Governance retreat public session transcript available

Penn State's Board of Trustees attended a retreat led by its governance consultant, Holly J. Gregory, on Thursday, Jan. 16. The first portion of the retreat was public and can be seen at http://www.youtube.com/watch?v=v1RPvytUYKE online. A transcript of the public session appears below.

Keith Eckel, member of the Board of Trustees and chair of the Committee on Governance and Long-Range Planning:

Well let me call our afternoon session to order and welcome all of the trustees here, and the pubic that is in the adjoining room. I think this is a great opportunity for us this afternoon to work together, and I would remind you not only afternoon but early evening, and the one thing that I would urge everyone is participate. Be involved. Don't hesitate to ask the key questions, challenging or not.

As you know, the committee, the Governance and Long-Range Planning Committee, was tasked with assisting the board in considering a range of governance reforms that have been suggested by a variety of interested parties. And to assist in that consideration, we have retained a consultant, through our RFP process to help facilitate. Our consultant is Holly J. Gregory, from the law firm of Sidley Austin LLP. And of course she is with us today. She is well-recognized for her work with boards, and many of you have already met or spoken with her. In fact, if you recall, she spoke to our board I believe about a year and a half ago. If you want to research her CV, you can do that at www.sidley.com. You will hear from Holly shortly, and she will help to facilitate our board assessment discussion and board retreat in private sessions later today. I expect that over the next several months, as we undertake consideration of further governance reforms, she will be reaching out as appropriate to ensure that our consideration is well informed by an understanding of many diverse viewpoints.

Let me begin with a brief recap of what we hope to accomplish with this project. At any institution, effective governance is a work in progress. There is no question about that. I don't believe there is any end point. It is a constant process to make sure that we have the best governance structure. No one set of governance structures or practices will fit an organization for all points in time. Rather, effective governance needs to include ongoing consideration of how the board, its committees and individual trustees can continually improve. This is doubly so in the aftermath of crisis, when we have the opportunity to learn from experience and reconsider our governance structures and processes in a pragmatic effort to position the board for more effective and efficient oversight and guidance in the future.

As you know, we have already made considerable and numerous changes in governance practices in the past two years. I've asked Frank Guadagnino, who is now new to our staff but is not new to us, to recap what we have accomplished to date. But there is also general consensus that more remains to be done. This process is not even changing in the last two years; it's been changing over the last 12 years I've been on the board. And I believe that it's critically important to recognize that there is not one singular model that's right for every organization. The right model for Penn State will be the Penn State model. It is within every one of our hands an ability to shape that.

Holly is the expert. I have great confidence in her ability. But perhaps her most important talent is one of facilitation; one of working with each of us and the board as a whole to improve the governance model and to make it the best for Penn State. And indeed that's why the board has tasked the corporate governance and long-range planning committee with undertaking this review, to do this work, and then to bring it to the board. And I can tell you, it is my personal hope that this undertaking will bring this committee, number one, and this board, together. There are differences of opinion. There may be divisions amongst us. But I am convinced that there is one thing that unites all of us. And that is that we want the best for Penn State.

Our viewpoints may be different in what that definition is. But we want the best for Penn State. And this effort is to create and in many cases re-underline processes that we may already have, as the best Penn State model to do that. So I am looking forward to this afternoon and this early evening in working with Holly and each of you as we begin this process together. And so at this time, having mentioned a number of reforms that have already taken place, I'm going to turn the program over to Frank, and Frank I would like you to outline for us, and remind us of the journey that we have been on in the last few years, in improving the governance of Penn State University. Frank?

Frank Guadagnino, senior partner with Reed Smith LLP of Pittsburgh, and consultant to the Board of Trustees

Thank you. As background for today's discussion, I've been asked to remind everyone of the actions that this board has taken since early in 2012, which respond to most of the critiques and criticisms of its governance structure that the board and others have identified. I think it's fair to say that this board has accepted suggestions from all quarters as serious contributions to its review and analysis, and while not accepting all, adopted many recommendations that originated from outside the University.

With respect to the review of governance documents, this has been an ongoing item on the board's agenda for the last two years, and continues to be a topic of interest as evidenced by the retreat that the board is having today. It is, as chair Eckel noted, a work in progress. The charter, bylaws and standing orders of the University are not static, nor have they been. In fact, this board made revisions or changes to its governing documents more than 20 times over the last 12 years.

