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Community Content: Penn State’s Runaway Governance

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The Pennsylvania State University is academically one of the best universities in the country, and I recommend it over any Ivy League institution. Students get equally good educations, and for far less money. The University’s governance is, however, more like that of a stereotypical banana republic than that of any kind of reputable organization.

The problem’s symptoms manifested themselves on November 9, 2011, but the problem itself began nine years earlier in the form of a coup d’état made the Business & Industry Trustees accountable to nobody but themselves and the Board’s power brokers. A PennLive opinion column by former Penn State Trustee Robert L. Horst, P.E., shows that these Trustees are supposed to be elected as follows:

“The [University’s] charter calls for agricultural and industrial trustees to be nominated and elected by county delegates from respective professional societies. They then serve three-year terms, as do the alumni trustees. By court decree in 1951, six trustees are elected by delegates of county “agricultural societies,” and six are elected by delegates of county “engineering, mining, manufacturing and mechanical societies or associations.”

In November 2002, however, the Board changed the Charter without the consent of either the Commonwealth Court or the Legislature, as follows.

Members Elected Representing Business and Industry: Six trustees representing business and industry endeavors shall be elected by the Board of Trustees. (Resolution of the Board of Trustees, November 22, 2002.)

State Senator Andy Dinniman said of this, “There is statutory law that requires Penn State to come to the Legislature for changes as it involves the composition of the Board. Penn State has ignored essentially what its statutory obligations are.” He then talks specifically about the Business and Industry Trustees, and adds that the University ignored the statute by using its status as a nonprofit organization to file the change with the Department of State.

University Counsel Cynthia Baldwin, however, made it emphatically clear in January 2012 that Penn State is not a private nonprofit institution, but rather an “instrumentality of the Commonwealth of Pennsylvania, providing the essential governmental function of higher education.” Baldwin adds that the University is tax exempt under Section 115 of the Internal Revenue Code. I cannot give legal advice, but this suggests strongly that the University is indeed subject to the Legislature’s oversight and supervision.

The Business and Industry faction’s complete lack of accountability has turned it into Penn State’s foremost problem. The Board, as led on 11/9/2011 by B&I Trustee John Surma, admitted falsely on Penn State’s behalf that the University was somehow responsible for Jerry Sandusky’s crimes against children. Then, in July 2012, B&I Trustees Kenneth Frazier and Karen Peetz, the latter in her capacity as Chairwoman and explicitly on Penn State’s behalf, affirmed the Freeh Report’s findings that Penn State had enabled Sandusky’s activities. This contravened the Board’s Standing Orders that say no Trustee can speak or act on the Board’s behalf without authorization by the Board. The Board never studied the Freeh Report, much less approved it. Then, when the NCAA used “Penn State’s” acceptance of the report as an excuse to impose the kind of sanctions it normally reserves for the nation’s most corrupt and dishonest athletic programs, these individuals failed to inform the NCAA of its misstatement of fact.

Now B&I Trustee Richard Dandrea has introduced a motion to reduce the number of alumni-elected Trustees regardless of the foreseeable and obvious effect on University-alumni relations. Before this goes any further, the Legislature, and/or a court of law, needs to determine whether Dandrea even has the right to speak at Board meetings (outside the three-minute slots allocated to members of the public), much less vote or propose resolutions. The same goes for Trustees (???) Hintz, Frazier, Mead, Peetz, and Rakowich.

William A. Levinson, P.E.,  PSU B.S. ’78, is the owner of Levinson Productivity Systems and the author or principal editor of nine books on business, management, and industry. 

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