The University Faculty Senate met on Tuesday, March 16, 2004, at 1:30 p.m. in Room 112 Kern Graduate Building with Christopher J. Bise, Chair, presiding. There were 142 senators who signed the roster.

MINUTES OF THE PRECEDING MEETING

We will begin our meeting today with Agenda Item A, minutes of the preceding meeting. The December 9, 2003, The Senate Record, which provides a full transcript of the proceedings, was sent to all University Libraries and is posted on the Faculty Senate web page. Are there any corrections or additions to this document? May I hear a motion to accept?

Senators: So moved.

Chair Bise: Second?

Chair Bise: All in favor of accepting the minutes of October 28, 2003, please signify by saying, “Aye.”

Senators: Aye.

Chair Bise: Opposed, say, “Nay.”

Chair Bise: The ayes have it and the motion carries. The minutes of the December 9, 2003, meeting has been approved.

COMMUNICATIONS TO THE SENATE

Chair Bise: Agenda Item B, Communications to the Senate, The Senate Curriculum Report, the blue sheets of March 2, 2004, is posted on the Faculty Senate’s web page.

The Senate calendar for 2004-2005 is included in your agenda. You will notice that the meeting on October 26, 2004, will take place at Penn State Harrisburg. We are pleased that Madelyn L. Hanes, Provost & Dean of the Capital College is enthusiastic about hosting this meeting. The Senate Office will be contacting senators later this summer regarding meeting arrangements and additional details. There have only been two other Senate meetings that have taken place away from the University Park campus. One was in Altoona in 1980, and the other was at the College Of Medicine in 1994.

REPORT OF SENATE COUNCIL

Chair Bise: Agenda Item C, Report of Senate Council. The minutes of the Senate Council meeting held on March 2, 2004, appear as an attachment for today’s meeting.

ANNOUNCEMENTS BY THE CHAIR

Chair Bise: Out of courtesy to our presenters, please turn off your cell phones and pagers at this time.

Today’s agenda is very full and we are carrying over the agenda from the February 3, 2004, meeting. As a coal mining engineer, global warming and I have our differences. I am glad we do not have the predicted eight inches of snow right now. We will try to address all of these items in a timely manner. We plan to take a break at an appropriate stopping point in the agenda.

I would like to refer you to the minutes of the Senate Council at the end of your agenda for announcements that were made at the Senate Council meeting on March 2, 2004. The Faculty Advisory Committee to the President met yesterday and discussed the following items: Nona Gerard Termination; Maternity Leave Policy for Tenured and Provisional Faculty; Outdoor Public Art Policy; Internships: What Constitutes Placing a Student in Harm's Way; University Web site; Faculty Input for AD14; and the Relationships Between Curricular Issues, Faculty Issues, and Budgeting Pressures for Diverse University Units and Locations.

The GI Conference Committee, under the leadership of John Moore, sent a final draft of their report to the Senate Committees on Curricular Affairs and Undergraduate Education for review at today’s meeting. I expect to see the final report on the Senate Agenda at the April 27, 2004, meeting.

The Senate has received notification that the Council of Commonwealth Student Governments, (CCSG) has organized an event called “The Rally in the Rotunda” on Monday, March 22, 2004, at 1:00 p.m. on the steps of the Capital Building Rotunda in Harrisburg. This rally, which is expected to involve students from Penn State, other state-related and state schools, will draw attention to the funding of higher education in the Commonwealth. We applaud the CCSG students for their leadership in this important rally. If you are in the vicinity of Harrisburg on March 22, 2004, around 1:00 p.m., I encourage you to participate in this rally.

I have been asked by the Social Security Number Conversion Team to make the following announcement:

All University Administrative Information Systems, including eLion grading, will be taken offline for several days, beginning late on December 18, 2004, to facilitate the replacement of social security number identification with a new Penn State ID number (PSU ID) for all Penn State faculty, staff and students. The conversion meets new requirements designed to prevent identity theft. The eLion shut down will cause an interruption in both the eLion grade entry by faculty and the eLion grade inquiry by students. Please plan your fall 2004 syllabi, assignments, testing, and grading, to accommodate the December 18, 2004, scheduling.

There was broad discussion with a widespread group of University offices about when this shut down should occur and it was decided that the winter break is the best time even though grade reporting is interrupted. It was also agreed that the shut down must start prior to December 23, 2004, in order to allow the conversion and testing work to be completed before the start of business on January 3, 2005.

More information will be provided at the start of the fall semester. The Social Security Number website will appear in the Senate Record for today’s meeting. For information about this University initiative, visit the official Social Security Number Project web site at http://ais.its.psu.edu/SSN.

SPECIAL PRESENTATION TO THE UNIVERSITY FACULTY SENATE
BY THE PRESIDENT OF THE UNIVERSITY

Chair Bise: Agenda Item E, Comments by the President of the University. President Spanier is here today and he will be providing a special report to the Senate. I am pleased to invite him to come forward and address the Senate.

