Governor Proposes ‘Bold’ Plan to Restructure Pennsylvania Higher Ed

Pennsylvania governor Josh Shapiro on Friday announced plans for a sweeping overhaul of the state’s higher education system as part of an initiative focused on workforce development and boosting college access, maintaining affordability and shoring up 25 state institutions.

The multipronged approach includes consolidating the governance of two- and four-year institutions at a time of limited state resources and a greater supply of colleges than students. It also includes a new funding formula.

Shapiro, a Democrat, said his plan will ensure state institutions aren’t stretched thin and forced to cut services crucial to educating and training students and keeping the state’s workforce competitive.

“We’ll build a higher education system that opens up doors of opportunity, prepares our workforce, and serves as the linchpin to Pennsylvania’s economic success,” Shapiro said in a press release about the blueprint.

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Under the new proposal, 10 public universities which are part of the Pennsylvania State System of Higher Education (PASSHE) and all 15 of the state's community colleges would come under the purview of one governing body but would remain independent institutions. There are no current plans to close campuses, cut staff or merge any of the individual institutions, according to Emily Roderick, a spokesperson for the governor.

The plan would not apply to four other state-related institutions—Penn State University, the University of Pittsburgh, Lincoln University and Temple University— which are not state owned but do depend on some state funding.

The plan also includes a significant tuition reduction for low- and middle-income students, requiring them to pay only $1,000 per semester instead of the average $7,716 it normally costs to attend a PASSHE institution. The proposal would set up an increase in state funding based on a new formula based partially on institutional performance.

Shapiro wants this new strategy to give every Pennsylvanian the “freedom to chart their own course.”

“For some, that means going right into the workforce—but for those who want to go to college or get a credential, we need to rethink our system of higher education,” he said in the press release. “Whether you want to take one course to brush up on your skills, earn a certificate to qualify for a promotion, or pursue a degree that will lead to a new career—you deserve accessible, affordable higher education options.”

The announcement comes nearly a year after Shapiro, who took office in January 2023, gave his first budget address in March 2023 and declared the state’s higher education system “isn’t working.”

A History of Struggles

As higher education systems and institutions across the country experience declining enrollments and demographic shifts, they’re also under increasing pressure by state and federal lawmakers to meet workforce demands and ensure they provide students a return on investment. At the same time, college costs and institutional spending are often outpacing inflation, even as tuition is on the rise.

Michael Horn, a co-founder of the Clayton Christensen Institute for Disruptive Innovation, a nonpartisan think tank, and a specialist in consolidation, said these challenges create a “perfect storm” and raise “a sustainability question” for Pennsylvania and many other states.

“In industries hit by disruption, you typically do see consolidation. That is typically the first move you see … trying to figure out how to get cost structures in line with demand,” Horn said. “So my sense is … they’re trying to address those very real challenges and create a reset.”

Brian Prescott, president of the National Center for Higher Education Management Systems (NCHEMS), said Pennsylvania has for years had a “void in statewide coordination.” Addressing it is particularly important in such a “saturated marketplace,” he added.

Pennsylvania has the fourth-highest number of colleges of any state, after California, Texas and New York. With one of the highest ratios of institutions to students in the country, the state’s colleges have been forced to fight for a dwindling pool of applicants and limited state funding.

Pennsylvania was one of six states that cut per-student funding by more than 30 percent between 2008 and 2019, according to a 2021 report from the Center on Budget and Policy Priorities. Enrollment at PASSHE institutions declined nearly 20 percent between 2017 and 2023, according to state data; the state’s community college enrollment also fell 25 percent between 2017 and 2021 but saw some gains in 2023.

Prescott believes it would be “a step in the right direction” if the governor’s plan is supported by a divided Legislature and the higher education institutions receive the “magnitude” of investments needed to execute it.

Even if the plan does come to pass, it still won’t include the state’s four largest public institutions, one of which—Penn State—has a sprawling collection of 19 branch campuses that operate more like community colleges.

As a result, it still won’t provide the full statewide coordination system NCHEMS has advised for Pennsylvania, and the issues facing many states “will continue to plague” the Keystone State, Prescott said. “So the enrollment and demographic challenges aren’t leaving Pennsylvania, at all.”

Strength in Shared Resources

Roderick said the governor’s plan aims to build on the strengths of individual institutions and allow them to maintain a “degree of independence” while also sharing state resources.

