Trustees approve across-the-board tuition freeze for 2020-21 academic year

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Editor’s note: The Penn State Board of Trustees voted to approve the 2020-21 operating budget and tuition and fees schedules, as outlined below, during its full meeting on July 17.

UNIVERSITY PARK, Pa. — The Penn State Board of Trustees Committee on Finance, Business and Capital Planning has recommended a $7 billion University operating budget for the 2020-21 academic year that advances a planned tuition freeze, announced in April, for all students University-wide in response to the ongoing economic challenges presented by the COVID-19 pandemic.

The proposed budget and accompanying tuition schedules will now go to the full board for a final vote on Friday, July 17. If approved by the board, it would mark the third consecutive year, and the fourth time since 2015, that Pennsylvania resident undergraduate tuition rates have remained level from one year to the next — joining tuition freezes that were implemented for the 2015-16, 2018-19 and 2019-20 academic years. 

“Maintaining the accessibility and affordability of a Penn State education are long-term University priorities, and given the current economic hardships induced by the COVID-19 pandemic, it is particularly important that we not raise our tuition rates for the upcoming academic year,” said Penn State President Eric J. Barron. “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.”

Tuition and fees

Under the budget plan recommended by the committee, all resident, nonresident, undergraduate and graduate tuition rates at all Penn State campuses would remain level for the 2020-21 academic year. At University Park, this means the tuition rate for full-time, lower-division, resident undergraduates would remain $8,960 per semester, and the corresponding tuition rate for nonresident students would stay at $17,492 per semester. 

Penn State has not raised tuition for Pennsylvania resident undergraduates since the 2017-18 academic year, when a modest 2.45% aggregate increase was implemented. For eight of Penn State’s 19 undergraduate Commonwealth Campuses — Beaver, DuBois, Fayette, Greater Allegheny, Mont Alto, New Kensington, Shenango and Wilkes-Barre — this would mark the sixth consecutive year that resident tuition rates have been held flat. Over the last decade, Penn State’s in-state tuition increases have been among the lowest for state flagship universities.

“We are thankful for the support of our leaders in Harrisburg, whose forward-thinking actions maintained education funding at all levels this year despite the state’s uncertain revenue picture,” said Barron. “The state’s continued investment in Penn State and our land-grant partnership plays an essential role in helping the University to provide an affordable, world-class education for Pennsylvania’s citizens.” 

Of note, tuition rates are now inclusive of the former Information Technology fee, which was eliminated as a separate line item on the student bill beginning with the spring 2020 semester. The IT fee had been frozen at $252 per semester since the 2014-15 academic year, and moving forward that charge will be absorbed into the regular tuition rate. 

The Student Initiated Fee, a combination of the former Student Activity and Student Facilities fees that began in fall 2017, would remain flat at $265 per semester for full-time students at University Park. The Student Initiated Fee would increase by $5 per semester at the Commonwealth Campuses and range from $191 to $249 per semester for full-time students at most campuses. Two student-run fee boards — one for University Park and one for the Commonwealth Campuses — set and oversee the allocation of the Student Initiated Fee, which supports student activities, programs and facilities at the generating campuses.

Operating budget

The proposed $7 billion operating budget reflects Penn State’s 2020-21 state appropriation, which passed the General Assembly and was signed into law by Gov. Tom Wolf in May. Even in the face of revenue uncertainty brought on by the pandemic, lawmakers maintained the University’s $242.1 million general support appropriation for the entire fiscal year — funding that is used primarily to provide an in-state tuition rate for approximately 50,000 Pennsylvania resident students. 

The University’s state appropriation also includes level funding of $54.96 million for Penn State Agricultural Research and Cooperative Extension, $26.74 million for Pennsylvania College of Technology, and an expected $15.1 million for Penn State Health and the College of Medicine through the Pennsylvania Department of Health and Human Services, for an overall appropriation of $338.9 million. 

Like all institutions of higher education, the pandemic created a unique environment for crafting the University’s 2020-21 budget, as many of the planning assumptions used for budget modeling are still changing due to COVID-19, including enrollment projections and unanticipated expenses due to changes in instructional delivery, such as implementation of increased cleaning processes, social distancing practices, and an enhanced information technology infrastructure. Due to increased instructional costs and anticipated COVID-19-related enrollment impacts, the University is projecting a $188 million deficit in the general funds budget for the next fiscal year, to be offset by prior-year surpluses that are available to be spent in the 2020-21 budget.

To help lessen the financial impacts of the pandemic on University operations, Penn State has engaged in targeted cost-saving initiatives and budget reductions for the next fiscal year. This includes reductions in operating budgets totaling $104 million, composed of a combination of savings related to the restructuring of the University’s expenditures under the State Employees’ Retirement System, released debt service, reductions from a plan underway to centralize IT services, and efforts to drive savings in health care costs, as well as $30 million in savings from a previously announced 3% across-the-board reduction of unit budgets.  

“While the budget reflects the University’s best projections and aggressive expense management, contingency planning continues, and we are prepared to be nimble to respond to any future revenue changes, depending on how the pandemic progresses,” said Barron. “The University has a strong financial foundation. We maintain healthy reserves, a strong credit rating and have strong borrowing capacity that will allow us to close potential revenue gaps while continuing to make investments that enhance the quality of our academic programs.”

As with a typical year, the University has budgeted additional funds to meet rising costs, including a $5.2 million increase for property and liability insurance, $7 million to address facility and maintenance needs, and $5.3 million in debt service related to the 2019-2023 capital plan. The University is projecting a decrease of $400,000 in fuel and utility costs for the next fiscal year. 

As previously announced, the proposed 2020-21 budget does not include funds for general employee salary increases, outside of $2 million for faculty promotions in the academic ranks and associated benefits. The plan does, however, include $22.8 million to cover projected cost increases related to the University’s benefits program — $18.7 million of this amount would fund mandatory increases in the employer share of health care for employees, graduate assistants and fellows, and an additional $4.1 million would cover mandatory employer retirement contributions. A total of $2.7 million has been budgeted for increased costs of grants-in-aid, primarily for graduate assistants, fellowships, employees and dependents. 

The budget proposal also earmarks $7.5 million for meeting strategic needs, supporting innovation initiatives to advance the thematic priorities in Penn State’s Strategic Plan, and to provide support for University efforts aimed at improving access and affordability for students. 

Once approved by the full board, the final operating budget and accompanying tuition and fees schedules will be available at https://budget.psu.edu/.

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