President Spanier’s speech may be viewed at the following web site: http://president.psu.edu/presentations/privatization_031604.pdf.

President Spanier: Thank you Chris, and thanks to all of you who came out in the nasty weather. How many of you from the campuses came in last night? Good thinking.

I'm pleased once again to have this opportunity to discuss with you some topics pertinent to the future of higher education in Pennsylvania. In a previous report, I discussed some of the demographics of Pennsylvania and the nation that are significantly altering the higher education landscape.

I'd like now to explore some additional forces that are reshaping American higher education. Demographics are again part of the mix, but so are a complex of other variables, including rising costs, increased competition, and declining resources from state government.

Despite these challenges, I feel fortunate to be part of an enterprise that contributes so much to our society. As Pennsylvania's flagship public university, Penn State has a historic partnership with the Commonwealth. One hundred forty-one years ago we became one of the nation's first land-grant institutions, answering the Commonwealth's call to educate its citizens, engage in public service, and provide knowledge that would help advance society.

That has been our legacy. But that legacy is at risk, and our role as a public university is changing on many fronts.

There is a shifting landscape in funding of the nation's top public research universities. This is leading to the increased privatization of public higher education. The reality is that while we are becoming more like our private counterparts, they are also becoming more like us.

Allow me to demonstrate this.

There are 628 public, four-year institutions of higher education in the nation, and 1,541 private, four-year institutions. Combined with other institutions like community and junior colleges, we collectively educate more than 15 million students at a given time. These numbers do not take into account the 780 or so for-profit institutions that are also awarding degrees.

Public institutions are educating the majority of American college students. This has been true for about the past forty years.

It is clear that with so many students attending our public institutions, we play a pivotal role in our nation's well being. However, many people—including too many elected officials—now see post secondary education as a private benefit rather than a public good. This view has aggravated our long-term funding problem as public universities have received a shrinking share of state dollars.

In Pennsylvania, this phenomenon is especially exacerbated by our state's aging population, which means that support is shifting to programs like health care. Each new dollar in state health care spending crowds out higher education by about six to seven cents, according to a recent Brookings Institution report.

As a university of national stature, Penn State competes with the country's most distinguished public and private universities for students, faculty members, grants, and contracts. All of these schools receive a large portion of public money to support their enterprises. We show five examples of such institutions and the percentage of their budgets that come from public dollars—compared with Penn State's federal and state public income, which amounts to 31 percent of our total expenditures.

These numbers were compiled from data extracted from the Integrated Post secondary Education Data System, a national reporting structure for institutions receiving federal funds. There are a variety of reporting standards, but the numbers are as comparable as we could find.

These funds include not only state dollars, but government-supported student aid, federal appropriations, and sponsored grants and contracts that come from public funds. Again, while public universities have become more private, top private universities have become more public.

The Big Ten public universities average 42 percent of their funding from the state and federal government. This certainly prompts us to ask what it means in 2004 to be called a public university.

In Pennsylvania, the story is no different.

Pennsylvania ranks second in the nation, after New York, in the number of public, four-year institutions, and third, following California and New York, in the number of private four-year institutions that are part of its higher education system.

More than 600,000 students are enrolled in Pennsylvania's degree-granting institutions. About 60 percent of them attend public institutions.

But because of its dense population of private institutions, with their deep roots in this state, Pennsylvania has a long history of providing a significant portion of its funding to private colleges and universities.

The Pennsylvania state budget for fiscal year 2002–2003 shows seven “private state-aided” institutions received a total of nearly $82 million in direct appropriations. These private institutions include the University of Pennsylvania, Drexel, MCP Hahnemann, Thomas Jefferson, Philadelphia College of Osteopathic Medicine, the Pennsylvania College of Optometry, and the Philadelphia University of the Arts.

Other private institutions that do not receive direct appropriations were given over $40 million through Institutional Assistance Grants, or IAGs. IAG funds are provided through the Pennsylvania Higher Education Assistance Agency to schools as per capita grants based on the number of student grant recipients enrolled in that institution. The IAG program, created in 1974, was started to “help preserve and develop the diverse system of higher education in Pennsylvania by allowing private colleges and universities to stabilize their educational costs and maintain enrollments.”

In other words, the state decided to use public funds to subsidize the operations of private institutions. In addition, nearly $133 million in PHEAA grants went to students attending private institutions.

Pennsylvania's support of higher education has for decades lagged other states, leaving Pennsylvania ranked near the bottom of the fifty states for its financial commitment.

Over the last three decades, taxpayer support for higher education in Pennsylvania has fallen short, to a low in 2003 of $5.12 for every $1,000 of personal income earned. Since 1970, for every $1,000 of income earned by residents in the state, the Commonwealth has provided an average of about $6.75 for higher education.

