Budget Allocation Approach
Penn State has developed a new data-driven budget allocation model as part of a comprehensive effort to modernize the University’s budgeting approach and to uphold Penn State’s commitment to student success, research, and the land-grant mission across the commonwealth.
The New Model
The new data-driven budget model creates a clearer picture of the University’s overall revenue and costs and will help better inform spending priorities and investments to support Penn State’s mission and values. The University is committed to aligning resources with the needs of our students by using data and metrics to inform annual allocations.
To help keep Penn State on track with its financial goals and to protect institutional finances, monthly financial reports will be distributed to budget executives, financial officers, the president, and the Board of Trustees.
How are allocations determined in the new budget model?
To determine a unit’s budget allocation, the model uses activity-based data, including student headcount — which is the number of degree-seeking students enrolled in a college or campus — student credit hours, tuition, and research expenditures, among other factors. Any increases or decreases in a unit’s allocation are based on the various types of data that were input into the model. Student-supporting and administrative units are also funded through the model. In addition, strategic funds are allocated to the president, provost, and vice president for Commonwealth Campuses to supplement allocations, especially for units where the model doesn’t account for complexities or extra costs in those units.
How are a unit's revenues used in the new budget model?
The new model is a tool that will use data to calculate what allocations should be for each unit, and as always, units will use their allocations to determine their own budgets and strategies for their areas. Unit leaders will use the budget allocation model to help inform decisions about strategic investments, personnel, and other priorities for their areas.
How does fundraising impact Penn State's budget challenges?
The allocation model includes revenues from tuition and state appropriations. Other revenues generated by units, like gifts and endowments, are not included in the model.
What will the budget planning process look like in the future?
The budget allocation model is designed to be flexible and is a tool to help Penn State leaders make budget planning decisions. The model will continue to evolve as University leaders work through and analyze data.
Looking Ahead
Penn State is a large and complex institution providing tremendous value to the Commonwealth community and beyond. The new Budget Allocation model will help the University in long-term planning and prioritizing key priorities such as student success; research; diversity, equity, inclusion, belonging, and more. As we move towards this goal, the budget working group will remain committed to the principles created at the start of this journey and continue to meet and address challenges to the budget allocation model and process.
The group will focus on near-term decisions that may impact the next budget model run for FY 2026 and review long-term needs like data management and process improvement efforts.
Advocate for funding that will enable the University to better fulfill its mission.
OPAIR Dashboards
The Office of Planning, Assessment, and Institutional Research (OPAIR) developed student credit hours dashboards for Penn State employees. The dashboards can only be accessed by employees on campus or using the University's VPN. Contact OPAIR for more information.
Penn State’s Institutional Values
Upholding and strengthening Penn State's core mission, vision and values are the foundation of the process to build a new budget model.
Principles
The working group identified key principles to guide the budget model decision-making process.
Frequently Asked Questions
Here you will find answers to the common questions about the budget allocation initiative.
Asked and Answered
A video series featuring members of the Working Group addressing questions about the budget plan.
Additional Information
VIDEOS
- Faculty & Staff Budget Town Hall (September 2022)
- Students & Family Budget Town Hall (September 2022)
- Budget Allocation Town Hall (December 2022)
ARTICLES
- Penn State unifies financial organization, begins new budget transformation (July 2022)
- Penn State leaders discuss budget and tuition at student and family town hall (September 2022)
- Top frequently asked questions at employee town hall (September 2022)
- Penn State working group continuing efforts to redesign budget allocation model (November 2022)
- Penn State leaders provide overview of budget allocation model at town hall (December 2022)
- University budget effort continues as units start work on individual budgets (January 2023)