Penn State will see its first increase in state education support in seven years thanks to new performance-based funding included in Pennsylvania’s $50.8 billion 2026-27 budget passed on Sunday.
While the university’s base general appropriation will remain flat at $242.1 million, Penn State is expected to receive more than $4 million from a $10 million performance-based pool set aside for three of commonwealth’s state-related universities, which also include Pittsburgh and Temple — bringing its general support to more than $246.1 million.
The state budget keeps funding level with 2025-26 for other Penn State line items, including $57.7 million for Penn State Agricultural Research and Extension, $35.67 million for the Pennsylvania College of Technology and $2.35 million for Invent Penn State.
Legislation approved in 2024 and 2025 established a funding model for the state-related universities that ties a portion of their support to student outcomes and institutional performance. Each university’s allocation from the performance-based funding pool is based on a formula that incorporates Pennsylvania student enrollment — including full-time undergraduates, Pell Grant recipients and community college transfers — and performance measures such as graduation rates, production of high-demand degrees and affordability.
Penn State and President Neeli Bendapudi advocated for a performance-based funding model as a way to help address its lagging commonwealth support for in-state students, which trails Pennsylvania’s other state-owned and state-related universities as well as most of its peers nationally.
Gov. Josh Shapiro had proposed a $30 million performance-based funding pool, but Bendapudi said the ultimate $10 million included in the final budget is an important step forward.
“I want to thank members of the General Assembly and Gov. Shapiro for their leadership and partnership in making performance-based funding a reality in Pennsylvania,” Bendapudi said in a statement.
“This initial investment is an important first step that recognizes the essential role higher education plays in strengthening our commonwealth. The metrics at the heart of this model align closely with Penn State’s mission and values. We are proud to help students from every background earn degrees that prepare them for meaningful lives and careers here in Pennsylvania, while contributing to the economic vitality of communities across the state.”
Penn State’s Board of Trustees is scheduled to meet Thursday and Friday, when it will set the university’s own budget and tuition rates for fiscal year 2027-28. Penn State moved to a two-year budget cycle, effectively establishing fiscal plans and tuition a year in advance.