The last time such data were collected, Pennsylvania ranked third in the nation for its support of private colleges and universities for revenue it provided per full-time student. When the same measures are applied to public universities in the state, Pennsylvania ranks near the bottom in its support.

Penn State has the dubious distinction of having had our revenue lines cross two decades ago. It was in 1984 that tuition replaced state funding as the largest portion of revenue in our general funds budget. For 2003–2004, tuition and fees make up 69 percent of our general funds, or instructional budget, with only 25 percent coming from state appropriations. Currently, only 12 percent of Penn State's total budget comes from state appropriations. This could soon fall below 10 percent. This gap reflects long-term policy decisions to move funding away from higher education to other sources.

By the way, this is not a result of Penn State increasing its spending. Adjusted for inflation, our most recent data show that we are spending only $71 more per student than we did in 1970.

As states continue to back away from providing sufficient educational funding to their public universities, those same institutions continue to turn to other sources of funds—most notably tuition—to absorb the burden, thus shifting costs for higher education from the taxpayer to students and their families. We are in fact replicating a pattern of high tuition/high aid, which started in the private sector some years ago.

This trend troubles those of us who believe higher education is a public good, not just a private benefit.

Pennsylvania's history of lagging support has caught up with us and is reflected in the form of the highest in-state tuition among our public Big Ten peers. However, as public tuition has been on the rise, so have the tuitions of private colleges and universities.

For all of the challenges that public universities face, we still remain a relative bargain, costing an average of about $15,000 less per year in tuition and fees than our private counterparts.

Tuition, however, remains a serious concern for a number of reasons. The most pressing is affordability and the potential for high tuition to limit access for qualified students—a major attribute of public higher education.

The average tuition and fees for in-state students at public four-year colleges and universities nationally this year are $4,694.

Meanwhile, average tuition and fees at four-year private institutions are $19,710.

At the undergraduate level, public universities universally enroll a majority of in-state residents. In fact, lower in-state tuition is supposed to reflect the tax support provided by residents. But with diminishing state support, most publics are happy to have students who can pay the full cost of education. At Penn State, the reality is that we spend thousands of dollars more per in-state student than we ask for in the form of tuition.

The actual annual cost to provide a Penn State education for a freshman at University Park is $15,042. We charge in-state students $9,706 in tuition and fees and receive $3,249 per student from the state to help cover the remaining costs. This leaves a sizeable $2,087 gap, which Penn State must subsidize through a variety of means—principally, out-of-state tuition.

Attracting out-of-state students—historically more common for private institutions—is now a regular practice of most public institutions.

Pennsylvania expects a decline in college-bound Pennsylvania residents due to a decline in our high school-age population. Fortunately, we have the ability to attract out-of-state students. This revenue boost is helping to open doors of opportunity for Pennsylvania residents, but we must rightly ask if it is fair for students from other states to pay more than the actual cost of their education.

The impact of rising tuition has been cushioned somewhat by an increase in available financial aid for students. Less encouraging, however, is that the pool of federal and state financial aid is insufficient to meet the total cost of education for many of our students. Moreover, the proportion of students requiring financial assistance has increased.

A recent analysis reported that aid from two key federal programs—Perkins Loans and work study—was higher for wealthier colleges, which are less likely to have students from low-income homes. Ten nationwide, private colleges enroll a quarter of all students, but get three-fifths of federal loan funds.

The reason for this disparity is mostly historic. Students from public institutions with low tuition are not eligible for as much aid. So lower-cost universities are at a historic disadvantage.

In Pennsylvania, the Pennsylvania Higher Education Assistance Agency, known as PHEAA, provides grants to Pennsylvania students.

In 2002–2003, PHEAA distributed more than $332 million in grants. Of this amount, private college students received 31 percent of the number of PHEAA awards and 40 percent of the dollars awarded. State-related university students received 24 percent of the number of awards and 27 percent of the dollars awarded. Another source of aid for students comes from an institution's own resources.

Private institutions have been in the fund-raising business longer than public institutions and tend to have much larger endowments. These pools of money obviously are a tremendous resource. For example, in 2001, Princeton University announced that it would eliminate the need for loans from its undergraduate financial aid packages. According to one widely cited annual study of private institutions, only 19 percent of students paid full tuition in 2002, down from 37 percent in 1990.

Research universities with large endowments are not only able to attract top students, but are better able to compete for top faculty and graduate students.

Many institutions within Pennsylvania have enviable endowments. For example, Swarthmore College, with an enrollment of fewer than 1,500 students, is ranked eleventh in the nation for it’s per student endowment support.

