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Penn State to Dig Deeply for Budget Cuts

on April 14, 2010 7:33 AM

For about 18 years, Penn State has steadily reviewed its books for unnecessary expenses.

The push has generated savings of roughly $190 million, redirecting that money to academic priorities and helping to temper tuition increases, according to university figures.

But unprecedented financial challenges are now prompting Old Main to dig deeper and more aggressively for cost cuts, administrators said. This spring, Penn State executives announced the creation of the Academic Program and Administrative Services Review Core Council, a 13-member panel comprising faculty, staff and administration representatives.

For the next 18 months, their announced goal is to identify short-term and long-term cuts of $10 million per year. Savings will be used to help advance the Penn State's five-year strategic plan, which emphasizes academic and research excellence, diversity, technology and public service, according to university documents.

Provost Rodney Erickson said the new campaign will center more on "vertical budget cuts" -- or strategic, targeted, permanent reductions -- rather than the "horizontal cuts" seen in earlier years. Horizontal cuts tend to follow a more across-the-board approach.

"This is a more concerted and directed focus on vertical cuts. ... We're looking at big-ticket items that represent large expenditures for the university," Erickson said.

For instance, he said, the Core Council will scour for potential savings in the areas of information technology, employee travel and employee health care. "We're looking very closely at a whole palette of benefits, particularly health care."

On the health front, Erickson said, Penn State is looking for "ways to focus on wellness, prevention, disease management and lower cost increases."

He met this week with faculty members to review elements of the strategic plan, including the cost-cutting strategy. Jean Landa Pytel, assistant dean for student services in the College of Engineering, was among those present for the meeting. She is chair-elect of the University Faculty Senate.

"I think that the administration is doing the best it can under very uncertain conditions that are expected in the future," Pytel wrote in an e-mail message to StateCollege.com. "It is too early to tell how things are going. My main concern is about appropriate and timely consultation with the faculty so that we can contribute to the solution of the problems, rather than being faced with a 'done deal.'"

Areas under review for potential cost cuts also include "under-enrolled" courses, workload policies and academic programs, Pytel said.

The financial pressures confronting Penn State are varied, university President Graham Spanier has said. While costs for health care, utilities and the State Employees' Retirement System are ballooning, state appropriations have been just about stagnant, if not falling, Spanier said. Money from the state now accounts for about eight percent of the university budget, down from nearly 37 percent in 1970.

Increases in tuition, meanwhile, have made up for much of the difference. In-state, full-time undergraduates at University Park now pay more than $13,000 a year in tuition, up some 300 percent since the early 1990s. Tuition at Penn State is often ranked among the highest at public universities in the United States.

The university runs an overall budget of more than $3 billion a year.

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