My public comments from the Penn State Board of Trustees Meeting, September 16th 2022

Tldr; Yea: 32, Nay: 1 (Fenchak)

The Penn State Board of Trustees met Friday, September 16th 2022 at the Penn Stater to vote on six agenda items. As a service to alumni and the public who were unable to access the live broadcast of the meeting*, the following is an excerpt of the public comments I prepared and the vote results for each agenda item.

When the video of the meeting is released I will post a link to it on my website, https://barryfenchak4trustee.com. I encourage you to watch it in its entirety to get a feel for the mood in the room.

• Proposed Operating Budget for Fiscal Year 2022-2023 (Action Item 3)

“I have two significant reservations with regard to approving of this proposed budget.

“There are two very different, but equally important, tasks that we, as a Board, undertake in the budget approval process. The first is, of course, assuring that we have a viable, fiscally-responsible, financial plan. That aspect has drawn a lot of attention in the wake of our large current operational budget deficits.  It is, as we sit here today, incredibly important that we move as quickly as possible toward a sustainable, balanced operating budget. 

“The second aspect, and an equally important one, is that the development of and approval of a budget is the litmus test for proving what the University’s priority missions are.  It is the de facto ‘Mission Statement’ for the University. Because the allocation of the University’s resources--money, manpower, and assets--are where the rubber meets the road. It more clearly defines our true priorities than any words or speeches could convey.

“In both of these regards, this budget misses the mark in two critical ways.

“Last year, we had a (corrected) operating deficit of approximately $120,000,000. This budget proposal has a comparative operating deficit of approximately $160,000,000. Increasing the Operating Budget deficit by $40,000,000 is not moving in the right direction.

“Moving in the wrong direction, despite the fact that we have a $130,000,000 tuition revenue increase, is not good. We may not be able to responsibly eliminate last year’s operating deficit, but we should certainly be able to reduce it. Beginning this year.
 
“The second key purpose of a university’s budget is to define its priorities. We may not all be in perfect alignment as to what we think Penn State’s priority missions should be, but mine are to provide a quality, affordable education, to underwrite meaningful research, and to leverage Penn State’s resources for the benefit of the community at large.

“There are items in the proposed budget that I find beneficial, including the increased allocation to student aid. But there is also a $120,000,000 increase in support spending, while instructional spending remains flat.

“We just need to get together, dig in, do the work, and not stop until we have a budget that is both fiscally sound, and that prioritizes Penn State’s core missions.  In my opinion, that is what we should do. I believe it is our duty to Penn State’s stakeholders.”

Vote - Yea: 32   Nay: 1 (Fenchak)

• Proposed Final Plan Approval and Authorization to Expend Funds, Comparative Medicine Facility Expansion and Modernization, Penn State College of Medicine (Action Item 1)

“This certainly sounds like the type of project that is appropriate to take on. However, I have a couple concerns regardless of whether or not this is an appropriate project:

“At first brush, the cost, for what we are undertaking, appears to be quite high. With the understanding that every project has its unique parameters, I researched potential comparables of recent projects elsewhere, including industry-wide reports from Jones Lange LaSalle and Coldwell Banker Richard Ellis. The cost estimate appears out of range; where the ranges through those sources indicate approximately $1,000/sq ft as a high-side figure, we are 25-30% higher than that.”

[Note: Penn State University will be assuming $18,000,000 of this debt.]

Vote – Yea: 32   Nay: 1 (Fenchak)

• Proposed Appointment of Non-University Employees to the Penn State Investment Council (Action Item 2)

“Question; when Penn State files their annual Form 990, which department is responsible for compiling and verifying the information for Section D, Part V? That’s the section accounting for the inflows and outflows from the Endowment/LTIPs.  And who would be the subject matter expert with regard to those flows of funds?

“Until we can get some reviewable information there, I can’t responsibly evaluate the reappointment of anyone to that Council.”

Vote – Yea: 32   Nay: 1 (Fenchak)

• Request for Fiscal Year 2023-2024 Appropriations for Operations submission (Action item 4)

I had no prepared comments.

Vote: Yea: 33     Nay: 0

• Proposed Election of Directors to the Corporation for Penn State (Action Item 5)

I had no prepared comments.

Vote: Yea: 33 Nay: 0

• Proposed Sale of Alcohol at Athletic Events (Action item 6)

“I commend the Athletic Department for pulling this plan together. Please explain the metrics that will be put in place so that in one year we can accurately measure the success of this program. And make corrections, if necessary.”

Vote: Yea: 28  Nay: 5 (Black, Cairns, Detwiler, Dietrich, Hoffman)

*Access to the live broadcast via the Penn State Board of Trustees website was disabled for many public attendees trying to connect.

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As a member of the Penn State Board of Trustees, I will from time to time be made aware of certain confidential information.  I will also engage with Trustees and administrators in private, off-the-record conversations, with the expectation of privacy on both parties. I take these expectations seriously, as they are required in order to catalyze important discussions.

As a fiduciary, it is also important that I engage in conversations with all stakeholders of the University. Stakeholders like you.  Discussions will involve publicly available information and issues before the Board, as well as my personal thoughts, concerns, and ideas. I also will continue to solicit your thoughts, concerns, and ideas, and plan to engage in meaningful conversations with you on those topics. I hope that you will continue to share your concerns and ideas with me.