Question No. 3: Financial Challenges
What, in your view, are the major fiscal challenges Penn State will face over the next three years—and how should the university address them?
1. Ted J. Sebastianelli ’69 Bus
Rising cost of Intercollegiate Athletics (ICA). Hire an extremely well qualified and fiscally responsible Athletics Director. During the 2012-13 academic year, Penn State sports lost $5.9 million. Now ICA wants to borrow $30 million. We’re spending as if we’re printing money in the basement of Old Main. Just two years earlier, Penn State showed a profit of $14.8 million. We need to get our ICA fiscal house in order now.
Rising cost of education. Trustees and presidents can’t continue to balance their books on the backs of students and taxpayers. University Park is the second priciest four-year public university in the country. Penn State can’t continue to rubber stamp tuition increases without eventually having some negative impact. At least one Big 10 school has frozen tuition and reduced meal plans with positive results. It can be done, but only with a president-led university-wide commitment to root out every cost saving possible, including those in major capital projects. Reduce the time to degree. Student loan debt has surpassed credit card debt. Our students are leaving saddled with huge loan debt and high loan default rates. We must facilitate and, in fact, encourage students to take advantage of year-round learning to reduce their time to graduate. It’s not cost-effective for buildings to go unused or underutilized during less popular times like early mornings and Fridays. Students should be provided incentives including reduced tuition to matriculate during the summer so they can graduate faster and less expensively.
2. Ned Rauch-Mannino ’10 MPS Agr
There should be no greater concern for any university than affordability. Students face tuition uncertainty given economy trends and state budget constraints due to pension costs, corrections and other issues: Today, Harrisburg and federal support account for merely 14 percent of the University’s general funds budget, whereas appropriations represented more than 30 percent of the general funds budget in 2000, 40 percent in 1985, and 60 percent in 1975. First, we need to better protect appropriations in Harrisburg, and second, we must smartly advocate for and identify increased federal and other financial resources. Third, the Board of Trustees absolutely must take a greater role in institutional advancement. Board members need to be engaging philanthropic voices and foundations, and to best empower this effort Penn State needs to restore its reputation nationally and highlight the service it provides Pennsylvania and higher education at-large. Tuition continues to account for more and more of Penn State’s budget, climbing from 32 percent of the general funds budget to 79 percent in 2013-2014: The University is depending too much on tuition increases to maintain its operations. This spoils one of the University’s greatest advantages, and will box out generations of prospective students without action. To support any action, the University should formally investigate where tuition is likely to rise to during the next five, ten and fifteen years and plan accordingly to stem increases. Funding requests and fundraising initiatives today can be positioned to protect students’ access to a quality, affordable Penn State education tomorrow.
3. Daniel N. Cocco ’08 Com
Penn State is recognized as one of the top universities in the world but like our peers, we still have significant fiscal challenges. While state funding has decreased or remained the same in recent years, the Board needs to have meaningful discussions about how to better control the cost of a Penn State education. Trustees should take on a more active, yet coordinated, role in advocating for greater state funding in Harrisburg. They will need to work with the administration to make the case for an affordable education for students and highlight the positive impacts made by the University in communities throughout the state and region. The Board should also closely review budgets that directly add to the cost of tuition to ensure value is delivered along with a quality Penn State degree. The Commonwealth Campuses provide opportunities to first generation college students to pursue an education. I attended Penn State Hazleton before graduating from University Park and saw firsthand the difference made when a world-class education is closer to home. We need to find ways to make sure all campuses remain accessible and affordable for future students.