Let me highlight several of the significant changes adopted by the board within the last 24 months. Starting in January of 2012, 12-year term limits were established for trustees elected for terms beginning July 1, 2013. Further amendments applied those limits to all trustees other than the ex-officio trustees, and eliminated an exception for trustees serving as vice chair of the board. Committee restructuring in January 2012 added four new committees for a total of six, providing for greater oversight and engagement by trustees.

The board also added new subcommittees for legal and for human resources. This past November the board added a seventh standing committee, the committee on compensation. Committee membership was expanded to include faculty, staff and student representation on all but two of the committees. Key staff positions including the general counsel and the directors of internal audit, and ethics and compliance, now have a formal dual-reporting requirement to both the president and the Board of Trustees.

The board also instituted a public comment period at its meetings in order to hear from internal and external constituencies. The meetings are now streamed online so that citizens of the Commonwealth and others can view first-hand the deliberations of the board.

In May of 2013, many additional changes to the charter, bylaws and standing orders were approved by the board. For the sake of brevity I'll highlight only the most significant of those changes.

Changes to the charter: The charter was changed to make the president of the University and the governor ex-officio, non-voting members of the board. The charter was amended to reflect existing practice with respect to elections of alumni trustees, and to be consistent with electronic and notice and voting methodologies currently in use.

Changes were made to facilitate electronic delivery of notices. The 10-day notice requirement for meetings of the board was reduced to three, consistent with the Pennsylvania Sunshine Law. The charter was changed to reflect current practices with respect to reimbursement of trustees for travel expenses. The charter was revised to change the composition and method of selection of the executive committee. And a number of anachronistic provisions no longer relevant were deleted.

With respect to the bylaws: again, the president and the governor were made ex-officio, non-voting members of the board. As previously described the language relating to term limits was amended. A waiting period was added with respect to University employees to become trustees. That waiting period was extended from three years to five years. And a similar waiting period with respect to Commonwealth row officers was added.

A new section provides for removal of a trustee in the event of a breach of his or her fiduciary responsibility to the University. Language was added permitting notices to be made electronically. The quorum requirement was changed from 13 to a majority of the voting members then in office. A new provision expressly permits telephonic meetings, subject to compliance with the Sunshine Law. A new provision authorizes the chair to excuse non-voting members of the board from meetings at his discretion.

References that previously existed in the bylaws with respect to consultation with the president on committee and subcommittee appointments and committee and subcommittee agendas was deleted. The majority of the members of the executive committee now serve by virtue of their position on the board plus such number of at-large members necessary to create an executive committee of 13 members, with those at-large members nominated by the governance committee and elected by the board. And information was added to impose a five-year limit on committee chairs, with limited exceptions subject to the super-majority vote of the board.

Given the recent increase in the number of standing committees, the minimum number of trustees on each committee was reduced from six to five. The provision making the president the ex-officio secretary was deleted. The secretary is now an elected position. The description of the president's duties was expanded by including language from the standing orders.

The matters requiring approval by the board and matters to be presented to the board for information were moved and revised in a couple of respects, to clarify which items come to the board for approval, and which items are brought to the board for information.

A statement requiring the University's annual Clery Act reports and Right to Know Law reports to be presented to the board for information was added. This change codified existing practices. And importantly, the conflict of interest and disclosure provisions of the bylaws were enhanced and strengthened to include not just financial conflicts of interest, but any situation where the interests of the trustee conflicts with the interests of the University.

We made, this board adopted additional changes to the standing orders, relating to the trustee elections; relating to the conduct of public meetings; and with respect to the expectations of membership to clarify and amplify certain of the expectations of the board of its members. And then finally the standing orders relating to trustees emeriti was revised, to make former board chairs automatically eligible for emeritus status and they include that the expectations of membership, with a few limited exceptions, apply equally to the emeritus trustees.

With these collective changes, practically all of the recommendations made by former Auditor General Wagner, and to the extent that they relate to the University's organizational documents, the recommendations contained in the Freeh Report, were addressed in whole or in part, as were the recommendations made by the Middle States Commission on Accreditation. Subsequent to May 2013, additional changes were made. In September and November, changes were made to change the annual meeting date to July; to amend the matters to be brought to the board for approval, as well as the matters to be brought before the board for informational purposes, clarifications on that; and as previously mentioned, a new standing committee on compensation was formed.

Finally, the Governance and Long-Range Planning committee at its meeting this morning approved and will recommend to the board for adoption at its meeting in March, additional changes to the charter that are intended to promote broader participation by the University's alumni in the annual election of trustees elected by the alumni. And additional changes to the bylaws that further clarify issues to be brought to the board for approval, rather than for information, with respect to real estate transactions and other capital expenditures.

