Dive Brief:
- Pennsylvania State University’s commonwealth campuses will reduce their workforce by 10% this summer after 383 employees accepted the institution’s voluntary buyout offer last month.
- The combined salaries and expenses of the departing workers is $43 million, which could ease Penn State’s $49 million budget deficit. But officials Tuesday said some positions will need to be backfilled and that they will determine the actual cost savings later this year.
- The same day, Penn State also announced a campus restructuring plan that will bring 11 universities under the leadership of four chancellors. The plan will also shift some costs from individual campuses to Penn State’s general overhead budget.
Dive Insight:
At the beginning of the year, Penn State unveiled plans to cut almost $100 million from its fiscal 2026 budget. It cited the need to reduce expenses when announcing the voluntary buyouts for commonwealth campus employees in May.
Penn State’s overall student body has fallen slightly in recent years, declining about 3.9% from fall 2019 to fall 2023, when the university had around 88,000 students, according to the institution’s data. But the overall enrollment count is buoyed by increases since fall 2019 at University Park, Penn State’s main campus. Enrollment at the 20 commonwealth campuses declined 15.2% to around 24,000 students during that time, it said.
Tracy Langkilde, Penn State’s interim executive vice president and provost, said Tuesday the buyout program allowed campuses to lower personnel costs “in a way that we felt would be as compassionate as possible.”
Buyout packages include 12 months of employees’ base salary and subsidized health insurance for six months. A fifth of eligible employees took the deal, and 77% of those workers are staff, Penn State said.
June 28 will be the last day for about half of departing employees, while the rest will leave by the end of the year.
The buyouts also presented a chance for Penn State to reconfigure how its campuses operate, Langkilde said. Several commonwealth campus chancellors are leaving, including through the buyout program, according to Penn State.
Beginning July 1, 11 of Penn State’s commonwealth campuses will be combined into four regional groups, each of which will be overseen by one chancellor.
For example, the chancellor of Penn State Brandywine, Marilyn Wells, will also begin leading Penn State’s Mont Alto and York campuses this summer.
“Grouping campus administrations together geographically will enable further collaboration and resource sharing while continuing to offer students full academic and support services,” Penn State said.
The remaining commonwealth campuses will not be affected at this time, but officials Tuesday left the door open for further restructuring in the future.
The new model will also bring employees and services related to facilities, information technology and finance under Penn State’s corresponding central offices.
“At present, each campus is fully responsible for the salaries and fringe paid to employees in these positions,” Penn State said. By centralizing the positions, they will become part of the general overhead budget and “result in further savings for the Commonwealth Campuses,” it said.
Penn State President Neeli Bendapudi allocated up to $20 million to the consolidation and restructuring, about 40% of her office’s fiscal 2026 strategic funds. The one-time expenditure will also give Penn State until the end of June 2026 to fully balance the commonwealth campus budget, it said.
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