4. Gavin Keirans ’10 Bus
First and foremost, we need to stop the trend of an ever-increasing Operating Budget, with reduced/flat state appropriations, so that lower & middle class families can attend Penn State without drowning in student loan debt. As someone who graduated with $20,000+ in debt, I know personally how our tuition costs can be prohibitive to attending our great university. Part of looking at the overall cost structure, is also looking at the synergies that may exist in functions across our commonwealth campus network. We must also address the ongoing issue of our debt capacity and continual borrowing to finance new projects. This is a major reason why we have introduced new fee structures, such as the Facilities Fee, so that we can continue to finance the costs of new projects for student space. A major part of being a trustee is your fiduciary responsibility, and this issue has not fully been addressed. We must make this a priority so that it does not plague our university for years to come. Professionally, I work in the Management Consulting industry for global consultancy Accenture. It requires a significant commitment, analyzing and developing strategies for some of the leading companies in the world. I specialize in providing financial benefit to clients, either through cost savings efforts or margin/revenue growth. This will prove valuable in executing my fiduciary responsibility on the board, as I have provided actual financials benefits for many Fortune 500 companies.
5. Ryan Bagwell ’02 A&A/Com
While the Board of Trustees should focus its energy on reuniting the torn alumni community, it cannot ignore the other challenges that beg for its attention. Record tuition has become too expensive for even the most committed Penn Staters to afford. The board should immediately rethink the way it sets the price of a Penn State degree by providing discounts for alumni and need-based tuition credits. It should form a task force comprised of trustees and administrators to expand the university’s private loan program and lower its 6 percent interest rate. Finally, the university should set a long-term goal of providing a free education for students whose families earn less than $60,000 a year.
6. Robert G. Milnes III ’02 Eng
The biggest challenge to the University is making it affordable for current and future students. As alumni, we understand the value a Penn State education provides. A Penn State degree along with the network of loyal and enterprising Penn Staters has been a huge bolster to each of us. Passing this gift on to future students is key. The University has several ways to do this: Increase student enrollment, increase income, cut costs or combinations of the three. As Penn State overall enrollment continues to increase, making sure that costs for the individual student are low helps to continue this trend. State funding is also key to the advancement and accessibility of the University. A Penn State education for citizens of the Commonwealth promotes better lives and drives economic growth. Showcasing this will help to maintain appropriation dollars. Cost cutting is a dreaded phrase as it generally means losing capability. However, a fresh and comprehensive review of the current budget and expenditures is necessary to rule out waste and maintain that the University is running as efficiently as possible. In addition, Penn State must create and implement innovative technologies that are long-term wins for both the environment and our budgets.
7. Jason P. Kutulakis ’91 Lib, ’94 JD Law
It is important to the viability of the University that the President have a true working relationship with its Trustees. I will work tirelessly to build that relationship with President Barron. With all candor, it is truly difficult to provide suggestions on how to address the various fiscal challenges facing our University until I am privy to the confidential records available to the Trustees. As a former member of the Dickinson School of Law Board of Governors, I am familiar with its financial structure and the competitive nature of its enrollment processes.
I am also familiar with the significant deferred maintenance issues facing many of the buildings owned by the University and other issues that must be addressed by the Board.
I will be a leader who will develop a full assessment of the immediate, as well as the long term, needs of the University’s physical plant and economic structure. Once completed, a cost containment matrix must be developed along with the President’s budget to ensure the continued educational quality of our students will be met for the students of today as well as tomorrow.
I believe it is also imperative to build systems to interface with private industry and corporations to partner with the world renowned research capabilities of Penn State to develop products, medicines, and treatment processes that will generate revenue for the University.
8. George A. Weigand ’69 Edu
There are four primary fiscal challenges that Penn State faces in the next five to ten years:
- We need to solve the increasing tuition rate for our undergraduate and graduate students. Students are graduating with debts of between $20,000 and $30,000, or more.
- Capital improvement projects need to be prioritized so that we utilize those expenditures for projects that are needed the most.
- We need to aggressively approach the Pennsylvania State Legislature to gain support for increased funds to meet the growing financial demands of our university. It is our responsibility to provide the necessary information to our elected officials for this request.
- Seeking continued financial support from our alumni base continues to be a priority. This will enable us to provide additional funds for many scholarships currently being provided for our students. This can benefit both the academic as well as the athletic side of educating our students.