In 1996, Penn State raised about $83 million through philanthropy and received about $281 million in operating funds through our state appropriation. This past year we raised $181 million and received about $316 million from the state. The ratio of state to private dollars used to be three-and-a-half to one; the current ratio is about 1.75 state dollars to every dollar in private support. The ratio has been halved in just seven years, again demonstrating the privatization of public higher education.

About 100 years ago, steel magnates Andrew Carnegie and Charles Schwab both provided full funding for the construction of the two buildings on the University Park campus that bear their names. At the time, this generous support was not all that common for a public university.

Today, exclusive use of private funding for buildings at Penn State is not that uncommon. Some recent examples include The Hintz Family Alumni Center, the Pasquerilla Spiritual Center, the MBNA Career Services Building, and the Smith Chapel at Penn State Erie.

Many recently conceived buildings that are now under design or construction—for the School of Architecture and Landscape Architecture, School of Forest Resources, Chemistry, Life Sciences, Food Sciences, The Smeal College of Business, and for our campuses across the state—are being constructed through a mix of funds from private donations, University borrowing, and in only some cases, state support.

Like our private counterparts, we have made philanthropy an integral part of the culture of our University.

We aggressively pursue federal dollars and private industry support for our research mission.

At Penn State, where we had $545 million in research expenditures last year, our success in acquiring increased federal and private funds has resulted in a more than doubling of our research funding since 1990.

Considering federal support for research, instruction, and other services, as well as federal student aid, Penn State now receives more funds from the federal government than from the state government.

Penn State is home to the largest unified outreach organization in American higher education, and I am extremely proud to say it is also one of the very best. We have an exceptional record of public engagement and are considered a model by peer institutions. Penn State has hundreds of centers and programs that fulfill our outreach mission. Public service is one of our greatest strengths, but sustaining these initiatives in the face of lagging state support has become difficult.

We may have reached a crossroad in our history where financial considerations will force us to refine our mission. Asking students to pay more tuition to support our outreach mission is not an option. The unmistakable trend of flagging state support and the associated privatization of public higher education is not related to any political party, any governor, or any legislative leader. But it is happening, nonetheless.

What can we do?

We can lobby our Legislature for more funding. We can take our message to the public. We've done these things, but have not been able to turn around a funding trend that began in the late 1970s. While everyone seems to agree that higher education must play a vital part in economic and social development, other public needs have taken precedence.

Now we need to take more constructive action to close this resource gap and remain accessible.

While we reaffirm our three-part mission of teaching, research, and service, we will become more entrepreneurial. As a public institution, we are still committed to the public good—but how we go about investing in that part of our mission could change if state support becomes unavailable for our public service mission.

We must explore different financial models that rely less on state dollars. We need to continue forming partnerships with the private sector.

We will persist in cutting unnecessary costs and will look for ways to use our existing resources more efficiently. Creative uses of technology, which have helped trim expenditures in many areas, can provide us even more flexibility.

We will continue to emphasize fund-raising and building our endowment. Through philanthropy, we can accomplish initiatives that have been left unfunded and help open the doors financially for more students through scholarships.

In response to Pennsylvania's anticipated decline in college-bound high school students, we will continue to recruit out-of-state and internationally.

We will aggressively pursue competitive federal research dollars and look at attracting funds from other non-state sources.

We will continue to make the best case we can in Harrisburg and tell our story to elected officials and the public. If they are unable to fund us at the level we need to be funded, we will have to trim back our services.

What we will NOT do, however, is sacrifice quality. We are not going to become mediocre. We are going to focus on areas where we have been identified as national leaders and on areas where we wish to achieve excellence.

We have developed a number of innovative approaches that have helped us overcome some financial hardships and also strengthened our core missions of teaching, research, and service.

We will remain competitive, maintain our leadership position, and we will thrive.

Of all of these things I am optimistic.

Looking to the immediate future, and in the spirit of looking for places to thrive, we plan to build on the extraordinarily positive experience of the four interdisciplinary consortia that were launched in the mid to late 1990s. We learned that by investing new resources in our areas of strength—the life sciences, materials sciences, environmental sciences, and children, youth and families—we have been able to significantly enhance Penn State's stature, its external funding, and its instructional programs.

Through a consultative process involving administrators and the Academic Leadership Council, we have identified eight other areas of special investment for the next three years. They are:

1. Research commercialization

2. Fund-raising

3. Increased K–12 educational partnerships

4. A World Campus/resident instruction course development initiative

5. A humanities, fine arts, and social science initiative

6. Improvement of faculty/student ratios through new faculty hires in selected

programs

7. Conversion of fixed-term positions to tenure-track positions and conversion of

graduate assistant positions to fixed-term faculty positions in selected programs

8. An enhanced investment in student services and recreation

By investing in these areas, we hope to make the best use of our resources and promote a student-centered University. We expect these special investments to encourage interdisciplinary initiatives, boost non-state sources of revenue, and enhance the quality of selected programs.

