Guest Column By Scott Paterno of RockTheCapital
The loud wailing you heard Tuesday coming from the old Mitchell Mansion, one of the nicest pieces of property in State College, was the sound of Penn State University President Graham Spanier losing his mind over the proposed state budget.
In case you missed it, the governor’s proposed budget takes a battle-ax to higher education funding — a 50 percent cut across the board for the 14 State System schools and Pitt, Temple, Lincoln and Penn State.
It adds up to $554.4 million in cuts.
Now, let me acknowledge the obvious: I have a family history with dear old state. I grew up a mere three blocks from campus, all of my family went there, and I hold two degrees from the original land-grant university. My parents have donated generously to the school and their name adorns the library. Yet against that backdrop, I still feel compelled to say the following:
Not only should the state cut $153 million from Penn State’s general appropriation — it should cut all $304 million. Every dime.
And I have a good policy reason: I want to shift those funds back to the State System schools — the 14 schools that serve the broadest swath of the commonwealth’s children.
In a perfect world no cuts would be necessary.
We live in tough times, and that means we have to make tough choices. Penn State, with its proven ability to raise private funds, is plainly in a better position to absorb these cuts than the other players at the education table. And while an “across-the-board 50 percent cut” looks like equal pain to all in higher education, it is not.
Putting Penn State’s cuts in perspective shows they are hardly “catastrophic” as claimed by President Spanier. On the contrary — the proposed cut in state funding represents a modest — but significant — 3.8 percent cut in Penn State’s overall budget of roughly $4 billion (athletics is self-funded, by the way).
By comparison, the proposed $232.6 million cut to the State System’s 14 schools represents 11 percent of its roughly $2 billion annual budget. In that light, the cuts proposed disproportionately impact the State System when compared with Penn State — some might even say catastrophically so.
(You can read a more detailed comparison at www.rockthecapital.com, from which this is adapted). So when you ask me “why cut Penn State more than others?” the question should really be “why are we asking so much more from the State System?”
After all, Penn State is a premium product and can afford to increase its price tag more easily than the State System.
That’s why I make the case that all of Penn State’s state funding should be cut if there are cuts to be made in higher education.
Surely Penn State can find a mix of cost savings, private giving and resource reallocation to survive such a hit — especially when you consider that it has a top 25 business department full of smart people to help.
More to the point, the only fair way to approach this is to view the cuts in terms of the institutions’ total budgets.
If we cut Penn State by $304 million and the State System by only $80 million, the result is more balanced in light of the total picture.
And there are many other reasons to start weaning Penn State off the public’s trough.
It is a huge corporation, it has a president making more than, well THE president, and it has gone from being an affordable option for Pennsylvania kids to the most expensive state school for in-state kids anywhere in the United States.
It has thrived — and expanded — in that time.
It also has had several high-profile failures (remember the Hershey/Geisinger merger? That cost millions of dollars), has built on an aggressive scale and has raised billions of dollars in private funds.
In many ways, it is only a state school in its origins; it is now so large and state funding is so small a part of the budget that it more closely resembles Penn than Bloomsburg — something that 30 years ago was not the case.
In that light, and understanding that the mission of state taxpayer higher education dollars are to educate the children of the commonwealth, it is only logical that Penn State take the biggest cuts in lean times as it has the ability to take them more easily.
President Spanier and the administration should look at it this way — we ask the richest Americans to pay the most taxes, largely because they can take the hit.
Likewise, Penn State will thrive even without $304 million of our dollars.
I don’t like the cuts, and I wish they didn’t have to be. But as a matter of policy, once we determine the cuts have to be made shouldn’t they be allocated in light of the total financial picture of these institutions?
After all, Penn State is as strong as it is because we built it — now we are asking it to move out of the house and live on its own, secure on the foundation we gave it.
SCOTT PATERNO is a consultant who lives in Derry Twp. and a contributor to rockthecapital.com.
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