Palmer earned a bachelor's degree from IU in 1970 and graduated cum laude from the IU School of Law-Indianapolis, in 1974. She joined IU, from state government where she had worked as state budget director and chief fiscal adviser to the late Gov. Bob Orr, in 1985. She served as special assistant to the president and associate professor in the School of Public and Environmental Affairs. She was promoted to vice president for planning in 1986 and assumed responsibilities as vice president and chief financial officer in 1994.

As IU's vice president and chief financial officer, Palmer was responsible for developing IU's $2.4 billion annual budget and aligning IU's legislative requests with its budgetary needs. Her efforts helped IU win a funding formula for research support, funding to establish the School of Informatics and initial funding for IU's Life Sciences Initiative.

Palmer also served as former IU President Myles Brand's finance chief during his entire tenure which ran from 1994 to 2002. In 2007, Palmer took a six-month leave of absence and then returned to IU in the newly created position of Director of the Office of Legislative and Policy Analysis. Palmer now reviews state laws and all legislation that affects Indiana University with a view toward developing a prioritized agenda for legislative initiatives aimed at helping the university pursue its missions of education and research more effectively.