BOT Discusses Detailed Reform Proposals

August 18, 2014 at 12:03 pm 10 comments

The immediate result of Friday’s meeting of the Board of Trustees’ governance and long-range planning committee is easy to sum up: Needing more time to discuss the issues in board reform, the committee decided to use its regular September meeting to decide on a proposal to send to the full board, and a special October meeting will be called for the full board to vote on the proposal.

Explaining the rest of the meeting, however, isn’t so simple.

The committee finally delved into the details of governance reform. For more than a year now, we’ve heard about the general issues the board intended to consider; on Friday, for the first time, the committee engaged in a substantial discussion of the issues.

That took a while: nearly four and a half hours.

It also took the existence of three proposals, which moved the discussion from hypotheticals and abstractions to concrete suggestions:

Proposal A, conceived by board chair Keith Masser ’73  and Richard Dandrea ’77, would shrink the board by three voting members—the three voting members of the governor’s cabinet, the secretaries of agriculture, education, and conservation and natural resources—for a total of 27 voting members. The three secretaries, the governor, and the university president would remain as non-voting members. This proposal also eliminates three alumni-elected trustees and replaces them with a trustee from the Penn State Alumni Association, a student trustee, and an academic (i.e. faculty) trustee.

Proposal B, conceived by Anthony Lubrano ’82, also eliminates the three cabinet secretaries for a total of 27 voting members. This plan has only one ex-officio non-voting member: the university president. Neither the governor nor members of his cabinet have any role. Lubrano said he intends for the plan to be a compromise. This proposal requires that one of the governor’s appointments be a student and changes the way agricultural trustees are elected (by alumni of the College of Agricultural Sciences).

Proposal C, conceived by Barbara Doran ’75, makes the biggest changes. It cuts the board to 18 voting members by eliminating as voting members the three cabinet secretaries, four gubernatorial trustees, all six business and industry trustees, all six agriculture trustees, and two alumni-elected trustees. It adds one student trustee, elected by the board, and eight at-large trustees appointed by the board. The university president and the state secretary of education remain as non-voting ex-officio members.

Those are the highlights—you can click here to see the 10-page matrix with all three proposals that the committee used as its basis for discussion, which was the most detailed the members have had about possible changes.

Everyone knows the big issues—the size of the board, the composition of the board, the way board members are chosen. Committee chair Keith Eckel used those issues as the framework for the meeting. What those discussions revealed were the more specific questions that must be resolved to come to a consensus on those bigger issues. I’m going to focus on some of those questions:

Why so many agricultural trustees, and how would shrinking the number reflect on the university’s land-grant mission?

Penn State has more agricultural trustees than any university in the country: Cornell, a private land-grant university, has two of 64, and Purdue has one, elected by alumni of the agricultural college. Penn State’s six ag trustees reflect the university’s roots as the Farmers’ High School and the Agricultural College of Pennsylvania (it became the Pennsylvania State College in 1874), and its land-grant mission. Doran pointed out, however, that only 3.6 of the student body is in the College of Agricultural Sciences.

“My real question,” she said, “is why we have so many given the small percentage on campus. We are trustees of the university, not trustees of the state.”

That’s why Doran’s plan eliminates ag trustees—and also business and industry trustees. She says the board needs to be able to address its needs and would be better able to do so by making at-large selections.

The governance committee includes four ag trustees—board chair Masser, committee chair Eckel, Carl Shaffer, and Betsy Huber. Shaffer pointed out that agriculture is Pennsylvania’s No. 1 industry; Eckel called this issue “one that the chair is prejudiced on.” Roger Egolf, a non-voting faculty member of the committee, noted Penn State’s agricultural extension program, which has representatives in all 67 counties. The committee also noted the high proportion of research dollars pulled in by the college.

Lubrano said he saw a role for ag trustees but wondered how they fit proportionally into a reconstituted board. His proposal calls for ag trustees to be elected by alumni of the College of Agricultural Sciences, but Masser pointed out that he himself is an ag trustee who graduated from the College of Engineering. Egolf added that Lubrano’s proposal would “cut out people employed in the ag industry but not from the ag college” and that “also, ag grads go on to other careers,” so someone elected by college alumni may not be working in the field.

What’s the real issue about the alumni trustees—their large number, or the fact that the most recently elected alumni trustees have been vocal in criticizing the board’s previous decisions?

Dandrea started this discussion with a look at the benchmarking—of the 36 peer institutions the board identified, 33 have zero alumni-elected trustees. He noted the “highly unique situation we have at Penn State, where we have had this huge cadre of alumni trustee elected by alumni in contrast to all the other schools basically we decided were appropriate to consider.”

Dandrea further noted that a small percentage of alumni vote in the election—between 2.5 percent and 5 percent, he said, with the higher percentage coming in the three years since the Sandusky scandal. But even those numbers have fallen in the past three years. The combination, he said, means that the board is unbalanced if it has nine alumni-elected trustees.

