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Penn State’s board of trustees approves $8.6B budget for 2022-2023 fiscal year

Penn State’s full board of trustees formally approved the 2022-2023 operating budget Friday, setting it at $8.6 billion after delaying the vote about two months to give university leadership more time to revise it.

The $8.6 billion operating expense budget is an increase of about $900 million from the previous year, with a majority of that increase ($477.3 million) stemming from higher operating costs involving Penn State Health. Other increases went toward employee salaries, faculty benefits, student aid, building maintenance, utility costs, etc.

Although Penn State has cut costs in a number of ways — with a “strategic hiring freeze” and a 3% rescission, or across-the-board cut — rising costs and surging inflation have helped to reduce gains from additional revenue. Still, with this fiscal year’s budget, the university’s general funds deficit is projected to shrink about 25% to $149 million, which will be funded by reserves.

Penn State President Neeli Bendapudi previously said she expected to balance the university budget by the summer of 2025.

“This new operating budget makes strategic expense reductions that are necessary to shrink our operating deficit while we continue to provide our students with an affordable, high-quality education,” Bendapudi said Thursday in a university news release. “Reducing costs, finding efficiencies and identifying new revenues are all critical as we work to achieve a balanced budget.”

The board’s approval comes after approving an interim budget in May and after OK’ing a tuition hike/general salary increase in July. Normally, the board would have voted on the full operating budget in July, when the fiscal year begins, but university leadership requested more time to revise unit budgets they said have been impacted by “inflation, flat state funding and ongoing pandemic-related enrollment and revenue pressures.”

The full board voted overwhelmingly Friday to approve the budget, with just one dissenting vote, from alumni-elected trustee Barry Fenchak.

The full operating budget can be found below: