June 22, 2017

Auditor General DePasquale Calls Penn State Tuition Growth Outrageous

Auditor General Eugene DePasquale Thursday said a recent audit of The Pennsylvania State University shows the school made some progress since the Sandusky scandal, but the state-related institution needs to improve campus security, prioritize Pennsylvania students and be subject to open records law.
“Penn State has made a modicum of progress in restoring the reputation of the commonwealth’s flagship state university,” DePasquale said, noting the 2011 arrest and subsequent conviction of former coach Jerry Sandusky. “Penn State must – first and foremost – do more to improve campus security, particularly for children who participate in programs and events on its campuses.
“Penn State also must do whatever is necessary to control tuition, which increased 535 percent in 30 years — making the school increasingly unaffordable for middle-income Pennsylvanians — and improve the university’s transparency and accountability to taxpayers.”
DePasquale emphasized the audit did not include a review of grants to the former Second Mile charity, nor did it include the Freeh Report, an investigative document commissioned by Penn State after the Sandusky scandal.
“I want to be clear: This was an audit of Penn State, not of the Second Mile, the Freeh Report or the Sandusky scandal,” DePasquale said. “I will review the Second Mile grants in a future capital budget audit. “As for the Freeh Report, I believe that the review should have been conducted by the U.S. Department of Education or another independent body, not by someone who was hired by the Penn State board of trustees.”
The 115-page audit report, which covers January 2013 through March 2017, has nine findings and 23 recommendations.
Tuition Growth
“Over the past 30 years, Penn State’s in-state tuition – at $19,347 for the 2016-17 academic year — has increased by a whopping 535 percent,” DePasquale said. “With the exception of 2015-16, resident tuition increased every year — on average about 6.4 percent.
“By comparison, over the past three decades, the price of a gallon of milk increased 48 percent and a new car increased in cost 163 percent. In fact, not even the rising cost of health care could keep pace with Penn State’s tuition growth.”
In a March 2016 U.S News and World Report article, Penn State ranked third on the list of the most-expensive public colleges for in-state students.
“My team found that Penn State is the most expensive public research university compared to its Big Ten Conference peers, and tuition increases continue to exceed the Consumer Price Index,” DePasquale said, noting the University of Nebraska’s in-state tuition is $8,618 a year.
“Unless Penn State does something now to rein in attendance costs, even fewer middle-income students will be able to attend Pennsylvania’s acclaimed land grant university,” he said.
“Worse yet, Penn State appears to be part of a growing national trend among public research institutions that give preference to no-resident students as a means of increasing tuition revenue,” DePasquale continued.  “At Penn State, and at many other public research institutions, nonresidents pay nearly twice as much as residents in tuition — yet it costs nothing more to educate these students.
“In essence then, a university can get a ‘better bang for the buck’ by increasing the number of its nonresident students,” he said. “Rather than increasing nonresident enrollments, another alternative is to better control tuition cost drivers. If these expenses are adequately controlled, it should then slow the growth of tuition.”
Over the past four years, Penn State’s operating expenses have increased by nearly 10 percent but revenues have grown by just 6.7 percent. Instruction costs increased by 17 percent. Academic support — including libraries, museums, galleries, information technology, academic administration and audio-visual services — increased by 19 percent.
“Simply put, expenses are out of control,” DePasquale said. “Penn State must create a tuition task force that includes board members with a focus on identifying and lowering costs that are driving tuition into the stratosphere.”
In-State Student Enrollment Drops
High tuition costs are not the only accessibility challenges for potential in-state students. From 1990 through 2016, at Penn State’s University Park campus, the number of in-state students decreased by 12 percent, while nonresident and international students increased by 95 percent and 310 percent, respectively.
In 1990-91, at the University Park campus Pennsylvania residents comprised 76.5 percent of the campus population. By 2015-16, just 56.2 percent of the campus population was from Pennsylvania. Similarly, when looking at acceptance rates, in 11 of the past 16 years, including the last seven consecutive years, nonresident acceptance rates were higher than that of Pennsylvania residents.
“Penn State’s expansion of nonresident enrollment threatens accessibility for Pennsylvania residents,” DePasquale said. “Clearly, because Penn State has not adequately planned for expenses that are outpacing revenues, there is a financial appeal to accepting nonresident students who will pay nearly $15,000 more and be more likely to live on campus.”
DePasquale said while Penn State officials remain adamant that the university never intentionally favored nonresident students, and his team found no evidence to suggest otherwise, he cautioned that such practices are in place at other universities similar to Penn State.
“After the California state auditor raised concerns earlier this year about the growing number of non-resident students in the University of California system, the board of regents approved its first-ever enrollment cap on nonresident undergraduates,” DePasquale said.
“A nonresident undergraduate student enrollment cap may well be necessary to help ensure Pennsylvania residents can get into Penn State, or any other state-related university for that matter,” he said. “These institutions are called state-related for a reason: Pennsylvania taxpayers help fund their operations. Therefore, Pennsylvania students should always be at the top of the acceptance list.”
A copy of the audit is available online.