Penn State offers employee buyouts to resign amid budget cuts (2024)

STATE COLLEGE — Penn State is offering buyouts to Commonwealth Campus employees to reduce its multimillion-dollar budget deficit, a dramatic step for Pennsylvania’s flagship university.

Tenured faculty, tenure-line faculty, academic administrators, and staff who are full-time employees, not on fixed-term contracts, and were hired before April 1, 2023, are eligible, according to the university’s website. These employees have until May 31 to decide, and their final day of work, in most cases, would be June 28. Employees who voluntarily resign will be paid a year’s salary.

“Each of our campuses brings a unique element and value to our Penn State community, our structure and our students,” a university spokesperson wrote in an email to Spotlight PA.

“However, a handful of campuses have experienced significant enrollment declines in the last few years,” the spokesperson wrote, “and some campuses are spending significantly more than they bring in revenue; with our current funding level from the state, the current business model is unfortunately not sustainable.”

The university did not provide an estimate of the number of eligible employees or how many it anticipates will accept. The 20 Commonwealth Campuses had more than 3,200 full-time employees as of fall 2023, according to the university’s website.

The spokesperson said the university does not plan to close any Commonwealth Campuses, but “all options are on the table.”

Julio Palma, a chemistry professor at Penn State Fayette, told Spotlight PA he questioned whether the administration wanted to ruin tenure at the Commonwealth Campuses and said the plan would “destroy” what morale is left among employees there.

“How is the administration imagining that faculty and staff are going to continue going into their jobs believing that their work and their loyalty is going to be appreciated?”

In March, Palma successfully introduced a resolution to the university faculty senate that asks university leadership to stop the fiscal year 2026 budget cuts and instead “initiate a comprehensive, multi-year planning process with a reasonable budget model that actively involves all the stakeholders from the beginning.”

Sarah Townsend, a University Park professor of Spanish and Portuguese and spokesperson for the Coalition for a Just University at Penn State, said in an email to Spotlight PA that the voluntary separation plan is a recipe for chaos, and questioned how students will be affected.

“As if we needed any more evidence, this shows that the Penn State administration is not to be trusted, and that they’re going to take advantage of the summer to ram through changes as a way of bypassing faculty and staff involvement and oversight,” Townsend wrote. “Clearly the administration is trying to empty out the Commonwealth Campuses in advance of the university-wide program review so that they can justify cutting programs and perhaps even closing entire campuses.”

There are no immediate plans to make similar separation offers to University Park, College of Medicine, or law school employees, the university said in its statement.

In January, the university announced plans to slash almost $100 million from its budget starting in July 2025. The administration expects to cut $49 million from the Commonwealth Campuses, a figure that was reduced by $5 million after the university acknowledged a spreadsheet error.

President Neeli Bendapudi’s administration seeks to balance the university’s budget by 2025. Under her leadership, Penn State moved to a two-year budget model to provide more predictability and stability to its financial planning. Handling the university’s multimillion-dollar budget deficit has been an ongoing challenge for Bendapudi since she became president in May 2022.

To ease the transition to the new budget model, the university had previously capped the annual reductions for colleges or other departments. Such limits are gone for fiscal year 2026, resulting in steep cuts for the Commonwealth Campuses, as well as for Penn State Law and Dickinson Law (15% each), the College of Agricultural Sciences (5.5%), and the graduate school (5%), according to the university’s budget office.

The University Park colleges of business, communications and information sciences will receive a funding boost in fiscal year 2026. The administration will keep flat the budgets of its president’s office, communications department, general counsel and lobbying unit for fiscal year 2026, according to the budget office.

The university Board of Trustees is expected to vote on the fiscal year 2026 budget at its July 19 meeting.

The Penn State spokesperson, in an email to Spotlight PA, said the costs of the voluntary separations will be included in the fiscal year 2025 budget.

Employees who accept the offer will be eligible for medical, dental and vision insurance through COBRA. According to the university’s statement, a Penn State subsidy will allow the individuals to pay the same insurance premium they did while employed for up to six months. Employees who accept the separation offers cannot work at Penn State for at least three years.

Josh Wede, a psychology professor at University Park and chair-elect of the Faculty Senate, told Spotlight PA there was “zero consultation” by the administration with faculty on the separation plan.

“Had we been consulted, we could have worked to a solution that would have resulted in the same fiscal realities without having to have some of the potential negative outcomes that will result from this,” Wede said.

The professor described the plan as a short-sighted business decision with long-term negative impacts.

Palma, who is eligible for a buyout, said the university has offered its employees just weeks to make a huge decision.

“I would like to know, what are the values of our university administrators and their priorities? Because it’s clear shared governance is not one of them,” Palma said.

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Penn State offers employee buyouts to resign amid budget cuts (2024)

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