Update On Things Fiscal

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Dean's Message

(February 2010)

 

Update on Things Fiscal

  

I know there is quite a bit of curiosity about the Penn State budget and its impact on faculty, staff, and students in the College. While many uncertainties remain, there have been some developments, and I am pleased to share these along with my thoughts about implications for the College.

The governor has released his budget recommendations for next year and is proposing level funding for the state-related universities in the Commonwealth, including Penn State. The speculation I have heard suggests that level funding will be the reality. While this is good news in these turbulent times for Penn State and the other state-related universities, we need to be mindful of the fact that approximately $16 million of the roughly $330 million state appropriation come from the federal stimulus dollars for Pennsylvania. These dollars will not be available for the following year’s budget. Thus, for starters, Penn State is looking at a $16 million reduction in its state allocation two years from now. In addition, there will be significant upward pressures on the cost side of the budget. The cost to the University of the Commonwealth’s retirement system is scheduled to rise quite substantially; health insurance costs continue to rise; the cost of electricity will increase substantially as the rate caps are scheduled to be removed; and the list goes on and on.  

One of the hallmarks of President Spanier’s leadership is his commitment to excellence and his pressure on all the colleges and campuses to perform at ever-higher levels. The trustees have embraced his vision by being willing to make up on the tuition side the relative financial losses the University has experienced in terms of Commonwealth support. Tuition has been rising at Penn State to the point where our in-state tuition is among the highest of any of the public research universities in the nation. The recent double-digit percentage increases in tuition at many public research universities around the nation still leave their tuition levels below what Penn State is charging.  

There is a growing concern that Penn State cannot continue to simply make up the difference in revenue shortfalls by increasing tuition. Applications for admission to Penn State continue to increase and the University continues to see strong enrollments. Indeed, applications for admission to the College of Education continue to be strong and are up from what we were seeing last year at this time. Penn State is incredibly popular, and President Spanier’s commitment to excellence is paying handsome dividends. Nevertheless, there are limits to how much we can expect students and parents to pay, particularly when there are peer institutions where tuitions are lower.  

President Spanier’s advice to all of the budget executives is to be cautious and prudent with respect to making future commitments. I am endeavoring to follow this advice within the College of Education, but I also do not want to err on the side of being too cautious. We are pursuing an important agenda and there are attractive opportunities that lie in front of us. We have developed a strong and compelling vision for the future through our strategic plan and we are working to put the plan into effect.   Here is a sketch of recent steps we have taken:

  1. We have trimmed some staff positions in the College and have done so without layoffs or furloughs.
  2. We have achieved greater efficiencies in the dean’s office through a significant reorganization that now allocates administrative responsibilities across two associate deans.
  3. We are continuing to hire new faculty in high-priority areas as retirements occur. Our underlying budget model is based on the premise that the faculty will be entrepreneurial and productive and continue to move the College forward.
  4. We are moving forward with key strategic investments like the Center for Educational and Developmental Sciences (CEADS), the Innovation Studio, the EDUCATE initiative, the new program evaluation center, and the new program of support for recruiting top graduate students into our doctoral programs.
  5. We are shifting discretionary funds that our generous alumni, faculty, staff, and friends contribute to our Future Fund into scholarship support for students. The downturn of the market has reduced the payout of our scholarship endowments, and the infusion of Future Fund dollars is part of our effort to offset the effect of the decline.
  6. We are re-doubling our fund-raising efforts and have some recent successes to celebrate, including the largest estate gift in the history of the College (a planned gift of $3 million). 


I am also pleased to share the news that the University is making plans for a general salary increase (GSI) program that will be implemented on July 1, 2010. The University recognizes that all employees sacrificed during the past year through the loss of last year’s salary increment. I expect the salary increase pool to be similar in size to what we have seen in recent GSI programs.  

No decision has been made about the amount of permanent recycling that will be imposed on the colleges and campuses for next year. As you may recall, we were required to return 2% of our base budget, or $336,650, last year. My expectation is that this year’s recycling will be closer to 1%, which is better than 2%, but still not a trivial cut. Plus, it is hard to know for sure what will be happening after next year.  

Department heads and other budget administrators in the College have helped in many important ways to minimize the adverse impact of these budget challenges. Compared to what I am seeing elsewhere in higher education, I think we can be proud of what we are accomplishing. I welcome your thoughts about how best to handle the challenges we see on the horizon, and I am confident that by pulling together we will continue to find ways to move forward even in the face of continued challenge.

 

David H. Monk Dean