The talk of privatization resurfaced this week at a Faculty Senate meeting during which trustees chairwoman Karen Peetz mentioned that she was intrigued by a private-public model used by Cornell University. A Penn State spokeswoman later downplayed the remark.
"Penn State is not exploring how to become private," spokeswoman Lisa Powers said in an email. "Penn State is exploring how to remain public in the face of declining public funds."
Many public college systems have had conversations about restructuring over the past decade as state legislatures continue to cut higher education funding, said Michael Tanner, vice president for academic affairs at the Association of Public and Land-Grant Universities.
Penn State was chartered in 1855 as a publicly supported agricultural college, and became Pennsylvania's sole land-grant institution in 1863. Today, it is an unusual hybrid model: The university is considered "state-related" because it gets about 6 percent of its $4.1 billion budget from the state, but operates independently.
Penn State's public financial support has been steadily eroding, however. Most recently, the governor proposed cutting $64 million in aid to the university next year, which would come on top of a $68 million cut this year.
At Tuesday's Faculty Senate meeting in State College, two people asked university trustees whether Penn State should consider cutting the apron strings entirely and go private.
Peetz, the board chairwoman, responded that she and another trustee had spoken informally with their counterparts at Cornell University in Ithaca, N.Y. The Ivy League institution is largely private, receiving state funding only for four of its 11 colleges.
"I think the Cornell model is of great interest," Peetz said.
But Powers, the university spokeswoman, said a day later that Penn State is not moving toward any other model. "The board is listening to various ideas and will continue to do so in the spirit of openness and communication," according to a statement on the school's website.
Going private would be complicated, said Tanner, of the Association of Public and Land-Grant Universities. One major issue is ownership of facilities, since public money bought the land on which such colleges sit and paid for many of the buildings and infrastructure, he said.
But perhaps the bigger question is about mission, said Tanner. Land-grant schools have a commitment to providing educational opportunities for a broader range of students, including those with the most financial need.
An inscription over Old Main at Penn State quotes from the 1862 act of Congress that created the land-grant institutions: "To promote liberal and practical education in the several pursuits and professions of life."
No state has formally privatized its public higher education system, but some have been given more autonomy in the face of declining public support, said Julie Bell, education program director for the National Conference of State Legislatures.
Gary Fethke, a professor of management sciences and economics at the University of Iowa, said that higher funding levels are never coming back. Public universities would be better off accepting that and planning accordingly, he said.
"We are evolving toward privatization whether we want to or not," Fethke said.
And that's a good thing, he said, because subsidies can breed complacency. Going private will allow public college systems to position themselves "increasingly toward greater self-reliance, entrepreneurship, and competitive vigor," said Fethke.
Penn State trustees are meeting Friday in Hershey, where they are expected to discuss proposals to increase transparency. As a state-related institution, it is largely sheltered from Pennsylvania's right-to-know law.
Trustees have been under fire for months for their handling of a child sex-abuse scandal involving a former assistant football coach. The board is facing challenges at an upcoming election, including a slate backed by an organization called Penn Staters for Responsible Stewardship.
Group founder Michelle Murosky dismissed privatization talk in a statement this week as something simply meant to "deflect attention from the most serious matter at hand."
But the discussion has generated "very visceral, extremely negative reactions," said Maribeth Schmidt, a spokeswoman for group.
"Many of our alumni members immediately expressed concern that Penn State would not have been an option for them, had the school been private, most likely carrying a much higher price tag," Schmidt said.
Associated Press writer Genaro C. Armas in State College, Pa., contributed to this report.