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For Our Future — Tuition, State Appropriations, and What it All Means

(The first draft was written in July 2010. Today, at the University Park Undergraduate Association Encampment, Dr. Spanier fielded several questions about increasing tuition. This is a very general guide to understanding how your tuition works at Penn State. Several students have e-mailed me asking me to make this data publicly available. The following is just my opinion, and doesn’t reflect any data or insight received from Penn State faculty members, university administrators, or staff members. Spreadsheet created using data available at http://budget.psu.edu. Please provide your questions, comments, concerns — all feedback — in the comments or via Twitter @davidadewumi)

“Criticize by Creating.” ~~ Michelangelo

Then Pennsylvania State University is the most expensive state-related university in the nation. Florida students pay about one-fourth of what we pay (in-state), while University of Maryland students pay one-half. California students were paying much less than Penn State students (until the state went bankrupt, and students tuition increased by more than thirty percent). According to Dr. Spanier today, for the 60% of students who have loans, they graduate with an average debt of almost $30,000.

This brings to light a few questions:

Why do we pay so much for a four-year education compared to other state-related universities? Is it all worth it to be a part of the largest and arguably the most exciting alumni-base in the world? What does any of it mean?

There’s a lot of recent press about some important issues regarding tuition in Pennsylvaniaparticularly at Penn State.

What does it all mean?

The problem of ‘increasing tuition’ is very complex, but we could start by saying:

A + B + C = X

Where A is tuition; B is State Appropriations; C is Private Donations (hereafter “The Endowment”); X is Operating Expenses

Tuition + State Appropriations + Private Donations = Operating Expenses (1)

If (B+C) decrease, than naturally A will increase to maintain a level X.

As it stands now, even with the multi-billion dollar For the Future campaign, The endowment is generally not used to fund the operating expenses for the University (buildings, grants, and specifically donated scholarships not withstanding).

Therefore, we will say C = 0.

In other words, if State Appropriations decreases, tuition will naturally increase to maintain the current operating expenses, adjusted for inflation.

Where A + B + 0 [c] = X; when B decreases or remains constant A will increase to maintain a level or inflated X.

Thus when in 2010 the state chose not to cute appropriations — and not to increase them either, there was a net win for the University — and most importantly for the students who support this institution.

“Given the current economic climate and challenges faced by the commonwealth, we are grateful that the legislature and governor have continued to support Penn State at level funding,” Penn State spokesman Geoff Rushton said.

The ‘win’ then for Penn State, is that although the appropriations were not cut (which, adjusted for the rate of inflation, it would allow Penn State to taper off an increase in tuition), appropriations also did not decrease, which would mandate either a steeper increase in tuition, steep budget cuts to operating expenses, or a mixture of both.

Since 1990, State appropriations have been increasing at a CAGR rate of 1.44%, 79% which the university currently allocates to the General Education (GENIE) fund, while the rest is diverted to Hershey Medical Center and minimal funds to research.(2)

In 2008, the Commonwealth appropriated $352,782,000 to Penn State, $267,451,000 of which was appropriated directly to the GENIE.

Since 1990, Pennsylvania State University tuition for in-state students (out-of-state has seen a greater increase) has been increasing at a CAGR rate of 6.06%

The two greatest increases to tuition were in fact in 2002 and 2003, of 13.52% and 22.45% respectively, whilst the appropriation saw modest cuts of 2.66% and 2.62% respectively.

So Tuition (A) has been increasing at a rate of just over 6%, while the appropriations from the commonwealth of Pennsylvania (B) have been only increasing at a rate of just under 1.5%.

Clearly the growth of appropriations is under-matching: the University’s need for Operating Expenses (X); the University is outspending the rate at which appropriations increases; or a  mixture of both.

Thus, in order to see a substantive change in the rate of growth of Tuition (think, increasing at a decreasing rate), Penn State officials would have to:

  1. Significantly cut operating expenses
  2. Increase private donations via the For the Future campaign to be used for the GENIE (general tuition fund).
  3. Receive more public state appropriations flat-line or increase.