These additional investments come at an extremely challenging time in our history, and it is critical that we continue an ambitious agenda that will allow us to remain competitive and preserve the academic quality for which Penn State is known.

I am hoping that through this discussion I have stimulated some thought about the future of Penn State and public higher education.

Reduced state support, increased competition for resources and students, and a heavier emphasis on fund-raising are making public institutions more private. At the same time, higher tuition has caused public universities to anguish over our public responsibilities in the face of these critical challenges.

At Penn State, we have always been expected to do more with less, and we have been extraordinarily successful in our endeavors. In fact, to those outside the University I'm not sure it appears as if we're facing crossroads. But we are indeed at a juncture in our history where maintaining our public mission and remaining a quality institution will require all of us to be more entrepreneurial and more judicious in our use of resources.

In just one year, we will celebrate our sesquicentennial. During our 150 years we have educated generations of leaders and have been a source of some of the greatest achievements and discoveries. I remain hopeful that the next 150 years at Penn State will yield the same outstanding outcomes. Thank you.

Chair Bise: Thank you, President Spanier. At this time I would ask President Spanier to answer some questions and I would like to take the questions in two parts. First, I would like to have questions that deal specifically with his presentation before us today. Any specific questions on his presentation today?

Gordon De Jong, Liberal Arts: Obviously you have thought about where the line not only crosses, but where it reaches zero. So when is it that it is no longer even practical or feasible for trips down to Harrisburg? When do we become private? As you know, if we didn’t have state in our name, and we were the Pennsylvania University in fact, our ranking would go up. So when is it that we, in fact, substitute federal attempts to get federal monies, or other sources to replace state monies?

President Spanier: I do not think it ever reaches zero, unless one of you in here does something really stupid and gets the Legislature so mad that they say there is no more money for Penn State. (Laughter.) Which, by the way, at last one or two of them threaten every year. I do not really expect that to happen. I do expect that we are not very far away from falling below ten percent. That will come about through a combination of the State, even if they increase our budget, probably not being able to keep up with the inflationary increases that we face.

By the way, we don’t have consumer product/index=type inflationary forces to face up to. We do have to face up to something called the “higher education price index.” This is a marketplace basket that includes things that weigh very heavily on us. They also weigh very heavily on scientific equipment, technology, information technology and library materials. Also, because over 70 percent of our instructional budget is in people, we have a very high employee benefits bill. In fact, it is higher than most any other kind an employer would have. So our inflationary forces are even greater. So I don’t think it goes to zero, but I do think the percentage continues to decrease.

When I became President, which seems like yesterday to me, but it is about nine years ago now, we had been going down about one percent per year. We were at about 20 percent when I arrived. Now it is also due to the fact that as we become more entrepreneurial, and as we are increasingly successful at bringing in federal grants and contracts and industry supported research and philanthropy, we are helping ourselves out. We are helping to move that number a little bit on our own. The biggest cause of it, of course, is the declining appropriation. So I don’t think there is a place where we ever draw the line.

I think we have to face up to the fact that we are becoming more private, and we are increasingly in competition with private universities for the scarce public funding. We just try to keep all the numbers up as best we can. Keep in mind Penn State is by charter, by definition, by law a quasi-public, quasi-private university. We are a mix of public and private enterprise. Your paychecks are not Commonwealth of Pennsylvania paychecks. They are Penn State University paychecks. We manage our own funding. We incur our own debt. We have an independent bond rating and so on down the line. We have been in that zone for a long time. It really is just a matter of degree. One of the messages is that we all have to work a little harder. We have to recognize what I am talking about here and work a little harder to make it all continue to work well.

Tramble Turner, Abington College: Given what you just said about the Legislature and our status along with Pitt and Temple as a state-related university, would you care to expand on what you see as opportunities in terms of either benefits or not having to answer questions on special legislation, if there was more of a move to becoming a private institution?

President Spanier: As I said, we are in that quasi-public, quasi-private university. I think most of you, maybe all of you, know that we are called state-related and we are also designated as a non-preferred appropriation. This technically means that the legislator can’t actually take up and pass our budget, nor can the governor sign it until the rest of the state budget is in place. You need a two-thirds vote of the Senate, a two-thirds vote of the Legislature and the governor’s approval for our budget to pass. Now one of the consequences of that, practically speaking, is that even in the majority and minority party in both the House and the Senate and the governor are really five different entities all have to be supportive of our budget at any one time. That is one of the reasons why certain issues on campus might be particularly sensitive in the Legislature. You can have a small number of people in the Legislature getting their caucus to hold up our vote because of what is required. Not only that, even though 12 percent of our budget does not sound like a lot, it is $300 million dollars. The prospect of us not getting a state appropriation and going to zero, but in very simple terms is essentially equivalent to saying there is no in-state tuition anymore. It is equivalent to saying what we now charge for out-of-state tuition, we charge for everybody. That is what a private university would do. Even if they do some internal discounting, even if they put more of their money into financial aid, they only have one tuition rate. The prospect of us doubling our tuition for in state students, which is what we would have to do if we acted as a fully private institution, is not a good prospect for me. I am willing to spend a lot of my time taking a lot of grief, if that is necessary, to deal with whatever unfolds in Harrisburg; the Commonwealth’s 67 counties; and with taxpayers throughout the state. I would hate to have to replace that $300 million dollars with yet more tuition money and that is what would happen. Let the record show that I continue to be very grateful for that declining level of state support that we are receiving.

