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Spanier: Scores of Penn State Job Losses Projected from Funding Cut

on July 04, 2011 6:23 AM

It's tough to put an exact number on them, but the Penn State job cuts made necessary by a $68 million state-funding cut will be measured in scores, university President Graham Spanier said.

"The most devastating part of it all is how it affects our agricultural programs, which are really at the heart of this university historically," Spanier said in a half-hour interview Friday with StateCollege.com. "We are desperately trying to find ways to help the College of Agricultural Sciences go through this. ...

"They're in the hole $12 million to $13 million" compared to 2010-'11 funding levels, he went on. "Where does one dean come up with that kind of money? That's where the largest share of our employees will be lost."

Pennsylvania lawmakers last week agreed to, and Gov. Tom Corbett signed off on, a 2011-'12 budget that reduces overall state support for Penn State by just more than 19 percent -- the largest single state-funding cut in the university's history.

They reached the agreement as the state faces a budget deficit in the $4 billion range. State spending overall has been trimmed about three percent for the new fiscal year that began Friday.

In his Old Main office, Spanier noted that the Penn State cut will drop its state appropriation to "back where we were in 1995" in actual dollars. Adjusted for inflation, he said, the appropriation will be about one-half what it was that year, even as the university enrolls 19,246 more students than it did 16 years ago.

Spanier also underscored that the funding cut includes a 50 percent reduction in state support for the Penn State Milton S. Hershey Medical Center, which means "we're giving up federal matching funds as a result."

And while the state cut is being felt across all the university's colleges -- some of the job reductions have already been announced in anticipation of state-support decline -- the College of Agricultural Sciences will feel acute pain in its agricultural-research and Cooperative Extension areas, Spanier said.

That's because those public-service operations rely almost exclusively on state money and cannot draw from tuition revenue for supplemental funding, administrators have said. Spanier said the job losses in the agricultural college, to be "announced and worked through within weeks," will number in the dozens.

"The longer it takes, the longer we postpone getting to the savings. At the same time, we're trying to be very fair to our employees and come up with ways to help them find other positions, severance, health benefits," he said. "These are good people who work hard and really care."

Overall Penn State job losses stemming from the state-funding cuts will include direct layoffs and positions lost to attrition, Spanier said. Although the complete tally will climb into the scores, he said, he expects it will not reach as high as 600. (Penn State employs more than 17,000 people statewide.)

At the same time, "when we talk about scores of people losing their jobs or scores of positions being collapsed, that doesn't mean there's an equivalent number of houses in State College that will now be empty," Spanier said.

He explained that growth in certain self-supporting areas of the university -- such as grant-funded research areas -- should offset some of the job losses by creating new positions.

Still, earlier last week, Penn State announced that its internal cuts and cost-trimming measures have already achieved nearly $30 million in savings during the past three months alone. The administration is finding additional savings by amending health-care benefits, reducing energy use, scaling back capital improvements, reworking property and liability insurance, freezing most employee salaries and offering some limited early-retirement options, among other measures.

Pennsylvania routinely ranks among the least-generous states in its state support of higher education, a trend that university leaders have said makes it necessary to push tuition rates higher. News reports last week identified Penn State and the University of Pittsburgh, both state-related institutions, as the most expensive public universities in the country.

Spanier has said that Penn State, a $4 billion-a-year operation, needs to know if it's likely to face continued dramatic cuts in its state support. An initial proposal put forth by Corbett in March -- and later abandoned -- would have cut the university's state support by 52 percent.

Even now, with the finalization of the 2011-'12 budget, Penn State has "no more guidance" about how its state appropriation is likely to shake out in the years to come, Spanier said.

"We've already done the deep cutting, and I don't think we're going to see inflation this low again. If anything, it's going to go up," he said. "We have to give raises to employees at some point. So if you don't get an appropriation increase, it puts more burden on the tuition side.

"At the same time all this cost-cutting is going on, we're trying to keep tuition down," he added.

Asked if he sees any reason to think the downward state-funding trends will change course, Spanier said he is hopeful.

"I'm always optimistic," he said. "You have to be. We have to put our best foot forward, make the case, hope that other people are persuaded."

However, Spanier said, he has "no doubt that the state is going to continue to feel budget pressures.

"What we don't know is, now that we've taken this big cut, will they keep our budget even or allow us to be considered for modest increases (later) -- or will there be another major cut?

"We certainly hope not," he said. " ... We've used up an awful lot of our flexibility this year."

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