Chair Eckel that concludes the summary. At this point we'll turn the program over to Holly.

Gregory Gregory, governance consultant to the Board of Trustees

Thank you all. I'm really very pleased to be here. I really greatly appreciate the trust that you all have shown in me in asking me to facilitate a consideration of reforms at this critical point in time for this great institution, this Penn State. In the interests of full disclosure, I'm not an alumni. I am a product of state university education, and I have to say as I learn more about Penn State, I'd love to be able to claim it, but that wouldn't be truthful.

I want to emphasize a couple of points at the outset. And what I want to do in this talk is sort of set a frame for the discussions we're going to be having later this afternoon as we do a board assessment, discussion and start to explore governance ideas in our retreat. It's helpful to create a framework and again, you have to understand my biases. One of my big biases is I'm a lawyer, and so that framework of fiduciary duty really does effect very much how I look at boards and what they do as a starting point. Not as an ending, but as a starting point. I also believe very much, as Keith Eckel said, that governance is a work in progress. It's about continuous improvement. It never really ends. You never say, 'We're done, we're set.' Something will change. Something will change in the context in which you operate. But you need to continually think about how this board functions and operates, and what are the rules that it has in place to guide it.

I want to emphasize a couple things at the outset. First, the focus of my practice as a lawyer is working with boards of directors and boards of trustees, so for-profit and not-for-profit entities, including some entities in the education area – although I don't pretend to be an expert on university governance. I work with boards in times of normalcy, and in times of crisis, and in times of aftermath of crisis. And I know well from my experience the tensions involving key relationships in an organization are not at all unusual in times of crisis. In fact, they are the norm. And the success of an organization in weathering a crisis comes down to the ability to commit to building trust, while under fire, and in the aftermath.

Now you've begun that reform, but we've heard from Frank a considerable amount has been done but more remains. You've made changes in the last year to address many governance concerns that have been raised, but there are a number of areas where observers have continued to call for change, and we have to listen. These relate primarily to issues around board size, board composition, and trustee selection method. And these calls for change, these types of calls for change are also not unusual in the aftermath of a crisis. The reality is that the buck stops with the board. And in my experience when an institution goes through a crisis, significant changes in corporate governance are often necessary to signal to constituents and the community at large that change is at hand.

I will spend time later today exploring, without deliberation or any effort to come to any kind of conclusion or decision, ideas about how to rebuild confidence and trust in the board as the governing entity of this great institution. That's really sort of where we are starting out today. I hope that we can do this with candor, and with a respect for the diverse viewpoints that are here in this room, with a goal of building trust among the trustees. That's our starting point. I'm going to ask that you set aside your own personal interests, and that you engage with an open mind. My task is to help you step back, and think about your effectiveness, both as an individual trustee, and as a collective body. Because after all, any discussion of board effectiveness must focus on both the individual and the collective. After all, each individual trustee owes legal duties to the University, but the authority to govern lies with the board as a whole.

I want to talk a little bit about the context that we're in. Context matters. We can't ignore it. As you know, I'm at the very, very beginning of my learning about the University and about the University's governance, and I greatly appreciate the time that so many of you have spent with me, especially over the holidays, in getting acquainted with the issues. In the last three weeks I've met or had phone calls with more than two-thirds of the trustees and it's really been helpful in sort of a jump-start for me. I wish the time had allowed for me to meet with each of you before our discussion today, and I commit that we will have the opportunity in the coming days and weeks to spend time together.

I also greatly appreciate the opportunity to have met with key members of the University's administration, its student leadership, Faculty Senate leadership and the Alumni Association leadership. This is all very important to me understanding what viewpoints are, and the concerns and issues that surround the board and the University. I anticipate that I'll be reaching out for additional conversations and will be also circling back to many of you whom I've already spent some time with as this process progresses.

Now I well appreciate as I said that the board operates in a context, and that the events of the last several years provide that context. I also well understand that trustees hold a variety of very different views about how the board operates, what works well and what needs to change. Not everyone has the same point of view, and if all agreed I don't think we'd be having this discussion. You wouldn't need my facilitation of efforts to consider additional reforms. My job is to help you find areas of agreement around potential reforms. Now I have no set views regarding the events that have brought the board to this point. I'm really agnostic. I'm neutral. I don't have a viewpoint. Nor am I really looking to form one. I'm here to help you think about how to position yourselves to work now at the highest and best level, and what kinds of reforms will help you do that, from the things that have been suggested.