Joseph Cecere, Capitol College: As the population in Pennsylvania goes down with students going into higher education, we may have to start looking again at more out-of-state students as a possibility and yet our tuition keeps going up. Have we looked at the possibility if we gave them a kind of discount, let’s say ten percent, we would get more students interested in coming to Penn State, or are we going to be at a point where it is not worth coming to Penn State because it is cost prohibitive? I can certainly go someplace else like another state.

President Spanier: As an institution-wide phenomenon, we have been very reluctant to think about heading down that road. Keep in mind once you start saying what each person pays is up for grabs, every family with a college-bound student in the country is going to want to negotiate their tuition. This is the typical scenario at most private institutions now. Tuition is negotiable at virtually all-private institutions. We don’t want to head down there because we just operate to close to the margin.

Now having said that, let me mention two caveats. One is that at many of our campuses there is a different tuition level for out-of-state students. For example, this is recognition of the fact that many of our campuses are very close to state borders and even though a student might be in Ohio, the Shenango campus might still really be their local campus so to speak. So we do have some different mechanisms at place for commonwealth campuses for tuition. The other thing we are doing, and we have completed it now, is a cost study of what the actual cost of the Penn State education is. As I said or at least implied in my remarks, we have passed a point where out-of-state students may actually pay a little bit too much. We have always known that there has been a subsidy for in-state students. We worried for years and years the percentage increase on tuition was applied equally to in-state and out-of-state students, and that has taken that out of state tuition up to a very high level. With whatever increase we come up in July of this year, for the coming year, we may pass through $20,000 for out-of-state tuition. Tuition is always going to go up for everybody, but we may look at a differential increases in relation to the numbers in relation to our analysis. The increase for out-of-state students may not be as high as the percentage increase for in-state students. The percentage increases may differ the dollar amounts, still it is going to be higher I think under any scenario. So those are a couple of caveats as we look at the actual numbers.

Chair Bise: Lets take two more questions on the presentation.

Digby Macdonald, Earth and Mineral Sciences: Reviewing your session with the Legislature, what is their rationale for the declining state support? That is the first one. Secondly, with respect to the private university versus public university issue, looking at your data there may indeed be an advantage in terms of percentage of our budget that we receive from the state by becoming private.

President Spanier: Please repeat that last part of your question.

Digby Macdonald: There may be an advantage in terms of percentage of the budget by actually becoming private.

President Spanier: The first question is on the rationale. Well, Penn State is very popular in the Legislature on the whole. I mean our governmental relations folks are the most popular guys in Harrisburg. When I’m in Harrisburg, with an occasional exception, when we are on TV for our appropriations hearings, which is sort of a public event, but really as we all make the rounds in Harrisburg there is tremendous appreciation for Penn State and a lot of support for what we do, but it is a matter of priorities. Higher public education has not been a priority in Harrisburg for a couple of decades or more.

Digby Macdonald: (inaudible)

President Spanier: If you take the long-term perspective; absolutely. I don’t think in the last few years anybody has done well. During the Ridge administration the financial support for PHEAA, I think in the seven years that Governor Ridge was in that position, PHEAA’s appropriation increased 67 percent and Penn State’s appropriation increased about 15 percent over those seven years. The differential was phenomenal and clearly represented some thinking about what the priorities where. In the last couple of years no one has faired very well. Governor Rendell hasn’t had an opportunity, as a fair way of putting it, to demonstrate what his priorities might be. We are very hopeful and we have worked on trying to convince him to support Penn State. You might feel that it is a mixed message that they love us in Harrisburg and they aren’t giving us money, but it is a matter of other pressures on the state budget and where they would prefer to send the money. On your second topic, this ties into a previous question. In some ways I feel we have the advantage already, we have the advantage of being able to operate on a day-to-day basis in very similar ways to a private university. Now I do not know if it feels this way to you, but the truth is we do not have much bureaucracy here at Penn State.

