tl/dr: Goodbye Penn State University, Hello Penn State Inc.
The Penn State Board of Trustees met Thursday and Friday, September 18 and 19 at the Nittany Lion Inn on the Penn State University Park campus. My report below contains information available to the public, including quotes from public discussions. I strongly urge you to click on the links provided to find further information you might find interesting.
Attendance:
There were no roll call votes taken during the meeting, so no reliable record of attendance is available. But I attended most of the meetings in person and among the trustees who I did NOT see there were:
Alumni trustees Brandon Short, Matt McGloin, and Uma Moriarity. Trustee Moriarity WAS present via zoom for at least some of the meetings.
As I mentioned in the last meeting report, we have a problem with many trustees (including many alumni-elected trustees) who are unable to prioritize their fiduciary duties to the university over their personal business (although in-person attendance does typically increase during football season – when taking in the football game in the President’s Beaver Stadium suite tends to increase attendance).
A trustee cannot be fully “engaged” if they are not even in attendance at the meetings. The Board meets in scheduled sessions just five times per year (all scheduled a year out). Perhaps the new trustee screening committee should consider a candidate’s willingness to attend the five meetings the Board of Trustees holds annually, as they cull candidates for ‘the right kind of people’.
There were a total of 18 items to be voted on at the meeting, and I will touch on each of
them briefly below. Along with some comments. Be sure to check those out for Item 4c)11) – related to the Endowment, and 4c)13) related to a new “Contract”.
It is worth noting:
The entire time the Board spent deliberating any and all of these issues was 0 hours, 0 minutes, and 0 seconds; before unanimously approving of every one of them. None. Zero. I expect this lack of deliberation and discussion, along with the reflexive “Aye”s from the entire congregation, brought a smile to the faces of Board leadership. It is what it is.
Meetings:
On Thursday September 18th there were meetings of the committees for Audit & Risk, Student Success, Finance & Investment, Governance, Equity & Human Resources, and Research & Technology. On Friday September 19th the full Board met in private session in the morning, and then in a brief public session in the afternoon. You can find the agendas, supporting materials, and meeting recordings here: Board of Trustees -September 17 – 18, 2026 | Board of Trustees
The items which drew the most attention from the public were likely the sale of two of Penn State’s soon to be shuttered Commonwealth Campuses (Wilkes Barre and Shenango Campuses). These are listed as voting items 4c)7) and 4c)8) below.
However, it was the approval of a “contract” – listed below as item 4c)13) – that may be the most impactful, and damaging, item ever brought before and approved by the Board. This item received little to no attention, and was obfuscated by Board leadership. We will discuss that in far more detail in the coming days.
The voting items, in the order in which they were presented:
From the Finance & Investment Committee:
4.c.1. Proposed Five-Year Capital Plan Updates.
This is regarding the approval of Capital Project (construction) spending for the 2024-2028 period.
When the capital spending plan was originally approved in 2023 spending was set at $2.183 Billion. Since then, the spending plan was bumped up to $2.408 (in September 2024), to $2.432 (in September 2025) and now to $2.531 Billion. An increase of $343 Million over the original budget.
Of that $343 million increase to the budget, the amount allocated to Maintenance of our existing physical plant – what the University refers to as “System Renewal”, is $0.00. This despite the fact that backlog of proper maintenance of our infrastructure has been, and remains, a huge problem that leads to larger costs when buildings are not properly maintained.
It was also disclosed that the renovation/repurposing of the ‘old’ Palmer Museum building is now not in the plans. As some will recall, part of the rationale given for Eric Barron’s $100 million+ expenditure for the new art museum was that ‘old’ Palmer would be repurposed to meet critical capacity needs in central campus, and we now see that to not be the case.
RESOLVED, that an increase in the total authorized amount of the capital plan of the University for fiscal year 2023-2024 through fiscal year 2027-2028 (the “Capital Plan”) from $2,432,100,000 to $2,530,700,000, be, and hereby is, authorized, approved and declared advisable and in the best interest of the University
4.c.2. Proposed Project Approval, Center for Manufacturing Competitiveness, Penn State Behrend.
The project will construct a new 31,300-square-foot facility at Penn State Behrend’s Knowledge Park to function as an “intrapreneurial sandbox and catalyst for Erie County’s economic, innovation, and social development”.
Cost $19.2 Million:
RESOLVED, That the Center for Manufacturing Competitiveness project at Penn State Behrend as designed by Weber Murphy Fox of Erie, Pennsylvania is hereby authorized and approved.
4.c.3. Proposed Project Approval Animal Diagnostics Laboratory Addition, University Park. Cost: $65.327 Million:
RESOLVED, That the Animal Diagnostics Laboratory Addition project at Penn State University Park as designed by Perkins & Will Architects of Boston, Massachusetts, is hereby authorized and approved.
