PASSHE board OKs 2011-12 request
HARRISBURG - The board of governors of the Pennsylvania State System of Higher Education has approved a 2011-12 state appropriation request of $482.6 million.
The request seeks the restoration of soon-to-expire federal stimulus funding with state dollars and would place funding for the system at the level it was four years ago.
"This budget proposal is below our projections of costs for next year, but reflects the reality of significant state budget deficits for the foreseeable future," said John Cavanaugh, PASSHE chancellor. "We are hopeful that the commonwealth's fiscal picture improves enough over the next few months that we can receive an increase in our funding."
"The state system has been aggressive in implementing a number of significant cost-saving efforts in the last year to help to address our budgetary and other challenges," Cavanaugh continued. "These efforts include a voluntary retirement incentive program that was offered earlier this year and a systemwide academic program review."
More than 250 eligible non-faculty PASSHE employees accepted the retirement incentive, which is expected to save the state system between $5 million and $8 million annually starting next year. The program review, which also was completed earlier this year, led to the elimination of 15 programs in which no students were enrolled and the placement of another 56 low-enrolled programs in moratorium.
A program that is placed in moratorium does not accept any new students, but continues in place until those in the program have graduated.
In addition to the most recent cost-saving efforts, PASSHE has employed a host of other initiatives in recent years, including the use of strategic sourcing and joint purchasing of goods and services, the introduction of a variety of energy conservation programs and the development of cooperative programs and services across universities. Combined these efforts have resulted in a decrease of more than $200 million in operating costs across the system since 2001.
A recent review of university operations by the Pappas Group, a nationally recognized higher education consulting company, concluded that any additional cost-cutting efforts would have only "modest" results "primarily due to PASSHE's diligence in recent years to significantly reduce and/or minimize" its operating costs.
While all of the initiatives already undertaken have helped to ensure PASSHE universities can continue to offer the programs students want and need, they still are not enough to match expected budget increases "over which we have no control," said Kenneth Jarin, board of governors chairman.
"Even if our state funding is restored, our universities are facing a very difficult road ahead," Jarin said. "Many of our universities already have had to make significant budget cuts over the last several years. They have had to make some extremely difficult decisions, and more likely lie ahead."
The proposed budget includes expected near double-digit increases in both the cost of employee benefits and utilities in 2011-12. PASSHE's share of healthcare costs for its employees is anticipated to increase by 10 percent next year. Four PASSHE universities saw their utility rates increase significantly at the beginning of this year with the expiration of electric generation rate caps. The remaining 10 universities will experience the same thing in January 2011.
The proposed budget does not include any provision for salary increases for PASSHE employees. The state system currently is negotiating with all of its labor unions — which represent nearly 90 percent of PASSHE employees — whose contracts will expire June 30, 2011.