Now I can't help but share with you a little bit of my philosophy and perspective on corporate governance. It's a perspective and philosophy that I've said is very shaped by my understanding of the legal framework in which you operate. Now of course there are different types of systems that an organization could have to govern itself. There's no one set, right way of governing. And there's a broad range. There's legislative governance models. There's fiduciary governance models. You have a fiduciary governance model. That's what the law has given to you. You are trustees. That is not is not a legislative or representational governance system. You each volunteered, in effect, to serve on this board, and you've been selected through a variety of methods and by a variety of groups, to serve on this board. And by volunteering, you've each agreed to take on that very special duty as a fiduciary of the University. And again, you volunteered to do so. This duty that you've agreed to has been described as encompassing one of the highest standards of care that a person can owe to an organization or to another person. You've agreed to put the interests of Penn State above your own interests. Or above the interests of anyone else with whom you may be affiliated or associated.

Your duties run to the University and not to any group that may have been involved in your selection as a trustee and this is a difficult concept, especially when there are identifiable groups to which each of you owe your position on the board. You owe your position on the board to a group but your obligations run to the University as a whole.

It bears emphasis and it bears reiterating because it is a difficult concept. Now, I note that the bylaws reiterate this point, providing that trustees bring to their roles their varied backgrounds and experiences, that's why you are selected from different groups, for the backgrounds and experiences that it's going to allow you to bring to bear in these discussions that the board has. And you've been selected in different ways. But you must keep the welfare of the entire University and not just the particular constituency at all times paramount. That's in your bylaws. Now, I know that you are well aware of your fiduciaries. You've probably heard this ad-nauseum. I can't help myself because it does provide the frame in which we're going to be talking about governance.

And I know that you all have the best interests of the University at heart. I understand that, especially after talking with you. People are so passionate about what they are bringing to this board and how much they care about the University and what they want to accomplish here.

But you do need to understand that the obligation that you bring of considering the best interests of the University is not a subjective standard. It's an objective standard. It is what is reasonable. What a reasonably prudent person would view as the best interests of the University. Of course as in any group there will be disagreement and I think disagreement isn't something to be afraid of; it's something to be valued. There is a reason why you have come together as a diverse group from different constituent -- to come onto this board and that's to bring these different viewpoints and to debate them in the boardroom. By doing so, to come to the best decisions possible. We come to the best decisions when we are forced to think about viewpoints that we may not have begun with.

It's through discussion and thoroughly informed debate about differences that the quality of the board's decisions are improved. Your views should be expressed on the board and in the committee. That's where you want to have this discussion and debate; in the boardroom and in committee deliberations, but ultimately you have to come together as a board and make decisions.

And this is the other hard context. Whether unanimous or not the board speaks with one voice when it's making decisions. How the board handles disagreement with the view to ensuring that the benefits of rigorous debate are actually achieved without causing further harm to the University becomes the measure and part of this board's effectiveness. I want to underscore this point. Effective and efficient decision-making cannot be made in an environment of divisiveness. We want to value discussion and debate and differing views and respect them but try to use that to come to better decision-making in an environment of hopefully consensus, not always consensus but at least decisions that the board will then support.

That's why the culture of trust that develops within a boardroom is so key. No trustee will ever be in the majority or the minority all of the time. But all trustees need to respect the views of others, come to board and committee meetings with an open mind and a willingness to strive for consensus. Where consensus cannot be had, all trustees need to be committed to supporting the decision of the majority. Once a decision is made by the board, it's the decision of the University. The place for criticizing and revisiting the board issue is in the boardroom. You can come back and try to reopen the issue, but it's now a decision of the board, to which you are committed to support.

Now, I need to share with you what I view as predicates for effective governance. Now we're going to be talking about this more as we talk in the self-assessment. We'll go through them in more detail but I think it's good to step back and say: What makes an effective board?

In some ways it's not rocket science but because we are like a carbon-based group, it can be difficult at times. First, you need a board that's comprised of the right mix of skill sets and experiences and viewpoints for the needs of the University. And the needs of the University change over time. That's why board composition needs to change over time, because you need to make sure you've got the right mix of experiences to help the University face the challenges that it faces, for whatever strategy it's going to achieve in the future.

