UNIVERSITY PARK, Pa. — After a delay of more than four months, the Pennsylvania General Assembly has passed a 2025-26 state budget that includes level funding for Penn State’s general support appropriation. Including this year, Penn State’s general support funding has been held flat at $242.1 million for each of the last six fiscal years and has not increased since a 2% rise in 2019-20.
The state’s budget package also includes a funding increase of $1.7 million (5%) for Pennsylvania College of Technology; level funding of $57.7 million for Penn State Agricultural Research and Extension; and continues line-item funding of $2.35 million for Invent Penn State.
President Neeli Bendapudi emphasized the essential role state funding plays in advancing Penn State’s mission to serve students and communities across Pennsylvania.
"I am pleased that our state’s elected leaders have reached a budget agreement,” Bendapudi said. “The funding Penn State receives from the commonwealth is essential to making higher education attainable for tens of thousands of Pennsylvania students and their families. State investment is the foundation that allows us to provide an accessible, high-quality education through our in-state tuition rate, while also supporting Penn State Extension, Penn State Health, Invent Penn State, and Penn College — all of which strengthen communities and enhance the lives of people across the state.
“While we deeply appreciate the commonwealth’s continued commitment to Penn State, I look forward to working closely with leaders in Harrisburg to have the critical conversation about our support. Particularly through the state’s new performance-based funding formula, we plan to demonstrate to the General Assembly that Penn State is a committed partner and worthy of additional state investment. New funding would support Penn State’s efforts to be a catalyst for innovation, economic and workforce development, and to create upward mobility across Pennsylvania.”
Penn State is integral to Pennsylvania, serving as a major economic engine and teaching, research, medical and cultural hub. The University’s impact is felt statewide from an economic, workforce and societal perspective — delivering $15.8 billion annually to the state’s economy and supporting nearly 110,000 jobs, according to a recent economic impact report. Additionally, the report found that one out of every 10 jobs in Pennsylvania is supported by Penn State and Penn State alumni.
Performance-based funding
In addition to the University’s 2025-26 funding, the General Assembly also passed Senate Bill 315, which establishes a new State-Related University Performance Fund and outlines the state’s first performance-based funding formula.
Although not funded for 2025-26, the new formula, once funded, would apply to Penn State, Temple University, and the University of Pittsburgh.
To determine the maximum award for each institution, the new formula considers each university’s population of in-state students in the following categories: full-time, fall undergraduate students; students who have received a Pell Grant; students who transferred from a community college; students from a low-matriculation high school; students who earned a high-demand degree; and students who have earned 60 credits by the start of their third year.
Subsequently, each university’s performance allocation would then be calculated based on goals for the following metrics: four-year graduation rate for in-state, undergraduate students; six-year graduation rate for in-state, undergraduate students; six-year graduation rate for in-state, Pell-Grant-recipient undergraduate students; and high-demand degree production for in-state undergraduate students.
The model also includes an improvement bonus for an institution's year-over-year improvement in its performance metrics and an affordability bonus for institutions that keep the percentage increase in their total cost of attendance below the percentage increase in the Higher Education Price Index for the most recent available year.
“We are pleased to see performance-based funding take the next step toward becoming a reality,” said Mike Stefan, Penn State vice president for Government and Community Relations. “We feel strongly that performance-based funding will be a win-win for the commonwealth and the state-related universities by tying funding increases to metrics that will help to advance student success, improve college access and affordability, and strengthen our workforce. We are eager to continue working as partners with the commonwealth to meaningfully fund this new model, for the benefit of our Pennsylvania-resident students and families.”
The need for increased state support
Unadjusted for inflation, Penn State’s general support funding is less today than it was in the year 2000 — when the University received a general support appropriation of $242.9 million — despite nearly a quarter century of inflation and significant increases in instructional and operational costs. Had the University’s funding kept pace with inflation over the past 25 years, Penn State’s appropriation today would be more than $450 million, a difference of over $200 million.
On a per-in-state-student basis, Penn State’s funding ranks last among Pennsylvania’s public universities. When divided among approximately 42,000 Pennsylvania-resident undergraduates, Penn State’s current $242.1 million general support appropriation equals approximately $5,796 per student. This is well below the levels of per-Pennsylvania-student support provided to Temple ($10,830), the schools in the Pennsylvania State System of Higher Education ($10,200), and Pitt ($9,342). Nationally, the gap is even wider — U.S. public colleges and universities received an average of $11,683 per FTE in education-related funding in 2024.
Despite this disparity and absent regular funding increases, Penn State significantly amplifies the state’s appropriation to provide in-state undergraduates with an average tuition discount of $16,642 per year compared to their nonresident peers — in line with the University's land-grant commitment to provide an accessible and affordable education to all qualified Pennsylvanians.
To bring Penn State’s funding into parity with Pennsylvania’s other public universities, the state would have needed to increase its general support allocation by $156 million for the 2025-26 fiscal year. Understanding the budget constraints of such an increase, Penn State instead had requested a more modest $30 million boost for this fiscal year as a gradual step toward closing this gap.
Looking ahead to 2026-27, Penn State has submitted a request for a $49 million increase to its general support appropriation, an amount that would allow the University to freeze tuition for all undergraduate students, at all campuses, for the 2027-28 academic year.
Penn State’s funding by the numbers
Penn State’s complete 2025-26 state appropriation breaks down as follows:
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General Support: $242.1 million, representing level funding from 2024-25. This funding is applied entirely to the University’s education budget and allows Penn State to offer a discounted in-state tuition rate. These dollars also enable Penn State to invest in the quality of its academic programs so that it can attract the state’s top students and prepare them for successful careers in Pennsylvania.
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Agricultural Research and Extension (Land Scrip Fund): $57.7 million, representing level funding from 2024-25. Agricultural research and extension programs are not funded by tuition, so regular appropriation increases are vital to help keep pace with rising costs and to leverage matching federal and county dollars. This funding supports Penn State Extension and the critical research conducted by Penn State’s College of Agricultural Sciences, benefiting citizens in all 67 Pennsylvania counties and helping the state’s agriculture industry address endemic and emerging diseases and invasive species.
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Pennsylvania College of Technology: $35.7 million, an increase of $1.7 million, or 5%, from 2024-25. As a special-mission Penn State affiliate, Penn College delivers nearly 100 career-focused programs in fields like nursing, cybersecurity, welding, HVAC, aviation maintenance, building automation, electrical systems and mechatronics — areas where Pennsylvania employers are actively seeking skilled professionals. This funding will benefit the college’s growing enrollment of more than 4,700 students, nearly 87% of whom are Pennsylvania residents.
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Penn State Health and the College of Medicine: Funding was maintained at the same level as the 2024-25 budget. This funding, which is a combination of state and federal dollars distributed by the Pennsylvania Department of Human Services, is used for medical assistance to provide access to high-quality health care for Pennsylvanians with limited financial means, particularly in rural or underserved areas.
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Invent Penn State: $2.35 million, representing level funding from 2024-25, as a co-investment with the University to drive statewide economic development. This funding will be used to strengthen and grow Invent Penn State’s LaunchBox and Innovation Network, and to further expand access to the Pennsylvania Technical Assistance Program for small to medium enterprises, with an emphasis on the manufacturing sector.