Updated 5:53 p.m. Oct. 30 with corrected attribution of a quote by a trustee.
I’ve tried my best this fall to focus on Happy Valley news that really matters. Like the exploits of the Penn State football team or the pre-season rankings of the Nittany Lion wrestlers.
But doggone it, even sports fans like me must focus on courtroom dramas that affect our lives. So yes, I’ve paid attention when Penn State, my alma mater and our region’s chief employer, has been taken to court. More than once.
For example, a lawsuit and a request for injunction was filed in Centre County by PSU Board of Trustees member Barry Fenchak who alleges that the board and its chairman, Matthew Schuyler, withheld financial data from him—data needed for him to perform his fiduciary role.
Or a lawsuit was filed last month in Lackawanna County by another trustee, Anthony Lubrano, who claims that the board launched a retaliatory investigation against him for giving media interviews wherein he “expressed his opinions on matters of public concern affecting the university.”
Or an earlier but still pending lawsuit was filed in December of 2023 by Spotlight PA against the Board of Trustees. Spotlight alleges that the board was violating Pennsylvania’s Sunshine Law by regularly meeting in secret.
So here I am, the guy who cares about such cases but who responds to terms like “aforementioned,” “pursuant,” and “prima facie” with “Huh?” Needing a little help to understand these matters, I reached out to my friend, Alvin de Levie, Esquire.
Like me, Alvin is a townie who graduated from State College High School and from Penn State. Unlike me, he’s an attorney and he’s also a former member of PSU’s Board of Trustees. We spent more than an hour discussing the controversies swirling around the board, and the following are portions of that conversation. But for starters, let’s just say that Alvin’s term on the board (July 1, 2021 to July 1, 2024) left him disappointed and sometimes shocked about Penn State’s governance.
I know you have concerns regarding the controversies that have surrounded Penn State’s Board of Trustees. What is the most serious matter?
de Levie: It’s going to be hard for me to say one concern is the most serious because you have to look at the whole picture. You can’t look at one small piece of the puzzle in trying to understand what’s happening on Penn State’s Board of Trustees. But I think I have an excellent perspective since I’m now on the outside after serving on the board for three years and being its chair of the legal and compliance committee and a member of its executive committee. In my opinion, the board’s leadership is going down the wrong path and not serving all the constituents of Penn State. They’ve lost their way.
What concerns me is the overall contentiousness on the board that has necessitated two lawsuits being brought by trustees. As the judge in one of those cases found, “There was uncontradicted evidence of a broad pattern of retaliatory behavior (by the board) that he (Fenchak) has faced at the hands of the defendants (Chair Matthew Schuyler and the Penn State Board of Trustees).”
As for specific issues, let me first refer to the matter involving Barry Fenchak. Trustee Fenchak had asked board leadership to supply information on several financial issues so that he could fulfill his fiduciary responsibilities as a trustee. He was denied this information despite repeated requests. Therefore, in accordance with Pennsylvania law, he sued Schuyler and the board on July 16 to get this information.
Just three days later, as has been reported in various media, Fenchak made an off-color remark to several IT staff members after a July 19 Board of Trustees meeting. This remark was inappropriate and uncalled for. He should not have said it. He admitted that and apologized several times. But it should be noted that he was repeating a line from Tom Hanks in the 1992 movie, “A League of Our Own,” a PG film that was seen by everyone back in the day. I’ll just leave it at that.
So board leadership sought to remove Fenchak as a member after he made that comment?
de Levie: Yes, they announced their intent to vote on Fenchak’s removal at a Board of Trustees meeting on October 10. Fenchak then filed a motion requesting an injunction to block this vote. The court found that Matthew Schuyler and the Board of Trustees “repeatedly denied the requests (for financial information) and (the board and Schuyler) sought an opportunity like (Fenchak’s inappropriate comment) to remove (Fenchak) and permanently end his probing inquiries into the health of the (Penn State) endowment and other university business for which he (Fenchak) has a responsibility.”
And the court went on to say “granting the injunction serves the public interest by preventing the potentially retaliatory termination of a trustee based on that trustee’s inquiries regarding the operation of a public university that it serves.” What I found so interesting was that the court stated that “denying the injunction and allowing Plaintiff’s (Fenchak) removal would re-cast a shadow over the financial operations of Defendants (Schuyler and the Board of Trustees) to the detriment of every PSU stakeholder except those at the very top of the PSU hierarchy.” I agree wholeheartedly with the court’s decision, but it makes me sad that Fenchak had to go to court.
