The Pennsylvania State System of Higher Education’s (PASSHE) Board of Governors today agreed to request $472 million in state funding to support its base operating budget for Fiscal Year 2006-07.

The request would support an overall operating budget of $1.24 billion. The annual state appropriation provides about one-third of the funds needed to operate PASSHE Universities. Student tuition and fees cover most of the rest.

The request approved by the Board represents an increase of $26.7 million, or 6 percent, over PASSHE’s current base appropriation. The request assumes tuition would be increased next year by about $152, or 3.1 percent.

“Our goal is to continue the high quality and growing quality of education our Universities provide in an as affordable way as possible, in a very difficult economic environment,” said Board Chairman Kenneth M. Jarin.

PASSHE expects its overall costs to increase next year by about $57 million. The largest increases will be in the areas of salaries and wages, employee benefits and utilities. On average, union contracts that cover a majority of PASSHE employees will require an increase in salaries and wages of 5.9 percent next year, while the cost of providing employee benefits is expected to increase by more than 8 percent. PASSHE’s projected 2006-07 utility costs reflect an increase of nearly 40 percent, to address both recent unanticipated rate increases as well as anticipated future rises.

Growing enrollment also has added to the cost pressures facing PASSHE. Since 2000-01, enrollment at PASSHE Universities has increased by nearly 12 percent, with seven Universities reporting record enrollments this fall. Over that same time, PASSHE’s state appropriation actually has declined. The System will receive about $4 million less from the state this year than it did five years ago.

In order to balance their budgets through these challenging times, PASSHE Universities have become much more efficient, limiting expenditures and improving productivity levels to enable them to reallocate $163 million is cost “savings” to key program areas. Cost saving initiatives have included consolidating operations in areas such as administrative computing, employee benefits management, construction services and distance education; developing collaborative academic programs in nursing, urban education, math and science education, athletic training and foreign languages; and streamlining academic offerings and graduation requirements. Most recently, PASSHE began entering into strategic sourcing initiatives that are expected to save about $8 million over the next two years.

PASSHE also has begun providing certain services internally or has developed unique ways to procure services in areas such as workers’ compensation self-insurance, investment services, auditing services, natural gas procurement and guaranteed energy savings plans.

In addition to approving the base appropriation request, the Board also approved separate funding requests totaling about $32 million to support a variety of initiatives, including performance funding, teacher education programs and diversity and equal opportunity efforts.

The appropriation request will be submitted to the Governor’s Budget Office next week, marking the beginning of the annual budget process. Gov. Edward G. Rendell will make his budget recommendations to the Legislature in February, after which a series of public hearings on the spending proposal will be held in both the House and Senate. The 2006-07 budget must be approved by June 30, 2006 in order to take effect July 1.

The Board will determine next year’s tuition rate sometime after passage of the 2006-07 state budget. A 3.1 percent tuition increase would raise tuition for full-time undergraduate students who are residents of Pennsylvania to $5,058. PASSHE Universities are the lowest-cost option among all four-year colleges and universities in Pennsylvania. Ninety percent of the students attending PASSHE Universities are Pennsylvania residents.

With more than 107,000 students, the Pennsylvania State System of Higher Education is the largest provider of higher education in the Commonwealth. The 14 PASSHE Universities offer more than 250 degree and certificate programs in more than 120 areas of study. More than 405,000 PASSHE alumni live and work in Pennsylvania.

The state-owned universities are Bloomsburg, California, Cheyney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock, and West Chester Universities of Pennsylvania. PASSHE also operates branch campuses in Clearfield, Kittanning, Oil City and Punxsutawney and several regional centers, including the Dixon University Center in Harrisburg.