He called accusations that his position is an assault on alumni-elected trustees a “mischaracterization,” explaining, “Nobody is proposing that we take the alumni-elected trustees from nine to zero, nine to one, or nine to two. It’s taking the alumni-elected trustees from nine to the same number as the other major mechanisms for appointment or election to the board. That’s fair. It’s not draconian.”

He pointed out that while Proposal A, which he helped to develop, cuts the number of alumni-elected trustees to six, same as the number of business and industry, gubernatorial, and agricultural trustees, it also requires that half of those three groups be composed of Penn State alumni. The proposal also allocates a seat to the Alumni Association.

That prompted a spirited dissent from Lubrano, who referred to a previous conversation between himself and Dandrea.

“I told you that having three children, I’ve done a fair amount of studying in the area of psychology. And one of the points driven home is that fair does not mean equal. So the notion that it’s fair to me is preposterous. The largest group representing this university is alumni—over 600,000. … I must confess that when I saw this proposal, it struck me that the hue and cry against the alumni election the last few years is in part against PS4RS, that folks at least quietly within the board are talking about how the process had been co-opted, that we can’t afford to have the kind of elections we’ve had the past three years. So this is really a control issue. If the alumni have nine, they can gain control of the board, and we’re going to harm the university. I find that insulting, frankly. … My only interest is to leave this school better than I found it.”

Lubrano, who had previously called the influence of Penn Staters for Responsible Stewardship “the elephant in the room,” then returned to a recurring theme—that the alumni election is the most transparent part of the board selection process.

Dandrea responded: “It is that. It is a good process. That’s why, even though only 2.5 to 5 percent or more than alumni participate in it, it’s out of respect for the bona fides of the process that we say, that I say, we should nevertheless still have six alumni trustees. Because if you look at the data and consider the micro-minority of the alumni who take the time to vote—and no criticism; there were many years after I graduated when I didn’t vote. Lots of people just don’t vote; that’s just a fact. When you take into account the micro-minority of alumni who vote, this proposal is reasonable.”

Dandrea added that a seat for the Alumni Association would give alumni representatives seven seats on the board, more than any other group, but Lubrano and Doran spoke against that addition.

Doran said that when she mentioned benchmarking with respect to the ag trustees, other committee members mentioned the importance of agriculture beyond those numbers; she said that position was “very eloquently explained.” And she said she was skeptical of benchmarking as a the motivation to reduce the number of alumni-elected trustees.

She described the perception as this: “Alumni trustees have marginalized themselves by violations of board confidentiality, violations of the standing orders, with being at odds with the majority. That’s an absolutely false narrative.”

A related discussion about the seat requested by the Alumni Association largely repeated the points from the discussion at the July meeting—that there is a conflict of interest because of the Alumni Association’s relationship with the university.

Can the process for choosing business and industry trustees be made more public?

The business and industry trustees are chosen by the board itself, a process that some reformers have decried, but that the Faculty Senate report noted was a typical means of board selection. Dandrea suggested that the process works—he noted that the two newest business and industry trustees, Daniel Mead ’75, ’77g and Walter Rakowich ’79, were unanimously approved by the selection committee, which included both a governor-appointed trustee and an alumni-elected trustee.

The committee discussed the procedure and logistics of the search with Eckel wondering whether the committee members could be made public and how important confidentiality was to those who may be nominated. (Mead, who’s on the governance committee, said it was very important.) There seemed to be some confusion over whether the names of the committee were known to the rest of the board. The members are chosen by the chair.

“What we’re saying is that I need to trust my colleagues on the board,” Lubrano said. “That’s what we’re all striving to do, develop a level of trust. It would go a long way if we had some level of information.”

And, finally, here are quick hits on the other discussion points:

—On board size, the committee discussed again having a small enough board to have all members be engaged, yet a large enough board to have members on all of the seven standing committees, which some consider an important part of the reforms that have already been implemented.

—There was widespread agreement that a board seat should be designated for a student, and that students should have input via a student selection committee.

—Dandrea said that he has “come full circle” on the idea of having a voting faculty member on the board and that any financial conflict can be managed by not having the faculty member vote, say, on the budget. Lubrano said he was still against this but noted that he was continuing to speak with “Professor Nichols”—that’s professor emeritus John Nichols, who chaired the Faculty Senate’s special committee on governance (which recommended two faculty trustees) and has extensively researched the role of governing boards.

—The need to find the right balance for emeritus trustees—taking advantage of their expertise, honoring them for their services, and making sure they don’t have undue influence after their terms expire—was discussed again. Specifically, the committee discussed the usefulness of having emeritus trustees on committees as non-voting members.

—Doran’s proposal got deeper into the details than the other two—on the matrix comparing the three proposals, three pages were devoted solely to items raised in her Proposal C. Among the ones that received the most attention: term limits, conflict of interest language, and delivering executive committee notes to the rest of the board within three days of a such a meeting. The last point generated significant discussion: Penn State lawyers said that many gatherings of the committee, such as a traditional Wednesday night dinner before Board of Trustees meeting, are simply informational and not technically meetings.

Lori Shontz, senior editor

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Entry filed under: Alumni Association, Board of Trustees.

