Governor’s Reduction

Governor Ed Rendell released the latest of his increasingly drastic budget reductions for the 2009 fiscal year. The governor has now reduced the budget proposal by $2 billion dollars.

Overall, 229 line items would be impacted by the latest round of spending reductions. Compared to the current fiscal year, the Governor has now cut three out of every four line items, totally eliminating 163 of them and reducing another 328.

One of the details in the most recent revision, which was released on Thursday, is that the public-related institutions will not be receiving federal stimulus money, resulting in a loss of $20 million in expected appropriations.

Penn State’s Catastrophe

University spokeswoman Lisa Powers told the Centre Daily Times that the reduction would be “catastrophic” for the university. If the current cuts came into effect for next year, the state aid Penn State receives would be back down to 1996-levels.

Graham Spanier is understandably upset. He has to present to the Board of Trustees on July 10th. Before then, he has to make some pretty big decisions.

He has told us that he does not want to raise tuition any more than normal– roughly 5%. He has also told the faculty that the university had not and hopefully would not need to enact any mass layoffs.

Here’s what he had told the Board back in January.

We do not anticipate resorting to any of the university-wide emergency actions being taken by scores of colleges and universities throughout the nation such as mid-year tuition increases, hiring freezes, mandatory furloughs, pay cuts, travel freezes, liquidation of endowment assets, and loans to meet basic operating needs.

But he knew this kind of situation would finally come, and he probably could have guessed that it would occur during the annual budget impasse. It was fully underway by November, when the state actually asked for $20 million of its 2008 appropriation to be returned to the government.

Watch this story over the next couple of weeks. Something is going to happen. Veblen speculated wondered if Rendell wants some relinquishment of budgetary oversight by the school to the state, but it seems to me something that massive would get overlooked in the push to get the budget passed to prevent furloughs.