4.c.4. Proposed Project Approval, Henderson Building Renovation, University Park
The project will modernize key student-facing areas, including general-purpose classrooms and student services spaces
Cost: $16.6 Million
RESOLVED, That the Henderson Building Renovation project at Penn State University Park as designed by Whitman, Requardt and Associates of Baltimore, Maryland, is hereby authorized and approved.
4.c.5. Proposed Project Increase Approval, New Applied Research Laboratory Building, University Park
This was the authorization of an additional $6 Million to the expenditure previously approved for $91.1 Million
RESOLVED, that an increase in the total authorized amount of the New Applied Research Laboratory Building project from $91,100,000 to $97,100,000
4.c.6. Proposed Real Estate Purchase Option Exercise – 331 Innovation Blvd., University Park
This is an 82,142 square foot building located in Innovation Park, an area just north east of campus, where the Penn Stater Hotel is located. In addition to the hotel, the space includes several office buildings. This is one of them. For decades, Penn State leased space in several of these buildings – at lease rates far in excess of market rates. Some of those buildings were owned by a group led by former PSU Board of Trustees Chairman Ira Lubert. Current ownership of this building is murky, but I believe this is one of those buildings.
The building is currently leased by Penn State – for use by the Applied Research Lab offices. This proposal is for Penn State to now buy the building, at “Fair Market Value” (to be determined).
Cost: To be determined based on “Fair Market Value”
Resolved: Will the Board of Trustees adopt the following resolutions: acquisition of the building leased and located at 331 Innovation Blvd., College Township, Centre County, Pennsylvania from GLP 331 IP, LLP, at the fair market value.
4.c.7. Proposed Real Estate Divestiture – Penn State Shenango
This is the sale of the Shenango Commonwealth Campus. Including 12.74 acres and campus buildings and infrastructure. The property is being sold to JCL Development, LLC, for a price of $1 Million (a small fraction of the market value). JCL development Our Story | JCL Development in Downtown Sharon, PA is a company owned by Jim Landino. In recent years they have been buying/renovating old buildings near the Shenango campus in Sharon PA – in an effort to “revitalize” the area. Projects include things like renovating an abandoned building into student-centered rental units. Obviously, when PSU announced they were intent on closing the campus this threw a monkey wrench into those efforts. News | As Penn State considers campus closings, one small-town developer is undeterred . It would not be surprising if these were factors leading to the sale being done at far below market value.
Sale Price: $1 Million
RESOLVED, That the Board of Trustees hereby authorizes and approves the University’s sale of the Penn State Shenango Campus for a purchase price in the amount of $1,000,000.
4.c.8. Proposed Real Estate Divestiture – Penn State Wilkes Barre
This is the sale of the Wilkes-Barre Commonwealth Campus. Including 57.31 acres and campus buildings and infrastructure. The buyer is HGC Development, a subsidiary of Huntsville Golf Club, a local golf course. The club plans to use the property for: Event and Conference Space for the golf club, and may also lease some of the campus space to nearby Misicordia University, and other uses as they may occur.
Sale Price: $5.25 Million
RESOLVED, That the Board of Trustees hereby authorizes and approves the University’s sale of the Penn State Wilkes Barre Campus to HGC Development for a purchase price in the amount of $5,250,000.
4.c.9. Proposed Real Estate Divestiture – Penn State Harrisburg – Meade Heights
This is a 57.5 acre plot of land at the Harrisburg campus. Previously, the land was the site of student housing for the campus, but the housing units were demolished in 2002, and the land has been undeveloped since then. Penn State is now selling that land to AREG Industrial Acquisitions LLC. AREG plans to develop the land into a distribution center.
AREG appears to be a private equity firm – that chooses not to disclose its actual ownership – and no information as to the actual owners/buyers appears to be publicly available.
Sale Price: $19.4 Million
RESOLVED, That the Board of Trustees hereby authorizes and approves the University’s sale of approximately 57.5 acres of vacant land AREG Industrial Acquisitions LLC, a Delaware limited liability company, or its direct subsidiary, for a purchase price in the amount of $19,400,000.
4.c.10. Proposed Real Estate Divestiture – Penn State Behrend – Kanty Prep
This is a 98.86 acre parcel of land at the Penn State Behrend campus. The property is being sold to Gladstone West LLC, a local redevelopment company. The usage of the property is unknown, but Penn State said that Gladstone intends to develop the site as “mixed-use development complementary to the surrounding area and the Behrend Campus”.
Sale Price: $1.325 Million
RESOLVED, That the Board of Trustees hereby authorizes and approves the University’s sale of approximately 98.86 acres and all improvements located at East 38th Street and Shannon Road, Harborcreek Township to Gladstone West LLC for a purchase price in the amount of $1,325,000.
