the enormous
potential of increased investment in Penn State as a vehicle to advance the economic
development agenda for Pennsylvania. The initiatives outlined in our proposal for the 2015-16
appropriation request and budget plan offer exciting opportunities to use the Penn StateCommonwealth partnership to fuel Pennsylvania’s economy. Together, Penn State and the
Commonwealth can create jobs for our students and for citizens in every corner of Pennsylvania.
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HIGHLIGHTS OF PENN STATE’S
2015-16 BUDGET PLAN AND APPROPRIATION REQUEST
BASIC OPERATING COSTS
 Faculty and Staff Compensation – Maintain competitive faculty and staff salaries.
 Benefits – Respond to increasing costs for health care and retirement, including the
employer contribution rate for the State Employees’ Retirement System (SERS).
 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.
APPROPRIATION REQUEST
 The University is requesting an appropriation increase of $17.3 million

$4.8 million increase in the Educational and General (General Support) line item.

$7.9 million for a Penn State-Commonwealth strategic partnership to stimulate
Pennsylvania’s economy and promote student career success.

An increase in the amount of $3.2 million is requested for our programs in
Agricultural Research and Cooperative Extension; $2.2 million is needed to
support basic operating increases for these activities and $1.0 million to invest in
food safety faculty and extension educators.

Increased support of $879,000 is included for the Pennsylvania College of
Technology to build on recent increased investments from the Commonwealth to
expand instructional capacity in the technical fields most in demand by students
and Pennsylvania employers.

