An Overview Of Penn State’s Performance Audit Recommendations
Pennsylvania Auditor General Eugene DePasquale released his performance audit of Penn State on June 22. The audit reviewed issued areas including transparency and accountability of university governance, campus security and background checks in the “post-Sandusky era,” and tuition affordability.
Among the major recommendations included in the audit reports and the university’s response are the following:
Reduce the membership of the Board of Trustees to 21 voting members.
In 2012, the auditor general reported that 32 voting member on the board was “too large for effective, engaged governance.” The Department of the Auditor General recommended reducing the size of the board from 32 to 21. However, Penn State has since increased the number of voting members from 32 to 36. The Auditor General admitted that while “there is no ‘one size fits all’ for public universities,” he called this increase “too unwieldy for effective governance.” He referenced the American Council of Trustees and Alumni stating that the “optimal” board size is 12-15 members and that “extremely large boards of 30 members…tend to defer their executive committees and members [do] tend to be less involved in important issues…”
Penn State responded saying it agreed with the concession that “there is no ‘one size fits all’ for public universities.” The university said “apples to apples” comparisons of public university boards are difficult to make because of different state laws, histories, and missions, and sizes and scopes of public universities.
The university also stated it has had a board of more than 30 voting trustees for more than a century, and the size of the board has not impeded its ability to carry out its land-grant mission.
Pen State said the size of its board allows for greater participation of its members in its committee and subcommittee structure. The university also noted 36 voting trustees is equal to or fewer than the number of voting members on the board of trustees of other public universities in Pennsylvania. This includes Pitt (36 voting members), Temple (36), and Lincoln University (39).
Support legislative amendments to include aspects of Penn State’s operation under the Commonwealth’s Right-To-Know Law.
In 2012 the Auditor General recommended the university comply with provisions of the Right-To-Know Law “as if PSU was an entity as defined in these good government laws.”
The Right-To-Know Law is an act that seeks to provide access to public information and public records. However, the law differentiates between “state-affiliated entities” and “state-related institutions.” State-related institutions, under the Right-To-Know Law, are specifically defined as Temple, Pitt, Penn State, and Lincoln University. These institutions are “instrumentalities of [the] Commonwealth, but not the Commonwealth itself… they are not state agencies and are not under the absolute control of the Commonwealth” according to joint testimony on March 22, 2016 to the House State Government Committee on behalf of Lincoln University, Penn State, Temple, and Pitt.
Penn State stated it is opposed to making the law applicable to the university as if it was a state agency. Penn State also said it is fully compliant with Chapter 15 of the law, which sets forth the specific reporting requirement for state-related universities, and makes public other records (such as financial statements and crime statistics) pursuant to other laws.
Re-evaluate internal controls and procedure to ensure that no employees are hired without clearing a standard background check.
In his audit, DePasquale found that “Penn State failed to ensure the university conducts 100 percent of mandated background checks.” His office found an 8 percent error rate for required clearances mandated for children’s academic and sports camps on Penn State’s campus, and a 4 percent error rate for other pre-employment background checks campuswide.
The university stated it is currently in the process of moving to new HR delivery service model that will improve record-keeping, and the centralization of hiring and background checking process. The university said once this project is complete, it will be able to better track and control the background check process to ensure no employee is hired without first being cleared.
Prohibit future tuition increases above the projected CPI for that year.
Another major focus of the audit included tuition. The Auditor General stated “Penn State also must do whatever is necessary to control tuition, which increased 535 percent in 30 years.” The university said it will make the Board of Trustees aware of this recommendations, but announced some reservations as well.
Penn State said the recommendation is unrealistic for a few reasons. One reason is the university is set to face a $12.9 million increase in its required contribution to the State Employee Retirement System. Over the past 10 years, says the university, this expense has increased from $10 million to in 2007-2008 to $100 million in 2016-2017. This alone accounted for a more than 13% increase in tuition for Pennsylvania resident students.
Also, the university argues its Commonwealth appropriation has not kept pace with the Consumer Price Index (CPI). Penn State’s appropriation for 2016-2017 is less proportionate than the appropriation from 2001-2002, and had the Commonwealth kept up with the CPI, the result would have been a 19% decrease in tuition for Pennsylvania resident students, the university argued.