4.c.11. Proposed Approval of (i) Amendment and Restatement of the Investment Policy for the University’s Long-Term Investment Pool and Intermediate Term Investment Pool and (ii) Reappointment of Non-University Employees to the Penn State Investment Council
This action introduced changes to the University’s Investment Policy Statement 2026.07-ltip-investment-policy-statement.pdf for its Long-Term Investment Pool. Largely, “The Endowment”.
As we know, the Endowment has been horrifically mismanaged for years – costing the University Billions of dollars in excessive fees and unrealized investment returns.
The proposed changes neither address nor mitigate these concerns.
BE IT RESOLVED, that the amendment and restatement of the Policy, as set forth on the attached Exhibit B be, and hereby is, authorized and approved
This proposal also included the re-appointment of three of the current members of the Penn State Investment Council – a group ostensibly providing oversight of the investments. These are members whose terms are expiring this year. They are all being “re-upped” for an additional three-year term.
Those members are:
Barbara L. Doran (Former member of Board of Trustees)
J. Alex Hartzler (Former member of the Board of Trustees)
J. David Rogers (CEO of Private Investment firm JD Capital in Greenwich. Rogers was also instrumental in establishing the “trading room” in the Smeal College of Business)
RESOLVED, that Barbara L. Doran, J. Alex Hartzler, and J. David Rogers, each non university employees, be, and each hereby are, re-appointed to the Penn State Investment Council to serve for a term of three years commencing on January 1, 2027, and expiring on December 31, 2029.
A few words about the changes to the Endowment Investment Policy statement. This is very interesting, and important:
PSU always said, we can’t access the endowment assets for things like “controlling tuition costs”, because, they said, “All of that money is contributed by donors for specific purposes”.
First of all: That has never been true.
Second: As I discovered, through a year’s long ordeal to force PSU to provide documents, PSU did indeed use endowment assets for other purposes, when it suited their desires. Specifically, to fulfill Neeli Bendapudi’s claims of “balancing the budget”. The accomplishment of “balancing the budget” was, in actuality, largely a game of financial statement whack-a-mole: moving expenses from one budget (the General and Education budget, that she wanted to “balance”) into other areas. Not actually improving the financial performance. Instead, she “accomplished” this feat not by cutting waste or improving efficiencies, but by hiding operating costs by having them charged against endowment assets, or other acts of sleight of hand.
Board leadership and many members of the Board proclaimed Neeli to be a “rock star”, and piled more and more tribute into her bloated compensation package.
So: Now PSU has amended the “investment policy” statement to allow for endowment assets to be spent to provide funds for any “distributions to cover University expenses”.
I doubt if any members of the Board at large even know what happened, or what it means going forward (especially in light of Item 4.c.13 discussed below).
The Board also, repeatedly, inserted wording into the Investment Policy statement that the policy “hereby is authorized approved and to be in the best interests of the University”. As if authorizing, approve and declaring it to be “in the best interests of the University” somehow overrides that the management of the endowment is NOT in the best interests of the University. If it was, they wouldn’t have to make such farcical and superficial claims.
You can see those changes to the policy – beginning on page 64 of the document – here: University Capital Plan – Fiscal Year 2023-2024 to Fiscal Year 2027-2028 Update (September 2026)
4.c.12. Consideration of Request for Fiscal Year 2027-2028 Appropriations for Operations
This is the annual funding request put forward by Penn State to request the annual appropriation from the Commonwealth of Pennsylvania.
In prior years, Dr Bendapudi often asked for very large increases for Penn State funding, in the name of “fairness”. Those requests tending to fall on deaf – and sometimes unhappy – ears. This year’s request is more modest/reasonable:
The request asks for an increase to the “regular” funding in the amount of $12.15 Million over last year’s funding, bringing the total request $367 million.
More impactfully, it asks the state to increase the pool of “performance-based funding” from $10 Million to $60 Million. This funding pool was initiated by the State last year, with a $10 million state budget allocation – and the funds ($10 Million last year) were divided among the four state-related Universities. Penn State received around $4 million (40%) of the $10 million. So in asking for the pool size to be increased to $60 Million – assuming the same 40% allocation to Penn State – would bring Penn State’s share from $4 million in 2026 to $24 million in 2027 – an additional funding increase of approximately $20 million if the request is approved. I assume that the other state-related universities coordinated their requests to echo Dr Bendapudi’s suiggestion.
RESOLVED, That the officers of the University are authorized to submit to the Legislature of the Commonwealth of Pennsylvania a State Appropriation Request for fiscal year 2027-2028 in the amount of $367.026 million and $60.0 million for the State-Related University Performance Fund.
4.c.13. Proposed Action Item: Non-Personnel Contract Approval
This is a long-term contract with consulting firm McKinsey and Company. McKinsey has actually been working within the University for some time now, but, to the best of my knowledge, this is the first public acknowledgment of that infiltration of McKinsey into University administration. The relationship is now being cemented with this long-term contract.