What were the matters of board business that caused Fenchak to request data?
de Levie: According to an August 27 court filing, Trustee Fenchak “has made repeated requests for financial information related to the administrative fees that PSU pays investment managers to oversee PSU’s endowment, estimated by Plaintiff to be valued at approximately $4.5 billion.” By the way, Fenchak is a trained financial consultant and he noted that Penn State’s IRS forms for the years 2008 to 2018 indicated that the average administrative fee for the endowment was 0.75 percent. But in fiscal year 2018-19, the administrative fee jumped to 2.49 percent, and Fenchak asserted this is well above industry standard. I’ll allow our readers to do the math, but when you compare 0.75 percent to 2.49 percent on something like $4.5 billion the difference is massive. All that Trustee Fenchak wanted was to see the documents and learn why the administrative fees had tripled at one point. Meanwhile, he asserted that the administrative fees in more recent years have still been well above what PSU was paying prior to 2018-19. I am amazed that board leadership did not give him—and all trustees—this information.
Not only would such information show dollars, but it would also reveal the identity of the management firm or firms that have been investing the endowment’s money. Is that right?
de Levie: Yes, I can only assume but with great certainty that he wants to know not only what the rates were and why they went up but also who has been getting paid. So he asked for the specific data information following his election to the board in 2022. He was denied access to this information and despite repeated requests, he has not received it.
Does this situation suggest that something serious is being hidden?
de Levie: Well, I can’t say that, but what I can say according to the court opinion, is that the information that Trustee Fenchak is likely to be entitled to is being hidden. And what that may ultimately reveal, who knows? I’m not saying that there is any hanky panky, but when information is being withheld, people wonder. I’ve had people come up to me on College Avenue or in Good Day Café or Rothrock Coffee and say, “What’s going on? Why isn’t this information being given?” And I can’t tell them why.
So why wasn’t this financial information just given to Fenchak?
de Levie: That’s a good question. And the court went on to note—and I think this is so important—that “PSU is a public state-related, state-supported, land-grant research university, whose largest financial asset is its endowment that is valued at over $4 billion and consists, in significant part, of contributions from the public to PSU…” The court then wrote, “Plaintiff, as a trustee that was voted into the position by alumni of PSU, is entitled to inquire about the administrative fees, to whom they were being paid and how the cost of those fees impacts the operations of PSU.”
Meanwhile, didn’t Fenchak request details on another major financial matter?
de Levie: Yes, in filing for his injunction, Mr. Fenchak noted that he had made three requests this spring for information on a potential contract between Penn State and Elevate, a consulting firm that was purportedly engaged with the goal of “generating a game day engagement, ticketing and premium seating and experiences strategy reflective of the passionate Nittany Lion fanbase.” Mr. Fenchak stated that he believes the contract has a 10-year term and is worth approximately $1 billion. Given that this contract was promoted as a “means to ensure the future economic stability of the athletics department,” Fenchak asserts that he should have been given access to the contract information so he could vote in accordance with his fiduciary responsibilities as a trustee. And again, Trustee Fenchak still hasn’t gotten the information either about Elevate or about the endowment administrative fees because his original lawsuit is still in court. By the way, I am also concerned about the possibility that the contract might allow Elevate to share or sell demographic information about students or other ticket holders.
And we haven’t even talked about the lawsuit brought by Trustee Anthony Lubrano.
de Levie: Yes, thank you for mentioning that. Mr. Lubrano is also an alumni-elected trustee. And the board started a secretive investigation of him with the view, as with Trustee Fenchak, to potentially expel him from the Board of Trustees. But a judge in Lackawanna County granted an injunction on September 30 that halts any further investigation of Mr. Lubrano until the university advances his legal fees. That’s because the court held that the Board of Trustee bylaws require Penn State to do so. And in entering that order, the court wrote one sentence that I think was especially significant. It said, “We find that the public has significant interest in this state-created university and how its governing Board of Trustees hews to its own bylaws and treats its own members.”
So two different courts have granted injunctions against the Penn State board?
de Levie: Yes, sadly.
Speaking of bylaws, I know that on July 30 the board proposed new amendments to its bylaws, and one of them was especially troubling to you.
de Levie: Correct. In my opinion, the board not only wants to expel trustees who ask tough questions, but now it wants to stack the board with trustees who will tow the “company line.” One new bylaw has to do with the nomination and election of alumni trustees. Previously, a would-be candidate for an alumni seat on the Board of Trustees simply had to gather signatures of other alums in order to be listed on the ballot. But now there is a nominating subcommittee of six or seven board members, hand-picked by board leadership, who will select the candidates they want. And this subcommittee will be utilizing an undemocratic process—behind closed doors—that will specify a matrix of prior experiences for board candidates. In my opinion, this approach is both elitist and dangerous.
