HARRISBURG, Pa. — During his 2026-27 budget address to the Pennsylvania General Assembly on Feb. 3, Gov. Josh Shapiro reaffirmed his support for Pennsylvania’s state-related universities by proposing a $30 million allocation for the commonwealth’s newly created performance-based funding model. If approved by the General Assembly, the money would be distributed to Penn State, Temple University and the University of Pittsburgh via the State-Related University Performance Fund, which was established by the General Assembly late last year.
Shapiro also proposed flat funding of $242.1 million for Penn State’s general support appropriation, which is anticipated to serve as the University’s funding baseline, with any increase coming from the performance-based pool. Penn State President Neeli Bendapudi will appear before the Pennsylvania House Appropriations Committee on March 11 to discuss Penn State’s funding with legislators, who will work toward passage of a final budget package by the end of the fiscal year on June 30.
“Following last year’s successful effort to bring performance-based funding to fruition, I am encouraged by Gov. Shapiro’s proposal, which includes the funding for this new model that would allow the commonwealth and the state-related universities to focus on shared goals,” Bendapudi said. “We are committed partners with the state and in this new funding model, as it would link future funding increases to metrics that support student success, college access and workforce readiness. We in turn would use this funding to fuel greater innovation, strengthen the economy, and expand opportunity for students across Pennsylvania.”
Funding the new performance-based model would grow the state’s investment in the state-related universities for the first time since 2019-20, when the General Assembly approved a 2% increase.
“Performance-based funding provides a framework to link student outcomes with stable, long-term state investment,” said Mike Stefan, Penn State vice president for government and community relations. “The governor’s proposal with this new funding moves us in the right direction, and we are hopeful it will lead to Penn State’s first funding increase in seven years.”
The governor's proposal does not address the additional $49 million in general support funding requested by Penn State for 2026-27, which would be on top of the University’s current $242.1 million appropriation and its share of the potential $30 million in performance-based grants. If ultimately approved by the state, this funding increase would be used to continue to offset educational costs for Pennsylvania resident students and freeze tuition for all undergraduate students for the 2027-28 academic year.
In recent years, Penn State has requested additional support from the state to help close a funding gap that exists between the University and Pennsylvania’s other public institutions. On a per-in-state-student basis, Penn State receives $5,796 in general support per in-state undergraduate, ranking last in Pennsylvania. By comparison, the University of Pittsburgh and Temple University receive $3,500 and $5,000 more per in-state student, respectively, than Penn State.
Because of state budget cuts over the years, Penn State receives less general support funding today than it did in 2000, when the University was appropriated $242.9 million. If state funding had kept pace with inflation, Penn State’s current appropriation would exceed $450 million. Even with this funding shortfall, the University continues to prioritize access and affordability for Pennsylvanians, leveraging its state appropriation to keep in-state tuition low. On average, Penn State offers a tuition discount of $16,642 per year for in-state undergraduates relative to nonresident students.
Funding for performance-based model
Although not funded in the 2025-26 state budget, after a two-year process, the General Assembly established the new State-Related University Performance Fund in November 2025, which outlines the state’s first performance-based funding formula.
To determine each university’s share of the award, the formula would consider in-state students in predetermined categories, including full-time undergraduates, Pell Grant recipients and community college transfers, among others, as well as each university’s performance based on goals for graduation rates, high-demand degree production, year-over-year improvement, and affordability.
Penn State’s proposed funding by the numbers
The governor’s proposed 2026-27 funding for Penn State is as follows:
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General Support: Shapiro is proposing $242.1 million in general support funding, with an additional $30 million in performance-based grants to be distributed among Penn State, Pitt and Temple, via the new State-Related University Performance Fund. This new funding methodology was signed into law during the 2025-26 legislative session in Senate Bill 315, but received no funding in the final state budget. The new model ties funding increases to performance metrics, which would be in addition to Penn State’s general support appropriation. General support funding covers core teaching costs in Penn State’s education budget and helps to fund the University’s in-state tuition rate. These dollars also enable Penn State to invest in the quality of its academic programs so that it can attract and retain 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 2025-26. Agricultural research and extension programs are not funded by tuition, so appropriation increases are necessary to keep pace with rising costs and to leverage matching federal and county dollars. This funding supports Penn State Extension and the vital research conducted by the College of Agricultural Sciences, benefiting citizens in all 67 Pennsylvania counties. In its 2026-27 appropriation request, Penn State is seeking a $4 million increase, or $61.7 million, for the Land Scrip Fund, which supports Penn State Agricultural Research and Extension.
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Invent Penn State: The governor’s proposed budget does not include line-item funding of $2.35 million for the Invent Penn State initiative, which the University had included in its appropriation request, and the state had funded in its 2025-26 budget. The commonwealth first provided a line-item appropriation for Invent Penn State in the 2022-23 budget and has funded the initiative in three of the last four years.
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Pennsylvania College of Technology: $35.7 million, representing level funding from 2025-26. Penn College, a special mission affiliate of Penn State, offers approximately 100 academic programs focused on hands-on, applied technology education in high-demand career fields that are critical to a wide array of Pennsylvania industry sectors. The University is requesting a $41 million appropriation for Penn College, to benefit its growing enrollment of more than 4,700 students, 87% of whom are Pennsylvania residents. An increase would allow the college to expand access to in-demand but waitlisted programs that support specialized workforce needs across the commonwealth. For example, an increase would allow a 50% expansion in the number of seats in their best-in-class aviation maintenance program.
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Penn State Health and the College of Medicine: Proposed level funding from 2025-26. This funding supports high-quality health care for citizens with limited finances, specialty disease programs and research.