I haven't seen this, PSU certainly wouldn't announce it, but I would bet U Park is becoming marginally less selective. Which mean thousands of kids who would have been offered Berks or Mont Alto or Altoona 10 years ago are offered UPark now.
PSU draws heavily from Pennsylvania between Philly and P-burgh, and that area is experiencing very rapid population loss. College age kids in Philly and Pittsburgh areas are increasingly nonwhite without long-term family ties to Pa., and that has not traditionally been UPark's demographic.
Yes and no. University Park is getting a little less selective and has been admitting a greater number of applicants. But this mostly the result of decreased yield (the number of students being admitted who are choosing to go to PSU). They usually accept around 40,000 students to UP and about 9000 enroll.
That being said they have been getting historical numbers of applicants including a ton from out of state (and a good bit international as well). I believe that part of the reason that yield is not as high over time is that a greater percentage of admits are from out of state/international and so it is very costly to go to PSU and so more such students decline to attend. Just eyeballing it, but ~40% of admitted Pennsylvania residents accept going to PSU while only ~12% accepted out of state residents end up going there. The 40% is actually a pretty solid number, but as mentioned with a stagnating population in state, PSU cannot depend on only in state to fill PSU main seats (in recent years, in state students make up around 55% of those at UP).
That being said, I don't think the "problem" is that kids are being offered UP instead of Commonwealth campuses. Out of state kids rarely attend non-UP campuses except for some like Behrend and Harrisburg and that's where the bulk of the "choosing not to go to PSU" admits are from. If PSU were being more selective, you'd have a smaller number of students enroll at UP but (I suspect) virtually no change at the other campuses - those not admitted to UP students would almost certainly go elsewhere (Pitt, Temple, PASSHE or private in state or to similar public schools out of state like WVU or SEC schools).
Ultimately it's just fewer college-age students and there are also some signs that college attendance may be trending downward because the job market has been so strong for non-college trade jobs and there has been disillusionment with taking on huge college debt.
If you can make close to $100k as an a/c installer/tech, why pay PSU $140,000 for a business degree?
I know people in the trades in Philly area and just about all of them have more jobs than qualified people to fill them (though with a recession probably on the way, that may not be true 6 months from now).
Just FWIW (since you brought up a business degree) but getting into Smeal is extremely competitive as a Freshman. So much so that it's a common piece of advice for anyone not Ivy League type caliber to just apply to DUS and transfer in to Smeal (it's not that tough to get a major there once enrolled, but it's very tough to get in out of high school).