9. Amy L. Williams ’80 H&HD
The overall fiscal challenge is how to effectively manage the cost of running a large University with a $4.45 billion annual budget and yet keep tuition at a price point which balances affordability with value. In doing so it is important to support our land-grant status and legacy. Penn State was founded when only the very rich could attend college. When we received our land grant, it was to provide affordable college educations to Pennsylvanians who would not normally have the luxury of a college education. Although I fully support being a public University, it is clear we cannot count on commonwealth appropriations. (Currently appropriations are down to ~ 6 percent of our total annual budget). Constantly raising tuition is an archaic and non-innovative approach to meeting budgetary goals. Additionally it is not sustainable and is against our own land-grant legacy. Therefore it is critical we focus on Operational Excellence and how to identify and rank initiatives of true strategic value. In my involvement with the runnings of various branches of the University and listening to PSU Board meetings, I am convinced there are meaningful efficiencies which can be realized. By effectively developing, refining and strengthening key areas of operations (e.g. communications, governance, real estate investment and maintenance), we will be able to effectively identify duplication of efforts and areas of efficiencies which can help to ultimately fund all initiatives of strategic value. The student should be at the heart of every fiscal spend, decision and program.
10. Joshua D. Fulmer ’01 Lib
A shrinking state contribution will continue make it difficult to provide Pennsylvania residents with a world-class, affordable education. This must be our primary responsibility to our students, and will be the main criteria that guides every decision I make. The University must find ways to cut costs while still providing the best possible college experience.
11. Edward J. Kabala ’64 Bus
For Penn State, as other institutions of higher education, governmental contribution to education in an uncertain economy is a major challenge. Pennsylvania has reduced its historic funding to education. State-related universities are less favored than those designated as state institutions. Regardless of the party in power, the conflicting demands of all needs of citizens of Pennsylvania with universities will only increase. The success of programs instituted by Penn State, plus size and visibility, work against its plea of need. The Board’s attitude that Commonwealth funds are welcome, while legislative oversight and involvement are not, is also not helpful. Penn State must reduce its costs without reducing its product; that may come from research combines, an allocation of educational functions among all state and state related institutions, or other strategic partnerships. One must take a fresh look to avoid duplication of services already provided elsewhere, even if Penn State can deliver them more effectively. Available funding must be utilized to support those initiatives already undertaken or for which there is a clear need. Prior initiatives must be reviewed. Is there a need for a law school? What combination of world versus Pennsylvania focus is appropriate? Medical coverage for employees escalates annually. We must reduce, share or shift it. Imposing lifestyle demands, however laudable, without “buy in” from all constituencies was ineffective, but the cost and lifestyle problems remain. Better communication and agreed upon common goals are necessar
12. Joel N. Myers ’61, ’63 MS, ’71 PhD EMS
Penn State will come under increasing pressure in the years ahead in ways people may not expect. The pace of rising tuition is unsustainable, and government loans and grants to students used to pay for these costs will not continue to accelerate into the future. Tuition costs are eclipsing the ability of families to pay or are causing hardship in meeting those costs. While we cannot expect the cost of a Penn State education—one of the very best in the nation in many respects—to become inexpensive, we must use responsible stewardship in slowing the increase, securing better funding sources for our students, and provide alternative ways to secure the Penn State experience. Second, digital media technologies are turning the residential learning model on its head. This challenge is enormous. Penn State needs to continue to lead the way that I have helped to forge over a number of years. Third, change is accelerating, and educational needs are likewise changing faster than ever, because of the Internet, mobile access, robots, 3D printing, and a host of new developments. These are the changes I am working to focus the Board and the Administration on now. And these will continue to be my focus. The Board and the University has to embrace the “disruptive technologies” that we are seeing today in society in order to survive in what will be an increasingly competitive environment. The delivery system for education is changing, and as a university we must change with it.
13. Ricardo Azziz ’81 MD Hershey
Major fiscal challenges for Penn State, as a global research university, include the need to continue to develop its innovation engine in the face of declining federal support for research; the need to increase student access and affordability in the face of continuing decline in already small state support, the added cost of further developing the necessary technologic infrastructure to meet current and future student needs, and a limitation on continued tuition increases; and the need to continue to develop a strong philanthropic base in a competitive and now-strained environment.