Now let me tell you this. In Pennsylvania we do not have a coordinating commission; we do not have a system above Penn State that has to make decisions about where our funding goes. When the Legislature does approve our budget we essentially get a lump sum check. This check is divided into twelfths and comes each month. This year we did not get our first check until the seventh month. Generally speaking, we just get the check and then we pretty much manage it. There are some strings attached, but not a lot. That is very different from public higher education almost anywhere else. I have the ability to make decisions at my desk that other university presidents can’t make ever or take them years with other layers to get done. We have a lot of that private kind of flexibility, but at the same time we still have the state appropriation to help us. I think it is a good situation to be in. We just wish there was more of the state money there.

Chair Bise: One final question please.

Mike Jonson, Engineering: I had a chance to see some of your give-and-take with one of the legislators, regarding the unfunded mandates that Penn State had to do with regards to a lot of paperwork. Is that a consequence of the fact that we are a state-related university in having to go through all that extra paperwork? Would it be worthwhile for the faculty to look at places where there is a lot of additional paperwork that is required by the state so we can cut some of our expenses as far as dealing with the state?

President Spanier: First let me say how impressed I am that you would stay up and watch that. I think you lead a boring life. Late night entertainment watching the re-runs of my testimony.

Mike Jonson: I have a newborn. I was having trouble sleeping.

President Spanier: One of the questions that came up this year is the unfunded mandates. I think there are two types. Certainly, we have a lot of them from the federal and state government that do not emanate from the appropriations process. They emanate from the state’s environmental protection efforts or from anywhere else in state government, where everybody is subject to certain kinds of reporting and having people assigned to deal with various issues. We have those like anyone else, but we also have a whole list of unfunded mandates that come with our appropriation. I guess the best way of putting it is that those emerged as trade-offs over the years, where someone in the Legislature said, “We want Penn State to be accountable for this. We want this or that to happen.” In the negotiations, the Legislature says, “Okay, we are not going to make you do that, or we are not going to make your appropriation contingent on one thing or another. We are going to ask you for a report every year of the following things.”

There are thousands of pages of documents. So if you put the reports up on a table, you would say they are about this high. I have not ever actually found anyone in Harrisburg who has ever read any of those reports. I think I may have said that in my hearing and was hoping it would not get me into trouble, but they all acknowledged that they never read any of the reports. It was very embarrassing one year because one of the people asking me a question was the chair of the committee that received one of the reports, and his name was on the cover sheet of the published report. He asked the question, and I said, “Well, it is in your report.” However, he had never seen his own report based on the data we submitted to him. We do have a lot of that and we would love to scale back. If we were able to accomplish that we could let Dick Althouse retire someday. (Laughter.) We could give his staff some other things to do, but there is lots of stuff that comes through and lots of paper that is related to that. Thank you for your questions on this report. I hope this will generate some additional discussion.

Chair Bise: At this time, I would like to open questions to a more general nature. President Spanier, I would like to ask the first question. The Senate Leadership and various other senators have received communications dealing with the situation where tenure was revoked from a faculty member at Penn State Altoona. Could you please describe the procedure followed in the termination proceedings regarding Nora Gerard.

President Spanier: Let me say first of all that it is one of the most difficult decisions I have ever had to make. It is something a University President does not want to be confronted with. I have been in higher education administration for 27 years. I have never had a situation like this one. I have been President of Penn State for nine years. We have not needed to revoke anyone’s tenure. We do not do something like this lightly. We have 5,000 faculty members at Penn State. This is the first case I have had where a duly constituted committee has recommended the revocation of someone’s tenure. The first thing that I should say is that it is a very unfortunate situation. We only do it only under the most extreme cases. It is difficult to talk about in public because while certain elements of this case have been made public, most of it has not been. This deals with a confidential personnel matter.

You have phrased your question in terms of the process. I think that is certainly fair game. The process at Penn State is that there is a joint standing committee that is charged with adjudicating matters of this sort. It is written up in the Faculty Senate handbook. You can read about the process in this handbook. The Standing Joint Committee on Tenure is a committee of five individuals. A majority of them have to be faculty members. They are elected, not appointed by this body. The way the system works is if someone is brought up on charges, those charges are outlined. This would not usually happen until there have been multiple efforts to solve the problem. The problem solving would be between supervisor and faculty member, between the department head, faculty member, dean, and going through the usual mechanisms that many people use from time to time when there is a problem.

In this case, there apparently wasn’t a resolution and the charges came to the committee. The committee submitted a report to me on Thursday or Friday. About ten or eleven days later, after examining the case and voluminous files, I supported the committees’ recommendation. There were two sets of charges. The committee, on one set of charges, voted five to nothing. There was a unanimous vote that the employee had engaged in grave misconduct. In a separate vote, a majority of the committee voted recommending the revocation of that faculty member’s tenure. Then I was actually presented with actual verbatim transcripts of the files. In addition, I would estimate, 2,000 pages of additional supporting material was given to me. There were three sets of attorneys involved. Much of the proceeding was conducted in a legal format. There were briefs filed by the attorneys, witnesses, testimony and so on. So that is a little bit about the process. If I missed something I would be happy to take additional questions.

