UNIVERSITY PARK, Pa. — Pennsylvania Gov. Josh Shapiro proposed $60 million in new funding for Penn State and its fellow state-related universities — to be distributed through a soon-to-be-developed performance-based funding model — during his 2025-26 budget address, delivered Feb. 4 in the Pennsylvania House Chamber. The governor also proposed flat funding for Penn State’s general support appropriation of $242.1 million, a number that would serve as a funding baseline, with any increase to come from the pool of funds earmarked by the governor for performance-based funding.
“I am appreciative that Gov. Shapiro continues to show his support for performance-based funding,” said Penn State President Neeli Bendapudi. “Penn State has been proactive in our support of this new, additional funding model and has already made strides toward some of the proposed potential metrics through our annual accountability report. Success in similar models throughout the country has come when universities and their states work together on shared goals that support positive student outcomes and workforce and economic development. I am eager to continue to work with our leaders in Harrisburg to get performance-based funding across the finish line.”
Last year, the Pennsylvania General Assembly formed, and Shapiro signed into law, a new Performance-Based Funding Council. The council was tasked with providing recommendations for a new performance-based funding model for Penn State, the University of Pittsburgh and Temple University.
The new model, which must be enacted by the General Assembly and approved by the governor, is intended to grow the state’s investment in higher education, which has remained stagnant for the state-related institutions for five years — Penn State’s general support funding last increase in the 2019-20 fiscal year — by tying future funding increases to a predetermined list of performance metrics. Looking back even further, Penn State’s annual funding remains at nearly the same level it was in 2000, despite a quarter century of inflationary cost increases.
Each year, Penn State uses general support funding to offset educational costs for Pennsylvania-resident students, which allows the University to offer a significantly discounted in-state tuition rate. Penn State reaffirms its promise and commitment as the state’s sole land-grant institution by amplifying the state’s investment on a per-student basis to save Pennsylvania undergraduates across all campuses an average of $15,000 annually on tuition costs.
"The governor’s proposed increase through performance-based funding is a step forward as we look to partner with the commonwealth to generate increasingly meaningful outcomes for our students, increase funding predictability, and incrementally grow our funding,” said Mike Stefan, vice president for government and community relations. “With the help of our advocates, we hope that we’re able to secure Penn State’s first funding increase in five years.”
Progress on performance-based funding
The Performance-Based Funding Council has an April 30 deadline to deliver its recommendations to Shapiro and the General Assembly. As part of its exploratory phase, and as required by statute, the council has been holding hearings on the campus of each state-related university to receive input from experts and stakeholders. So far, the council has held hearings in Harrisburg and on Penn State’s and Temple’s campuses, with Pitt hosting the final hearing on Feb. 19. The hearings are livestreamed and saved on the council’s website.
During his address, Shapiro highlighted a few possible metrics that the state could consider for its performance-based formula, including graduating students with in-demand degrees and skills, graduating first-generation college students, and incentivizing universities when their graduates stay and work in Pennsylvania.
Bendapudi has long been a strong proponent of instituting a performance-based funding model to grow Pennsylvania’s investment in public higher education, while providing more clarity, consistency and accountability for higher education funding.
Research innovation funding
Shapiro also proposed $65 million more for innovation funding in Pennsylvania, with $30 million specifically designated for life sciences innovation. Shapiro mentioned engaging Pennsylvania’s world-class universities and research institutions — including Penn State — to bolster the state’s life sciences research, innovation and commercialization efforts.
“I’m grateful the governor recognizes Penn State’s role as a leading research institution in Pennsylvania, specifically in the life sciences discipline,” said Andrew Read, senior vice president for research. “Penn State is well positioned to help realize these goals, and we’re eager to work with the governor on this worthy endeavor.”
Penn State’s proposed funding by the numbers
In its 2025-26 appropriation request to the commonwealth, Penn State asked for general support funding of $272.1 million, representing an increase of $30 million over 2024-25 funding. Penn State is the lowest-funded public university in Pennsylvania on a per-student basis, trailing the state’s other public institutions by between $3,700 and $4,700 per student. This request was made to begin to close the per-student funding disparity.
The governor’s proposed 2025-26 funding for Penn State is as follows:
-
General Support: Shapiro is proposing $242.1 million in general support funding, with an additional $60 million in Performance-Based grants for Penn State, Pitt and Temple, per the Performance-Based Funding Council established by Act 90 of 2024. This new grant methodology must be enacted by the General Assembly and approved by the governor. The new model would establish performance metrics tied to funding increases, 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 the state’s top students and prepare them for successful careers in Pennsylvania.
-
Agricultural Research and Extension (Land Scrip Fund): $60.6 million, a proposed increase of $2.9 million, or 5%, over 2024-25. 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 2025-26 appropriation request, Penn State included $61.7 million for the Land Scrip Fund, which supports Penn State Agricultural Research and Extension.
-
Pennsylvania College of Technology: $35.7 million, an increase of $1.7 million, or 5%, over 2024-25. Penn College, a special-mission Penn State affiliate, offers nearly 100 academic programs focused on hands-on, applied-technology education in high-demand career fields that are critical to Pennsylvania’s workforce needs. The University had requested a $39.3 million appropriation for Penn College, to benefit the college’s growing enrollment of more than 4,700 students, 89% of whom are Pennsylvania residents, and create broader access to several in-demand programs needed by employers across the commonwealth.
-
Penn State Health and the College of Medicine: Proposed level funding from 2024-25. This funding is used for medical assistance to provide high-quality health care for citizens with limited finances, specialty disease programs and research.
The governor’s proposed budget did 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 2024-25 budget.
Bendapudi is scheduled to appear before the Pennsylvania House Appropriations Committee on Feb. 20 to discuss Penn State’s funding with legislators. The governor’s budget proposal marks the first step in the state’s budget process as lawmakers work toward passage of a final 2025-26 budget package by the end of the fiscal year on June 30.