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Peetz Pledges Fairness to Abuse Victims; PSU Board Adopts Recommendations, Hears from Corbett

on January 20, 2012 8:16 PM

Penn State trustees elected Friday bank executive Karen B. Peetz and and agricultural businessman Keith E. Masser as their board chairwoman and vice chairman, respectively, after Steve Garban and John Surma declined to seek reappointment.

Peetz, in one of her first actions as chairwoman, said Penn State will offer to cover abuse-related health-care and counseling expenses faced by Jerry Sandusky's alleged victims.

"There is no higher priority than to be fair to victims of abuse," Peetz said in a news conference. "The criminal legal process will take its course, and it would be wrong to (predict) its outcome. ...

(But) we want fairness for them," she went on, referring to the alleged victims. "And we want healing for them. And we will do what we can."

Garban, a retired Penn State vice president, and Surma, the U.S. Steel Corp. CEO, will remain on the university board as non-leadership members. Garban had served two years as chairman; Surma, two years as vice chairman.

University tradition holds that each board chair and vice chair serves three consecutive years, formally reelected at the start of each.

Garban, in parting remarks at a board meeting Friday, did not say specifically why he declined to seek reappointment as chairman. But Masser told reporters later that Garban informed the board of his decision in November.

"This was getting to consume him," Masser said, referring to the abuse-and-cover-up scandal that engulfed the university. "And he decided he would limit his time to two years."

The 32-member board gave Garban a standing ovation at the Friday meeting, where a number of other news stories broke. Trustees adopted the first round of policy-change recommendations from former FBI Director Louis Freeh; heard a Right-to-Know warning from Gov. Tom Corbett; and approved plans for the $89 million Pegula Ice Arena. Board members also accepted the appointment of David J. Gray to succeed Gary Schultz as senior vice president for finance and business.

Separately, in a rare split, seven members broke ranks with the majority to vote against several administration-proposed items, including higher room-and-board rates and some capital improvements.

But much of the day centered on the board itself. Garban, in announcing his departure as chairman, described himself as a coal miner's son. He went on to be educated with help from a football scholarship at Penn State, where he played under Joe Paterno.

"Graduating from college was a huge accomplishment in my family," Garban said. "My debt to Penn State, for all it has given me, will never (end)."

He acknowledged that "these have been difficult days at Penn State" since November and that "I have had some regrets.

"But one I don't have is that this board has been together, never forgetting their responsibilities and acting decisively and unanimously," Garban went on. "I'm proud to be a member of this board. There was never any doubt that this board would make the right decision, keeping in mind the long-term interests of the students, faculty, all employees and the university itself."

Surma, for his part, said he declined to maintain a leadership role because of the heavy demands on his schedule. University President Rodney Erickson said the board would have "liked (Surma) to continue in an officer role."

Erickson was quick to welcome Peetz and Masser to their new positions, though. Peetz joined the board in July 2010, having been elected as one of six board members to represent business and industry. A Penn State graduate, she is a vice chairman and CEO of financial markets and treasury services at Bank of New York Mellon.

Her term on the Penn State board will expire in 2013. In opening remarks Friday, she said the board will put a premium on transparency, reform and change under her leadership.

"All of us, including the board, with the wisdom of hindsight, could have done things differently," Peetz told reporters.

She said the board holds respect and gratitude for Paterno's legacy and contributions -- and the same goes for former university President Graham Spanier, who left the administration in November, she added. The trustees fired Paterno.

As the university moves ahead, Peetz said, Erickson has already made clear that Penn State values "do not begin with what is lawful or unlawful." Rather, she said, they begin with "what is moral" and with doing the right thing.

Peetz said she will strive to ensure that Penn State remains among the best teaching and research universities in the world. She will work toward a healthy balance between academics and athletics, she said.

And she said the board -- and Erickson -- will take steps to expedite any Sandusky-related legal action against the university, to prevent alleged "victims from going through years of litigation."

(Erickson said the university will not use any tuition, taxpayer or donor-contributed money to pay for the alleged victims' health care or counseling. The money will come from other internal business sources, likely to include insurance payouts, he said.)

Masser, meanwhile, joined the board in July 2008, having been elected by delegates from agricultural societies. His current term will expire in 2014.

Also a Penn State graduate, Masser is president of Sterman Masser Inc., a Sacramento, Pa.-based family farm that specializes in potatoes.

