Penn State to request increase in state aid

Posted: September 21, 2013

STATE COLLEGE, Pa. Pennsylvania State University plans to ask the state to boost the school's funding by 5.1 percent - and even that much won't be enough to stave off another tuition increase.

And while we're at it, the athletic department - usually a moneymaker - may need to borrow $30 million to cover losses arising from the Sandusky scandal.

Those were the grim financial messages Penn State officials delivered to the trustees at a committee meeting here Thursday. They said they plan to ask for $14.7 million more in state aid for the fiscal year that starts next July - bringing the total state appropriation to almost $300 million.

It's a particularly ambitious request, considering the state froze funding to Penn State, as well as Temple and the University of Pittsburgh, in the last two years - and cut funding for those so-called state-related schools by 19 percent the year before that.

Even if PSU were to get the increased aid, it plans to raise tuition 3.49 percent for in-state students on the main campus and 2.4 percent at branch campuses. The overall average increase would be 2.85 percent under the proposal, which is to be voted on by the trustees at their full board meeting Friday.

At the same committee meeting, the board heard the athletic department's request for permission to borrow up to $30 million if that's what it takes to cover losses resulting from the scandal involving former assistant Penn State football coach Jerry Sandusky, now in prison for sexually assaulting boys.

Attendance at Nittany Lions home football games is down and is expected to be at about 88 percent capacity for the duration of the ban on bowl games handed down by the NCAA as a result of the scandal. The athletic department also must pay the $60 million fine levied by the NCAA.

The department is reluctant to raise ticket prices during the bowl ban, and said it is losing $21.2 million in revenue that the lions' participation in a bowl game would have generated.

Officials said the borrowing would include $5 million to $10 million for an operating line of credit to offset projected deficits in the next three fiscal years, plus $20 to $25 million for short-term capital needs.

Authorization for the borrowing, too, awaits a trustees' vote Friday.

As for seeking more state funding, Penn State President Rodney Erickson left no doubt that if Harrisburg doesn't come through, even higher tuition could result. The requested increase in funding "would directly offset operating costs that would otherwise impact tuition," Erickson said in a news release.

'Top priority'

University officials cautioned that it's very early in the budget process and a lot could change.

"The request to the Commonwealth and our budget planning are driven primarily by our top priority - keeping tuition increases low," Erickson's statement said. "Our plan also is driven by the overarching priority to maintain the quality of our academic programs and provide the high-value education that our students deserve."

The state education department gave little hint Thursday of how it might treat a plea for that much more money. ". . .Penn State's request will be considered along with other requests for funding to ensure they are affordable and in line with what Pennsylvania taxpayers can afford," said department spokesman Tim Eller.

In-state students at Penn State's main campus now pay $26,362 in tuition, fees and room and board. That includes the 3.39 percent tuition increase and 4.2 percent increase in room and board, both enacted as the state froze funding.

Adding up

Penn State officials said the additional state aid is needed to cover the school's increasing costs, including an estimated 2.5 percent rise in employees' base salaries and benefits, and a 1-percent increase in a merit pay pool. The budget also includes inflationary increases for employee health-care costs, and additional money for agricultural research, the medical center and the college of technology. New faculty hires are part of the plan, too.

Also at Thursday's finance committee meeting, the board announced plans for a $2.7 billion, five-year capital plan to upgrade classrooms, residence halls, technology, equipment and other needs at the various campuses. No new buildings are in the plan, a spokeswoman said. About two-thirds of the buildings at main campus are more than 25 years old and have had no significant upgrades, the school said.

The university also announced that its endowment rose $174 million over the last year, finishing at $2.03 billion as of June 30.


BY THE NUMBERS

$14.7 million

How much more

in state aid Penn State wants.

3.49% Proposed in-state tuition increase at

the main campus.

2.4%

Proposed in-state tuition increase at branch campuses.

$26,362

Current in-state cost of tuition, room and board, and fees at the main campus.


Contact Susan Snyder at 215-854-4693 or ssnyder@phillynews.com or follow on Twitter @ssnyderinq. Read her blog at www.inquirer.com/campusinq.

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