UNIVERSITY PARK, Pa. — The Pennsylvania General Assembly’s Performance-Based Funding Council held its first statutorily required on-campus hearing at Penn State’s University Park campus on Jan. 21 as part of its charge to develop a new performance-based funding model for Pennsylvania’s state-related universities.
The hearing featured testimony from Sara Thorndike, Penn State senior vice president for Finance & Business/treasurer and chief financial officer, who is the University’s representative on the Performance-Based Funding Council; Tracy Langkilde, Penn State interim executive vice president and provost; and Mike Fowler, Lion Caucus president and current Penn State junior political science major. Each discussed how the proposed performance-based funding model would impact Penn State and its mission as the state’s sole land-grant institution.
“Penn State views performance-based funding as a tool for higher education to work together with the commonwealth to focus on workforce and economic development, increase transparency and accountability for taxpayer funds, and generate increasingly meaningful outcomes for our students,” Thorndike said.
Performance-based funding is not a new idea in higher education, as more than 30 states already utilize this model to fund their higher education institutions. The council was established in 2024 with the goal of having recommendations for a new performance-based funding process delivered to Gov. Josh Shapiro and the General Assembly by April 30. The council will hold additional hearings at Temple University on Jan. 30 and the University of Pittsburgh on Feb. 19 as it works to finalize its recommendations.
Penn State President Neeli Bendapudi has been a strong proponent of instituting a performance-based model to grow Pennsylvania’s investment in public higher education and create more clarity, consistency and accountability for higher education funding.
According to the legislation passed in 2024, performance-based funding is intended to increase degree attainment, encourage affordability in higher education, meet workforce needs and grow the economy.
During her testimony, Thorndike highlighted Penn State’s preferred starting point for performance-based metrics through the lens of input, throughput and output.
Thorndike outlined those themes as follows:
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Input: The key indicator should include enrollment. Additional weights could be considered for students with certain characteristics, such as Pell Grant recipients, first-generation college students, or for in-state vs. out-of-state enrollment.
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Throughput: Throughput should consider both progression and completion metrics. This could include first-year retention rates, completion of credit milestones (30, 60 and 90 credit hours), and degree completion (number of graduates; additional weights could be considered for students with certain characteristics, such as Pell Grant recipients, first-generation college students, etc.).
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Output: Suggested output, or workforce indicators, include degree completions in high-demand fields critical to Pennsylvania’s continued economic and workforce development needs.
Adding to Thorndike’s testimony, Langkilde said Penn State is interested in working with the council to implement a performance-based funding formula that focuses on student success from the time they enroll at an institution of higher education through graduation and as they enter the workforce.
“We believe this approach meets several goals, including painting a fuller picture of how successfully institutions support students from day one of their college careers, through course and degree completion, to successful post-graduation outcomes that align with the workforce development needs of the commonwealth,” Langkilde said.
During her testimony, Langkilde highlighted current trends in Penn State’s enrollment, retention and degree completion outcomes that align with some of the student success metrics being discussed by the council. Langkilde pointed to improvements in one-year retention rates, as well as improvements in four-year and six-year graduation rates that include increased graduation rates for underrepresented minority students, Pell Grant recipients, and first-generation students.
Langkilde also provided the council with an update on Penn State’s Academic Portfolio and Program Review (APPR), which encompasses all academic programs the University offers across every campus.
“APPR aims to build upon our strengths and ensure that our comprehensive academic portfolio meets Penn State's educational mission and aligns with both student demand and workforce needs, as well as Penn State's research strengths and priorities,” Langkilde said. “We're evaluating the broad portfolio of our academic programs across all of our locations with three primary goals: to understand how our existing programs meet both student interest and workforce demands; to provide insight into future workforce needs across the commonwealth, so we can proactively prepare students to fill these credential gaps; and to facilitate a University-wide approach to assessing current and future offerings to maximize Penn State's impact and mission across the commonwealth and beyond.”
The General Assembly mandated that the council’s on-campus hearings include testimony from a current undergraduate student. Fowler represented the Penn State student body as a panelist with his testimony that focused on the reasons why he chose Penn State: the University’s large alumni network, vast opportunities in and out of the classroom, and the pride of the Penn State community. He also spoke about the importance of state funding in making Penn State a stronger institution for current and future students.
“Every student at Penn State has their own unique story, but funding from the commonwealth of Pennsylvania not only allows more students to experience Penn State, but it puts them in a stronger position to succeed here, whether it goes to in-state tuition, Invent Penn State, Penn State Health or agricultural research, state funding is essential to the success of Penn State and its students,” Fowler said.
Greg Scott, president and CEO of the Chamber of Business and Industry of Centre County, also was invited to testify during the hearing and spoke about the importance of funding higher education to help develop a pipeline of skilled workers who can fill high-demand jobs in the commonwealth. Workforce development is one factor the council is considering as it develops performance-based funding metrics.
“The linkage between education and workforce development is clear: Pennsylvania’s economic future depends on producing a skilled labor force prepared for high-demand occupations,” Scott said. “Performance-based funding offers a unique opportunity to align state investments in higher education with our economic priorities. It is essential that this funding incentivizes degree and credential attainment in fields critical to Pennsylvania’s economic growth.”
Scott noted the economic and social impact of Penn State campuses in communities across the state.
“Having a major educational institution like Penn State in our region is a cornerstone of our economic strategy,” Scott said. “Beyond its role as an employer and innovation hub, Penn State is a magnet for talent and a driver of regional vitality. The University’s commonwealth campuses, in particular, extend access to higher education across rural and underserved areas, helping to address equity gaps in degree attainment and workforce participation.”
Also testifying during the hearing were Steven Gentile and Russell VanZomeren from the Tennessee Higher Education Commission, who were invited to provide insight into how Tennesse has structured and implemented performance-based funding for higher education.
“We were grateful to host the council members at University Park and look forward to working with them to establish a new way forward in how we fund higher education in Pennsylvania,” said Mike Stefan, Penn State vice president for Government and Community Relations. “While there are still items to be figured out, I am hopeful that the new funding model will set a course for more equitable funding for Pennsylvania’s flagship university.”
Penn State’s general support appropriation has been held flat at $242.1 million since a 2% increase was implemented for the 2019-20 fiscal year. In real dollars, Penn State’s funding remains at nearly the same level it was in 2000, despite almost 25 years of inflationary cost increases. The University continues in its purposeful work to be as strategic as possible with its available resources, but further investment from the state is critical to Penn State’s efforts to provide an accessible and affordable education for Pennsylvania students of all backgrounds and means.
Penn State’s general support funding is used to offset educational costs for Pennsylvania-resident students, allowing the University to offer a discounted in-state tuition rate. As part of its commitment to access and affordability, Penn State significantly amplifies 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.
On Feb. 4, Shapiro will release his 2025-26 budget proposal, where he is expected to give additional details of his support for higher education and performance-based funding, including Penn State and the other state-related universities. Bendapudi and her fellow presidents and chancellors of the state-related universities are scheduled to testify during their annual hearing with the Pennsylvania House Appropriations Committee on Feb. 20 in the state capitol in Harrisburg.