These are difficult and challenging times for higher education institutions, not only in Pennsylvania but throughout the nation. For years, public colleges and universities have seen their state funding support decline in terms of their overall budgets. With the nation’s economy still struggling, the competition for scarce state dollars has become more pronounced than ever.
Pennsylvania’s situation is compounded by the unique makeup of its higher education sector and by the way the commonwealth funds the various institutions. Most states have a public university system such as the Pennsylvania State System of Higher Education, which includes IUP. However, no other state has what the commonwealth calls “state-related universities,” which include both Pennsylvania State University and the University of Pittsburgh, that also receive state funding. Pennsylvania even funds selected private institutions, including the University of Pennsylvania. It also offers grants and loans to students whether they attend a public or private college or university.
For now, at least, the funding squeeze facing colleges and universities in Pennsylvania has been lessened somewhat through the temporary infusion of federal stimulus dollars, which are helping to augment state funding. But those funds are scheduled to disappear next year, creating a funding “cliff” that could have an enormous impact on public university budgets.
“It’s going to be quite challenging,” said IUP Vice President for Administration and Finance Cornelius Wooten. “We’re going to have to do some things differently, look at things differently, basically reinvent the institutions, because we’re required and expected to have a balanced budget.”
PASSHE spokesman Kenn Marshall ’80 said IUP and the thirteen other state-owned universities are the truly public universities in Pennsylvania. Tuition at the PASSHE schools is set by a Board of Governors, the members of which are public officials, students, and individuals appointed by the governor. All appointments require confirmation by the State Senate.
When the System was founded in 1983, the state provided two-thirds of the System’s operating budget. The rest came mostly from student tuition and fees.
Today, those numbers have flipped, with the state providing only one-third of the PASSHE budget, and tuition and fees filling in the gap, Marshall said.
That shift puts an enormous amount of pressure on the state schools’ budgeting. “Over the years, public higher education that used to be fully state supported has become state assisted,” Wooten said.
The Last Five Years
||Total E&G budget
*Supplemented with $38,158,000 in federal stimulus funding
Source: Pennsylvania State System of Higher Education
But Pennsylvania is better off than most states, Marshall said. While the state funding as a percentage of the overall budget has decreased, the actual amount of money the state gives has typically increased at least a small amount every year. Other states often see large increases one year, followed by large decreases the next.
“Pennsylvania’s funding has remained fairly stable,” Marshall said. “Those increases have rarely kept up with the rate of inflation, but at least our funding has been consistent. For the most part, our budget has gone up steadily every year, which makes it much easier to plan long term.”
The state also provides PASSHE universities with funding for capital improvements, currently budgeting $130 million a year for new construction and major renovations to academic buildings, Marshall said. Student unions, residence halls, and dining halls, which are supported through student fees, do not qualify for state funding.
Overall, however, the fourteen PASSHE universities receive a smaller operating allocation from the state than do the four state-related institutions combined.
For the 2009–2010 fiscal year, the PASSHE schools received $503 million in combined state and federal funding. The four state-related schools received a total of $688 million, although the allocation made up a smaller percentage of the overall budgets of those schools.
Wooten said the state-related institutions have much more flexibility when it comes to increasing tuition and fees. The PASSHE Board of Governors has increased tuition every year since 1998 but not at the rates seen at the state-related universities or even in other states, where double-digit percentage increases have been common. In fact, PASSHE’s annual tuition increases have been below the rate of inflation in four of the last five years.
“You want to make higher education accessible and affordable, so Board of Governors members, of course rightfully so, are reluctant to make significant tuition increases over the years,” Wooten said.
The PASSHE schools also have to follow the state’s strict guidelines when it comes to making purchases and putting contracts for building projects out for bid, Wooten said.
“Enrollment growth has been the savior for us,” Wooten said of the budgeting process at IUP. “That has been a positive for us in terms of having to deal with the decline in state appropriation and limited amount of tuition increase.”
But change is coming.
Last fiscal year, the state cut PASSHE’s appropriation by about $40 million, Marshall said. Federal stimulus dollars plugged that deficit, giving PASSHE an even overall appropriation. But those stimulus dollars are set to disappear in the 2011–2012 fiscal year, forcing PASSHE and its universities to begin looking at alternatives.
“We could be looking at a rather severe funding cliff,” Marshall said. “We’re hoping the state’s economy will recover to a sufficient level that revenues will increase and we’ll get at least some of that money back, but we’re trying to plan right now for that.”
Wooten said IUP is already planning for the “cliff.” Such a shortfall—$5.1 million for IUP—could lead to increased class sizes, a reduction in the number of classes being offered, reductions in faculty and nonfaculty positions, and other cost-cutting measures, Wooten said. “We have to think differently and put on a different type of thinking process to ensure that we meet the needs of our students.”
IUP is also actively looking for new funding sources, including an increased emphasis on fund-raising. “We are competing with private institutions for students and for private and state dollars,” Wooten said. “We can no longer rely on the state as our sole support if we’re going to continue to be a high-quality institution.”
Terry Carter, IUP’s vice president for University Relations, said it’s becoming more and more important to get additional financial support from outside state funds and tuition and fees.
“It’s a new day when it comes to building philanthropy at a state university,” Carter said. “For us to make sure that we stand solidly behind the tradition of educational excellence for which IUP has been noted for a long, long time requires resources, and the resources of yesterday don’t carry you as far in today’s world.”
Today’s students expect much more in the highly competitive higher education market. “Prospective students have more choices than ever before about where they go. It has always been a theme of the State System to have our fourteen campuses provide higher education at a reasonable price,” Carter said. “We want to make sure that quality continues in the future, and we’re able to adapt and change with trends in the present and future.”
Carter and his staff are working on developing more fund-raising programs to make that happen. Academic and athletic scholarship fund-raising is essential and continues to be needed. But Carter said there are other avenues for fund-raising that could include endowed professorships and chairs. Donated monies would help provide faculty members with resources far beyond what the state can provide, Carter said.
Increasing IUP’s discretionary donations is also a priority. “It helps the individual colleges and athletic programs to respond to changing needs that may surface in a given year even with the best planning,” Carter said. And IUP anticipates the need for new academic buildings in the coming years, which will require donor support.
Increased fund-raising isn’t a luxury; it’s a necessity as the “cliff” approaches. “There’s not an option about it,” Carter said. “It’s something we absolutely must do at this point in time, because this process is not instantaneous.”
The Shrinking State Dollar
Percentage of the overall budget covered by the state appropriation since 1983–1984
Source: Pennsylvania State System of Higher Education
More from the Summer 2010 Issue of IUP Magazine
The 2009–2010 men’s basketball team won more games than any other and competed on nationwide television for the Division II crown.
In six decades, the ROTC program at IUP has produced nearly two thousand U.S. Army second lieutenants, not to mention eight generals.
Legacy Gala, Ruddock Hall, who’s in that photo, and more
Highlights about IUP faculty members, past and present
The latest IUP player to be picked in the NFL draft, plus other newsworthy IUP athletes
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June 30, 2010
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May 12, 2010
Promoting Native American awareness at IUP.
April 21, 2010
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