14. Jennifer E. Bird-Pollan ’99 Lib
Universities currently face significant financial challenges. Shrinking state support and rising costs mean universities must reevaluate how money is raised and spent. As a full-time faculty member at another large state university, I bring a unique perspective to the role of Trustee. The lack of faculty representation on the Board means that the voice of the Penn State faculty is too easily ignored. Faculty members are the university’s eyes and ears on the ground, and the university administration should do more to include faculty voices in financial decisions. In ensuring that faculty have the resources they need to do their jobs, the university administration should inquire into how best to support faculty grant applications. At the same time, sufficient resources should be directed to admissions, to ensure that high standards continue to be met among Penn State’s incoming classes. While Penn State has many excellent facilities, tough decisions may need to be made about construction or improvement priorities during these lean years. Such decisions must be made in a way that considers where spending is most likely to increase revenue, but also respects the educational mission of the entire university, even the areas that do not typically produce significant revenue. In the face of serious economic challenges, it is more important than ever that the Board and the president serve to protect Penn State’s faculty and students and the important role Penn State plays in educating young Pennsylvanians.
15. John J. Graham Jr. ’99 Lib
Penn State currently faces several major fiscal challenges, which will continue to challenge the university for the next three years and beyond. These include:
- Sandusky scandal costs: The costs associated with the Sandusky scandal are myriad. Reports indicate that the total cost of the scandal is more than $170 million, but a true measure of cost is difficult to quantify in that some are indirect and many will continue to accrue over time. The most notable costs include penalties, fines, attorney’s fees, consultant’s fees, settlement payments, lost revenue and decreased contributions. The costs related to the scandal warrant a greater discussion, but a concise summary of how the university should address scandal costs would be to exhaust every legal remedy in an effort to reduce each line item.
- Commonwealth funding: The 2011-12 Commonwealth appropriation to Penn State was decreased by $68 million. Since then, the Commonwealth has maintained level funding for the university, but the university is operating with a Commonwealth appropriation equal to the 1995 appropriation. Because the university is reliant upon Commonwealth funding for approximately 14 percent of its operating budget, the university needs to partner with the Commonwealth and demonstrate that an investment in Penn State’s appropriation is one that has far reaching benefits to Pennsylvania.
- Financial aid reform: Tuition and fees account for approximately 80 percent of Penn State’s operating budget. It is likely that the federal government will legislatively limit tuition increases. If so, the university will have to find alternate funding sources to cover increasing costs.
16. Vincent J. “V.J.” Tedesco III ’86, ’95 MA Lib
As I currently understand things, there are two major fiscal challenges facing Penn State. Tuition control is first and foremost. Declining state appropriations and rising costs have driven tuition up to the point that the working families of Pennsylvania struggle to afford an education at the Commonwealth’s best university. As education is critical to the health of our democracy and the economic vitality of the state, it is critical that the Trustees of the Pennsylvania State University partner with like-minded parties to control costs and increase state appropriations. The latter is particularly important as between 1970 and 2013, the Commonwealth’s contribution to Penn State’s annual operating budget fell from 62 to 14 percent. Pennsylvania should and must do more. Second and despite the need to control costs, Penn State must have the resources required to attract and retain world-class faculty and then give them the facilities and support they need for teaching and research. The “For the Future Campaign” ends in April and we will require a new major campaign to propel us forward. Likewise, with federal support for research declining, Penn State must be both more aggressive and more effective in its efforts to secure both government and corporate funding.
