Temple’s annual capital allocation will be reduced in the next fiscal year.
After nearly a year of budget battles in Harrisburg, Temple is geared to take another hit in its funding from the state.
Temple was notified on Nov. 2, in a letter from Pennsylvania Secretary of the Office of the Budget Charles B. Zogby that its capital funding allocation will be cut in half, from $40 million to $20 million, for the 2012-13 fiscal year. Zogby cited a struggling economy as a main reason for the cuts in his letter.
“In the current economic and budgetary climate, such a capital funding level is unsustainable to the Commonwealth,” Zogby said in the letter.
Colin Saltry, Temple Student Government student body president, said that the decreased allocation is not good for the university and is a major setback for Temple.
“I think it’s a blow, especially to our development plans and keeping the university running well,” Saltry said.
Capital funding, which differs from the university’s operating funding allocations, largely subsidizes construction projects at Temple, including those in the 20/20 plan.
Margaret Carney, university architect, said that construction projects that are now underway are financed and won’t necessarily be impacted by the cuts. She added that future projects will have to include more financing from borrowing and donations.
Though Carney said that these cuts will not have an immediate effect, Anthony Wagner, chief financial officer and treasurer, said that the decrease in funding will impact future projects coming out of the 20/20 plan.
“It will impact the 20/20 plan because we’ll just have less money from the commonwealth to work with,” Wagner said. “Say over the next five years, this will be $20 million a year less, or $100 million total less. That’ll certainly affect how much construction our Board of Trustees is willing to do.”
A major project the decreased capital funding could impact is the plan to build a new library on the west side of Broad Street.
The project, which Wagner said has yet to be approved by the Board of Trustees, received a special allocation of $50 million from the state. Though it has received this allocation from the state, Wagner said it will still have to be financed through other means.
“[Gov. Tom Corbett’s] administration has agreed to a $50 million one-time allocation for the library project,” Wagner said. “That project will certainly cost more than $50 million, so we have to figure out how to cobble the rest of it together.”
Carney added that the amount of money from the state used to finance a specific project varies between each plan, noting that some can be almost entirely reliant on it, while other projects are not financed at all by state funding.
“On certain buildings, it’s significant,” Carney said. “So, for example, the new science building that is going up, we have a $100 million allocation from the commonwealth for that project. So that’s basically the project budget we’ve been working with, so that’s a huge amount of money.”
Carney said the South Gateway residence hall project underway at Broad Street and Cecil B. Moore Avenue is not funded with commonwealth money. According to the university’s 20/20 website, the $147.4 million project’s sources of funding include FY 2010 bond proceeds, a capital contribution from Sodexo and university reserves.
While decreases in state appropriations for the university’s operating budget have caused an increase in tuition, Wagner said he does not believe Temple will directly raise tuition as a result of the cuts.
Saltry, however, said he thinks tuition could be raised in the long run.
“In the short term no, I don’t think [it will be raised], but I think if it became acute enough, combined with an overall funding reduction then yes I think it would [be a possible scenario],” Saltry said.
Though Temple’s capital funding allocation has been cut in half for the coming fiscal year, it is not decreased from the level it had been at historically.
According to Zogby’s letter, the university normally receives an annual allocation of $20 million, since 1997. However, during the past two fiscal years, Temple’s allocation had been doubled to $40 million.
Zogby writes that the state is simply re-establishing the funding at the level it had been at before.
Wagner said that he expects the state to maintain a relationship with Temple, and said he does not think this downward trend will continue.
“The commitment will continue,” Wagner said. “We’re expecting it to stay at $20 million and we feel pretty comfortable with that. I would hope that some time in the future when the economy gets better, and the state’s finances are better, that we can revisit the issue of going back up to $40 million. For now, that’s what it is and what we’re planning on.”
Saltry said that, while he thinks capital funding is important, his biggest concern is the allocations for the operating budget.
“I think the real, biggest danger, is the general operating funding that we’re going to receive for the next fiscal year,” Saltry said. “And I am really concerned about what Corbett is going to be proposing given the state of revenues so far in Pennsylvania.”
Wagner added that Temple is very aware of the budget situation in Harrisburg and wants to remain partners with the state.
“We’re just very cognizant of the fact that the Corbett administration continues to deal with a difficult situation financially with the commonwealth’s budget,” Wagner said. “Unfortunately, as this year is unfolding, at the end of October, they were down $300 million on about a $27 billion budget.”
He also said that the university hopes to advocate for more funding for Temple to keep the cost on students down.
“We’re advocating as hard as we can because money that we get from the commonwealth helps us to keep tuition down and they’re an important partner,” Wagner said. “They’re dealing with some serious issues, so we’re trying to be a good partner and we’ll do our best with what we get.”
Sean Carlin can be reached at email@example.com.