Penn State, Temple, and Pitt get flat funding from the state — with a catch

Following years of struggles acquiring money from the legislature, three of Pennsylvania’s state-related universities were funded without issue under the state budget signed Thursday. But there is a catch: The universities’ future funding will depend on their performance.

A new funding process for Pennsylvania State University, Temple University, and the University of Pittsburgh will be based on the findings of a council that will study the schools’ affordability, transparency, graduation rates, and career outcomes. Lincoln University, Pennsylvania’s fourth state-related school, will not be subject to the change.

The performance-based funding agreement is among a number of changes made to higher education in this year’s budget, as Pennsylvania universities struggle with declining enrollment. State-related institutions are quasi-public and rely on state funding to offer in-state tuition discounts to their students.

Republican lawmakers in the House have held up state-related university funding in recent years, citing issues such as transparency concerns, opposition to fetal tissue research at Pitt, and gender-affirming care for minors offered by Penn State’s health system. Campus protests over the war in Gaza raised Republican eyebrows anew this year.

State Rep. Jesse Topper, (R., Bedford), the top Republican on the House Education Committee and a longtime proponent of performance-based funding, said that the performance metrics could help improve trust between the state and universities.

“These are flagship universities in the commonwealth that bring students from all over the world, but that’s just what we hear,” Topper said. “We need to see that reflected if we’re going to continue to support tuition through tax dollars.”

The council tasked with reviewing the schools’ performance will include appointees of the governor and legislative leaders, and the universities’ presidents will join as non-voting members.

The council is a watered-down version of a system Democratic Gov. Josh Shapiro proposed in his February budget address. He said a new performance-based funding system should apply to all schools under a newly consolidated board of education, which includes state-owned community colleges and universities.

The state-owned schools, instead, will have to provide some enrollment and performance data to the state education department under the funding deal. Unlike state-related schools, funding for state-owned schools will not be contingent on their performance.

Temple University spokesperson Steve Orbanek said the school “has been an active participant in the discussion surrounding a performance-based funding model” and looks forward to working with legislators more when the council is established.

Penn State’s president, Neeli Bendapudi, wrote an op-ed last year that touted performance-based funding as a way to “grow the funding pie.” About 30 states have a form of performance-based funding, with varying results.

All but one of Penn State’s 19 satellite campuses have seen enrollment drop since last year. The university slashed its budget and offered buyouts to many of its employees earlier this year, a trend that some believe could be slowed with performance-based funding.