You need a commitment by all trustees to understanding their roles and their duties and to actively engage in undertaking those duties. You need a commitment also to provide the time and the attention necessary to understand the complex issues facing the University and they are complex. That means there are a lot of times you have to devote to education of yourselves and reading and reviewing information and really learning what you need to know to make informed decisions. You need board meetings that are focused on the right issues at the right level of detail and with the right underlying information. This is a key challenge for many boards, to understand what should be on our agenda and what doesn't need to be on the agenda, so we can be very effective and efficient, and do we have the information that we need?

Information is key to informed decision-making on a timely basis. It's really the predicate for good decision-making overall. You certainly as I have highlighted I think need a board culture of trust and openness and acceptance and decisiveness that values the exploration and debate of diverse viewpoints with the goal of achieving consensus. Again, consensus is not always possible but it should be viewed as a goal to strive for. You need relationships between the board and the administration and the faculty that are marked by trust and respect, a shared devotion to the interests of the University and a constructive tension in which the board challenges the administration to be its very best.

Now, I know there is a lot of discussion about following best practices and benchmarking to what other universities do. And I think a grounding in best practices and benchmarking is key to considering governance reforms. We can learn a lot from others. And we should. However, I think as Keith suggested there's no one path to effective governance, there's no one model, or this would all be much easier. Governance structures and processes have to be tailored to the unique needs and circumstances of this University at this point in time, all in a pragmatic search for what will work best. And that's what I'm hoping that we're engaged in.

To ground our conversation this afternoon, I want to drill down just a little bit more on fiduciary duties, just to make sure we are all on the same page. And forgive me for this, again, but as a lawyer I can't help myself. As trustees you know you have three distinct duties to the University. You have a duty of obedience. That duty is to further the University's purpose, as set forth in the Penn State charter which is, and I'm quoting "Education of youth in the various branches of science, learning and practical agriculture." And then your bylaws provide additional direction. They say that the University exists as a multi-campus public research university that educates students from Pennsylvania, the nation and the world and improves the well-being and health of individuals and communities through integrated programs of teaching, research and service.

Everything that the University does should be linked to the purpose of the University as set forth in its charter and bylaws, and that is what is known in the not-for-profit world as the duty of obedience. Then in addition you have a duty of care. And sometimes I think of this as sort of, this is like the kindergarten duty, the duty to show up, pay attention, you know, use reasonable inquiry, prudence, you know, just act as somebody who really cares. But you do need to show up and spend time and attention. You need to act with the care of reasonable inquiry, skill and diligence that a person of ordinary prudence would use under similar circumstances so it's a reasonableness standard and it's based on the circumstances.

It means that you devote sufficient time to understanding the issues before the board, you prepare for and attend meetings, you pay attention at meetings. And of any committees of which you are a member ,and you participate in orientation and education and in workshop sessions like this. As the board requests. The duty of care also requires that you act on an informed basis, reviewing relevant information and seeking input from the administration and experts as necessary.

It requires that the board discuss and deliberate important issues and the board actively monitor University affairs and those to whom authority has been delegated. Where the board has delegated authority to others, you may rely on those persons for information and to carry out the delegated tasks, so long as that reliance is reasonable. The bylaws, note that reliance of the Board of Trustees must be based upon its continuing awareness of the operations of the University and it requires that the board receive and consider thorough and forthright reports on the affairs of the University. Kind of common sense. If you're going to monitor those to whom you delegate, you need information about the affairs of the University so you can provide direction and make sure that you believe they are fulfilling the delegated authority.

The board also has a continuing obligation to require information or answers on University matters with which it is concerned. And in addition, this duty of care requires that the board ensure that reasonable compliance, information and reporting systems are in place to detect and report up to the board any red flags or series of yellow flags that could themselves be a red flag. If a red flag is apparent, the board should investigate. In summary the duty of care requires active attention and informed decision-making. Nothing radical there.

Your third duty is the duty of loyalty. That's the duty to act in the best interests of Penn State and not in your own or others' self-interest and this requires special attention of course to identifying and handling appropriate any areas of conflict, handling conflicts of interest.

Now, I don't say strictly avoiding conflicts of interest, although that is one way of handling them, avoiding them where you can, but you can't always avoid conflicts of interest. Where they can't be avoided, it's important they be identified and handled appropriately. So disclosure, recusal, making sure that in the first instance the board and the University are aware of any conflicts and that there is an opportunity to make sure that there are mechanisms so that those conflicts don't further affect decision-making. Conflicts of course are most likely to arise with respect to financial interests, the use of University property, confidential information, acting on behalf of another party, competing with the University or taking a business opportunity that belongs to the University.

