Penn State Athletics does not receive any funding from the Commonwealth of Pennsylvania or its taxpayers.
During the 2012-13 academic year, Penn State Athletics used existing reserves to cover the deficit caused by expenses exceeding revenues by $5.9 million. Current projections, though, indicate that ICA will not be able to rely on the use of reserves in the near-term (anticipated 3-4 years) to cover projected annual deficits.
Last November, ICA presented a proposal for a $30 million loan request to the Penn State Board of Trustees. It is anticipated that loan will allow ICA to cover its anticipated operating expenses in the short term and still be able to invest in facilities and programs overall. The budgetary shortfall is the result of multiple factors, including lower ticket sales in a down economy, the impact of sanctions, lost bowl revenues and an increase in expenses, mostly the result of coaching turnover.
"Penn State Athletics is ensuring it remains healthy in all areas by borrowing now for the future - when we anticipate our revenue will increase," said Dave Joyner, director of athletics. "Penn State Athletics has been self-supporting for decades and we plan to remain that way. We are taking on debt service for a few years until we are back to full speed and out of the sanction period.
"In addition, we expect revenue increases in some areas -- including ticket sales and television revenue -- and have re-calculated our future budget plans to reflect all of these areas. We also have seen increases in sponsorships and miscellaneous gifts," Joyner added.
Penn State has one of the nation's most broad-based and successful athletic programs, offering 31 sports, tied for the third-highest total among Football Bowl Subdivision institutions, that are fully funded at the NCAA maximum scholarship levels. Joyner said that there are no plans to reduce it offering of sports and that securing the loan to cover the short-term deficit ensures that all 16 men's and 15 women's sports will continue well into the future.
Penn State is one of just nine institutions nationally that has placed in the final Top 25 of the Learfield Sports Directors' Cup in the program's 21 years of existence and had an NCAA Graduation Success Rate of 88 percent, according to NCAA data last fall. The Nittany Lions have won 71 team national championships and 85 Big Ten Championships all-time.