17. Laurie Anne Stanell ’80 Sci
Over the next three years, we at Penn State must continue to address the erosion of allegiance, both financially and emotionally, of the alumni towards the University. This erosion has had a large negative impact on our University. We must address this erosion and methodically and thoroughly correct it to the best of our abilities. Compounding our personal University issues, these are challenging times for all institutes of higher education. Higher education is facing global, national and state recession. Recession has brought a myriad of challenges to Penn State. Shifting demographics, rising operational costs, a changing competitive landscape, reductions in state appropriations, pressures for accountability and widespread economic downturn is our current environment, and these pressures clearly necessitate change. Penn State must continue its Dare to Be Bold educational thinking. We must find new ways to improve teaching and learning, advance creativity and discovery, and serve our various constituents in the best ways possible, while becoming a more efficient and effective institution. Our priorities must be set on an ongoing pursuit of excellence. We must balance current fiscal conditions with a positive attitude towards the future, all with a plan of sustainability.
18. Julie Harris McHugh ’86 Bus
I believe the three primary fiscal challenges facing the university are:
- Seeking new and/or improved sources of revenue, while holding tuition increases to an absolute minimum
- Identifying and acting on opportunities to reduce expenses
- Identifying and implementing efficiency measures that improve the value of a Penn State education without increasing costs
The first challenge will require a redoubling of efforts in Harrisburg to increase appropriations. For the past several years, state funding has been declining or stagnant. As a trustee, I will spend time in Harrisburg articulating the positive return to Pennsylvania’s economy for every dollar invested in Penn State. Another way to address this challenge is to continue to innovate in unlocking new sources of revenue. Penn State’s World Campus is a great example how this can be accomplished. The second challenge will require a holistic review of how Penn State operates. University leadership will have to be decisive in making hard choices about what to fund and what to discontinue. As a trustee, I will bring my experience as an operating executive to ensure discipline around making difficult funding decisions. The third challenge is about innovation in how we deliver a world-class education. I believe there are opportunities to reduce redundancies across the various colleges, improve collaboration across disciplines of study, and make more effective use of technology to optimize the balance of classroom instruction and virtual learning. Doing so will enable us to expand our reach without increasing our capital and operating budgets.
19. Christine Stempka Rhoads ’99 Com
Tuition control must be a priority. Since 2008, cost of PSU tuition has risen 31 percent, 7 percent higher than national average. The Board needs to be reminded about the importance of keeping a Penn State degree within reach of the middle class. I attended a public high school and was solely responsible for paying for my college education, worked part-time while taking as many classes as possible and graduated within eight semesters with a degree and two minors. I understand the financial burden students are facing and the importance of available financial aid. I received a grant and am still paying off my college loans. The Board needs to focus on finding ways to increase financial aid or at least keep it on pace with tuition growth.
20. H. Jesse Arnelle ’55 Lib, ’62 JD Law
21. Matthew W. Schuyler ’87 Bus
The major fiscal challenges we will face over the next three years are: attracting and retaining top faculty and staff; maintaining the physical plant (facilities at all campuses); and funding strategic initiatives that will propel us forward academically. The biggest single expense in the Penn State budget is human resources. The salaries and benefits for over 17,000 talented faculty and staff at all locations continue to represent the biggest slice of the budget pie. For 2013-14, the cost of the University’s benefits program alone increased by $28.8 million in health care costs and mandated employer contributions for retirement and social security. As the Chief Human Resource Officer for a company with over 320,000 employees, I have been personally charged with understanding the full range of benefit options nationally and globally. I believe my experience and areas of expertise can be of value to the University as we address these national and local budget issues. As a University, we must balance the desire to invest in infrastructure for our students with grants and scholarships so that those who worked and dreamed of going to college get that opportunity. We must also create new ways for these students to receive their education through online courses and educational programs. Penn State must continue to attract the best and brightest while making it affordable. We will do this by managing costs and increasing revenue through strategic adjustments and relationships.
22. Albert L. Lord ’67 Bus
Fiscal issues challenge every not-for-profit institution. The issue facing all is simple: How much longer can Americans afford the education investment regardless of the obvious long-term rewards it brings? The supply/demand balance is changing because the investment payback period grows and the tuition price tag is now intimidating. Penn State faces special challenges brought by the state’s negligible and falling funding and our fading reputation.