Chair Bise: Are there any other questions for President Spanier?

President Spanier: If you really do have a question, I would like you to ask it. This would be a much better way of communicating instead of sending emails back and forth saying, why did he not address this, or why did he not answer that question.

Chair Bise: Are there any other questions?

Zachary Gates, Dickinson School of Law: I was also able to watch some of the hearings on PCN. I have no excuse. (Laughter.) I am interested to hear about how the ongoing discussion regarding the future location of the Dickinson School of Law has affected the Senate and the General Assembly. Specifically, toward budget discussions and appropriations for the coming year.

President Spanier: My governmental affairs staff and I have spoken to dozens, maybe scores, of legislators about the matter. Clearly there are several members of the Legislature, most notably who are close geographically, that have concerns. The legislator either serves the Carlisle community or is close geographically. There is also an additional member of the Legislature from the Pittsburgh area who I only learned after, is a son of a former dean of the Law School. There are a few members who care very deeply about how this turns out. Other members of the Legislature are not as involved in the discussion. I do not have any reason to believe that it would affect our appropriation. I believe most people can see that we have a dozen hot issues on any given day and this is one of them right now. The University is about a lot more than how that question turns out. However, that is one of the more important questions before us right now.

Rod Erickson and I are going to be spending several hours at the Law School soon. We will be meeting with faculty, staff and students to discuss this issue. This is a decision that will be made collaboratively by some of us at the University, by the Board of Trustees and the Board of Governors at the Law School. When I say collaboratively, it means we will all be part of the discussion. Actually, the Board of Governors has the strongest voice in this decision, because we have a very clear understanding that were there to be a change in location they would have to concur with that decision. So it is not as if there is some movement afoot by us to move the Law School and we are pulling something over on someone. It needs to come from them and we are trying to facilitate the discussion. We are giving our points of view and outlining the pros and cons. We also talk about ways in which we can facilitate this from a facilities standpoint. From my point of view, the most important aspect of this discussion is what is in the long-term best interest of the students, the future graduates and the quality of the academic program. Legal education is changing, and the opportunity for collaboration with other disciplines is important. We say all of that, but at the same time we are very mindful of what it means to a local community in a smaller town where there is a lot of tradition and where there are issues of economic development and vitality of a community or region. So there are a lot of variables on the table and we are trying to go about this in a very thoughtful way.

Joanna Floros, Medicine: My question has to do with the Penn State policy whereby we refrain from supporting applications for green cards from postdoctoral fellows and non-paying faculty. My question is why did we opt not to support this change, which is essentially a change from J1 to H1 visa, where other universities opted to go forward with that. I think this is a very important issue, because it places the University in a disadvantage when we try to compete for the best foreign trainees. Before I give you the opportunity to respond, I would like to illustrate that by reading a short email by one of our senior and successful faculty from the College of Medicine that was sent to me recently. “Has the Faculty Senate or faculty organization ever addressed the Penn State policy that does not support applications for green cards from postdoctoral fellows or non-paying track faculty? This policy has cost me an outstanding postdoctoral in the past (he received an offer from Yale) for a non-paying tract position but with a promise to help him get his green card. This is about to cost me again. Who made and passed this policy?” Thank you.

President Spanier: I am going to have to ask Billie Willits and/or Bob Secor to help answer that questions. I am not aware we have engaged in any changes in policy or that we have done something out of the ordinary.

Billie Willits, Associate Vice President for Human Resources: I would be interested in the specifics of your case, but we have recently begun to support green cards for non-tenure track faculty. It is true historically that the University and most others did not, because the amount of effort that went into getting those green cards. Quite candidly, historically if you pushed for green cards for everyone then it limits the number of green cards you ultimately get for the people you would really like to have here. Presumably these individuals would be tenured or tenure track. However, we have created some variation from the recent past. So I think if an individual has a concern about the non-tenure track faculty I would like them to contact us. We are doing business differently in that regard. In terms of the postdoctoral, I really cannot speak to that because I do not know the specifics of that situation. To my knowledge we have not changed our procedure on that.

Joanna Floros: Postdoctoral, traditionally with a J1 visa, the University does not support their change to H1. What happens is they either go elsewhere to get that support or they go through the legal system themselves which costs them a lot of money. Either way it is not an environment that they would like.

President Spanier: Let me suggest you two exchange cards after the meeting. Billie is wonderful at solving problems and helping people.

Joanna Floros: Thank you; we will do that.

Chair Bise: Are the any other questions? Seeing none, thank you President Spanier for meeting with us today.

FORENSIC BUSINESS

None.

UNFINISHED BUSINESS

None.

LEGISLATIVE REPORTS

Chair Bise: We now turn to Agenda Item H, Legislative Reports. Today we have three Legislative Reports. The fi