“This will help them expand opportunities, programs and student support services that no one institution would be able to offer alone,” she said.

Although the plan will require a significant investment by the Pennsylvania General Assembly, Roderick said a better-coordinated system will “naturally” reduce inefficiencies and help reduce some operational costs in the process. The estimated costs of the governor’s plan were not provided in the announcement. Those details are expected to be revealed Feb. 6, when the governor delivers his annual budget message.

Roderick said Shapiro did not include the four state-related universities in the plan because they serve a different function in the state’s higher education ecosystem. She noted that Shapiro’s plan is designed to specifically increase the accessibility and affordability of “workforce-aligned credentials,” which are the kinds of programs on which PASSHE universities and community colleges are focused.

Prescott also noted that because the four flagship universities have a different mission, “politically speaking, it would be a heavy lift to try to wrangle those institutions under the governance of the state.”

Roderick said that although staff and program cuts at all levels are “not something that’s part of the conversation right now,” the restructuring of each college’s administration will be up for discussion in the months ahead.

“There are a lot of details that need to be worked out in consultation with the General Assembly,” she said.

Initial Support by Higher Ed Leaders

Higher education leaders across Pennsylvania are generally supportive of what they’ve heard so far about the proposed overhaul, but that may change as the details are more fully outlined and losses and gains for the affected institutions become more clear. And General Assembly members may not uniformly support increases in funding.

“The governor’s proposal is a real opportunity to build upon the strengths of PASSHE universities and the community colleges,” Dan Greenstein, chancellor of PASSHE, said in a news release. “Together we can create a new, larger system with better collaboration that gives students more pathways to a degree or credential, rapidly adjusts to the changing knowledge and skills employers want, and provides the lowest-cost option for students throughout their lifetime.”

John Sygielski, president of HACC, Central Pennsylvania’s Community College, said in a news release that the plan “sets Pennsylvanians, including current and future HACC students, up for success by making it easier for them to transfer earned credits, build skills that employers are seeking and save time and money in the process.”

Chris Lilienthal, assistant director of communication for the Pennsylvania State Education Association, which represents college faculty and staff, said in an email that the organization is supportive of what it knows about the plan so far “but looks forward to learning more about this proposal.”

Under Shapiro’s plan, the four state-related universities would also be able to offer reduced tuition to students from low- and middle-income households. They’d also receive any funding increases that may come out of a performance-based funding formula Shapiro proposed.

The funding formula would be overseen by the state Department of Education, which would eliminate the requirement of a legislative vote and help break “the cycle of political gamesmanship that has held funding hostage,” Shapiro said in his press release. Many of the state’s colleges went months without funding in the 2024 fiscal year budget because of legislative gridlock, which started early last summer and lasted well into the fall.

The formula would consider factors such as graduation rates, increasing enrollment and the number of first-generation college students who receive credentials. It would also incentivize institutions to recruit and support students pursuing degrees and credentials in high-demand and emerging fields, such as education, nursing, advanced manufacturing and biotechnology.

Neeli Bendapudi, president of Penn State and a self-described “advocate for performance-based funding,” said in a news release that the formula “presents a significant opportunity for Penn State and other state-related institutions to work together with the Commonwealth on shared goals for workforce and economic development.”

Questions Remain for Lawmakers

But Shapiro will also need support from the Legislature to move his plan forward.

“We need to hear more on how the Governor proposes to ask the General Assembly to create this new governance structure and how much it will cost taxpayers and students,” State Senator David Argall, the Republican chairman of the Senate Education Committee, said in an email. “Understanding the risks and ensuring this proposal is a net-positive is a must.”

State Representative Jordan Harris, the Democratic chair of the House Appropriations Committee, supports the plan.

“We need bold ideas to secure the future of higher education in Pennsylvania,” Harris said in an email. “I look forward to working with the Governor, PASSHE schools, and the Community Colleges to make sure that higher education is affordable and rigorous to provide a secure future for Pennsylvania students.”

Horn and Prescott, the governance and consolidation experts, still have many questions about how the new governance system will be executed and what the results will look like if it’s approved.

Prescott said the “devil is in the details” and much will depend on what happens in the state Legislature, but over all the concept is positive.

“This announcement reflects a big step towards ameliorating some of the conditions in Pennsylvania that have led to challenges for students and for meeting state needs,” he said. “But anything like this is going to be disruptive, and in Pennsylvania, it might be especially so.”