Governor Corbett's spring break surprise

It's spring break at PSU, so things have been pretty quiet here in Happy Valley.  At least they were until Tuesday, when Tom Corbett released his first budget as governor of Pennsylvania.  Governor Corbett ran on a "no tax increase" pledge, and since the Commonwealth was facing a roughly $4 billion budget deficit, and Corbett was not seen as a friend of public higher education, everyone expected that this first budget would likely not be very favorable to Penn State.  Discussions I had had with senior leaders of the university pointed to an absolute worst-case scenario of perhaps a 25 percent cut in Penn State's appropriation.

So nobody was prepared for the 52 percent, or $182 million, cut in Penn State's appropriation contained in the governor's FY 2012 budget.  Penn State was not singled out; overall, appropriations to Pennsylvania's state-related (Penn State, Pitt, Temple, and Lincoln) and state-owned (Pennsylvania State System of Higher Education) institutions were cut by 50 percent, or $660 million.  This is most likely the largest proportional cut in appropriations to higher education in the history of any single state, though the $660 million is dwarfed by Governor Jerry Brown's budget for next year, which cut $1.4 billion in total from the appropriations to the U. of California, California State U. system, and the California Community Colleges.

Penn State's response was swift and critical.  Al Horvath, Penn State's chief financial officer, said, "A reduction of this magnitude would necessitate massive budget cuts, layoffs and tuition increases, with a devastating effect on many students, employees and their families."  If the governor convinces the legislature to go along with such a large cut, Penn State will likely face some of the draconian responses other public systems have implemented during the current recession, including larger-than-normal tuition increases, layoffs, and furloughs.  President Graham Spanier, in a press conference the next day, even admitted that the possibility of closing one or more of the university's 24 campuses may be on the table, a measure that had not been considered in recent memory.

In the press conference, Spanier made the point that Penn State and the other public universities in the state were not responsible for the budget deficit the Commonwealth faced.  He showed the chart at the top of this post (you can click it for a larger version), which shows that the appropriations to the university have been largely flat over the last decade.  He also showed the chart on the right, which shows that while overall spending in the Commonwealth grew approximately 40 percent over the last decade, appropriations to the four state-related universities increased by only 5 percent (through the current year).

It is still unknown whether the legislature will go along with cuts of this magnitude.  Even though Republicans (who control both houses of the legislature) will want to support the new governor, they will face intense lobbying to restore some of the cuts.  State Senator Jake Corman, who represents the local district and is chair of the Senate Appropriations Committee, said, “It will be important for all institutions ... to come in and tell us what the ramifications of such cuts would be," a position that may be signalling an open door to restoring some funding for the universities.

I've been serving for the last year on a university-wide committee, chaired by Provost Rod Erickson, that has been charged with identifying ways of cutting the university's budget by $10 million per year over the next few years.  I can attest to the challenge of the effort, as this committee has been reviewing data on every single academic program and administrative unit in the university.  A number of programs and departments have already been slated for closure or merger, including some in the College of Education.  Even with these moves, however, finding $10 million of savings has been difficult.  As I said in an article this week in The Chronicle of Higher Education, the $10 million now "looks like a rounding error after the governor's announcement."