Penn State Board Meeting Review – Part 1: May 3rd and 4th 2018

 

xxx part 1

 

May 3, 2018:

Mark Dambly gives himself control over Penn State’s $5,000,000,000+ in Capital Spending funds……
and no one opposes him.

 

The most talked about events of the May 2018 Penn State Board meetings would likely be:

A) The announcement of the Alumni Trustee Election results
and
B) The announcement of a contract extension for President Eric Barron.

Those two issues, and others, are reviewed in “Part 2″…. at this link:

https://wordpress.com/post/barryfenchak4trustee.wordpress.com/56

 

However, the handling of several “under the radar” issues” provides more insight into the current workings of the Board….. most notably Ex-Con Mark Dambly’s move to control Penn State’s Capital Spending funds.

 

And we will start there, with the
FINANCE Committee meeting of May 3rd:

 

FINANCE Committee:

1) Approved – unanimously, and without comment or question – amendments to the Bylaws and Authority
of the FINANCE Committee.

Among the approved regulations was that the FINANCE Committee’s roles would include “Awarding of Contracts” for Capital Expenditures (construction projects).

In addition, Board Chairman Mark Dambly clarified that these new guidelines will NOT come before the full board for approval…. they would become “law” as soon as they were passed by the FINANCE Committee.

In essence, the FINANCE Committee – led by Fenza and Dambly – granted themselves full autonomy for awarding Capital Project contracts.
Outside of the purview of the Board at-large.

No one – including the two Alumni-Elected members of the Committee – Barb Doran, or Anthony Lubrano (who was absent from the meeting) – spoke one word in opposition to the changes.

BOT 2018 Doran  BOT 2018 Lubrano

Doran (L) and Lubrano (R) …..
Alumni-Elected Trustees on the 8-member FINANCE Committee, that were silent (Doran), and absent (Lubrano), while Mark Dambly took control of $5 Billion of Penn State Funds.

 The full impact of this maneuver cannot be evaluated without some knowledge of the background of Chairman Dambly:

If one is not familiar with the background of Mark Dambly,
a quick 2 minute video primer here:

https://www.youtube.com/watch?v=U3P4_GsNUrU

And a more through one here:

https://www.youtube.com/watch?v=efDPypT-Q1U

 

You are right to be both frightened and disgusted.

 

 

2) Approved – unanimously, and without comment or question – the $5.7 Billion Operating Budget.

Among the items of business during the meeting, perhaps the last item of the day was the most humorous… and sad:

Committee Chairman Bob Fenza (a Real Estate co-hort of Mark Dambly) had actually concluded the meeting – and had to be reminded by PSU VP David Gray that there was one “little item” that had been overlooked….. the approval of the $5.7 Billion Operating Budget.

After being reminded, Fenza called the meeting back to order,
asked for approval of the budget, and it was passed –
unanimously and without comment – in 6 seconds (I counted).

That is a maximum of 1 seconds “deliberation” per Billion Dollars spent.

The meeting was then adjourned (for good, this time).

Among the items discussed BEFORE Fenza had prematurely concluded the meeting:

 

3) Approved – unanimously, and without comment or question – $93 Million in expenditures for new PSU business software system.

The expenditures include a budget of:

$31,000,000 in Consultant Fees
$36,000,000 in Capital Costs
$26,000,000 in Operating Costs (over the next ten years)

There was some brief discussion regarding this project:

Trustee Ted Brown (not a member of the Committee, but attending the meeting as an observer) asked about the reliability of the system – and the contractor – in the event of “crisis” situations.
Chairman Fenza acknowledged Ted Brown’s question, and then moved on.

Fenza also – repeatedly – asked the PSU Administrator (Ortiz), who is managing the project from the Penn State side, to detail the savings in Operating Costs that the new system would provide.

Ortiz had already, just minutes earlier, outlined the degree to which Operating Costs would increase … and stated that she could not promise or anticipate any cost savings.

Over the course of the next 10-15 minutes, Fenza asked at least four times for an estimate of the “savings”, each time prompting a negative – and increasingly uncomfortable – response from the Administrator of the project.

Awkward.

4) Approved – unanimously – the awarding of a $20 Million Contract for work on an expansion project at the Hershey Medical Center.

Trustee Ted Brown (as an observer) asked for the results of
the “cost benefit analysis ” that were used to justify this project.

Chairman Fenza first deferred the question to the Head of Finance for Hershey Medical (who was in attendance).
The Hershey Medical Finance Chief stated that:  “We don’t have that”.

Trustee Brown then requested – since the official authorization would take place tomorrow – that the cost benefit analysis be provided “before tomorrow afternoon”.

At that point, Chairman Fenza BOT 2018 Fenza (BI)told Brown:

“This is a subtle project, and we don’t have financial justification”….. and told Brown that he (Brown) needed to “Trust the process”.

 

Fenza is the CHAIRMAN of the FINANCE Committee.
I only wish I was kidding.

 

5) Approved – unanimously and without comment – a contract to purchase heavy equipment from Trustee Valerie Detwiler’s Industrial Equipment company.

 

 

 

Other FINANCE Committee agenda items included:

An “Update on the State Appropriation”.

One of the highly paid PSU lobbyists (Zack Moore) reported that:

“There is no update”.

That was the report – in its entirety.

and,

A report on “Intercollegiate Athletics Oversight”.

The report?   “Nothing to report”.

and,

Approval of the sales of some relatively small parcels of Penn State real estate.

Passed – unanimously, and without comment – except for this one comical contribution from Trustee Donald Cotner, who asked:

“How much of a Capital Gains Tax liability will Penn State incur on the sale?” BOT 2018 Cotner (ag)

Apparently, Cotner had recently been made aware of the term “Capital Gains Tax”, but was somehow blissfully ignorant of the fact that Penn State University – the institution upon who’s Board he sits – was considered to be a non-profit (and such issues are therefore moot).

Bright engaged minds like Cotner’s are a huge asset to the governance of the University…. and in particular to the Board’s FINANCE Committee.

Oh well, at least a little levity to brighten an otherwise dark day for PSU Governance.

 

 

 

 

 

 

 

 

 

 

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