COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES APPROPRIATIONS COMMITTEE HEARING BUDGET HEARING STATE CAPITOL MAJORITY CAUCUS ROOM HARRISBURG, PENNSYLVANIA WEDNESDAY, FEBRUARY 22, 2006, 10:40 A.M. VOLUME II OF V PRESENTATION BY PENN STATE UNIVERSITY BEFORE: HONORABLE BRETT FEESE, CHAIRMAN HONORABLE DWIGHT EVANS, CHAIRMAN HONORABLE GIBSON ARMSTRONG HONORABLE MATTHEW BAKER HONORABLE STEPHEN BARRAR HONORABLE STEVEN CAPPELLI HONORABLE GENE DiGIROLAMO HONORABLE PATRICK FLEAGLE HONORABLE DAN FRANKEL HONORABLE HAROLD JAMES HONORABLE JOHN MAHER HONORABLE KATHY MANDERINO HONORABLE EUGENE McGILL HONORABLE FRED McILHATTAN HONORABLE PHYLLIS MUNDY HONORABLE SCOTT PETRI HONORABLE DOUGLAS REICHLEY HONORABLE SAMUEL ROHRER HONORABLE CURT SCHRODER HONORABLE JOSH SHAPIRO HONORABLE JERRY STERN HONORABLE MIKE STURLA HONORABLE THOMAS TANGRETTI 2 1 BEFORE: (cont'd.) HONORABLE KATIE TRUE 2 HONORABLE GREG VITALI HONORABLE DON WALKO 3 HONORABLE JAKE WHEATLEY HONORABLE PETER ZUG 4 ALSO PRESENT: 5 MIRIAM FOX EDWARD NOLAN 6 7 JEAN M. DAVIS, REPORTER NOTARY PUBLIC 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 I N D E X 2 WITNESS 3 NAME PAGE 4 PRESIDENT GRAHAM SPANIER 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 1 CHAIRMAN FEESE: I would like to reconvene 2 this hearing of the House Appropriations Committee. 3 This is the time to hear testimony regarding Penn 4 State University as it relates to the '06-'07 budget. 5 Dr. Spanier, welcome. Thank you for 6 attending today. 7 Will the stenographer please swear in 8 Dr. Spanier. 9 (Witness sworn in.) 10 CHAIRMAN FEESE: Please proceed. 11 PRESIDENT SPANIER: Good morning. This marks 12 my 11th appearance before you as president of Penn 13 State. The budget that Penn State presents to you 14 this year is unique among those that have come before 15 it in its effort to partner with the Commonwealth for 16 the benefit of future generations of students. It 17 reflects a much-needed commitment to access, 18 opportunity, and economic growth for Pennsylvania. 19 As you probably know, state budget 20 difficulties earlier in this decade have left Penn 21 State with an appropriation that is less than what we 22 received in 2000. Over the five-year period that our 23 appropriation was declining, many of our costs were 24 skyrocketing. We saw annual double-digit increases 25 for health coverage for our employees, insurance, 5 1 library journals, insurance and security. 2 To offset the loss of state support and cover 3 the increasing costs, our only option has been to 4 raise tuition. Sadly, this has dramatically shifted 5 the burden for the cost of education from state 6 support to students and their families. Increasing 7 the financial pressure on Pennsylvania's families 8 should be a genuine concern for all of us. 9 To help ease the burden, Penn State proposed 10 a tuition freeze at 20 of our campuses if the state 11 would provide a 9.5 percent increase in funding to the 12 university. This level of increase is certainly not 13 without precedent, as the community colleges received 14 a 10 percent boost just last year. 15 The Governor's proposed 3.3 percent increase 16 for Penn State is more than we have seen in recent 17 years; and for that recognition and support, we are 18 grateful. But it will barely return us to our funding 19 level of five years ago. And in the face of steeply 20 rising costs, such an appropriation falls far short of 21 what is needed to hold our tuition at the current 22 rate. 23 The funding a state provides to its public 24 institutions not only sends a definitive message about 25 its priorities, it also provides a hint of what the 6 1 state's future may hold. For Pennsylvania, its 2 investment in public higher education has failed to 3 keep pace at exactly the wrong time, a time when the 4 key to economic prosperity is a well-educated 5 workforce and research discoveries that will produce 6 technological innovation. 7 Penn State educates more students than any 8 other university in Pennsylvania and touches half of 9 all households in the Commonwealth with its outreach 10 activities. Its $638 million research program helps 11 create new products, businesses, and jobs. 12 Yet the proposed state budget inexplicably 13 provides no increase for the outreach provided by our 14 extension and agricultural research programs and 15 allocates a smaller percentage increase for Penn State 16 than any state-owned or state-related university. 