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Penn State Institutes Hiring Freeze Amid Budget Deficit

Penn State implemented a hiring freeze on Monday as the university aims to balance an operating budget that had a nearly $200 million deficit for 2021-22.

Described as “a strategic hiring freeze,” in a university news release issued on Monday afternoon, the measure is expected to be in place until at least summer 2023.

“However, searches to fill critical roles will still move forward as Penn State will continue to hire for positions that support the university in important ways,” the statement said. “This includes positions needed for safety, student success, and compliance, among others.”

The freeze also does not apply to students, graduate assistantships, or positions that are fully funded by external grants or contracts.

Currently listed job searches for which an offer hasn’t been extended will be “paused,” except for positions deemed “critical.”

The hiring freeze is one of a number of measures the university is taking to balance its budget by 2025, an effort that Penn State officials say will require saving an estimated $250 million.

Penn State President Neeli Bendapudi noted in July that for 2021-22 the Board of Trustees approved a budget with a $166 million operating deficit that “ended up being close to 200 million once we close the books.”

The university used central reserves to balance the operating budget, a practice that Senior Vice President for Finance and Business Sara Thorndike said is not sustainable. Overall, however, Penn State has “a very healthy balance sheet,” with a stable outlook and strong ratings from Moody’s and S&P.

Budget challenges were the reason why trustees in July approved, by a 26-6 vote, a 2022-23 tuition schedule that includes a 5% increase for Pennsylvania resident undergraduates and 6% for non-Pennsylvania residents at University Park, as well as a 2% for in-state undergrads and 3% for out of state.

The tuition increase will not apply to students from households making $75,000 or less, who will receive grants to offset the price hike.

Bendapudi said she is focused on affordability as well as balancing the budget.

“…[Y]ou hired a former banker and a businessperson to be president, so I commit to you that over the next few years, we will come to a balanced budget because we need to make those incredible investments that we all believe in,” she told trustees.

Bendapudi and Thorndike cited a list of factors that have contributed to budget challenges, including three consecutive years of flat general appropriations from the state and tuition freezes for three consecutive years before a 2.5% increase in 2021-22. Enrollment declines due to COVID-19 and demographic trends, $330 million in net expenses and revenue losses resulting from the pandemic, high inflation, and a competitive labor market also have contributed.

Penn State administrators are working on a 2022-23 budget to present to the board in September. Trustees typically pass an annual fiscal plan in July, but this year university leadership is using extra time to work with departments on budget revisions that will include a 3% rescission, which is expected to save about $46.2 million.

“We have urgency about this, not panic,” Bendapudi said last month. “We are a solid system but we will act with urgency.”

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About the Author

Geoff Rushton (StateCollege.com)

Geoff Rushton is managing editor for StateCollege.com. Contact him at [email protected] or find him on Twitter at @geoffrushton.

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