Shapiro’s plan includes a 15% funding boost for state universities, community colleges. But questions remain.

Gov. Josh Shapiro on Tuesday delivered on his promise to propose a new governance structure for state-owned colleges, additional funding to make college more affordable, and a more accountable system for distributing that funding.

But many questions remain about how much impact a new financial aid proposal would have on families it’s meant to help and how both a performance-based funding model and new system incorporating the state’s four-year and community colleges would work.

At least one new detail did emerge: the new financial aid for students would not become available until 2025-26.

» READ MORE: A plan to overhaul Pa.’s higher education landscape is a long time coming, but questions remain.

The Democratic governor said committees would develop some of those answers in the coming months and emphasized that Pennsylvania can’t afford to underfund its colleges any longer, noting that the state is 49th in the country in its investment in higher education. His plan for this year includes a 15% boost in funding for Pennsylvania’s State System of Higher Education (PASSHE) schools and community colleges, and a 5% increase for state-related universities, including Temple, Pennsylvania State University, Lincoln and the University of Pittsburgh.

The plan brought kudos from college officials locally and around the state.

“If we were to get the 5%, we would be incredibly grateful to the governor and legislature and it would help keep costs down for Pennsylvania residents,” said Ken Kaiser, Temple’s senior vice president and chief operating officer.

Penn State president Neeli Bendapudi heralded a move to performance-based funding and called the proposed increase in funding “critical to help us meet rising instructional and operating expenses and contain student costs.”

Kaiser also said he looks forward to helping to develop the new performance funding model.

» READ MORE: Pa. state universities are getting a historic boost in funding with state budget deal

“It would just bring a little bit more clarity and certainty to the process,” he said.

But it’s uncertain whether the plan will ultimately gain bipartisan support.

”We’re starting to hear from our local community colleges and others who have great concern over creating an even bigger system, one that I can say … has the ability to shift resources around where it sees fit,” said Sen. Scott Martin (R., Lancaster), who chairs the Senate appropriations committee and had previously served on the PASSHE Board of Governors. “What does that mean for community colleges out there?”

» READ MORE: Gov. Josh Shapiro proposes sweeping reform of Pa. state-funded higher education

Martin also questioned the plan’s affordability, when the state’s demographic projections continue to decline.

Senate Majority Leader Joe Pittman (R., Indiana) said the state should consider encouraging more out-of-state students to attend Pennsylvania’s state-funded schools.

”I’m not sure how merging two entities with declining enrollments makes them more sustainable and efficient,” Pittman added. He encouraged further negotiation on the issue.

But Martin acknowledged the need for a new solution on funding higher education.

”I can’t say we agree with different components of his plans, but we do need to change things,” Martin added.

Under the proposed budget, the 10 state-owned universities and the state’s 15 community colleges would be combined into one system and receive $975 million, up from $850 million this year.

For PASSHE, that percentage rise matches a historic increase the system received in 2022. Increases in state funding over the last few years have helped PASSHE — which includes West Chester, Cheyney, Kutztown, Millersville, East Stroudsburg, Slippery Rock, Shippensburg, Indiana, Commonwealth, and Pennsylvania Western universities — freeze tuition for five consecutive years.

Details were short on how the two systems would be combined and whether the board of governors for PASSHE, which educates 82,688 students, would remain intact. The community colleges, which enroll about 230,000, do not have an overarching board.

A Shapiro administration official said community colleges will not be consumed by PASSHE and that the administration was looking to Minnesota as a model. There, the state’s university system, community college system, and technical colleges were combined into a single system in 1991 by the state’s legislature.

The increase in funding for the state-related universities would be a departure from the last five years when funding was held flat amid legislative battles over the schools’ transparency, research and tuition increases. The schools received more than $603 million collectively in the current year, but had to wait until November to get it.

Shapiro also promised a performance-based funding system for the state-related and state-owned colleges under which schools would get money for meeting certain benchmarks, such as graduation rates and retention rates. He said the model would offer a “predictable” funding stream based on achievement.

As part of the plan, he said state-related universities would get their funding approved by a simple majority of the legislature; it currently requires a two-thirds vote. That’s a change the legislature would have to agree to.

Shapiro said in an interview last week that while criteria for the performance-based plan would be developed by a bipartisan committee, it would include a component that for the first time in Pennsylvania would award colleges money for keeping graduates in the state — addressing a long-standing “brain drain” concern that too many leave for jobs elsewhere. There also will be incentives for producing graduates in such shortage areas as nursing, and enrolling first-generation students, he said.

Performance-based funding plans aren’t new. About 30 states have them with mixed results.

The programs that perform best limit the number of metrics so that the money has an impact, and there has to be enough money set aside to make a difference.

Shapiro also called for a $279 million increase in financial aid to college students from families earning $70,000 or less, but that wouldn’t come until 2025-26.

Questions remain about what that would mean for those families.

Under his plan, students who attend state-owned universities and community colleges would pay no more than $1,000 per semester in tuition and fees. Many students from those families likely already qualify for maximum federal Pell grants of $7,395 or close to it and state grants of $5,750, which already more than covers tuition and fees at those schools. Shapiro’s aid plan is envisioned as a “last-dollar scholarship” aimed at tuition and fees, which means it would be applied after other aid.

“While we have not done all the math, our college team certainly sees a population of students who certainly will be impacted and benefit from this,” said Sara Woods, co-president and CEO of Heights Philadelphia, which helps about 3,000 Philadelphia students from low-income communities into and through college.

Amy Perez, Heights’ vice president for college and career pathways, said family size also matters in calculating Pell grants, and there are some students who could benefit from the new aid Shapiro is proposing, particularly for smaller families, because their income threshold to get the full Pell grant is much lower.

”For example, you’ll see that for families of 2, 3, or 4, the income threshold to get the full Pell grant is far below $70,000,” she said. “And even the threshold to get a minimum Pell grant is under $70,000 for two parents with one child.”

She said students, particularly those attending PASSHE schools, have gaps in the aid they receive and the cost of their education, especially when figuring in room and board.

Also under the plan, the state would increase grants through the Pennsylvania Higher Education Assistance Agency by $1,000, raising the maximum award to $6,750. That could have more impact at state-related universities and independent colleges, where tuition and fees cost significantly more than at PASSHE and community colleges.