Penn State to furlough staff, cut spending after $100 million in losses

Penn State will reduce spending for the coming year by 3% and furlough some 2,000 employees at half pay, effective May 4 through June 30, as officials struggle to balance their books in the face of a $100 million loss.

The sprawling university, with a budget of $6.8 billion this year, enrolls about 81,700 students at 19 campuses across the state, including locations in Upper Burrell, McKeesport, Beaver and Fayette County. It joins a long line of universities that have adopted a variety of cost-cutting measures in the face of the coronavirus pandemic that shuttered campuses across the country last month.

University President Eric Barron said furloughs at Penn State, which employs more than 21,000 full-time workers across the commonwealth, will be concentrated largely among staff that were left without work when instruction shifted to online learning with the shutdown in March. He said those employees will receive benefits “based on an adjusted salary.”

Although he said no further furloughs are planned through June 30, Barron said there may be a need for similar cuts in the future.

Officials could not say how many employees will be affected by furloughs at local Penn State campuses.

Like other universities, Penn State also is postponing capital projects, a move Barron said will save $60 million next year.

Commending his staff for their efforts, Barron said the school is well-positioned to emerge from the pandemic “more creative and agile.”

Meanwhile, Barron said he will ask trustees to freeze tuition at 2019-20 levels to ease costs to families struggling in the face of massive unemployment.

Penn State may face another $160 million shortfall in the 2020-21 fiscal year if an enrollment decline and projections of decreased state subsidies materialize, Barron said.

“Our strategies are based on detailed analysis and scenario planning to provide adequate time to assess, as much as possible, how our revenue projections are faring, and what stimulus and other supports are available to students, employees and the university in this uncertain and rapidly evolving environment.”

The state’s largest university is in line to receive about $55 million from the federal stimulus bill. About 50% of that, $27.5 million, is earmarked for direct aid to students.

Penn State New Kensington Chancellor Kevin Snider said 99% of employees at the commuter campus in Upper Burrell are working from home. He could not say how many employees are facing layoffs. But with the campus shutdown, he said, the school has no need for its café or tech services.

“We’re trying to do what we can to ease the impact on our employees. We were taking people who had nothing to do and carrying them through April,” he said.

While enrollment at the commonwealth campuses overall declined in recent years, the university is anticipating a slight overall enrollment decline, Snider said. But he added that local campuses may see a slight bump if students who might have been headed elsewhere decide they need an alternative closer to home this fall.

“It’s too early to tell, but I think we could be a safety net for some of those folks,” Snider said.

He said New Kensington was on track for a 2% uptick in enrollment before the shutdown hit.