Pa. Budget Keeps Penn State General Support Appropriation Flat; New Funding Model to Start in 2025-26

Pennsylvania's 2024-25 budget passed by the General Assembly and signed by Gov. Josh Shapiro on Thursday night includes no increase in Penn State's general support funding for the fifth consecutive year.

The budget's higher education package does, however, set the table for a new performance-based funding model that Penn State officials are hopeful will boost the university's lowest-in-Pennsylvania per-student funding. A bill supported by the university established the Performance-based Funding Council, which will be charged with developing recommendations for a new process for distributing funds to Penn State and fellow state-related universities Pitt and Temple using performance-based metrics.

For 2024-24, Penn State once again will receive a $242.1 million general support appropriation, funds it uses to provide lower in-state tuition rates for its approximately 42,000  Pennsylvania resident students. Yearly tuition for in-state undergraduates is about $15,000 less than for out-of-state students.

The last general support appropriation increase was 2% in 2019-20. In his February budget address, Shapiro had proposed a 5% increase in 2024-25 for each of the four state-related universities: Penn State, Lincoln, Pitt and Temple.

Penn State, which is working to balance its budget by next year, asked in its annual appropriation request last fall for a $126 million increase, which university officials said would bring it on par with the state funding per in-state student of Pennsylvania's other public universities. At $5,757 per in-state undergraduate last year, Penn State trailed other Pennsylvania universities by between $3,000 and $3,700 per in-state student.

“The funding we receive from the commonwealth is critical to our public mission to serve Pennsylvania students at our campuses across Pennsylvania,” Penn State President Neeli Bendapudi said in a statement. “Our students and families rely on this funding and the significant cost savings it provides through our in-state tuition rate. Thousands more Pennsylvanians benefit from the many programs and services offered through Penn State Extension, Penn State Health and Invent Penn State that are made possible because of state appropriations."

In addition to the general support appropriation, Penn State will receive about $109.4 million in other appropriations. While most remain unchanged from last fiscal year, one area will see an increase in state support.

The Pennsylvania College of Technology in Williamsport,  special-mission affiliate of the university focused on applied technology education, will receive a 13%, or $4 million increase, bring its state funding to $34 million.

Other state appropriations for Penn State include:

• $57.7 million for agricultural extension and research, representing level funding from last year. Penn State Extension and research by the university's College of Agricultural Sciences do not use tuition dollars, and Penn State wrote in a news release appropriation increases are needed to keep pace with rising costs for programs that benefit citizens throughout the commonwealth.

• $15.3 million for Penn State Health and the College of Medicine, also unchanged from 2023-24. The funding is used to provide medical assistance for low-income residents and for medical student training programs.

• $2.35 million for Invent Penn State, the university's entrepreneurship and economic development initiative. Pennsylvania has provided a similar level of support the last two years for the program, and the funding will be used "to strengthen and grow Invent Penn State’s LaunchBox and Innovation Network, and to further expand access to the Pennsylvania Technical Assistance Program for small to medium enterprises, with an emphasis on the manufacturing sector," according to the university.

Performance-Based Funding Model

Beginning in 2025-26, the commonwealth plans to use a performance-based funding model for Penn State, Pitt and Temple. The council established in this year's package of higher education bills will recommend metrics and a process that will determine how state funds are provided to the three schools, instead of the two-thirds majority vote of the General Assembly that is currently required and which has often resulted in political dogfights.

The bill directs the council to consider metrics such as retention and graduation rates, enrolled Pennsylvania students who receive Pell Grants, post-graduation employment rates and salaries and students who receive degrees in "high priority" occupations, among others. The universities will receive a fixed amount for ongoing operations, with funding added as the metrics are achieved.

Penn State and Bendapudi have advocated for a performance-based funding model, which is used in many other states to determine higher education allocations and which has long been considered in Pennsylvania before gaining traction this year. The model was part of Shapiro's budget proposal for 2024-25.

“Performance-based funding will allow the state to work in concert with universities on shared goals for workforce and economic development, college access and affordability and successful student outcomes," Bendapudi said. "I am eager to partner with the state and fellow university leaders to develop a performance-based funding model that rewards institutions for achieving outcomes-based metrics that align with the needs and priorities of the state, our students and our universities.”

The council will include five voting members from state government: the secretary of education, a senator appointed by the president pro tempore, a senator appointed by the minority leader, a member of the House appointed by the speaker and a member of the House appointed by the minority leader. Penn State, Pitt and Temple will each have a nonvoting member.

Public hearings will be held at each of the universities, and the council will consult with agencies and experts.

“This is a transformative opportunity for the state and universities to work together to better support Pennsylvania students and employers,” Mike Stefan, Penn State vice president for Government and Community Relations, said in a statement. “Penn State is already a valued part of so many Pennsylvania communities, and this much-needed update to the way we fund higher education only works to expand our impact and historic land-grant mission of teaching, research and service to the commonwealth.”

The council will have until April 30, 2025 to submit its recommendations and draft legislation for implementing the funding to the governor, the state Department of Education and the General Assembly, as well as a newly created State Board of Higher Education.

The new state board will include government officials, university representatives (including one from Penn State), students, business leaders and others. It will responsible for developing a higher education strategic plan with long-term goals, strategies for achieving them and assessing the higher education needs of Pennsylvania.

INCREASED SCHOLARSHIPS

Pennsylvania's 2024-25 budget also creates a new scholarship program and expands another.

The Grow Pennsylvania Merit Scholarship Program, which was proposed by Republican lawmakers , will provide up to $5,000 per year to students who enroll and remain in  approved courses of study such as agriculture, education, business, nursing and trades. Recipients will then be required to begin work in an "in-demand" occupation in Pennsylvania within one year of earning a degree, and must continue to work within the commonwealth one year for every year they received the grant.

The grants, which will be administered through PHEAA, will be offered starting this academic year, are open only to Pennsylvania residents and are available on a first-come, first-served basis.

Pennsylvania's Ready to Succeed Scholarship Program also will see expanded eligibility. Grade-point average requirements have been lowered 3.25 to 2.5 on a 4.0 scale and the program’s annual household income limit increases from $126,000 to $175,000.

Eligible full-time students can receive up to $2,500 and part-time students can received up to $1,250, with a minimum award of $500.

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