Penn State is no guiltier for Sandusky than Duke was for its lacrosse team’s party behavior. Yet outside Pennsylvania we are self-confessed enablers. With our reputation under duress, long-term demand for a Penn State education inevitably will ebb and so will the quality of the education we are able to deliver. Consequently we will lose pricing power and find our ability to attract academic talent—both educators and students—diminished.
My solution to short-term (3 years) fiscal pressure is to manage costs. We are fortunate to have a new president who is very cost-conscious. I will do what I can to bring years of cost control experience to Dr. Barron’s efforts. Long-term, only significant repair to our reputation will allow us to meet fiscal challenges without a decline in the value of a Penn State education.
23. Keith Bierly ’77 Lib
While the next three years will be financially challenging, hopefully, they will not be as challenging as the past three years. Perhaps lost in all the publicity regarding hundreds of millions spent in civil out-of-court settlements, attorney fees, public relations specialists, NCAA sanctions, internal investigations, etc. is the fact that the Commonwealth of Pennsylvania has provided significantly less money in their annual state appropriation to the University.
The single most challenging financial fact facing the University is that it has been an easy target for people who would argue for belt-tightening or even sanctions regarding recent activities. The University has made great steps toward improving this image in reforms undertaken, and the specific interest in child welfare. These efforts are considerable and very worthwhile.
My INDEPENDENT candidacy advocates for an additional $100 million in state appropriation to just get it back where it was when I worked in Harrisburg. It advocates for additional federal research grant support that can enable the University to play an even greater role at the national level while providing an economic stimulus to the Pennsylvania economy.
Twenty years ago I worked with Penn State senior administrators in working out an agreement still in place to have the University compensate local governments and the school district for their impact within our county. At that time, I also learned the enormous positive impact the University has on Central Pennsylvania and beyond. I could positively impact the University’s financial condition over the next three years.
24. R. Seth Williams ’89 Lib
The biggest fiscal challenge is that it is simply too expensive for those who wish to become future Penn State alumni to attend. We must fight to forever keep our alma mater true to its land-grant mission—to make an affordable quality education available to the sons and daughters of the working class. We must fight for our fair share of taxpayer funding and work even harder to gain outside revenue. Corporate America considers our university the number one school to recruit prospective employees from. I fought for keeping tuition low and budgets transparent as undergraduate student government president and again, I will do it as your trustee
25. Robert J. Bowsher ’86 Bus
Two of Penn State’s biggest financial wells—state appropriations and tuition dollars—are drying up fast. Over the next three years, the university will need to address these fiscal challenges by maximizing alternative revenue sources like the Hershey Medical Center, by reining in wasteful spending and by ensuring construction projects stay within budget. The Hershey Medical Center, currently generating over 30 percent of the university’s income, will experience greater demand for its services as the Baby Boomer generation ages. Hospitals that are well run financially often produce the best clinical outcomes, so any quality control improvements made at the Hershey Medical Center will do wonders for Penn State’s reputation and financial viability. It would also help if the trustees and university leaders stopped wasting so much money on overpriced, out-of-state consultants and public relations firms. Those millions need to be invested instead into programs that reduce tuitions and programs that directly benefit the Penn State community. As noted, construction projects need to stay within budget. The HUB-Bookstore Renovation project was $1.7 million over budget at the 14 percent completion stage. At this rate, that project could end up costing Penn State well over $50 million. I’m all for renovating the HUB and the Bookstore, but not at that price. Over the next three years, the trustees and university leaders will need to live within Penn State’s means so our alma mater can survive the worst economic crisis since the Great Depression.
