Penn State plans to slash $94M from budget, including deep cuts to Commonwealth Campuses

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STATE COLLEGE — Penn State University plans to slash $94 million from its budget starting in July 2025, changes it says are necessary for its long-term stability and success.

A significant portion of the budget cuts will affect the Commonwealth Campuses, which are slated to lose $54 million in funding, according to the university’s budget office.

Penn State’s Board of Trustees will vote on the budget plan this summer.

President Neeli Bendapudi’s administration is attempting to balance the university’s budget by 2025. Under her leadership, Penn State moved to a two-year budget model to provide more predictability and stability to its financial planning. Handling the university’s multimillion-dollar budget deficit has been an ongoing challenge for Bendapudi since she became president in May 2022.

“The need for change within our University is undeniable and must occur for Penn State to retain its status as a leading institution, to innovate, and to invest in greatness at scale in education and research,” Bendapudi said in the university’s announcement.

Penn State said its financial challenges stem from inflation, demographic changes, and increasing personnel costs, including an anticipated $30 million increase in health care expenses in 2025. The announcement also said that neither tuition rates, which Penn State’s Board of Trustees control, nor the state legislature’s support, have kept pace with inflation.

The announcement did not include information about or estimates of layoffs.

Here’s what to know about Penn State’s plans.

Cuts vary for University Park, administrative offices

The university’s release said that, in total, the colleges at University Park will have their budgets cut by $11 million, or 1.4%, between fiscal years 2025 and 2026.

For fiscal year 2026, Penn State’s colleges of business, communications, information technology, and science will receive a funding boost. The budget for every other college will be cut, including 15% cuts to each of its law schools.

Decreases to administrative or support unit offices vary, with the largest total dollar cuts expected for Penn State’s facilities department ($6 million, or a 4.6% cut), information technology office ($4.3 million, or a 4.6% cut), and online World Campus ($3.7 million, or a 5% cut).

Sara Thorndike, senior vice president for finance and business, said in the university’s news release that budget cuts will continue past fiscal year 2026.

The university is not cutting the budget for its president, strategic communications office, enrollment management unit, government relations department, or general counsel.

Deepest cuts, likely changes at Commonwealth Campuses

Penn State’s 20 Commonwealth Campuses, which are spread across the state, face the biggest changes under the proposed plan.

Penn State expects to cut $54 million from the campus system between fiscal years 2025 and 2026, which could amount to a 14.1% reduction in funding, according to the budget office.

Margo DelliCarpini, vice president for Commonwealth Campuses and executive chancellor, said in the news release that changes will differ across campuses. She also said that Penn State might partner with other community colleges and rent out its facilities.

Colleges and universities across Pennsylvania have struggled financially in recent years. In 2022, the state-run Pennsylvania State System of Higher Education merged six of its 14 universities as part of a systemwide restructure.

Bendapudi has said repeatedly that she does not plan to close any Commonwealth Campuses.

External group conducting ‘program review’

Penn State is hiring a consultant to complete an “academic program and portfolio review” by this summer, according to the announcement.

The project will include a review of all programs, majors, and minors, as well as enrollment data and workforce needs. Changes related to the consultant’s evaluation will be implemented in the 2025-26 academic year.

“At the end of the APPR process, we want to ensure that Penn State offers the right mix of residential, online and blended programs to best meet our mission, addressing the demands of our students and the needs of our society, to the greatest extent possible — this includes having the right programs, accessible where the demand exists,” Justin Schwartz, executive vice president and provost, said in Penn State’s announcement.

Enrollment changes across campuses

The university administration plans to add more than 300 additional first-year students to its University Park campus this fall, for a total of 9,500 students. Penn State then hopes to increase the first-year class at University Park to 10,000 students but did not provide a specific date for this goal.

Matt Melvin, vice president for enrollment management, said in the news release that increased enrollment at the University Park campus will require investments in infrastructure and employees.

Enrollment at Commonwealth Campuses has dropped 20% since 2016 and nearly 30% since 2010, according to the university’s announcement. The statement said that some Commonwealth Campuses are expected to see slight enrollment increases in the next year, but others will continue to experience “significant declines.”

According to an email sent to Penn State employees and shared with Spotlight PA, Bendapudi committed to town halls and visits with various departments to discuss the budget changes.

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