The Penn State Board of Trustees met Friday afternoon and approved an $8.6 billion operating budget for the 2022-23 school year.

Previously on Thursday, the Board of Trustees Committee on Finance, Business, and Capital Planning advanced the proposed operating budget, and the full board unanimously approved it today. The budget aims to help reduce the university’s general funds deficit, as Penn State intends to have a balanced budget by the summer of 2025. The revised budget lowers Penn State’s general funds deficit to $149 million.

More details on the budget can be found here

“This new operating budget makes strategic expense reductions that are necessary to shrink our operating deficit while we continue to provide our students with an affordable, high-quality education,” Penn State President Neeli Bendapudi said on Thursday. “Reducing costs, finding efficiencies and identifying new revenues are all critical as we work to achieve a balanced budget.” 

In a release, Penn State noted that it’s been operating on an interim budget that was approved by the board in May. Additionally, the release explained that the ongoing issues with the university’s budget are a result of “inflation, flat state funding, and ongoing pandemic-related enrollment and revenue pressures.”

The 3% rescission for the 2022-23 budget is expected to generate $46.2 million in cost savings, with yearly cost-cutting measures to follow. The budget rescissions over the past four years, including this year’s, have saved the university $113.4 million in recurring costs.

“I want to thank all of the budget executives and financial officers across Penn State who worked so hard to shrink the deficit and bring the University a step closer to achieving a balanced budget,” Sara Thorndike, senior vice president for Finance and Business/treasurer, said. “There’s still a great deal of work to be done, but we would not have gotten this far without their dedicated efforts.” 

Penn State has been taking steps to try to shrink costs moving forward. The university implemented a hiring freeze over the summer, and it hosted two virtual town halls to address tuition and its budget earlier this month.

Despite the reduced costs for the 2022-23 academic year, however, the university is expecting some cost increases for the upcoming fiscal year that include:

• $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 maintenance of new or remodeled facilities; and 
• $3.6 million for fuel and utility costs. 

Back in July, the board officially increased tuition for the 2022-23 academic year. However, no in-state or out-of-state undergraduate students with household incomes of $75,000 or less saw a tuition increase.