In sum the duty of loyalty requires strict protection of corporate assets, of University assets, if you will, and that includes maintaining confidentiality of information including confidential deliberations of the board. It also includes protection of the reputation of the University because after all that's one of the University's primary assets. Now, the good news is that perfection is not required. These duties, they expect a very, very high standard from trustees but the law recognizes that the board acting in real-time and in response to real, emerging challenges, will not always make the perfect or even the best decision. You're gonna get it wrong. You're gonna get it wrong sometimes.

And that's why so long as the board acts without conflict, with reasonable, prudent care, and in the interests of the University, you as trustees will not be held liable for failures in decision-making when those decisions are viewed in hindsight. This is a key principle. We want trustees to act decisively, quickly in a crisis. A perfect outcome, while certainly a goal, is not the standard by which you'll be judged in the aftermath.

So with all of this in mind let me share with you what I see as the big-picture goal as you reflect on potential areas for reform and improvement.

Effective boards institutionalize a culture of inquiry, mutual respect and constructive debate that leads to sound and shared decision-making. Let me repeat. A culture of inquiry, mutual respect and constructive debate that leads to sound and shared decision-making.

A lot of this is around boardroom culture, and let me describe a little bit more specifically what I see as the sort of culture to strive for, for an effective board. Certainly mindful of its fiduciary obligations, consensus-oriented where at all possible, and not always driven by majority rule; collegial and diverse but not divisive, conflict-avoiding and disclosing to the extent possible, in other words, committed to handling conflicts appropriately; curious and engaged. But at the same time respectful of role limits, the very important phrase, NIFO, nose in, fingers out, you delegate authority, you monitor to see that that authority is carried out well but you don't get in the way of those to whom you have delegated authority. Strategic thinking and not administering. You have delegated administrative tasks. Your role is above that, higher than that, it's meant to be future-focused, strategic, thinking about issues around controls, certainly, and risks, and the systems that are in place to control for risks, but letting the administration do its work.

This future-focused and not historic-looking. History guides us, we need to be aware of history, but the board in guiding the University has to be focused on the future. That's what you are guiding the University for. You need to be anticipatory and not reactive. You need to be spending your time thinking about what happens next, not just looking in a rearview mirror. You need to be revitalizing and not entrenched. You need to think about planned turnover, you need to think about, again, what are the qualifications and skill sets this board needs for the future to where the University is going and that means really paying attention to thoughtful turnover, thoughtful recruitment, board succession planning in addition to administrative succession planning. It's very important for any kind of entity and certainly for a large University such as this.

And finally diverse and inclusive. And again, I can't emphasize enough the value that comes from having the opportunity to debate a variety of viewpoints and be committed to using that debate to come to a better understanding and hopefully a better decision. So with that said, I look forward to working with each of you. I've enjoyed the time we've had to spend together so far. I'm looking forward to many, many more conversations and I really appreciate all the time you've given me in helping me to understand or start to understand, I don't pretend I'm anywhere significantly up on that learning curve yet. This is very much a work in progress for me just a couple weeks in. But I do look forward to working with you. I hope that I can be of some help to you collectively as you consider potential reforms. I view my role very much as one of facilitation to assist relevant views to be heard in a way that focuses the discussion in a positive direction.

So thank you. I'm looking forward to our discussion this afternoon.

Board of trustees gets update on Network on Child Protection and Well-Being

Penn State's Network on Child Protection and Well-Being has hired six faculty researchers and has searches in progress for six others, with a goal of translating knowledge into practice and policy aimed at combating child maltreatment, Susan McHale told the Board of Trustees today (Jan. 17).

"Child maltreatment is a complex and systemic problem that is difficult to study and hard to treat," said McHale, director of Penn State's Children, Youth and Families Consortium (CYFC) and Social Science Research Institute (SSRI), and coordinator of the Network. "We are building new knowledge, including providing evidence on whether programs and policies designed for child abuse prevention, detection or treatment are effective. A key effort in turning knowledge into action is building relationships with the local, state and national groups who share our concerns."

McHale spoke about the Network's goal to build collaborations across the University that will address the complex problems of child maltreatment. A key initiative is through a cluster hire of at least 12 faculty members in departments and colleges across Penn State including, Human Development and Family Studies, Biobehavioral Health, Law, Psychology, Education, Pediatrics, and Sociology and Criminology.