"What I hope to accomplish is to help find justice for the victims" and to enhance honesty and transparency at the university, Masser said. " ... We don't want to do just what's legal; we want to do what's moral, do the right thing. For this board, I'm committed to reform and change."

Peetz and Masser have been elected to the leadership roles for one year apiece, per board rules.

Among other developments at the Friday meeting:

  • Trustee Kenneth Frazier, who leads a board investigative committee on the Sandusky and related matters, introduced several recommendations from former FBI Director Louis Freeh. The university has retained Freeh's firm to conduct an independent investigation into the circumstances at Penn State that surrounded Sandusky's alleged misconduct.

That investigation, expected to yield recommended governance and policy reforms for the university, could run into the fall semester, Frazier said. He said Freeh has assembled a team of professionals that's set up an office at University Park.

The first round of recommendations, approved unanimously by the board, calls for the university to focus on toughened policies for programs that involve minors; the prompt reporting of incidents of abuse and sexual misconduct; compliance with the Clery Act's training and reporting requirements; administrative reforms; and security at athletic facilities.

The latter recommendation includes a call for the immediate removal of facility access for former athletic-department workers, Frazier said. The Clery Act requires many federally supported universities to disclose on-campus crime.

"I assure you that Judge Freeh and his team are moving as expeditiously as possible" in their investigation, Frazier said. "But we will not sacrifice thoroughness and completeness for expediency," and have not imposed "artificial timetables" on his work.

Frazier said the board's special investigative committee has no desire to exercise any content control over Freeh's final report. Board members have assured Freeh he will have total independence, without any expectation of favoritism for anyone, Frazier said.

  • In a post-meeting press conference, Corbett, a Penn State board member, said Penn State is fast approaching a critical point financially.

"The board has to decide whether they're going to be a public entity and receive public funds, or (be) a private entity," Corbett said.

State support has waned as a percentage of the university budget over the past few decades; it now accounts for less than 10 percent of overall Penn State spending.

Within the next few months, Corbett said, the board needs to decide whether it will define itself more formally as a private entity or as a public one. And if it decides to keep receiving state monies, he said, he will call for the university to face the full spectrum of state Right-to-Know requirements.

Right now, it's exempted from some of those. For instance, salary information for about two-thirds of university employees is held as private. The same is the case for many university contracts.

Erickson, questioned in a follow-up inquiry, said he has always felt Penn State is a public institution. Peetz said she is unfamiliar with "ins and outs" of the Right-to-Know legislation. But Penn State leadership is committed to following the best governance practices used at top universities elsewhere, she said.

If the Penn State leadership finds that Right-to-Know-type compliance is upheld at the best-governed universities, Penn State will look to achieve something similar, she said.

Already, Erickson has said he has no objection to opening all employees' salary information for public review. He expects the open-information question to come up with the state General Assembly in short order, he said.

In a brief interview with, Erickson said he is pushing for more overall openness of university information.

Earlier, in the board meeting, Corbett said he wasn't presented with enough data to make an informed vote on a bundle of 12 administration-introduced proposals. He abstained from voting on that bundle. A minority of seven other trustees dissented on the proposals, which included room-and-board price increases and some facility improvements.

  • Board members finalized the design and awarded contracts for the planned Pegula Ice Arena, to take shape along the west side of University Drive near Curtin Road. The $89 million facility, financed through private gifts, will include two rinks and space for 6,000 spectators. It should be complete by September 2013 and be LEED-certified, according to a university presentation.

Crawford Architects, of Kansas City, Mo., and Bohlin Cywinski Jackson, of Wilkes-Barre, developed the facility's design. Terry and Kim Pegula are the lead donors to the effort.

Given the volume of public and media interest in the board meeting, Penn State moved it from the regular location, on the Nittany Lion Inn's basement level, to the larger ballroom. The room was set up to accommodate about 200 onlookers, not including the news media.

The public seating areas were almost entirely full for the morning session, though they appeared less than half full for the board's afternoon session.

Some demonstrators assembled outside the meeting, some of them protesting the dismissal of Paterno. A number those who attended are board-candidate hopefuls.

Related coverage is available via the links below. The Twitter feeds available via @SCNewsDesk and @MinkNate also provide play-by-plays from the day's events.

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