When Gov. Ed Rendell decided Pennsylvania State University didn't deserve federal stimulus dollars, the university's president took his complaints to the man holding the purse strings.
In a June 29 letter, Graham Spanier urged U.S. Education Secretary Arne Duncan to reject Rendell’s application for education-related stimulus funding, hoping this would “compel” the governor to share the dollars with Penn State. Rendell has argued that Penn State and three other "state related" institutions are not entitled to the money, because they "are not fully public universities."  Unlike Pennsylvania's state-owned institutions, state-related universities are granted greater autonomy in exchange for receiving a smaller portion of state appropriations.
“If the Department approves this application as it is written, it gives governors in every other state the ability to pick and choose which public institutions they may support with federal dollars,” Spanier wrote.
“Penn State’s role as a public institution of higher education is clear in Pennsylvania statutory and case law. It is not in the Governor’s power to arbitrarily redefine the legal status of institutions simply because he does not exercise ‘absolute control’ over them.”
Penn State officials take issue with Rendell's assertion that the university is only quasi-public, but there’s some irony to the institution's position. It has previously used its “state related” status as justification for not operating like a public institution in many ways. For years, for instance, Penn State refused to publicly release the salaries of its employees, including that of legendary head football Coach Joe Paterno, citing its state-related designation. The university released the information only after it was so ordered  by the Pennsylvania Supreme Court.
Chuck Ardo, the governor’s press secretary, said Rendell was justified in leaving some universities out of the application for funds.
“We understand President Spanier’s frustration, but the reality is that the governor had very difficult choices to make in an unprecedented economic climate,” he said. “However, the federal law is clear that the governor is authorized to make the decisions.”
Asked what the governor made of Spanier’s letter, Ardo said Rendell “was surprised the president chose this course of action.”
Officials at Temple University and the University of Pittsburgh, both of which are state-related, acknowledged late Wednesday that they had also sent letters to the Education Department.
“We understand that these are very challenging times and that difficult financial decisions need to be made because we have been making such decisions ourselves,” Pittsburgh officials said in a prepared statement. “Still, we are stunned that the administration would advance a proposal that would impose very significant new tuition burdens on tens of thousands of Pennsylvania students and their families and that would cause significant harm to institutions that are widely considered to be among this state’s most important engines of economic growth.”
Officials at Lincoln University, the fourth state-related institution, could not be reached for comment.
Penn State Defends Public Status
While Rendell has taken a hard stand of late on the stimulus money, the state’s preliminary application  for State Fiscal Stabilization Funds, which are distributed through the stimulus program, actually included $20.3 million for Penn State. Pittsburgh, Temple and Lincoln were expecting $10.2 million, $10.5 million, and $870,000, respectively.
Something changed, however, between that initial April 24 application and the state’s final June 26 application , which includes no requests for supporting state-related universities. Pennsylvania is among a handful of states that has yet to set a budget for the 2010 fiscal year, which began Wednesday, and the decision to change the stimulus application came amid growing pressure on financial resources.
The debate over stimulus funding has opened a wider conversation about where state-related institutions fit within Pennsylvania’s system of public higher education. Rendell’s office points to numerous areas where state-related universities march to the beat of their own drums, even when the governor would prefer them to act more like public universities. Ardo cited tuition policy as one such area.
“[Rendell] has been adamant in insisting that [state-owned institutions] take every step possible in holding down tuition, and they have done so,” he said. “The state-related universities are independent and have not been as successful in holding down tuition.”
Undergraduate resident annual tuition at Penn State was about $13,000 this year for a full-time student, an increase of 5.9 percent over the previous year. The Pennsylvania State System of Higher Education charged its undergraduates $5,358 in 2008-09, which did not represent an increase from last year.
“The unspoken part of that equation is that if their tuition increases are less than ours it’s because they are receiving more state aid,” said Lisa Powers, a spokeswoman for Penn State.
Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education, said he was troubled by the precedent Rendell may set with the stimulus debate.
“I think it’s always dangerous when an elected official can unilaterally decide whether a college or university is a public or private institution, particularly when there’s a pretty clear history of a university being public,” he said.
“This is sort of [Rendell saying] 'when we like them we’ll call them public institutions, when we don’t we’ll call them state related,' ” Hartle added. “It sounds like the governor would like to have it both ways himself.”