New Network faculty include Jennie Noll, professor of human development and family studies; Chad Shenk, assistant professor of human development; Lori Frasier, director of the Penn State Hershey Children's Hospital Division of Child Abuse Pediatrics; and Idan Shalev, assistant professor of biobehavioral health. Two additional faculty members, Brian Allen and Kent Hymel, will join the College of Medicine later this semester.

"The cluster hire is designed to bring faculty members from different disciplines together to address the problem of child maltreatment in new ways," McHale said.

Margaret Gray, director of administration and policy, along with Noll, the director of research and education, lead the Network. Faculty members and students in four foundational centers and 10 affiliates provide the wide-ranging, interdisciplinary expertise needed in addressing the complicated issues of child abuse and neglect.

"With these experts joining us and working with the experts who are already at Penn State, we will be able to build synergies and develop new knowledge to better protect children and support their health and development," McHale said.

Faculty members involved in the CYFC conduct innovative and high-impact research on the behavior, health and development of children, their families and their communities and are nationally and internationally recognized leaders in this field. In November 2012, based on a proposal by the Presidential Task Force on Child Maltreatment, the University created the Network, which built on the Penn State faculty expertise and CYFC's established mechanisms that support, fund and promote interdisciplinary research.

The Network's third annual conference, "The Role of Parenting and Family Processes in Child Maltreatment and Intervention" is scheduled for May 5-6, 2014, at the Nittany Lion Inn on Penn State's University Park campus.

In September 2013, the Network hosted its second annual Conference on Child Protection and Well-Being. The event attracted district attorneys, children and youth services professionals, law enforcement officials and medical professionals as well as Penn State faculty for presentations and discussions about the development of multidisciplinary investigative teams and child advocacy centers across Pennsylvania.

The inaugural conference on "Sexual Abuse: Traumatic Impact, Prevention and Intervention" was held in October 2012.

Integrity monitor cites University’s momentum in newly released report

UNIVERSITY PARK, Pa. -- The University is displaying its "growing leadership in compliance" and continues its "serious, good-faith effort to embrace and adopt" change, according to the latest quarterly report tracking Penn State's progress in meeting the goals of the Athletics Integrity Agreement (AIA) signed by Penn State, the NCAA and the Big Ten Conference.

"This is the fifth quarterly update Penn State has received from Sen. George Mitchell providing an overview of the University's changes that will help guide our actions related to ethics and integrity. I'm happy to say that we have again received a positive report," said University President Rodney Erickson. "Much like the year-end report released in September, this report filed today (Dec. 6) notes our numerous accomplishments and the dedication of University personnel in meeting or exceeding requirements."

The complete text of the report and information about actions Penn State has taken is available at http://www.dlapiper.com/ncaa_penn_state_report_5/.

Mitchell, named by the NCAA as the independent monitor for Penn State to oversee the integrity agreement, has provided periodic updates to the University and general public on the completion of virtually all of the 119 recommendations made by Judge Louis Freeh in July 2012. Freeh's recommendations are intended to improve governance, safety, policies, procedures and operations at the University. Meeting the Freeh recommendations was a requirement of the AIA.

Erickson said that, in recent conversations, Mitchell has urged University leaders to keep up the momentum that has propelled the University to date and maintain their diligence in ensuring these changes are embedded into the daily operations of the University.

"We are deeply committed to these improvements and to ongoing implementation of best practices," Erickson said. "We are now in a second phase of continuous improvement. It is clearly a priority that we intend to pursue."

Touching on nearly every part of the University, the report cited work being done in a multitude of areas, from the new compliance staffing in Intercollegiate Athletics to the presidential search, to the ongoing governance changes undertaken by the Board of Trustees.

Academic performance data of athletes released by the NCAA was also cited in the monitor's report, acknowledging that Penn State’s athletic programs achieved an aggregate 88 percent graduation success rate eight percentage points higher than the average of its Division I peers.

The report also mentioned Penn State's plans for a "second phase of efforts to improve the University in ways that go beyond the recommendations of the Freeh Report, while ensuring that changes put into place … will become embedded in the University’s structure and culture."

Over the course of the last several months, Mitchell and his team have been on the University Park campus on a number of occasions and also attended the day-long Second Annual Child Maltreatment Conference hosted by Penn State, noting that about 260 child advocates from around the state participated.

In addition, the report documented that to date, 16,882 employees and students and 2,057 volunteers have completed the “Reporting Child Abuse” online training offered by the University. Another 18,266 individuals completed in-person, classroom training in 2012 and 2013. Similarly, 2,801 employees, students and volunteers have completed online Clery Act training in addition to approximately 3,000 individuals who completed in-person, classroom training on Clery Act compliance in 2012 and 2013.

