Casey freezes portion of U. state funding

While many economists continue to predict hard times for the state's economy and discuss the spectre of a "double dip" recession, another ominous sign has emerged from Harrisburg this week. As part of a $130 million state funding freeze affecting a whole host of aid recipients, Gov. Robert Casey has placed in reserve at least $200,000 earmarked for the University's equipment budget this year. The freeze will also affect the availability of funding for several other University-affiliated programs, including the Ben Franklin Partnership, which has had $4 million of its funding put in reserve. And if the economy continues to worsen, state officials said Casey could jeopardize a large part of the University's $37.6 million state allocation by extending the contingency plan to include the state's "non-preferred appropriations," which includes the University. Senior Vice President Marna Whittington said last night that the University would be able to "cope" under the governor's current plan, but added she was "very concerned" that a further downturn in the economy might lead the state to freeze part of the University's general allocation. Whittington said an abatement of any part of the $37.6 million allocation would put an even greater strain on the University because it was not increased from last year. It therefore represents a slight decrease in real terms because of inflation. "I think that our appropriation is contingent upon the economic health of the Commonwealth," she said. "And frankly, I'm not counting on it being 100 percent safe because I don't think the economic signals are clear at this point." Casey spokesperson Sue Grimm said yesterday the equipment funds have been put "on hold" as part of "a contingency against a possible decline in the economy," adding the University would receive the allocation sometime in the next few months, assuming there is no shortfall in tax revenues. Grimm said tax revenues collected so far are "pretty much on target," based on estimates made last summer. But she said that since the estimates assume zero growth until next spring, any negative growth could cause a revenue shortfall and force the state to spend the money now on hold. For now, Whittington said the University will put half of its equipment budget on hold until it receives the rest of the money from the state. The equipment money allows the University to provide classrooms with computers and other teaching equipment. Until all the tax revenues are collected, there is little the University can do except hope that the economy picks up, or at least avoids dipping back into recession as many economists think is happening. "I think this is one where we just have to wait out the fiscal year and see how the tax receipts go," Whittington said. "The state has a hard time appropriating money it doesn't have." But Economics Professor Gerard Adams, who has studied past recessions, paints a more hopeful picture. He said that although the economy has "slowed down and appears to be dead in the water," he does not think a double dip recession will result. Adams predicted the recovery would continue to be slow, but he said the economy would probably improve by sometime next year, when "we'll all feel better."

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