Trustee Broadhurst's full testimony before the Senate State Governance Committee

James Broadhurst, Penn State trustee and chairman of the board’s Committee on Governance and Long-Range Planning, testified before the Pennsylvania Senate State Government Committee on March 18. The hearing was convened to allow senators to examine changes that already have taken place at the University and explore further potential improvements to the University’s system of governance.  The following is the text of Broadhurst's testimony.

Good morning Chairman Smucker, Chairman Smith, and members of the State Government Committee.  My name is Jim Broadhurst, and I am appearing before you today as a member of the Penn State Board of Trustees, and Chairman of the Committee on Governance and Long-Range Planning.  With me today are Keith Masser, Chair of the Board of Trustees, and Trustee Ira Lubert.

The Committee on Governance and Long-Range Planning is a new committee of the Penn State Board, one of four new committees established last year as part of an ongoing process of reform and revitalization that we have voluntarily undertaken in our efforts to improve our oversight and performance as trustees of one of America’s great universities.

Today I would like to share with you the measures we have undertaken since early 2012, and those that we expect to adopt this May, which respond to most of the critiques and criticisms of our governance structure that we – through self-examination over the past 16 months – and others have identified for us.  I can say unequivocally that we have accepted the criticisms and suggestions from all quarters as serious contributions to our review and analysis, and while not accepting all, have adopted or will adopt many recommendations that have originated from outside the University.

With respect to the review of the governance documents, this has been an ongoing item on our agenda for the last year and it will continue to be a topic of interest in the future.  It is, in fact, a work in progress.  The Charter, Bylaws and Standing Orders of the University are not static, nor have they been.  In fact, we’ve made revisions or changes to those documents over 20 times in the past 12 years. 

The list of recently adopted and proposed changes is long, so to facilitate our review today I have appended four documents to my testimony.  The first is a matrix of the 30-plus recommendations we have already adopted or will soon adopt, with notations on how the change was or will be made, and the source of the recommendation.   This document served as the Committee’s playbook as it analyzed and debated the many – and sometimes conflicting – recommendations from the various sources.  Parenthetically, most of the items listed on the matrix came from suggestions offered by four sources:  The Freeh Report, the Auditor General’s Report, the Middle States Commission on Higher Education, and the Penn State Faculty Senate’s Special Committee on University Governance.  The other three documents are the draft revised Charter, Bylaws, and Standing Orders of the University which will implement many of the changes listed on the matrix.   These revised documents reflect the recommendations adopted by the Governance and Long-Range Planning Committee at our March 2013 meeting held last Thursday.

First, let me highlight several of the significant changes already adopted by the Board within the last 12 months:

-- 12 year term limits have been established for trustees elected for terms beginning July 1, 2013; further amendments will apply the term limits to all trustees, other than ex-officio trustees, and will eliminate an existing exception for a trustee serving as Vice Chair of the Board.

-- Committee restructuring has added four new committees for a total of six,  providing for greater oversight and engagement by trustees; we also have four subcommittees.

-- Committee membership has been expanded to include faculty, staff and student representation on all but one committee.

-- Key staff positions, including the General Counsel and Directors of Internal Audit and Ethics and Compliance now have a dual reporting requirements to both the President and the Board of Trustees.

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

Below I have listed many of the changes to the Charter, Bylaws and Standing Orders that were approved by the Governance and Long Range Planning Committee last Thursday.  For sake of brevity, I will 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 the electronic notice and voting methodology currently in use.

-- Certain changes were made to facilitate electronic delivery of notices.

-- The 10-day notice requirement for meetings of the Board was reduced to three days, consistent with the Pennsylvania Sunshine Law.

-- The Charter was changed to reflect current practice with respect to reimbursement for travel expenses.

-- Provisions relating to officers of the Board were amended to reflect modern usage and to eliminate any potential confusion with respect to the use of the terms “President” and “Vice President.”

-- The Charter was changed to revise the composition and method of selection of the executive committee.

-- A number of anachronistic provisions, no longer relevant , were deleted.

Changes to the Bylaws:

-- The President and the Governor will become ex officio non-voting members of the Board.

-- As previously described, the language relating to term limits was amended.

-- The waiting period for an employee to become a trustee has been extended from three years to five years. A similar waiting period with respect to Commonwealth “row officers” was also added.

-- A new section provides for the removal of a trustee in the event of a  breach of his or her fiduciary duty to the University, or for breaches of one or more of the Expectations of Membership.

-- 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 PA Sunshine Law.

-- A new provision deals with reimbursement of trustee expenses.

-- A new provision authorizes the Chair to excuse the non-voting members of the Board from meetings at his discretion.

-- All references that previously existed in the bylaws with respect to consultation with the President of the University on committee and subcommittee appointments and committee and subcommittee agendas have been deleted.

-- The majority of the members of the Executive Committee will now serve by virtue of their position on the Board, plus three at large members to be nominated and elected by the Board.

-- A new provision was added to impose a five year term limit on committee chairs, with limited exceptions subject to the supermajority 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 will now be an elected position.

-- The description of the President’s duties was expanded by including language from the Standing Orders.

-- The “matters requiring approval of the Board” and “matters to be presented to the Board” were moved from the Standing Orders to this section of the bylaws, so that all of the operative language on this subject is contained in the same place.  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 codifies existing practices.

-- The University’s General Counsel is currently reviewing and will propose to the Governance and Long-Range Planning Committee for its review a revised comprehensive Conflict of Interest and Disclosure policy.   It is likely that additional changes to the Conflict of Interest and Disclosure provisions of the bylaws will be proposed as a result of that review and analysis.

Changes to the Standing Orders:

-- For the most part, the substance of the first five standing orders has been moved into the Bylaws.

-- The Standing Order relating to trustee elections has been updated to conform to current practice and the electronic voting process currently being used.

-- The Standing Order relating to the conduct of public meetings reflects some modest changes to reflect current practice of the conduct of the public meetings of the Board, and to give the Chair some flexibility to deal with the public comment period.

-- The Expectations of Membership section was revised to clarify and amplify certain of the expectations of the Board.

-- The Standing Order relating to Trustees Emeriti was revised to make former Board chairs will automatically be eligible for emeritus status and, importantly, to make clear that the Expectations of Membership, with a few limited exceptions, apply equally to trustees emeriti.

-- With these collective changes, practically all of the Auditor General’s recommendations and to the extent they relate to the University’s organizational documents, the Freeh Group’s recommendations, have been addressed in whole or in part.

-- A principal matter that has been addressed only in a limited way is the size and composition of the Board.   While our committee reached consensus on the issue of the voting status of the University President and the Governor, we are not recommending any additional changes at this time.

There is no one model or “best practice” that speaks to the optimal size or make up of a university board of trustees.  The size and make up of university boards varies widely throughout the nation, partly due to the differences in the university’s mission, public vs. private status, and overall complexity.

We do know, however, that Penn State’s Board of Trustees is very similar in size to the other Pennsylvania public research universities, has far greater alumni representation, and a greater variety of membership, reflective of the Commonwealth’s interests.   We see this high degree of diversity and alumni involvement as one of our greatest strengths as a Board, and recommend that any additional changes be made only after much further consideration.

Now, with the Chairman’s approval, I would like to ask my colleagues to join with me in responding to any questions you may have.

Last Updated March 18, 2013