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BOT Committee Approves Building Renovations, Health System Merger

by on January 15, 2015 11:10 AM

Half-renovated buildings have been a common sight around the Penn State campus over the past few years, and that's not changing any time soon.

On Thursday, the Penn State Board of Trustees Committee on Finance, Business and Capital Planning discussed plans for numerous proposed renovations around campus, as well as a major merger with a central Pennsylvania healthcare system.

Ford Stryker, associate vice president of Penn State’s Office of Physical Plant, briefed the finance committee on a number of projects, including renovations to the Lasch Football Building – a project with an estimated cost of $12 million.

Stryker says the Lasch Building was “one of finest training facilities in country” when it opened in 1999, but it now lags behind more recent facilities built by other universities around the country. The project plans include expansions to the locker room, training facilities and office space.

The finance committee approved thiat project to move to the design phase pending approval by the full board on Friday. The committee also approved plans to send several other projects to the design phase, including expansions to the housing and food services warehouse and bakery and extensive renovations to the Research Building West.

Part of the motivation behind many of these projects is a desire for the university to become more sustainable, Stryker says. Through major renovations and more minor updates around the various campuses, Penn State aims to increase its energy efficiency by 20 percent over the next decade.

The committee also unanimously approved a resolution to move forward with a proposed merger between the Penn State Hershey Medical Group and the PinnacleHealth system of central Pennsylvania.

“This system has an estimated enterprise value of $600 million to 800 million that will be added to the university,” said Hershey Health System CEO Robin Wittenstein. “It’s important to recognize this isn’t a purchase, it’s a merger.”

The Pinnacle health system is entirely contained within the existing network served by Penn State’s Hershey Health Group. Wittenstein also pointed out that other major hospitals in Altoona and Lancaster have been acquired by outside health networks, steadily infringing on the area served by the Hershey system.

Penn State has been in talks with Pinnacle’s leadership for about a year. However, Wittenstein estimates that there’s at least another year's worth of approvals and legal red tape to work through before the merger might take effect.

The university might be spending many millions of dollars on various construction projects, but Penn State Senior Vice President for Finance and Business David Gray says the school is in a good place to handle these expenses.

“The university’s finances are extremely sound,” Gray said. “… We ended this last fiscal year about as solidly as can be expected for an institution of our size.”

He said that Penn State’s credit rating took a big hit in the aftermath of the Jerry Sandusky child sex abuse scandal in 2011, but that university has been able to “sustain and maintain our positive momentum” over the past two years.

Penn State currently holds a “AA” credit rating, with major credit rating agencies predicting a positive upcoming fiscal year.

Joseph J. Doncsecz, the university’s associate vice president for finance, tempered this good news with a dose of reality: Penn State’s tuition per student is higher than the state average, and the dollar amount of state appropriations per student is lower than the state average.

“Those figures are two sides of the same coin,” Doncsecz said. “… We would have to more than double our state appropriations to reach the median level.”

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Michael Martin Garrett is a reporter and editor for StateCollege.com who covers local government, the courts, the arts and writes the Keeping the Faith column. He's a Penn State alumnus, a published poet and the bassist in a local indie rock band.
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