26. Rudolph Karl Glocker ’91, ’93 MA Lib
Key fiscal challenges facing Penn State over the next three years:
- Creating a scalable online educational infrastructure
- Upgrading its human capital
- Asset investment and divestment
Online tools and methods are changing the way students take classes and people gather information. Penn State needs a scalable online platform for its World Campus that ensures quality in both instruction and delivery:
- Technological improvements to improve teaching, scalability and quality
- Attracting key technology people to State College
- Academic centers outside Pennsylvania
The changes in higher education are demanding a different type of human capital. Penn State needs to invest in the people that are going to drive innovation, teaching and research in this new era:
- Leading scholars and students – from all over the world
- Dynamic, innovative, risk taking, technologically savvy teachers who can communicate with a global student body
- Less hierarchical working environment
Penn State needs to conduct a full review of its existing and proposed infrastructure. This review should rank all infrastructure/assets into three categories:
- Mission critical assets—invest
- Complimentary assets that assist or enhance mission critical ones—maintain
- Unnecessary or obsolete assets that are burdening our budget—divest
By addressing these key fiscal challenges in a direct manner, Penn State can turn these obstacles into opportunities. By capitalizing on these opportunities Penn State can become the world’s leading University.
27. Alice W. Pope ’79, ’83 MA, ’86 PhD Lib
Six great fiscal challenges facing the university are:
- Stagnant and declining support from Commonwealth appropriations.
- The challenge of maintaining the quality of education in an environment of increased costs for salaries, health care and retirement benefits, insurance, utilities, governmental mandates, information technology and library materials while at the same time reining in tuition.
- Maintaining buildings and physical plant in an era of aging facilities and growing deferred maintenance.
- Making the cost of an education affordable for the majority of students who need financial aid and deserve a Penn State education.
- Supporting the Commonwealth Campuses, which are so critical to the education, human development, and economic development of their communities while creating efficiencies during a time of changing demographics and decreased enrollments at some campuses.
- Finding funds for investment in faculty, facilities, and programs that will allow Penn State to continue to be the most student-centered research university in the nation.
The University can address these needs through continued advocacy with elected officials in Harrisburg, preparations for another successful capital fund raising campaign with need-based scholarships as a top priority, further efficiencies in budget planning and administration, a fresh look at enrollment management and Commonwealth Campus programs, continued development of the World Campus and hybrid approaches to educational delivery, and targeting new funds to programs of great priority based on careful long range planning and sound leadership.
28. Robert C. Jubelirer ’59 Lib, ’62 JD Law
The most pressing fiscal challenges are sharply rising tuition costs and lack of public support. Certainly Penn State cannot keep tuition down when the Commonwealth continues to either flat fund the university or even worse cuts its annual appropriation in the budget. But raising tuition year after year is not the answer. Penn State is the largest economic engine in the state! The Governor and the State Legislature must be reminded of that constantly and treat it in the budget accordingly. Raising endowments for scholarships is one way to help with affordability, but it must be accompanied by controlling costs. Here, the Board of Trustees (BoT) must understand that there is no magic money tree out there for them to pick dollars from. It seems every time there is a question raised, the first thing the BoT does is to hire a high-priced consultant. There may be times when this might be necessary, but I believe it has become too habitual. Has anyone done a study of the tens of millions of dollars that the BoT has authorized and arguably wasted just in the last several years? The BoT should commission a study on how comparable universities are charging much less tuition than Penn State does. Let’s learn from our peers.
29. Brian M. Rutter ’03 Bus
As Penn State drove to keep a minimal 2.76 percent aggregate tuition increase for 2013-14, the unfortunate backlash was expense reductions for planned budget increases to the amount of $35.9 million. PSU is doing an effective job in working hard to keep our tuition as minimal as possible with hopes of keeping the best and brightest coming to the university regardless of their financial status. The challenge is how to get back to the growth that the university had previously intended and planned for as a part of a long-term growth plan without penalizing the students in the form of above average tuition increases. The university, from top to bottom and across departments and disciplines, must work together to identify individual opportunities to obtain large private funding for individual scholarship funds and major capital improvements. This is noted best by Terry Pegula and his individual donation of over $88 million to create the Pegula Ice Arena. Here an individual reached out to PSU on his own to donate to PSU for a specific cause. The BOT must actively get behind the Development Team at PSU to push programs and donors such as that of the Visionary Giving Opportunities—“The Big Ideas”. Penn State is no different than that of any business in that creating more income will allow us to grow more comfortably than simply tightening our budgets. The both must be done but growth in private donations will help to avoid tuition increases or cuts in needed capital improvements.
