Committee of Trustees Advances 2022-23 Operating Budget Plan

0

Editor’s note: The full board approved the 2022-23 operating budget at its September 23 meeting.

UNIVERSITY PARK, Pa. — At its meeting today (Sept. 22), the Finance, Business, and Capital Planning Committee of the Penn State Board of Trustees proposed an operating budget of $8.6 billion for the 2022-23 academic year. The revised budget is part of a larger effort to reduce the University’s general fund deficit as Penn State strives to achieve a balanced budget by summer 2025.

The full board will review the proposed budget at its September 23 meeting.

“This new operating budget enables strategic spending reductions that are necessary to reduce our operating deficit while continuing to provide our students with an affordable, high-quality education,” said Penn State President Neeli Bendapudi. “Reducing costs, finding efficiencies and identifying new revenue are all essential as we strive to achieve a balanced budget.”

Penn State operated within an interim operating budget approved by the board of directors in May. In July, trustees approved the 2022-23 tuition and fee schedules and a general salary increase of 2.5% for most employees.

Approval of the 2022-23 operating budget is the culmination of University-wide efforts to revise unit budgets that have been impacted by inflation, fixed state funding and pressures updates on pandemic-related registrations and revenue. Penn State management worked with budget officials and financial officers throughout the summer on a 3% write-off for 2022-23 and developed a budget plan that reduced the general fund deficit. University to approximately $149 million, which will be funded from reserve balances.

“I want to thank all of Penn State’s budget officers and financial officers who have worked so hard to reduce the deficit and bring the University closer to achieving a balanced budget,” said Sara Thorndike, senior vice president. finance and business/treasurer. “There is still a lot of work to do, but we wouldn’t have gotten this far without their dedicated efforts.

A more detailed introduction to the University General Funds Budget is available here.

The 3% cancellation is expected to generate about $46.2 million in cost savings and follows several years of budget cancellations and cost-cutting measures to reduce Penn State’s overall spending. Including this year’s cuts, broad budget cancellations over the past four years have saved Penn State $113.4 million in recurring costs.

In addition to the termination, the University has implemented a temporary strategic hiring freeze until at least the summer of 2023 to help reduce costs.

Ongoing budget challenges

At two virtual town hall events on Sept. 14, university leaders outlined Penn State’s current fiscal outlook and challenges. The University, like many institutions, has had to navigate a difficult fiscal environment that includes significant inflation; lump-sum state funding; tuition fees have frozen in three of the last five years; and rising costs, falling revenues, and declining enrollment, at least in part due to the pandemic.

While Penn State has successfully reduced its overall expenses for 2022-23, the University is planning a number of cost increases for the coming fiscal year, including:

  • $46.5 million for employee salary increases, as well as $2.2 million for faculty promotions and related benefits;

  • $15.2 million for employee benefits, including $12.6 million for employee health care and $2.6 million for retirement benefits;

  • $5.2 million for the maintenance of new or renovated facilities; and

  • $3.6 million for fuel and utility costs.

The University is also investing $39 million in student financial aid this year as part of its commitment to maintaining access and affordability. This figure includes $14 million to fund new access grants, ensuring that degree-seeking undergraduates with annual household incomes of $75,000 or less would not experience a boost. tuition this year.

The operating budget includes Penn State’s 2022-2023 state appropriation for education and general education, which remained fixed-funded for the third consecutive year. Penn State’s general support funding, which supports the university’s in-state tuition and helps cover a portion of basic education costs, has held steady at $242.1 million since 2019.

Achieving a balanced budget

University leaders reviewed all aspects of Penn State’s budget and embarked on a comprehensive budget review process to create a new multi-year budget allocation model.

Penn State has partnered with the National Association of College and University Business Officers to analyze the current budget model and develop a new strategic budget allocation model that should provide greater financial predictability, including setting tuition earlier. so students and families can plan better.

To achieve a balanced budget by 2025, Bendapudi said the University is taking a multi-pronged approach. She said Penn State will continue to seek to reduce costs, find efficiencies and increase revenue, including a new Business Partner Program.

The committee also advanced a proposal to seek appropriations of $469.5 million from the state legislature for the 2023-24 fiscal year, which seeks a significant increase in Penn State’s general support appropriations.

The final operating budget will be available on budget.psu.edu.

Share.

Comments are closed.