Tuesday, September 23

Barry Fenchak: CDT Op-Ed - Hold Trustees Accountable

Their View | Accountability needed on Penn State board of trustees

By Barry Fenchak
22 September 2014

Two years ago, then-Penn State board of trustees chairwoman Karen Peetz said that by 2014, all of the issues the university faced then would be a distant memory.

But the issues we face are not a memory, because they are far more impactful than short-term issues such as whether or not the football team goes to a bowl game. The issues are even more important than the tens of millions of dollars squandered due to the fiduciary negligence of this board's leadership.

The overriding issue is the genesis of most of the divisiveness of the last 34 months: The utter lack of accountability of the majority of the board.

With alumni trustees, the accountability process is clear. Trustees are elected in a democratic "one-man, one-vote" process in which all alumni are enfranchised. If it is felt that those trustees are not serving the best interests of the community, they may be removed.

Governor-appointed trustees and the voting ex-officio trustees are selected by the governor. Their accountability is to the governor, not to the stakeholders of the university.

Agriculture trustees are selected by delegates from "agricultural societies" throughout the commonwealth (a maximum of three delegates from each of Pennsylvania's 67 counties). There are several qualification parameters a society must meet to have delegates recognized at the election, and all delegates are required to be registered at the election. To ensure the validity of the election, there must be a proper vetting of the agricultural societies that had delegates recognized at the election. So, exactly which agricultural societies had delegates at the last election? This information has been repeatedly requested from the board of directors office, which has refused to provide this information.

Why is this information kept secret from the stakeholders (and even the other members of the board)? Based on the recent history of board leadership, the most logical reason may be that the board leaders know those delegates were not properly vetted, and the entire election process was invalid (the results of the most recent election are being contested in the state courts).

Historically, the business and industry trustees were selected in a process similar to the agricultural trustees - by delegates of business and industry interests. In 2002, a committee chaired by former board of trustees chairwoman Cynthia Baldwin recommended the process be changed. The implemented changes now allow for a five-member panel of existing board members (at least three of whom must be existing business and industry trustees) to select a candidate for those open chairs. Again, these trustees have zero accountability to the stakeholders of the university.

Are the appointed - not elected - board members serving the interests of the university? Recent non-elected appointments to the board include:

Todd Rucci: Appointed to the board by Gov. Tom Corbett in 2014. In 2011, Rucci was appointed by Corbett to the position of executive director of the Pennsylvania State Lottery at an annual salary of $136,000. In 2013, Rucci left the PA Lottery to take a position as government relations officer with PAP Technologies. PAP Technologies is a subcontractor of Scientific Games International, which has two contracts with the Department of Revenue to provide instant games and online lottery services. In fiscal year 2012-13, the state paid Scientific Games $62.3 million. Whose interests do we believe Rucci will protect: Penn State's or Corbett's?

Richard Dandrea: Appointed to the board by the five-member panel for business and industry trustees in 2013 and then placed on the exclusive executive committee of the trustees. Dandrea - an attorney - is a colleague of Katie Surma. Katie is the daughter of Vic Surma, and niece of former board of trustees vice chairman John Surma (former CEO of U.S. Steel). Dandrea's law office is in the U.S. Steel building in Pittsburgh. Dandrea was placed on the board by Ken Frazier and former trustees chairman James Broadhurst - other non-elected, non-accountable board members. And now Dandrea, in the ultimate act of hubris and gall, proposes that elected, accountable trustees are over-represented, and their numbers should be reduced. Whose interests do we think Dandrea is protecting: Penn State's, or the "old guard" of the trustees?

The presence of these conflicts become a non-issue if the board members are accountable. Unfortunately, no matter how strongly the Penn State stakeholders may distrust the non-accountable trustees, the trustees are just that, non-accountable. Would any of the non-elected trustees be selected and retained by a broad-based vote of the university's stakeholders? Keeping in mind that over the last 34 months, the only nine trustee seats that are subject to accountability have come up for election. None of those trustees were retained, and none of the votes were close. I think the answer to the question is that it would be highly unlikely that any of the non-elected trustees would be retained.

Before we can "move on" to tackling the myriad challenges facing Penn State, we must have an accountable governance board in place. Without accountability, we cannot begin to effectively address the issue of ensuring a Penn State education remains within the financial resources of Pennsylvania's young men and women. Without accountability, we cannot effectively develop solutions to the budgetary constraints we face in a time of increasing costs coupled with declining public support.

Penn Staters are a special breed, and we will not condone those who prostitute the legacy and the reputation our university. Penn Staters love our university too much to give in to tyrants.

Barry Fenchak is a Penn State graduate and finance instructor at the university


  1. There is indirect accountability for the Governor's appointed trustees. Just vote the Governor out and his appointed trustees likely will be replaced. I don't see why the Governor gets so many appointed trustees. One should be more than enough to represent the Governor's views.

    I don't see how George Mitchell can give PSU high marks for following the Freeh recommendations when they continue to be so secretive, instead of transparent. It is appalling that the BoT won't even reveal which agricultural societies selected the trustees.

    1. Tim -
      Which explains why the "A+" proposal now seeks to reduce the Governor's influence (removing voting rights from the cabinet positions), and diluting the board with additional sycophant seats.........to the point where the "Alum" seats + the "Gov" seats (which they know they will begin to lose after Nov 4th) will be a minority (15 out of 34 - 9 alum/6 gov......without the "A+" changes it would have been 18 of 30 - 9 alum/9 gov). And they think all of "us" are too stupid to see what they are doing, or too lazy to do anything about it............or are they right?

  2. According to Dandrea's bio on the Trustees' website, he is an attorney working in product liability defense, with an emphasis on pharmaceutical claims. So not only does he work with Surma's niece in the U.S. Steel building, where Surma was CEO and head of its BOD until 2013, but he also works defending pharmaceutical companies against product liability claims. Gee, if I'm not mistaken, isn't Ken Frazier the CEO of a large pharmaceutical company (Merck) that had one of the highest profile liability claims (Vioxx) of the last 10-20 years?

    Nevermind Karen Peetz's deep business connections with Surma (Surma on Board of Peetz's company, BNY Mellon, and Peetz appointed to the board of one of US Steel's suppliers, SunCoke Energy)

    The arrogance of these people is sickening.