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Spanier to Faculty: Penn State Funding Issue 'Not as Simple as the Bloggers Think'

on March 15, 2011 6:42 PM

Penn State President Graham Spanier supports Gov. Tom Corbett's emphasis on eliminating the Pennsylvania budget deficit, Spanier said Tuesday.

But he finds fault with that push when it puts a "disproportionate" burden on the university, he said.

"I don't know about you, but I'm a believer in balanced budgets," Spanier said, addressing a university Faculty Senate meeting at University Park. "I'm very frugal. I'm very conservative financially. ... I believe it's appropriate for Pennsylvania to rid itself of the structural deficit it has. ...

"What I am finding very difficult to absorb," though, "is that public universities like ours ... should have to absorb a disproportionate share of fixing a problem that we really were not a part of in the first place," he went on, referring to the state's deficit.

Over the past decade, Spanier said, the state budget has grown 41 percent. In the same period, Penn State's state appropriation -- as measured in actual dollars -- has been flat, he said.

Spanier normally speaks and stands for questions at all Penn State Faculty Senate meetings. But in light of Gov. Tom Corbett's proposed budget, Senate Chairwoman Jean Landa Pytel invited Spanier to appear for an extended period at the Tuesday meeting.

It was the first Faculty Senate meeting since Corbett unveiled his state budget proposal, which includes a 52 percent reduction in state funding for the university.

That would shave about $182 million -- roughly four percent -- from Penn State's overall budget.

Indirectly, Spanier on Tuesday addressed critics who've said that a four percent reduction should be a relatively simple trim in tough economic times. The state money is used largely to offset the price of tuition for in-state students and to support Cooperative Extension and agricultural research, Spanier said.

And, he said, the university can't easily move revenue streams around. For instance, Penn State medical operations in Hershey bring in about $1.3 billion a year, but "I can't take revenues intended for patient care at Hershey and send them up here to teach an English class. You can't do it," Spanier said.

The same goes for targeted grant money and donor-restricted endowment support, all of which count toward Penn State's $4 billion annual budget total.

"It is not as simple as the bloggers think" it is to deal with a $182 million funding cut, Spanier said. "It's not that easy to just tell everybody to take a 10 percent pay cut. Just get rid of a few hundred people (critics say). It's not a few hundred people.

"Do you know that because of the cuts proposed, in Cooperative Extension and agricultural research, those cuts amount to 440 positions?" Spanier went on. "That is in (just) one part of one college in the university."

Many employees in those Cooperative Extension and ag-research positions handle functions related to Marcellus Shale natural-gas development, including helping landowners with water issues, Spanier said. Plus, he said, much of the research that's led to Marcellus Shale exploration originated at Penn State.

"The state desperately needs us to do what needs to be done to properly deal with this resource in the Marcellus Shale, Spanier said.

He appeared before the Faculty Senate for about an hour in all. In the process, he fielded about a dozen questions. Also among his remarks:

  • Moody's, which issues bond ratings for universities, has put out a special notice announcing a negative outlook for Pennsylvania higher education, Spanier said. He added that "this is unprecedented for us" and that "I don't think it's been publicized yet." Penn State has seen two bond-rating upgrades during Spanier's tenure as president, he said, but he appeared concerned that the Moody's announcement could push ratings lower. It appears that the announcement may stem from the state budget proposal, Spanier said. has reached out to Moody's for additional information.
  • Penn State has been trying to decipher whether Corbett's budget proposal signals a long-term philosophical and structural shift toward complete privatization of the university, Spanier said. "We need to know whether that's the intent -- if this is Step One (toward total privatization) and there's another step coming -- or whether it was solely a budget-crisis issue," he said. Pennsylvania, already among the least generous states in its financial support of higher education, is facing a total state-budget deficit of $4 billion.
  • Spanier reiterated that, if Corbett's proposed cuts come to pass, tuition will rise probably "higher than we would like. But we will not principally deal with this by raising tuition. We aren't dealing with this just by raising tuition. It doesn't work. We're already one of the most expensive public universities in the nation." Administrators have said a combination of university program cuts, job losses, tuition increases and other measures would be likely if the Corbett budget gains passage.
  • Each Penn State employee who retires in the near future represents "one less person who has to be laid off," Spanier said. He told the faculty senators: "I love you all, but if any of you are thinking about retiring, now would be a good time to let your department heads and deans know about that. Those are funds that could be recaptured."
  • If the Corbett budget -- or a version of it -- wins passage, tuition increases for in-state students are likely to be greater -- as a percentage figure -- than those for out-of-state students, Spanier said. That's because state funds help subsidize the education of in-state students, he said. He said out-of-state students already pay the actual cost of their education. And "we can't load this on the backs of out-of-state students because they're already paying" that full cost.
  • Substantial tuition increases spurred by state budget cuts may reduce the viability of some Penn State Commonwealth Campuses, Spanier said, explaining that they would become less accessible. He has raised the prospect that some campuses may need to close in a worst-case scenario. But "we do not want to close any campuses," he said Tuesday. " ... It is the last thing I want to do."

Spanier and presidents of other state-related universities are due to testify at 1 p.m. Wednesday before the state Senate Appropriations Committee in Harrisburg. They're scheduled to testify before the committee's House counterpart on March 28.

Legislators and Corbett are expected to finalize the state budget by June.

Earlier coverage

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Penn State, State College Noon News & Features: Tuesday, March 15
March 15, 2011 12:01 PM
by Staff
Penn State, State College Noon News & Features: Tuesday, March 15
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