Funding for medical education at Penn State Milton S. Hershey Medical Center may, for the first time, come from the federally funded Medicaid program.

Hershey Medical Center could receive $7.5 million in federal funds in addition to $6.2 million already promised by the state's Department of Public Welfare. The center will receive a minimum of $11.5 million from both agencies, equal to what it received last year from the state.

The Department of Public Welfare has set aside $20.59 million for Hershey Medical Center, Temple University and the University of Pittsburgh.

Susan Hooper, spokeswoman for the state office budget, said that to relieve taxpayers, Medicaid could provide an additional $24.9 million in federal funding for a combined $45.5 million to all three institutions. State appropriations are currently $20.59 million.

"It's [federal funding] not the way medical education has traditionally been funded in Pennsylvania," said Sean Young, director of Strategic Services at Hershey Medical Center.

Hershey Medical Center could receive $7.5 million in federal funding, for a total of $13.7 million, a $2.2 million increase from last year, Hooper said. The Centers for Medicare and Medicaid services, a federal agency, is expected to determine funding for the medical centers in late fall 2005.

Richard DiEugenio, special assistant to the president of governmental affairs at Penn State, said the new plan is making a lot of people at Penn State, as well as at Pittsburgh and Temple, "very nervous."

"The funding is going to another state agency that has to release the money to us," he said. "We're concerned with the timely release of money."

Penn State spokesman Tysen Kendig said it did not matter where the funding came from.

"As long as we get the money, the budget line is irrelevant," Kendig said. "We're hoping the state has come up with a plan to provide support."

Hershey Medical Center is concerned that the money the state is asking for may not be approved since funding from Medicaid is part of a "loophole" of inter-governmental transfers, Young said. The transfers allow states to draw down money from federal welfare funds, he said.

"It is public knowledge that the Bush administration is looking to close loopholes," Young said.

But Hooper said the medical institutions would not have any problems getting the money for funding.

"We have made a failsafe; if they do not receive the money from the Fed, the state will hold all three institutions at the funding they had last year. It is a win-win situation," Hooper said.

State Rep. Kerry Benninghoff, R-Bellefonte, said he is not comfortable or confident that the federal government is going to approve the $24.9 million.

"I think it is risky budgeting scheme and I don't like that we are putting our medical schools and their research at risk," he said.

Benninghoff added that the economy grows every day and the money should come from within the state budget.

Donald Houser, spokesman for state Sen. Jake Corman, R-Centre, said Corman also disagrees with funding from Medicaid.

"What [the Department of Public Welfare] is doing is saying that we should be ripping off the federal government for Medicaid dollars," he said. "Medicaid dollars are not for medical education."

Collegian Staff Writer Adam Michael contributed to this report.