State System to require funding before university projects begin
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HARRISBURG -- The chairman of the State System of Higher Education's board of governors today directed the finance, administration and facilities committee to develop methods to ensure university construction projects have adequate funding in place before they receive state financing.
Guido Pichini asked that the panel submit recommendations to the full board in time for its October meeting regarding funding, as well as ways to ensure a project's scope and design promote its long-term viability.
"In light of recent issues, I believe it is appropriate that we look at ways we can further improve the planning process -- from its outset," Mr. Pichini said.
The State System last year was left to float millions of dollars in extra debt to finish a $59 million convocation center at California University of Pennsylvania. It did so after pledges by the school that it had $6.8 million on hand and would raise $5.5 million more in donations fizzled.
The project already had received $19 million in Commonwealth capital funding and $23 million in State System financing when Cal U approached the system in 2011 for $15 million more in bonds, mostly to cover the fundraising shortfall.
The State System has procedures and requirements that spell out what is expected of schools embarking on construction, but officials acknowledge they have no process to verify that funds are in fact committed and won't be diverted elsewhere once the project breaks ground.
Today's directive is in addition to measures announced Wednesday by the State System board, including a decision to add an audit component to the finance, administration and facilities committee and a planned confidential hot line to encourage reporting of fraud and abuse across the 14 universities.
The State System backs bonds it issues but schools must pay off the debt service.
At Cal U, the $2.5 million in annual debt from the center added to recent faculty complaints about spending decisions and emphasis on non-academic projects at a time staff was being cut and classes pared.
After receiving complaints that also were directed to state legislators, the State System conducted a financial review at Cal U. The report by auditors questioning certain financial practices and movement of funds was released May 17, a day after Cal U President Angelo Armenti Jr. was fired.
However, the State System has not linked its decision to the report or explained why Mr. Armenti was terminated, other than to say it was for cause.
In the firing's aftermath, the board of governors has faced scrutiny too, and not simply about the quality of its oversight of the 14 universities.
In response to reporters questions in recent days, the State System has defended the right of its universities to award contracts to members of the board of governors, so long as state ethics and procurement rules are followed, including a requirement that members recuse themselves.
Kutztown University awarded Mr. Pichini's firm, Security Guards Inc. of Wyomissing, a five-year, $3.7 million contract on spring 2011 while he was chair of the school's council of trustees. Mr. Pichini said he checked first with the state Attorney General's office and with State System counsel to be sure it was allowable and to learn what he had to do to keep an arm's length relationship with the contract.
"I don't get involved in writing any of the specs, inspecting the requests for proposals," he said. "I recused myself from anything to do with the discussions."
His firm's price was highest among the four eligible bidders, but in a point-by-point comparison it was deemed to be the best value for the security-related work, said Matthew Santos, a Kutztown spokesman.
Mr. Pichini's firm also has done work at Bloomsburg and Millersville universities.
Mr. Pichini said he wanted to avoid the appearance that he became a trustee to get work, so he did not initially submit bids when he joined the board. He said the university approached him.
Also today, the board approved and extension of State System Chancellor John Cavanaugh's contract through June 30, 2015.
First Published June 28, 2012 10:38 am