17 Since its beginning, American public higher 18 education has been based on an important social 19 compact. Our public institutions contribute to 20 society through education, research, and public 21 service. In exchange, the public invests in our 22 colleges and universities. 23 Penn State has worked diligently to be good 24 stewards of the funds that you provide us. Our cost 25 of educating students is among the lowest of any peer 7 1 institution in the nation. And at every level of the 2 university, we have looked for ways to reduce spending 3 even further, without damaging the integrity of our 4 academic programs. Over the past decade, Penn State 5 has aggressively trimmed budgets and closed programs, 6 producing nearly $139 million in budget reallocations. 7 But we can't cut our way to success. 8 In higher education, we recognize that our 9 needs are only one component of the state's budget, 10 and there are certainly compelling, competing needs. 11 However, an additional investment in our public 12 universities will yield tremendous benefits for 13 Pennsylvania residents. I ask for your support in 14 that effort. 15 CHAIRMAN FEESE: Thank you, Dr. Spanier, for 16 your testimony. 17 The Chair recognizes the gentleman from 18 Franklin County, Representative Fleagle. 19 REPRESENTATIVE FLEAGLE: Thank you, 20 Mr. Chairman. 21 Good morning, President Spanier. 22 PRESIDENT SPANIER: Good morning. 23 REPRESENTATIVE FLEAGLE: For many of us in -- 24 I don't want to say remote areas of the state because 25 State College is about as remote as you can get -- 8 1 certain areas of the state like Franklin County, we 2 don't have access to a community college. And many 3 times access to a community college is access to an 4 affordable education, at least at the 5 freshman/sophomore level. 6 Particularly in my district, there are other 7 options. And one of them is to go to Hagerstown, 8 Maryland, to a community college where rates are 9 rather low. And the other is what we consider our 10 community college, which is Penn State Mont Alto. 11 One of the ways that I've tried to work with 12 them is to certainly allow them to work with maximum 13 efficiency with maximum class size. To do that, 14 though -- and there's student capacity there that's 15 not being raised. What we like to do -- and I talked 16 to you about this last year and that's why I'm 17 bringing it up this year. I'm still on that issue -- 18 is to have a policy, which I believe the SSHEA system 19 has in some of its institutions, of allowing these 20 state tuitions within, say, a 30-mile radius of the 21 Commonwealth campus. 22 And I know some people say, well, you don't 23 want to give out-of-state students in-state tuition. 24 Well, in effect, that would supplement the capacity 25 that we have now or fill the capacity we have now and 9 1 actually lower costs for our in-state students, 2 because now those out-of-state students are just 3 priced out of the market by Penn State. 4 I don't know if you remember last year I 5 asked you folks to investigate that. That's very 6 important to our Commonwealth campus at Penn State 7 Mont Alto. Has that policy been looked at and are you 8 willing to bring that to fruition? 9 PRESIDENT SPANIER: Yes, we are talking about 10 that. Let me tell you where we stand. Just a moment 11 of history. Long before there was such a thing as 12 community colleges, as the need for higher education 13 grew around Pennsylvania, Penn State University, which 14 has also been known as the Pennsylvania State 15 University and, before that, Pennsylvania State 16 College, assumed a role that in other states at an 17 earlier point in time met the needs of community 18 colleges. 19 So our system of Commonwealth campuses at 20 Penn State developed because Pennsylvania did not have 21 a community college system and our extension centers 22 and then campuses came to serve that need throughout 23 Pennsylvania. We are still very committed to serving 24 those needs in all regions of the state. And with our 25 system of 24 campuses, it's our intent to have an 10 1 educational opportunity within reach for all 2 Pennsylvania residents. 3 Following the discussion in this room last 4 year, we put this topic on our agenda at the 5 university. And we have, in fact, launched a study, 6 which we are well into, of the benefits, the risks, 7 the costs associated with looking at the surrounding 8 geographical area. 9 Of course, it gets a little complicated 10 because the area surrounding some of our campuses puts 11 us in a county or so that reaches beyond the state 12 border.