[Trustee Naren Gursahaney, elected by the board representing business and industry] stated something to the effect that this process “will give us an opportunity to have the right kind of people sit on the Board of Trustees.” (Editor’s note: de Levie incorrectly attributed this statement to another trustee during the interview. It has been updated here in brackets to reflect correct attribution.) After reading the opinions from courts in Centre and Lackawanna counties, I wonder if board leaders themselves are the right kind of people.
You began our conversation by saying that it would require looking at more than one piece of the puzzle to understand the overall problem with Penn State’s Board of Trustees. Now, having described several of the pieces, how would you summarize the situation?
de Levie: There was a line in a movie that old timers like me remember. In “Cool Hand Luke,” the Paul Newman character famously said, “What we’ve got here is failure to communicate.” Well, it’s an old movie but the problem is still with us, and I’d say it’s very prevalent on the board.
There used to be a portion of every board meeting called “Public Comment.” It was a time-honored tradition where anyone from the public could make a comment or ask a question in person. And then there would be an opportunity for a give and take between board members and whoever was asking the question. Well, that was dismantled. The board no longer permits a question to be asked in person, so there is no more give and take. Today, the board will only answer a question with a written response on its website which really doesn’t reach the public.
In my opinion, another disturbing example of the board’s failure to communicate took place when Chair Schuyler cut short and then ended public deliberation on the $700 million renovation of Beaver Stadium. Chair Schuyler claimed there had been sufficient deliberations in executive session. But executive sessions are behind closed doors, giving the public no real opportunity to hear why trustees are voting on a $700 million stadium renovation. When I walk around town or go to the supermarket, many people still come up to me and ask why the public deliberation was cut short.
And how about communication from the board to current students, perhaps the most important segment of the university community?
de Levie: Absolutely. Back in 2021, in preparation for my first meeting with President Neeli Bendapudi, I walked around the campus to talk with students about their concerns. And I did this throughout my years on the board. So because I found this so helpful, I recommended that the entire board should find such an opportunity. Well, the board typically meets on a Thursday and Friday, and on Thursday evening everyone goes out for dinner somewhere like upstairs at The Tavern. I suggested to the board office and to Chair Schuyler personally that during some of our meetings we could have the Thursday dinner in a dormitory dining hall. We’d publicize that the trustees were going to be there from 6 p.m. to 8 p.m., and we’d put a trustee or two at each table. I mentioned this idea several times, and each time I was told no. What was there to lose? Maybe they didn’t want to be asked why increases in tuition, room and board always seem to be approved by a nearly unanimous vote of the board. By the way, I usually voted no on those increases. On the room and board increase, I asked for more data on how inflation was affecting the particular costs at hand, but I was told it would take too much time to get me that data—so I voted no.
My own attempt to believe the best of these people is to hope that maybe they just want to expedite the important business of the university. Maybe they feel like Mr. Fenchak and Mr. Lubrano are mavericks who slow down the process?
de Levie: I don’t know. There’s no reason not to have an occasional meal with some students. There’s no reason not to have public comment. There’s no reason not to provide all the trustees with the kind of information that Mr. Fenchak had to file suit for. Maybe several individuals are mavericks in demanding information, not being the kind of trustee who just votes “yes” every time they’re asked to vote. So if asking for information so you can do your job means you’re being a maverick, congratulations, that’s the type of trustee we need.
So, in your mind, where do things stand or where should they stand?
de Levie: Well, first of all, I acknowledge that serving in board leadership is difficult. But I’m sure we can do better, and we can learn from our prior mistakes. I hope this interview will start a discussion on how the board can become more transparent in fulfilling its responsibilities to all the stakeholders at Penn State. And then I want to ask this question: Has board leadership failed to fulfill its fiduciary responsibilities and thereby failed to adhere to the board’s code of conduct? After all, a court concluded there was a “broad pattern of retaliatory behavior” toward Barry Fenchak. And should there not be an investigation of board leadership, the type of investigation that it seemingly started against Trustee Lubrano?
I suspect I will be roundly criticized for this interview, and I guess if I ever decide to run again for the Board of Trustees, the selection committee will find me to be not the “right kind” of person. But maybe it’s better I’m not on the board because I have a free voice to comment upon matters that affect the future of this university that I love with all my heart.