Additional State and Federal Medical Assistance funding of $591,000 also is
included for the Penn State Milton S. Hershey Medical Center.
TUITION
 If the Commonwealth is able to provide the requested appropriation, the University’s
base tuition increases would range from zero to 2.40 percent for Pennsylvania resident
students at our Commonwealth Campuses and 2.99 percent at the University Park
Campus.
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DETAILS OF PENN STATE’S 2015-16
BUDGET PLAN AND APPROPRIATION REQUEST
The University’s proposed budget plan for 2015-16 reflects basic operating cost increases of
$53.5 million and an additional $7.9 million for the strategic priority to stimulate Pennsylvania’s
economy and student career success. 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 $17.3 million for 2015-16 is summarized on
Table 2. Details of the University’s proposed budget plan and appropriation request are
discussed below.
EXPENSE CHANGES:
Faculty and Staff Salary Compensation
Penn State operates in an extremely competitive environment for faculty and staff. As keepers,
creators, and transmitters of knowledge, the best way for us to continue to help Pennsylvania’s
communities is to maintain excellence across those activities that are core to our missions.
The basic ingredients of excellence are outstanding faculty and staff, and modern and efficient
facilities. We compete with much wealthier institutions to bring in the best talent. The budget
plan for 2015-16 includes $36.5 million for salary adjustments and related employee benefits.
The plan includes a 3.0 percent increase in the salary pool for merit based increases and for
market and equity considerations.
Benefits and Insurances
The University’s budget plan includes projected increases of $32.8 million for benefits cost
increases. This includes increases for health care and retirement.
Health care 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 2015-16 budget
will be the first full fiscal year for the additional costs associated with the mandated
implementation of the Patient Protection and Affordable Care Act.
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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 before peaking in
2016-17. The projected increase in the 2015-16 SERS employer contribution alone is greater
than a one percent tuition increase.
The increased costs associated with the Affordable Care Act and the increase in state-mandated
retirement contributions are outside of our control. We are requesting assistance from the
Commonwealth to offset a small portion of these increases so that we do not need to ask our
students to support the full impact of these additional costs.
The University is also projecting an increase in property and liability insurances for 2015-16.
Facilities
A total of $13.0 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 $5.9 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 $31.4 million toward deferred
maintenance needs. More needs to be done, however, to ensure the continued viability of
important academic and research facilities. 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 sufficient to cover only a small portion 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. It is important that we include additional funding to
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address the renewal and replacement of our facilities and information technology infrastructure.
A total of $3.9 million is included in the budget plan.
Strategic Priority: Stimulating Pennsylvania’s Economy and Student Career
Success
The budget plan includes a total of $7.9 million for strategic initiatives. Penn State proposes a
new high potential partnership with the Commonwealth to stimulate the economy through three
strategic investment priorities:
 Entrepreneurs-in-Residence – $2.4 million to recruit to Penn State colleges and
campuses seasoned entrepreneurs into our faculty ranks to facilitate the development of
discovery and knowledge creation into technology commercialization companies that will
employ our students and bring jobs to the Commonwealth and to recruit and support new
personnel who will guide and enhance transformation of Penn State ideas into products
and jobs.
 Engineering, Business and Nursing Education - $3.5 million to invest in the career
success of our students in areas of key work force needs in the Commonwealth.
 Investment in Commonwealth Priorities - $2.0 million to invest in two areas of direct
relevance to economic development opportunities in the Commonwealth; natural gas
research and cyberscience.
Agricultural Research and Cooperative Extension
The College of Agricultural Sciences relies on the 150-year old land grant partnership of federal,
state, and county governments as the foundation for agricultural research and statewide extension
programs. The federal, state, and county funds that support Agricultural Research and
Cooperative Extension are not supplemented with student tuition. The state appropriation
provides the required matching funds that allow Penn State to access Federal Agricultural
Research appropriations and support from Pennsylvania’s counties for Cooperative Extension.
Now more than ever, funding for the agricultural research and support for the state’s cooperative
extension network is an investment that ensures that the agriculture industry will be able to
continue to advance this important sector of the economy and to safeguard Pennsylvania’s
natural resources.
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The 2015-16 budget plan proposes an additional $3.2 million in the state’s investment in
Agricultural Research and Cooperative Extension. $2.2 million of the requested amount would
be used for the inflationary cost of salaries and benefits. The additional $1.0 million in
programs funds would be used to address issues of major concern to Pennsylvania’s agriculture
sector.
Libraries, Computing and Telecommunications
A total of $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 $34.4 million of expense reductions. This includes funds available
from restructuring our postretirement health care liability, funds set aside in prior years in
anticipation of the rapid rise in the employer contribution rate for the State Employees’
Retirement System, and targeted administrative budget reductions.
Student Aid
Because the University must increase tuition to generate the necessary funds to meet its budget
needs, it is imperative that additional 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 $2.0 million is included in the budget plan for student aid, bringing the total of
permanently budgeted funds to $48.0 million. 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 $61.4 million. This
amount includes $40.6 million from projected tuition and fees rate increases for students at all
locations.
The University is requesting an appropriation increase of $17.3 million (see Table 2). Of this
amount, $4.8 million, or a 2.2 percent increase, is requested for the Educational and General
(General Support) line item. In addition to addressing the normal operating increases, Penn
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State’s request for fiscal year 2015-16 proposes an investment of $7.9 million in the Penn StateCommonwealth partnership that has the potential to begin to transform Pennsylvania’s economy.
$879,000 is requested for the Pennsylvania College of Technology through Penn State’s direct
state appropriation. An increase in the amount of $3.2 million is included for our programs in
Agricultural Research and Cooperative Extension funded through the Agricultural College Land
Scrip Fund. An additional $591,000 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 $4.0 million in other income primarily from increases
in the facilities and administration cost recovery from grants and contracts and additional
investment income.
If the Commonwealth is able to provide the appropriation requested, the University’s tuition
increases would range from zero to 2.40 percent for Pennsylvania resident students at our
Commonwealth Campuses and 2.99 percent at the University Park Campus.
15
Table 1
Summary of Proposed Changes
2015-16 Budget Plan and State Appropriation Request
($ in thousands)
EXPENSE CHANGES:
Basic Operating Costs:
Educational
and
General
Ag. Research
&
Coop. Ext
College
of
Medicine
PA
College of
Technology
Total
$33,111
$829
$1,090
$1,443
$36,473
Benefits & Insurances
29,344
1,335
425
1,670
32,774
Facilities
12,749
-
270
-
13,019
-
-
-
-
-
-
1,000
-
-
1,000
Salary Adjustments
Strategic Priorities
and Other Program Needs
Libraries, Computing
-
-
-
-
-
and Telecommunications
640
-
390
-
1,030
Internal Budget Reductions
(34,374)
-
-
-
(34,374)
2,000
-
-
-
2,000
817
-
-
-
817
Student Aid
Student Activities
Student Facilities
715
-
-
-
715
Sub-Total – Basic Operating Costs
$45,002
$3,164
$2,175
$3,113
$53,454
Strategic Investment Priority:
Economic Development and Student
Career Success
-
-
-
-
-
7,900
0
0
0
7,900
$52,902
$3,164
$2,175
$3,113
$61,354
-
-
-
-
$37,452
$
-
$920
$2,234
$40,606
2,750
0
1,255
0
4,005
TOTAL EXPENSE CHANGES
INCOME CHANGES:
Tuition & Fees
Other Income
Requested Appropriation Increase
-
-
-
-
-
4,800
3,164
-
879
8,843
7,900
-
-
-
7,900
$12,700
$3,164
$0
$879
$16,743
$52,902
$3,164
$2,175
$3,113
$61,354
Basic Operating Costs
Strategic Priority - Economic Development
and Student Career Success
Sub-Total - Appropriation Increase
TOTAL INCOME CHANGES
* The University is also requesting an additional increase of $591,000 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 2015-16 totals $17,334,000.
16
Table 2
2015-16 Appropriation Request
($ in thousands)
Table 2
2014-15
Appropriation
Direct State Appropriation:
2014-15
Appropriation
General Support
Projected
Increases
2015-16
Requested
2015-16
Requested
Appropriation
Projected
Increases
Percent
Increases
Percent
Increases
$214,110
$4,800
$218,910
2.24%
17,584
879
18,463
5.00%
231,694
5,679
237,373
2.45%
46,237
3,164
49,401
6.84%
PA Department of Public Welfare:
-
-
-
-
M.S. Hershey Medical Center
-
-
-
-
11,816
591
12,407
5.00%
$289,747
$9,434
$299,181
3.26%
-
-
-
-
-
-
-
-
Entrepreneurs-in-Residence
-
2,400
2,400
-
Engineering, Business, and Nursing Education
-
3,500
3,500
-
Strategic Investment in Commonwealth Priorities
-
2,000
2,000
-
$289,747
$17,334
$307,081
5.98%
Pennsylvania College of Technology
Total Direct State Appropriation
Agricultural College Land Scrip Funds:
Medical Assistance Funding (estimate)
SUB-TOTAL - BASIC LINE ITEMS
Strategic Priority:
Economic Development and Student Career Success
TOTAL APPROPRIATION
17