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Penn States Budget Situation

Earlier this week, Penn State president Neeli Bendapudi shared her vision for the future of the university.

In a new letter to faculty and staff, she’s also releasing more details about the university’s budget situation, saying that Penn State, in recent years, has spent more money than it has brought in.

“We need to hold ourselves accountable. Are we going to transform our internal operations? Many of the systems in higher education were set up for yesterday, not for today and not for tomorrow.”

The university’s internal operations now also under an extensive budget review.

In the latest update to faculty and staff, Bendapudi confirmed a $140 million deficit in the university’s education and general funds budget.

According to Bendapudi, the deficit is due to various factors, including inflation, recent tuition freezes, lower enrollment numbers, and the pandemic costing Penn State more than $400 million.

Bendapudi says the university last year had $350 million in reserve funding and was using $100 million per year from that funding, which means without changes to the budget, the reserve funding to cover basic expenses at Penn State would be gone in three years.

What’s ahead for the future as a new budget model is adopted?

Bendapudi says some departments may have to reduce employee numbers, evaluate or delay program launches, or defer some purchase or improvements.

She stresses “while the overall institution is not in a financial crisis, I do understand these changes will have a significant impact for some units.”

Bendapudi also points out that while Penn State has an $8.4 billion operating budget, almost half of that amount belongs to Penn State health.

Penn State trustees have challenged Bendapudi and university administrators to balance the budget by July of 2025.

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