Affordability remains top issue for Pa.’s state-related universities during budget process

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HARRISBURG — Pennsylvania’s four state-related universities are asking the legislature for a long-awaited budget increase, but the schools’ leaders have not said whether more money would prevent future tuition hikes.

As part of his first budget as governor, Democrat Josh Shapiro proposed increasing the general state appropriation to Lincoln University, Penn State University, Temple University, and the University of Pittsburgh by 7.1% each, or more than $40 million collectively.

These universities have a special status that allows them to operate independently while receiving money from the state, unlike state-run Pennsylvania State System of Higher Education.

They use the lump sum to subsidize in-state tuition for Pennsylvania students, but despite those subsidies, the universities have some of the most expensive tuition in the country.

Lawmakers and Shapiro have until June 30 to pass a new budget. Here’s what you need to know about what the governor proposed, what university leaders want, and what it means for students:

Shapiro proposed increasing the general appropriation to each school:

The proposed increase, roughly the rate of inflation, comes after three years of flat funding to the four schools from the state government.

The proposed 7.1% boost would be more than what Pitt requested (6%), but less than the amounts requested by Temple (16%), Lincoln (25%), and Penn State (48%).

State law requires that the universities use the appropriation only for costs directly related to the instruction of students or student-related services. Currently, the universities must submit a report on how the money was used to the secretary of education, the General Assembly, and Pennsylvania’s auditor general within 120 days of the end of the fiscal year.

The state’s Office of the Budget publishes monthly updates on how much money each of the universities has used, though the reports do not specify how the appropriations were spent.

Lincoln University’s budget request detailed how it would use the requested $19 million, outlining $11 million for tuition and fee support for students and $2 million to hire more faculty to address higher enrollment. Pitt and Penn State did not offer such specific details in their requests, though Penn State noted it would use funds for things like student aid, deferred maintenance on buildings, and employee pay. Temple’s proposal was not included in materials the House Appropriations Committee shared.

During a budget hearing before state House lawmakers, none of the state-related university leaders would commit to freezing tuition if given the proposed budget increase.

Patrick Gallagher, chancellor of the University of Pittsburgh, said his institution has to look “holistically at the budget.” Brenda Allen, president of Lincoln University, said that because 70% of Lincoln’s budget comes from tuition, the university needs to be able to adjust tuition to keep up with economic changes like inflation.

Penn State is seeking a $115.2 million increase to its appropriation because, while its total appropriation is larger than the other universities, it teaches more students and therefore receives less per-Pennsylvania student funding than the state’s other public institutions. The university has argued that funding increases have not kept pace with enrollment, which has “intensified the pressures on Penn State’s tuition rates and budget.”

Temple, Pitt, and Penn State are among the most expensive universities for in-state tuition and fees in the nation, according to U.S. News & World Report. Each state-related university raised tuition last year.

A 2016 analysis by researchers at Vanderbilt University and the University of Pennsylvania ranked Pennsylvania among the least affordable states for higher education in the country. The report noted that while the state spends a lot on financial aid relative to other states, those investments are wiped away by jumps in tuition and fees.

Will Doyle, a professor of public policy and higher education at Vanderbilt who co-authored the study, told Spotlight PA that financial aid is crucial to ensuring access and keeping enrollment figures steady.

“And if you don’t have that kind of financial aid, particularly in a state with relatively high public college tuition like Pennsylvania, low- and moderate-income families just get priced out,” Doyle said.

During a March state House hearing, the university leaders said inflation had a massive impact on their respective budgets. The leaders also discussed concerns over drops in enrollment, mental health support for students, and access to higher education for state residents.

Penn State President Neeli Bendapudi told state senators on March 30 that decades of underfunding from the state created the situation. Universities like Penn State can really only generate revenue from tuition and from the state’s appropriation, she argued.

Doyle noted that in difficult economic times, states are more likely to cut funding to higher education because those institutions, unlike other state-supported programs, have an additional revenue stream through tuition.

Historically, colleges and universities have then charged higher tuition to make up for those losses, he said.

An analysis by the Center on Budget and Policy Priorities, a progressive think tank, determined that by 2019 Pennsylvania was spending 33% less per student on higher education compared to pre-recession 2008 figures, when adjusted for inflation. The drop, percentage-wise, was among the steepest in the nation and amounted to about $2,500 less per student in 2019.

Doyle said that states with low appropriation generally have higher tuition, though some states are outliers and there is not a direct causal relationship between the two factors.

A 2017 study of the connection by a Temple economist found that since 2000, there has been a 31.8% pass-through rate, meaning that a $1,000 cut in a state appropriation resulted in a $318 increase in tuition or fees to students.

During his budget address earlier this year, Shapiro said university and state leaders need to have an “honest dialogue” about higher education in Pennsylvania.

“It’s on us to rethink our system of higher education — because what we’re doing isn’t working,” Shapiro said. “Colleges competing with one another for a limited dollar — duplicating degree programs, driving up costs, and actually reducing access.”

Last year, under then-Gov. Tom Wolf, a Democrat, the state-run system of colleges and universities received a 15% increase in support, totaling $552.5 million, as the network merged six of the 14 universities into two new organizations.

The merger helped cut costs as the system struggled with enrollment. Even after the merger, concerns about the sprawl of Pennsylvania’s higher education landscape remained. Last fall, The Chronicle of Higher Education dubbed Pennsylvania the “state with too many campuses.”

Elizabeth Stelle, director of policy analysis at the Commonwealth Foundation, a free-market think tank, told Spotlight PA her organization would like to see additional funding go to scholarships or the Pennsylvania Higher Education Assistance Agency, which provides financial aid to students, rather than the general appropriation to the state-related universities.

Such an investment would create a market that rewards programs for attracting students, she argued.

“We think that’s a much better way of supporting higher education than handing over a lump sum of money to a university, especially universities that have large endowments,” Stelle said.

Last year, state House Republicans tried to block funding for all of the state-related schools due to Pitt’s research involving fetal tissue. The funding was eventually approved but without an increase from the previous year.

Wolf then directed $40 million in federal stimulus money that he controlled to the four state-related universities. Pitt said it committed its share of the money to financial aid for students.

In March, state Rep. Ryan Warner (R., Fayette) said it would be “tough to support this increase” to the state-related appropriation this year unless those universities are subject to Pennsylvania’s open records law, a position supported by the Republican caucus on the House Appropriations Committee.

The four state-related universities have special status under Pennsylvania’s Right-to-Know Law that exempts them from having to release records beyond some basic financial information.

Similarly, Gina Curry (D., Delaware) said it was “critical” that Penn State include racial justice in its plan after the university scrapped its proposed Center for Racial Justice last fall. Bendapudi is in the process of creating a new diversity, equity, inclusion, and belonging plan for the university.

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