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10 Comments Add your own

  • 1. Kevin Landon  |  August 18, 2014 at 4:28 pm

    The only way to do this so there is no repeat of the BOT fiasco that was foisted upon the Penn State community is to have alumni elected board members only. All others should resign immediately or be forced to do so. No non-voting members of any kind should be allowed to prevent the sort of hidden agendas that existed and continue to exist within the ilk of the non-alumni elected members.To clean up this mess the swamp must be drained so that the Alumni 9 can find out all that has been kept secret in all the CYA shenanigans that have gone on for too many years. As Deep Throat said in Watergate, Follow the money! Once the money trail is uncovered of these BOT members who have not acted in good faith we will know for whom they were really working since it was not for the greater good of Penn State. Most likely it was to line their own pockets and those of their puppet masters.Time to clean up the stench once and for all!

  • 2. Jeff Roby  |  August 18, 2014 at 9:48 pm

    I don’t believe there’s any way the current Board will effectively and meaningfully reform themselves. This should be done by a truly independent (not like Louis B. Freeh) commission established by either the Pennsylvania Legislature or US Department of Education. Otherwise everything is just window dressing and words.

    And I do not believe the answer is a full Board elected by Alumni. I am an alum who always votes and fully supports the recent 9 alumni elected Trustees. I don’t mean to sound condescending, but a large percentage of alumni don’t understand what is needed to govern and manage an enterprise the likes of Penn State. (I am one of those who doesn’t understand it.)

  • 3. Susan Gifford, '80 MBA  |  August 19, 2014 at 4:03 pm

    I agree with Kevin that the current board clearly has something(s) to hide – but what I’m not sure. I do, however, think at least one Ag trustee is appropriate, given our land grant status and the University’s history as Farmers High School. The business and industry trustees should and must go – and I am uncomfortable with any proposal (excuse me, Ms. Doran) that permits the board to elect the board, unless complete sunshine and transparency over the entire process exists. I support a student trustee. I also support a faculty trustee, but understand the conflict problem – perhaps that could be resolved with the faculty representative being emeritus faculty, but elected to the board via the Faculty Senate. Finally, I could never support a trustee elected/appointed by the University owned Alumni Association. The Association deeply disappointed me (to put it mildly) by supporting the Board’s actions in 2011, and has not, til this day, disputed the “football culture” characterization or stood up for the 600,000 alums or the integrity of our University. Finally, Jeff, you are dead on – the whole board should not be elected by the alums. The board needs a diversity of expertise and experience to properly oversee an institution of the size and scope of Penn State. I just don’t understand why Jack Wagner’s recommendations aren’t more a part of these reform proposals.

  • 4. Kevin Landon  |  August 19, 2014 at 6:27 pm

    Outstanding! You should be on the BOT as you have more sense than most of the others combined.It was an honor to read your reply and realize that true Penn Staters are out there with reasoned, common sense ideas that will improve the situation. Thank you!

  • 5. Susan Gifford, '80 MBA  |  August 20, 2014 at 12:31 pm

    Kevin, thanks for your kind words, and your commitment to improving the governance of our university. There are thousands of Penn Staters who truly care about improving the situation, and care about our reputation. We must stick together and continue to press for true reform and transparency.

  • 6. Kevin Landon  |  August 20, 2014 at 12:55 pm

    Susan, you’re welcome.
    You are right that we must stick together if we are to see the realization of our goal of having the Penn State that we can be proud of in word and deed.

  • 7. Alan Jagolinzer  |  August 21, 2014 at 5:06 am

    I have been on record with both the governance committee and Senator Yudichak that this board faces a crisis of confidence and needs to be restructured using a focus on identifying and representing stakeholders and requisite needs/competency to fulfill fiduciary duties. The board of a multi-billion dollar enterprise, needs, for example, expertise in public relations, law, finance/accounting, academics, human relations, student relations, and government relations. Benchmarking to other institutions is not particularly informative because benchmarking assumes (likely incorrectly) “peer” institutions are operating optimally and that they face similar needs. This board needs to restructure based on stakeholders + needs. The incremental-off-status-quo proposals that are under consideration are certain to under-deliver.

  • […] insights into the 1969 murder of Betsy Aardsma; details on the proposed shake-ups to the Board of Trustees; an introduction to Penn State’s new AD, Sandy Barbour, and much […]

  • 9. Alan Haberbusch '64  |  August 29, 2014 at 4:56 pm

    Agree with Susan and Alan. It’s hard to conceive of the current board majority doing away with any of “their ” members. They are just trying to water down the alumni representation and unfortunately will likely succeed. The best that can be done is to keep the light shining on every action so that everyone can see and react to what is being done. Enough uproar may get things changed.

  • 10. A Bigger Board of Trustees? | The Penn Stater Magazine  |  September 18, 2014 at 3:42 pm

    […] the board. (There’s an excellent summary of that meeting by Lori Shontz ’91, ’13g here, and a chart comparing the original three proposals can be downloaded from the Trustees’ […]

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