Here’s what the University is already doing:

  • Core Council: The groups have been tasked with the University-wide goal of finding $10 million annually in both permanent, long-term budgetary savings and short-term cuts that can be reinvested in support of the goals and priorities identified in Penn State’s five-year strategic plan found online.
  • For the Future Campaign:  “Since official counting for the campaign began on January 1, 2007, we have raised $1,004,210,828, creating powerful momentum toward the campaign’s goal.”
  • Grassroots PSU Network/PSSA/USSA: “The Grassroots Network is a legislative education and advocacy group sponsored by the Penn State Alumni Association. Its more than 39,000 members have joined forces to advocate for Penn State’s future…communicate Penn State’s needs to the governor, state legislators, and members of Congress.”

Where students might make the most impact is on working with and supporting University officials when they seek to cut programs, and by helping to call for the state to appropriate funds even more in accordance to its support of higher education.

It is very difficult for one to argue ‘the state of Pennsylvania does not support higher education in the commonwealth’ when in fact they do; the PASSHE consists of 14 state-owned schools through which over 100,000 students are educated and pay tuition rates below $6,000 (in-state), less than half of what Penn State students (in-state) pay per year. We’re already working together on some very important issues and of course tuition must be one of those issues on which we see deep, integrated collaboration and participation.

Students would partner with the University to help cut costs, direct private funds towards tuition relief (and not just private scholarships and grants; to which two-thirds of the FTF campaign funds will be allocated — a great step in the right direction), and help maintain or even increase the commitment of the Commonwealth to the four state-related universities.

There are many, many more issues here e.g. financial aid, grants, loan relief, fees but at least if we can all get a clearer picture, we might elucidate our possibilities for the future.

The new Governor, Tom Corbett, will set the state budget in the next several weeks, including appropriations. The Board of Trustees will meetsoon after to set budget and tuition for 2010-11 at the Penn State DuBois campus, and I believe they will make an enlightened, educated decision on the best direction for Penn State’s finances.

I strongly believe that not a single administrator, faculty, or staff member at Penn State wishes for tuition to continue increasing at the rates that effectively will price out prospective Penn State students, and also make us much less competitive in comparative publicly-funded research universities. One interesting note is that, while Penn State might become less competitive from a price point with publicly-funded research universities, we also become much more competitive against private universities and the Ivies, which is what I believe the principal reason Penn State is seeing more and more applications — almost 120,000 yearly– to attend Penn State.

In fact, on Tuesday March 23 in 2010 when Provost Erickson formally launched his Core Council (actually split into  three  coordinating committees: University Park Academic Review, Campus Academic Review, and Academic and Administrative Services Review) he said this:

“The question is not ‘what should we eliminate?’ The question is really how do we use and combine our resources to do what’s best for students? Consolidation is a preferred route, but we are no longer in a position to support everything…We need to reduce expenditures while preserving a high-value educational experience for our students. That is no small task, we need to find a balance between these two goals, but any decisions we make will be data driven and informed.”

Anyone with additional ideas for cost savings or efficiencies should contact the Office of Planning and Institutional Assessment at [email protected]

There was recent news, and back and forth from both the faculty senate, a few students (read a great essay by Dana Ray here) about the cut of the STS program. To be sure, I don’t think anybody wants to see the program be ended, but realistically we can’t ask for more services (Free CATA buses, Free printing, more programs, cheaper gym memberships, et. al) and simultaneously ask for the university to lower the tuition and fees that they charge to  float these programs.

Truly, under the great direction of our administration, our faculty and staff, our students, our community members, and our elected and appointed state officials and representatives, we can, we will, and we must support the mission of providing an affordable, top-rate education to Pennsylvania and non-Pennsylvania residents.

Give feedback. Write letters not just to the Daily Collegian or community posts on OnwardState — go to your faculty, your student affairs office, or the people who represent you and your interests — and work with them to create solutions, not just to criticize the current system. The best critics are those called to be the “watchdogs” — the media, the citizens — students — are best served by collaborating with other students, coming up with creative solutions, and asking for a seat at the table when important decisions are made so that all sides can understand one another.

It will not necessarily be great magnanimous steps that help us achieve our goals and visions, but the second, and fourteenth, and thirtieth steps of a 10,000 step journey. We are all in this together.

After all, it’s For Our Future.

(1) Notice, there is no mention of Football and/or the Athletic Department. Football ticket sales, merchandise, and related lines of revenue subsidize not only the entire athletic department, but also the intramural program at Penn State. While Penn State Football, along with Hershey Medical Center, are both 2 of the five revenue generators for the University, both are almost entirely self-supported and self-sustaining.

(2) All figures are drawn from the 10.i.10 drafted by David Adewumi & Darrell Reid, embedded above.

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