SCHUYLKILL HAVEN -- The University Board of Trustees approved the 1991-92 budget Friday, including an 8.9 percent tuition increase.

The tuition hike means in-state undergraduates at University Park, Penn State Erie and Penn State Harrisburg will pay $354 more this year, increasing their yearly bill to $4,332. Tuition for students at the Commonwealth Campuses will be $4,194, an increase of $342.

Out-of-state students will be charged $9,118, a $744 increase from last year.

Graduate students are not exempt from the hike. All in-state graduate students will pay $4,846 while those who are out of state will be charged $9,692.

The mandatory computer fee will remain at $35 per semester.

Undergraduate Student Government President Mark Stewart told the board that the tuition hike could cause financial problems for some students.

"This year's increase of 8.9 percent is quite large, potentially resulting in economic hardship for many students and their families," Stewart said.

"When will Penn State attempt to draw the line?" he asked. "Our out-of-state costs are already entering the private university realm. How long will it be before our in-state costs enter that plane?"

Along with the tuition hike, the $1.4 billion budget increased expenditures on:

-- Instruction and research -- up $3.6 million.

-- Academic support -- up $1.3 million.

-- Physical Plant operation -- up $1.9 million.

-- Employee benefits, including $6.5 million for mandated employee benefits increases and $1.8 million for grant-in-aid cost increases -- up $7.6 million.

-- Salary adjustments -- up $17.2 million.

Thomas blamed the state for the hike.

"Underfunding continues to be Penn State's most serious problem," Thomas said, adding that Pennsylvania is 47th in the nation in funding for higher education.

He presented figures showing that University state appropriations are about $63 million, or 40 percent, less than the national average. But the University enrolls 26,000 more students than the average.

Using 1988-89 data, the Joint-State Governor's Commission reported that, per student, Penn State is the least funded college or university in Pennsylvania. The state allocates $2,620 per student for Penn State and an average of $3,530 per student for other colleges and universities.

"Despite this underfunding, Penn State has, in my opinion, compiled an excellent track record in cost containment and in efficiency," Thomas said, citing that Penn State has the lowest tuition among the state's public research universities.

University administrators were forced to estimate the level of state appropriations because Pennsylvania is still without a budget for fiscal year 1992. State legislators are entering the third week of budget negotiations.

Lt. Gov. Mark Singel, a non-voting board member, said the University may not receive the $261.4 million it expects from the state.

"I think it's fair to say the best guess is that the final appropriation will be somewhere between $255 million and $260 million," Singel said.

The University may have to cut programs or raise tuition during the semester if it doesn't get the amount it expects, Thomas said.

"Probably, if the difference is no more than a million dollars, then we can just postpone some expenditures and go with what we have," he said. "You can't just work out a million dollars. Some things would have to be cut."

Stewart told the board that a mid-year tuition hike should be avoided.

"I would hope if the state appropriations does not meet our expectations . . . we will not see the tuition increase still go further," Stewart said.

Singel said Thomas was right about the University's underfunding but added that Penn State will always be underfunded unless taxpayers are more willing to help out.

"Penn State will continue to have this problem as long as Pennsylvanians continue to think they're overtaxed," he said.

Despite this, Thomas told the board that he is encouraged by the $1.38 billion budget.

"I hope that you'll come to share in my optimism that the budget . . . will allow this University to continue its upward momentum," he said. "We move forward, however, mindful of the need to keep tuition as low as possible."

At its March meeting, the board approved a 4.7 percent increase in room and board charges -- raising rates from $3,370 to $3,530 per year for a double room.

Stewart asked University President Joab Thomas to write a letter to students and their families explaining the need for the tuition hike and how the money will be used.

Thomas said he will consider the idea, but added that the cost of sending the letter is high and the funds would come from tuition.