30. Allen L. Soyster ’65 Eng
Penn State students pay the second-highest tuition among public institutions in the country. Is it little wonder that PSU graduates (New York Times, 2012) are the most indebted in the Big Ten? How is this explained? One factor, undoubtedly, is that Pennsylvania funds higher education at $3,875/student (45th lowest in the nation). But this fact does not relieve the Board of taking action toward a more affordable Penn State, especially since the national average is only $2,000 higher. What can be done without affecting our acknowledged high quality? Some universities are adopting a financial model called Resource Centered Management (RCM). The basic idea is to decentralize revenues and costs by individual colleges. For example, the College of Engineering collects its own tuition (and research revenues, gifts, etc.) and then pays its own salaries, “rents” its space, and pays appropriate fees for university services. With innovation as the driver, individual colleges are inherently motivated to increase revenues and eliminate waste. Such a model allows the individual colleges to optimize multi-year plans, sometimes withholding expenditures in one year in to be used in later years, all to the benefit of our students. (RCM was adopted at Northeastern, my employer, in 2010.) Implementation of an RCM model at Penn State would require a multi-year, major budgeting overhaul. My recommendation would be to charter a one-year feasibility study and benchmark other schools, public and private, which have taken this step. U.S. business/ industry cannot survive without continuing innovation; in the long run, neither can Penn State.
31. Robert Hooper ’79 H&HD
The fiscal challenges of Penn State are shared by the students and community under her wings. In my view, the next three years continue to present an oppressive burden to students in the form of a tuition structure that drives far too many outstanding minds to other institutions. From the World Campus to the student entering a branch campus location for a certificate, tuition and expenses are driving forces when selecting a college. Additionally, I am concerned that the ratio of tenured to adjunct faculty could be slipping in the wrong direction due to financial pressures. Lastly, corporate funding for research finds an ever-expanding number of foreign academic programs in which to invest their research dollars. Penn State must maintain a reputation of excellence and academic leadership which will draw back the corporate dollar. The state legislature holds the key to tuition cost containment. As a Board member, I would propose a “Legislative Summit for Penn State,” where we would gather trustees and critical stakeholders together in Harrisburg to meet with legislative leaders individually and visit committees of jurisdiction to fight for proper funding. Additionally, a formal lobby day for concerned alumni and friends of Penn State, to reach out to their local legislators and place local voter pressure on the legislature. The key to a bright future for Penn State is directly associated with an increase in state funding of the programs provided by the University. As a former registered lobbyist, I will make this a personal agenda item.
32. Art Greenwald ’76 Lib
While major cutbacks in state and federal education funding are expected to continue amid an unstable economy and lagging recovery, Penn State must adapt in the face of such fiscal realities, while still meeting its primary mission—to educate. Shrinking revenue from state and national sources makes it imperative that Penn State consider more efficient and effective cost-control measures along with creative ways of generating added income to cover its ever-mounting expenses. The biggest challenge Penn State faces over the next three years is how to keep revenues and expenditures in balance without reducing essential services. Tuition control and stabilization, student debt and affordability presents another colossal challenge fiscally, especially for those prospective and current students from middle to lower class families who can no longer afford the exorbitant admissions bill. Gone are the days when government assisted and made up the difference with grants. To address these complex issues, I WOULD NOT raise tuition, but lower it for income-pressed middle class Pennsylvania families. Accommodating the academically fit students must be our top priority. I would also revamp the student loan services, and offer financial aid to as many students as possible at lower interest rates. In striving for smarter, sounder fiscal policies, I advocate for trimming the fat through administrative cuts, (particularly low-value and redundant positions and services), slashing needless programs, increasing class sizes, a merit pay freeze on high-paid administrative personnel, creation of academic scholarships like those in athletics and increasing those programs through alumni giving programs and fundraising.