"Through this and many other initiatives during the quarter, the University continued to further its commitment to prevent child abuse and assist its victims," according to the report.

Penn State publishes status update as part of Plan for Continuous Improvement

UNIVERSITY PARK, Pa. -- Penn State has published a regular status update detailing the University’s progress on a variety of critical, ongoing strategic initiatives. With the recommendations from the Freeh Report substantially completed, Penn State administrators are moving into the second phase of the commitment to continuously review and improve its policies.

(View the latest update at http://progress.psu.edu/assets/content/Phase_II_update_Nov_2013.pdf.)

As part of the Plan for Continuous Improvement, University leadership will maintain the existing change management structure, which consists of an administrative response team, advisory council and a joint trustee/advisory council group. Regular meetings of those groups will continue, as will meetings with appropriate University leaders to discuss change initiatives. Penn State also will continue to publish status reports on a regular basis, in order to keep the community informed of progress.

The latest update outlines a comprehensive plan for a wide range of functional areas, including ethics, culture and values; governance; legal, risk, compliance and audit; safety and security; youth programs; training and development; human resources administration; communications; policy review and development; and athletics. Continuous improvement also will play a role in University-wide initiatives including the replacement of the student information system, and the Human Resources Transformation project.

David Gray, senior vice president for Finance and Business at Penn State, said the effort will build upon the positive momentum of the past year and a half.

“We are committed to the process of reform and improvement at the University, and the model we have established has been effective in helping us to meet our goals,” Gray said. “Ultimately, it is our charge as university leaders to maintain and strengthen Penn State’s position as a world-class academic institution and as a great place for faculty and staff members to build a rewarding career. A dedicated focus on continuous improvement always will be critical to those efforts.”

Settlements announced for Sandusky victims

UNIVERSITY PARK, Pa. -- Penn State officials announced today (Oct. 28) that over the past few months the University has reached agreement with 26 of the victims of former assistant football coach Gerald Sandusky. The terms of the settlements, which include a release of all claims against Penn State and other parties, are subject to confidentiality agreements. Of the 26 settlements, 23 are fully signed and three are agreed in principle, with final documentation expected within the next few weeks.

The aggregate dollar amount paid by the University for the 26 settled claims is $59.7 million and will be reflected in the University’s audited financial statements for the year ended June 30, 2013.

"The Board of Trustees has had as one of its primary objectives to reach settlements in a way that is fair and respects the privacy of the individuals involved,” said Keith Masser, chair of the Board of Trustees. "This is another important milestone in accomplishing that goal. I would like to thank the board’s Legal and Compliance Committee, as well as its Legal Subcommittee for its leadership throughout this process.”

“We hope this is another step forward in the healing process for those hurt by Mr. Sandusky, and another step forward for Penn State,” said University President Rodney Erickson. “We cannot undo what has been done, but we can and must do everything possible to learn from this and ensure it never happens again at Penn State.”

The settlement amounts will not be funded by student tuition, taxpayer funds or donations, according to officials. The University maintains various liability insurance policies, which the University believes cover the settlements and defense of claims brought against Penn State and its officers, employees and trustees. Expenses not covered by insurance are expected to be funded from interest revenues related to loans made by the University to its self-supporting units.

Penn State has received claims from 32 individuals who were or allege that they were victims of Sandusky. The University has rejected certain of the six remaining claims as being without merit and has engaged others in possible settlement discussions. The University retained the law firm of Feinberg Rozen LLP to act as independent third-party facilitators of the settlement negotiations between the University and the victims.

"I would like to thank Ken Feinberg and Michael Rozen for their efforts to facilitate the settlements," Erickson said. "Their expertise and efforts have been invaluable to our ability to reach mutually acceptable resolutions in the large majority of the claims."

Over the past year, Penn State has instituted more than 115 changes related to safety, human resources, security, compliance and governance. Through self-imposed urgency, the Board of Trustees, administration and staff have brought sweeping reform and best practice processes to nearly every aspect of the University’s governance and oversight. In doing so, the University considered the recommendations of multiple parties to determine the best course forward, including but not limited to the Pennsylvania Auditor General, Penn State University Faculty Senate and the Freeh Report recommendations.

“We have made great strides, but a great deal of work remains,” Erickson said. “Our University is a better institution today as a result of the work and dedication of our trustees, administrators, faculty, staff and students."

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