IMPORTANT: It's a Serious Matter of Life

Pennsylvania higher ed bets on funding formula to force more cash from the legislature

The Pennsylvania State System of Higher Education this week approved a new funding formula for its 14 universities, pressuring the General Assembly to grant a historic funding request made by the system.

If that request isn’t approved, university leaders say the system can’t function.

The funding formula would allocate 75% of PASSHE’s funds based on enrollment, with the other 25% dedicated to core operations.

“The dollars are following the student in significant, significant measure,” Indiana University of Pennsylvania President Michael Driscoll said when explaining the formula at PASSHE’s June Board of Governors meeting.

Enrollment-based funding is a common way for states to divvy up dollars, but the PASSHE formula includes an added twist of brinkmanship.

“At the $477.5 million appropriation from the commonwealth – that’s the current level – it doesn’t work,” Driscoll said. “The formula works fine, but the sustainability of the system – it’s just impossible to achieve that.”

In the presentation for the new allocation formula, it was noted that current funding could not sustain 10 universities and would place other universities’ sustainability “at serious risk.”

The board unanimously approved the formula.

"The new formula and our significant funding request are separate issues," said Kevin Hensil, spokesman for PASSHE. "PASSHE has been preparing to update its funding formula for about two years so that it is primarily based on enrollment. That formula update occurred regardless of whether the System receives additional state support."

However, even with the proposed $75 million increase PASSHE wants, the system would still have serious issues.

“There is the real possibility that each of the universities can achieve that medium-term financial sustainability, as long as we continue to aggressively manage our costs-to-enrollment size and our revenue, Driscoll said.

If those costs aren’t controlled, the funding increase may not solve PASSHE’s financial problems.

Driscoll also mentioned the importance of getting an additional $200 million for student aid and one-time funding from the American Rescue Plan money.

“Life isn’t easy, but at least it’s possible,” he said.

The funding formula was well-received.

“This is an extremely thoughtful, well-vetted, well-discussed, and well-revised action that’s coming before the board today,” PASSHE Board of Governors Chairwoman Cindy Shapira said.

But the increase isn’t a done deal.

“Up until this point, I’ve been pretty confident that we were going to, in the legislature ... be able to meet the governor’s request,” said Rep. Tim Briggs, D-King of Prussia. “But as we get closer to the end of June, I am very concerned that that’s not going to come through.”

Briggs asked for “continued advocacy” for the funding request.

PASSHE’s push for extra funding has been based on their reform efforts. The system consolidated six universities into two to be more efficient, as The Center Square has previously reported. Yet the system has struggled to keep up student numbers. Enrollments have fallen by 22% since 2010, and poor financial decisions in the past have created present problems.

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