Is PSU spending more than last year? What you should know about 2020-21 tuition freeze, budget
Penn State is moving forward with a proposed $7 billion operating budget — an increase over last year’s $6.8 billion — that accounts for an across-the-board tuition freeze, prorated room and board fees in the fall, and expenses related to COVID-19, the disease caused by the coronavirus.
The Board of Trustees Committee on Finance, Business and Capital Planning voted unanimously Thursday to recommend the operating budget, which will almost certainly be formally approved by the full board Friday.
The university expects to operate under a deficit of less than $200 million for the fiscal year.
Why is the operating budget higher?
An increased budget doesn’t just mean increases everywhere.
The university has seen increased costs in some places — mainly with Penn State Health, which saw more than a $360 million rise in projected expenditures, largely “in support of the health system’s clinical activities.”
But it’s tried to limit costs elsewhere, such as saving $30 million from a 3% across-the-board reduction of academic department budgets. It also froze merit-based raises and projected a $400,000 decrease in fuel/utility costs.
Although the operating budget has increased overall, the university reported $104 million from cost-saving initiatives like those mentioned above.
Tuition/Room & board
The university-wide tuition freeze, for both in-state and out-of-state students, was first announced in April but was touted by Penn State on Thursday as the highlight to its operating budget.
According to the university, if approved Friday, it will mark the third straight year — and fourth time since 2015 — that Pennsylvania resident undergraduate tuition rates have remained level from one year to the next.
But even with the freeze, according to data provided to the Board of Trustees, Penn State remains the costliest non-private Big Ten university for in-state students. The cost is $18,454 —beating out Illinois’ second-highest rate of $16,210. (Northwestern was not included because it’s a private university.)
For out-of-state students, Penn State’s cost of $34,858 ranks it around the middle of the conference. It’s less expensive than Michigan ($49,350), Michigan State ($39,765), Wisconsin ($36,805), Indiana ($35,455) and Maryland ($35,216).
“Despite the challenging fiscal environment across higher education, I’m pleased that we have been able to put forth a university budget that provides a measure of financial relief for our students and supports their continued academic success,” President Eric Barron said in a news release.
Room and board will also decrease in the fall, mainly due to the fact students will not return to campus after Thanksgiving break that starts Nov. 20.
The cost is now $5,013 for the fall — a prorated amount from the original $5,876 rate, based on what was supposed to be a 3.52% increase from last year.
Could COVID-19 change all this?
The short answer: Yes.
The university acknowledged the pandemic has forced it to create “planning assumptions” that “are still changing due to COVID-19,” such as enrollment projections and unanticipated expenses. The budget is a series of projections, after all, and it’s possible the projections are proven inaccurate as the virus evolves.
“This budget that we are presenting to you today represents the most likely case scenario we have developed in response to the COVID-19 pandemic,” said Mary Lee Schneider, who’s been on the BOT for five years.
Of course, there are still some questions. The athletic department, for instance, is projected to have only a $5 million reduction in revenue compared to last year. With fall sports in flux, and the football team having already announced the apparent elimination of two home games, it’s not known why the projected reduction is so small. Or why that’s considered the “most likely case scenario.”
When asked about the accuracy of the projection, a Penn State spokesperson responded via email: “Given the many unknowns with the COVID-19 pandemic, Penn State is preparing for a variety of scenarios and contingency planning continues across all areas of university operations, including in Intercollegiate Athletics. Athletics does not release financial information other than what is made publicly available.”
The Board of Trustees are set to meet at 1 p.m. Friday, with the meeting set to conclude by 3 p.m.
This story was originally published July 16, 2020 at 5:03 PM.
