A loss of state funding leads to hiring freeze on campus

Pennsylvania rescinds $1.6 million from the university’s budget due to the economic crisis hurting the country.

The university’s hiring freeze will not affect student jobs, and tuition is not expected to be raised for the spring semester, despite increased budgetary pressure from the state that has prompted the university to make across-the-board cuts, Temple financial officials said.

The university recently announced a sharp decline in state appropriations funding due to a historic state revenue shortfall that has forced it to increase its budget reserve to $11.63 million, or about 1.5 percent of its $775 million annual budget.

A budget reduction plan was originally drafted two weeks ago after the state notified Temple that 4.25 percent of its state appropriation would be put on reserve. Since then, the state’s revenue shortfall has increased from $200 million to $300 million, forcing Temple to prepare for a larger cut.

Anthony Wagner, Temple’s senior vice president and chief financial officer, announced the immediate hiring freeze and the freeze on all out-of-state travel in a brief address to a solemn group at Feinstein Lounge at last Wednesday’s Board of Trustees meeting in Sullivan Hall.

Other measures in the original plan remain. The university will annul the 2 percent inflationary supplement of $1.6 million that was given to all schools and colleges for non-compensation costs, like office supplies and books. In addition, university officers will be given target amounts to reduce their budgets.

Student jobs went untouched because, unlike salary and benefits costs, they are “not a real significant part of the compensation budget,” said Ken Kaiser, Temple associate vice president and chief financial officer.

“We recognize that these jobs are important for students to earn some extra money while at the same time helping the university,” Kaiser said. “In some areas, the student workers are really critical, like in recreational services.”

Though Kaiser said “anything’s possible,” he also said he doubts spring semester tuition rates would be tweaked in order to raise revenue for the university.

“That’s not been talked about or considered,” Kaiser said, adding that in his years as a Temple student and employee dating back to 1985, he cannot remember a mid-academic year tuition raise.
With the uncertain economic climate, more cuts could be on the horizon for Temple, based on how the state’s economy performs leading up to Gov. Ed Rendell’s preliminary 2009-2010 budget draft in February.

At the board meeting, Wagner said the fallout from the financial crisis and the looming recession “could result in a loss of $1 billion” for the state.

For now, the university is still receiving regularly-scheduled payments from the state. But state department heads are placing money on reserve in case there is a budget deficit in five months.

By then, the university should definitively know how much of the state appropriation is cut.

Barring a dramatic economic turnaround, the hiring freeze and other measures are expected to last the rest of the academic year, Kaiser said. Other state-related universities, including Penn State, Pittsburgh and Lincoln have taken similar steps.

“When the governor proposes his budget in February, he’ll likely be conservative,” Wagner said at the board meeting.

Should Pennsylvania go through with the 4.25 percent cut, the university’s state appropriation will have decreased 2.8 percent from last year.

The university is anticipating a 3 percent decrease in funding and has modified its plan accordingly.
“This accentuates a 40-year trend on waning state appropriations and dependence on tuition,” Wagner said at the meeting.

Since 1972, the percentages have flipped: the university is relying twice as much on tuition and state appropriations have declined more than twofold.

Wagner closed his address saying that the university will continue to try and keep tuition down despite these obstacles.

In response to dwindling state funding, the university has encouraged more entrepreneurship among its schools and colleges as a way to gain new sources of revenue. This has made the school operate more like a private institution.

Kaiser said the university has given deans more freedom to initiate new programs and auxiliaries and to expand research.

“Putting them in control of their own destiny, so to speak,” he said.

Unlike a private university, Temple’s reliance on state funding insulates it to extreme cases of market volatility like the recent financial crisis, Kaiser said.

“The more schools depend on private investment, the more they’ll be at-risk,” Kaiser said. “The good news is that we’re a little insulated, but the bad news is that we’re insulated because our endowment isn’t as large.”

Nick Pipitone can be reached at nicholas.pipitone@temple.edu.

1 Comment

  1. Student jobs on campus are not always easy to find. Students should know that there are some other options when looking for jobs. I was a Vector employee for 2 years while in college. I is a great company to work for, especially because I was able to make my own schedule.

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