Universities Slash Budgets Nationwide

Colleges across the country are facing layoffs, program cuts, tuition hikes and possible campus closings as they brace for major reductions in state funding -- again.

The leaders of Penn State University are wondering if they'll have to close some of their branch campuses next year, and more than 400 faculty positions may be on the chopping block.

In California, class sizes are swelling while class offerings are shrinking. One community college district in San Diego has cut 90 percent of its summer courses. And in Washington, universities are increasing the enrollment of out-of-state students, who pay about three times as much as in-state students, while considering trimming resident enrollment.

Colleges and universities, which can levy revenue through tuition hikes, are a primary target for cuts when states are in a budget bind.

"This year is going to be the hardest year on record," said Dan Hurley, director of state relations and policy analysis for the American Association of State Colleges and Universities, which has 420 member institutions. "Any new revenue at the state level is being gobbled up by Medicaid and K-12 education," he said, and much of the federal stimulus money expires this year, setting up the perfect storm for higher education.

At least 28 states, including Pennsylvania, California, Texas, Nevada and Washington, are talking about reducing aid to higher education for next fiscal year.

Years of cuts have led to a sort of restructuring among colleges and universities, as they eliminate and consolidate programs, trim administrative positions, impose layoffs and bulk up faculty workloads. But now they're wondering if they've already cut all they can with a scalpel and if they'll have to dig in with a knife.

"For two decades, we've been cutting our budget," said Lisa Powers, a spokeswoman for Penn State. "Now everyone is starting to feel as if we're down to the bone."

At UC Davis, some lecture class capacities have doubled to 400 students. Science labs that had 12 students three years ago now have 20, and there are fewer sections of introductory foreign language courses because "we just don't have the money to offer them," said Bob Powell, a professor and chair of the Department of Chemical Engineering and Materials Science and chair of the Davis division of the Academic Senate.

Some faculty are entertaining lucrative job offers from private universities that pay 40 or 50 percent more than UC Davis, which hasn't provided across-the-board raises in four years, Powell said. "If that trickle turns into a river, we've got a big problem," he said.

The situation will only worsen under California Gov. Jerry Brown's budget for next year, which slashes funding to the California State University and University of California systems by $500 million each -- a decrease of 18 percent for CSU and 16 percent for the UC system. It also cuts $400 million from the state's expansive network of community colleges.

Worse yet, those cuts could double if an extension of temporary statewide tax increases isn't approved. After meeting with California college presidents in April, Brown vowed to mobilize support for the extension, telling reporters, "The university is an engine of wealth creation. Stripping it of its professors and its research in the way that an all-cuts budget would require is unacceptable."

College Budget Crisis Deepens

An "all-cuts" budget would rely almost entirely on cuts to close the state's $26 billion deficit. The possibility of steeper reductions has Powell, the UC Davis professor, worried. "You think you've found the bottom," he said. "You're like, 'Finally, we can stabilize things,' and then it just turns into another quagmire."

"Quagmire" may be an understatement. Palomar College in San Marcos, Calif., has cut 300 of its 600 summer courses and will likely drop 150 classes in each of the coming fall and spring semesters. The college is also considering going to a four-day workweek for the summer to reduce expenses.

"These are unprecedented times for us," said Laura Gropen, a spokeswoman for the college. "Many people who've worked here for 30 years say they have never seen anything like this."

Students, Faculty Protest Budget Cuts

Thousands of students and faculty members in California and elsewhere have protested the proposed cuts. Last month, 10,000 Cal State students waved signs and flooded administration buildings to show administrators and the governor that cuts aren't going unnoticed. In Pennsylvania, hundreds of students crowded the Capitol in Harrisburg to tell legislators that their schools can't afford more funding reductions if they want to stay affordable and competitive.

At Penn State leaders are evaluating the effects of closing some of their 24 campuses. The university has already frozen salaries for the second time in three years and is offering early retirement incentives to lure faculty off the payroll. And 440 layoffs in the agriculture college are impending if the governor's proposal to cut $182 million, or 52 percent, of PSU's state funding sticks, Powers said.

"We are not going to put the burden of this cut entirely on the backs of students," said Al Horvath, PSU's senior vice president for finance and business. "We're not talking about 20, 30 or 50 percent increases in tuition. We're talking single digits."

But even single digits could mean a hike of about $1,500 per year for in-state upperclassmen like Michael Alexander, who doesn't receive any financial aid and has already incurred $26,000 in debt. "If it comes down to borrowing an extra few grand to pay for tuition, I guess I could do it," said Alexander, a 21-year-old marketing and telecommunications junior. "It's going to hurt later, but I could do it."

Alexander said he chose the university for its highly ranked business school, proximity to home and reasonable in-state tuition. But tuition there is on the rise, and the governor's budget, if implemented, will undoubtedly force it higher.

Underclassmen at Penn State's main University Park campus are paying 17 percent more in in-state tuition now than they were three years ago. "I know people who I went to high school with whose younger brothers and sisters aren't looking here anymore" because of tuition hikes, Alexander said. "I know some people who have even left to go back home or to go to a less expensive college."

In Washington, legislators are recommending tuition increases well into the double digits -- 32 percent over two years at the University of Washington and Washington State University under the Senate's plan, and 26 percent in the House.

Annual in-state tuition and fees at the University of Washington have already increased 28 percent -- or about $1,900 -- since 2008. The university has also frozen in-state freshman enrollment in favor of nonresidents who pay significantly more.

At least for now, most budget plans are theoretical. Many colleges and universities won't have a clear picture of what their final budget will look like until summer, when their governing boards meet. Between now and then, things could get better -- or worse.

"Even the most well-intended legislators don't know where to find the money," Powers, of Penn State, said. "I think many people want to fund higher education, but where that money will come from, we just don't know."

ABCNews.com contributor Teresa Lostroh is a member of the ABC News on Campus program in Lincoln, Neb.