STATE COLLEGE — Penn State University plans to slash $94 million from its budget starting in July 2025, changes it says are necessary for its long-term stability and success. A significant portion of the budget cuts will affect the Commonwealth Campuses, which are slated to lose $54 million in funding, according to the university’s budget office. Penn State’s Board of Trustees will vote on the budget plan this summer.

President Neeli Bendapudi’s administration is attempting to balance the university’s budget by 2025. Under her leadership, Penn State moved to a two-year budget model to provide more predictability and stability to its financial planning. Handling the university’s multimillion-dollar budget deficit has been an ongoing challenge for Bendapudi since she became president in May 2022.

“The need for change within our University is undeniable and must occur for Penn State to retain its status as a leading institution, to innovate, and to invest in greatness at scale in education and research,” Bendapudi said in the university’s announcement.

Penn State said its financial challenges stem from inflation, demographic changes, and increasing personnel costs, including an anticipated $30 million increase in health care expenses in 2025. The announcement also said that neither tuition rates, which Penn State’s Board of Trustees control, nor the state legislature’s support, have kept pace with inflation. The announcement did not include information about or estimates of layoffs.