HARRISBURG, Pa. — A Penn State-supported bill that advances performance-based funding for Pennsylvania’s state-related universities passed the Pennsylvania General Assembly on July 11 and is headed to Gov. Josh Shapiro for his anticipated signature.
The bill, SB 1154, establishes the Performance-based Funding Council, which will be tasked with developing recommendations for a new process that utilizes performance-based metrics to distribute funding to Penn State, the University of Pittsburgh, and Temple University. Performance-based funding is intended to increase degree attainment, encourage affordability in higher education, meet workforce needs and grow the economy, according to the legislation.
Penn State President Neeli Bendapudi has been a strong proponent of instituting a performance-based model as a means to grow Pennsylvania’s investment in public higher education and create more clarity, consistency and accountability for higher education funding.
“I am grateful that the Pennsylvania General Assembly took this important step to pass this much-needed update to the way we fund public higher education,” Bendapudi said. “Performance-based funding will allow the state to work in concert with universities on shared goals for workforce and economic development, college access and affordability, and successful student outcomes. I am eager to partner with the state and fellow university leaders to develop a performance-based funding model that rewards institutions for achieving outcomes-based metrics that align with the needs and priorities of the state, our students and our universities.”
Performance-based funding is not new in higher education — most states use performance-based metrics to fund public higher education. The concept also is not entirely new to Pennsylvania, as the idea has surfaced in the General Assembly previously with bipartisan support before gaining increased traction this year.
The Performance-based Funding Council will include five voting members from state government — the secretary of education, a member of the Senate appointed by the president pro tempore, a member of the Senate appointed by the minority leader, a member of the House appointed by the speaker, and a member of the House appointed by the minority leader — and three nonvoting members from the state-related universities, including Penn State’s president or a designee. To develop recommendations for a performance-based funding model, the council will consult with commonwealth agencies and experts and hold public hearings at each participating university.
“This is a transformative opportunity for the state and universities to work together to better support Pennsylvania students and employers,” said Mike Stefan, Penn State vice president for Government and Community Relations. “Penn State is already a valued part of so many Pennsylvania communities, and this much-needed update to the way we fund higher education only works to expand our impact and historic land-grant mission of teaching, research and service to the commonwealth.”
In February, Shapiro formally endorsed performance-based funding during his annual budget address as part of his blueprint for higher education. The recommendation was based on the work of the state’s Higher Education Working Group, which included Bendapudi among other state and university leaders.
The act sets April 30, 2025, as the deadline for the Performance-based Funding Council to submit its recommendations to the governor, a newly created State Board of Higher Education, the Pennsylvania Department of Education and the General Assembly, including draft legislation to implement the process to distribute funding. The council will reconvene every five years to reevaluate the performance metrics utilized for the distribution of funds to state-related universities.
“I want to thank the General Assembly, especially those who have continued to advocate for this new future in the way we fund higher education in the state,” Stefan said. “We’re eager to continue working with the state and our peer universities to ensure we are delivering for our students and all Pennsylvanians.”
The Performance-based Funding Council will work within the new State Board of Higher Education, established in HB 897, which will create a board of governmental officials, university personnel, students, business leaders, and other community members. The board, which will have a Penn State representative, will be responsible for developing a higher education strategic plan, which shall include setting long-term, measurable goals; providing strategies for implementing those goals; and assessing the higher education needs of the commonwealth.
Ready To Succeed Scholarship Program
As part of a package of higher education bills that passed the General Assembly on July 11, the Ready to Succeed Scholarship Program received an update to expand its eligibility to more students throughout Pennsylvania. The update lowers grade-point average requirements from 3.25 to 2.5 on a 4.0 scale and increases the program’s annual household income limit from $126,000 to $175,000.
Historically, eligible recipients receive up to $2,500 for full-time students and up to $1,250 for part-time students with $500 as the minimum award.
Both Penn State and Pennsylvania College of Technology currently participate in the program. In 2023-24, Penn State processed these awards for 1,406 students at all locations and will continue to do so if students meet eligibility requirements and sufficient funding is available.
Expansion of the program does not require additional funding from Penn State, as the program is funded by the General Assembly and administered by the Pennsylvania Higher Education Assistant Agency (PHEAA).
Grow Pennsylvania Scholarship Grant Program
Other Capitol business included the passage of SB 1150, creating a new grant program within PHEAA to encourage students to enter industries that grow the economy and remain in the state after graduation.
Students who enroll in approved courses of study could receive up to $5,000 per year they remain in those approved courses. In return, grant recipients would be required to begin work in Pennsylvania within one year of earning their bachelor's or associate degree in an in-demand occupation, as determined by PHEAA. Recipients must work in that field within the commonwealth for 12 months for each academic year they receive the grant.
Approved courses of study include higher education courses that provide instruction in agriculture, education, business, nursing and trades, among others approved by PHEAA.
Grants in the program, which will begin in 2024-25, will only be open to Pennsylvania residents on a first-come, first-serve basis with grants limited to the amount of money appropriated to PHEAA for the program.
The program's introduction does not require additional funding from Penn State, as it is funded by the General Assembly and administered by PHEAA. However, the University would have to return unused grant funds from students who leave approved courses of study.