This will be a very expensive, very long-term action. I expect it will last for many years, at costs of at least “tens of millions” if not “hundreds of millions” to the University. Moving forward, this contract will essentially place McKinsey consultants at the wheel of the University.
Determining and implementing future strategies, and the administration of the University. And it is worth noting that McKinsey has a long, consistent, and troubled history with regard to business ethics and conflicts of interest (that don’t lead to positive long-term outlooks for the clients they work with). McKinsey is also relatively new to significant work in the “Higher Education” market, but is actively trying to expand that presence. Many Higher Education institutions, like Penn State, are realizing they do not have the administrative competency or abilities to run their institutions efficiently, and are turning to outfits like McKinsey – in the hopes that they do. The results may not be what we would all hope for.
Yes. This is big.
So much so that it deserves a far more thorough discussion, which will be done separately in the coming days. Suffice to say, some reasonable presumptions are:
The financial picture of the University is more dire than most would imagine, and the lack of administrative competence among PSU’s cadre of highly-paid leaders is disconcerting.
RESOLVED, that the proposed material terms and conditions of the Proposed Transaction as presented to the Committee by the officers of the University are hereby approved and declared advisable and in the best interest of the University
From the Governance Committee:
4.d.1. Proposed Election of Directors of the Corporation for Penn State
The University has a subsidiary known as the Corporation for Penn State, which houses some non-educational activities of the University.
As such, the University appoints the Board members of this organization. This year, that entailed the appointment/re-appointment of the following to the Corporation’s Board:
RESOLVED, That the following persons be elected to the Board of Directors of The Corporation for Penn State:
Neeli Bendapudi (President PSU)
David M. Kleppinger (Chairman PSU BOT)
Karen H. Quintos (Member PSU BOT)
Matthew W. Schuyler (Member PSU BOT)
Fotis Sotiropoulos (Provost Penn State)
Michael Wade Smith (Bendapudi’s Chief of Staff)
Naren Gursahaney (Member of PSU BOT)
Kelley M. Lynch (Member PSU BOT)
Tracy A. Riegel (Member PSU BOT)
Brandon Short (Member PSU BOT)
Sara F. Thorndike (VP of Finance PSU)
4.d.2. Proposed Approval of Limitation on Access to Classified Information
This is an issue that has discussed before. With Penn State’s research work with the US Department of
Defense, individuals with access to certain related information must pass various levels of Security
Clearances. This item clarifies that certain individuals with that access – such as the Chair and Vice Chair of the Penn State Board – meet the requirements for those clearances. It also states that such information may be excluded from others – such as members of the Board, and various Penn State Board staff.
4.d.3. Proposed Appointment of Director to The Milton S. Hershey Medical Center Board of Directors. The members of the Penn State Medical Center Board of Directors are appointed by the Board of Penn State Health. Those appointments then have to be approved by the Penn State University Board of
Directors. This is the approval of the appointment of one of those members – John Lawn. Lawn is the CEO of Hershey Entertainment and Resorts – the folks who operate Hersheypark and various Hotels in Hershey
PA.
RESOLVED, that Mr. John Lawn is appointed to the Board of Directors of The Milton S. Hershey
Medical Center for a term of three years
4.d.4. Proposed Appointment of Director to the Penn State Health Board of Directors
Penn State University is the majority owner (80%) of Penn State Health. Highmark owns the other 30%. As such, Penn State appoints most of the members to the Penn State Health Board. This action is the appointment of one of those Board members. John Dugan is an accountant by training, who has worked in the Health Care field. Other members of the Penn State Health Board include former PSU Board of Trustees chairmen Mark Dambly and Keith Masser (both well known to most Penn Staters), and current PSU Board of Trustees
chair David Kleppinger. None of which have any experience in health care.
RESOLVED, Mr. John Dugan is hereby appointed to the Board of Directors of Penn State Health for a
term commencing September 18, 2026, through June 30, 2027, or until his successor is appointed and
takes office or until his earlier resignation or removal.
4.d.5. Proposed Revisions to Penn State Health Bylaws
Similarly to item 4.d.4, Penn State must approve changes to the Penn State Health Bylaws.
The primary changes to the Bylaws deal with how Board members are appointed, and their terms, and the filling of vacancies on the Board.
The most notable change was the amendment that makes the Penn State President (currently Neeli
Bendapudi) and the Penn State VP of Finance (currently Sara Thorndike) ex-officio members of the
Board. Whomever holds those positions will automatically be granted a seat on the Penn State Health
Board.
RESOLVED, that the Board of Trustees hereby approves the amendments to the Penn State Health
Bylaws as set forth in Appendix I hereto.
