Speeches and Writing

President Eric W. Kaler’s remarks at the Board of Regents Work Session on “Lessons from the Freeh Report”

Thursday, October 11, 2012
(As prepared for delivery)

Madam Chair and members of the Board of Regents. The events that came to light at Penn State in November, 2011—and which were examined in a sobering report by former FBI Director Louis Freeh released in July—are clearly worthy of our examination. Many of you expressed to me your commitment to ensure that this University’s governance and compliance processes are robust and on the mark so that a similar situation could never happen here.

Of course, the Penn State scandal returned to the front pages again earlier this week when former coach Jerry Sandusky was sentenced to 30 to 60 years in prison. There was immeasurable impact on the lives of many young victims. And there was a catastrophic impact on Penn State’s reputation and integrity. In the end, the events investigated by Freeh caused a wholesale turnover of senior administration at Penn State and launched a multi-year review of virtually all facets of Penn State’s operation.

This is an opportunity for us to review our own administrative, compliance, and governance functions and to learn what we can from the Penn State events. I’d like to discuss Freeh’s recommendations for Penn State, how current University of Minnesota practices and structures compare, and potential next steps for us.

I want to emphasize that there is no history of crimes against minors on our campuses. We do have literally thousands of visits by children and minors every year in a variety of programs and camps, and we have in place policies and training designed to assure that minors are safe and secure on our campuses.

Of course, we are not immune, and in the 1990s we had ethical challenges in both our Medical School and in Athletics. The University investigated those problems, learned from its mistakes, corrected them, and, as a result, we are a stronger and a better place.

In many dimensions—in enrollment, faculty size, research and operation budgets—we are not so different from Penn State. The scope and size of our intercollegiate athletics operations are also similar. But we are in a very different place in our evolution as an institution. We are a mature, professional, administratively strong organization, and a place that is very mindful of maintaining a culture of compliance, and that is structured with necessary checks and balances.

Needless to say, I am committed to the protection of children on our campuses, and to improving our culture, policies, and processes to achieve this goal. I know you join me in that and the commitment to protect children when they come to our campuses to learn and to have fun.

 

SLIDE 2

I think you know most of the facts. Between November 2011 and June of this year, Sandusky was charged with 48 counts of child sexual assault and found guilty by a jury on 45 of those counts. President Graham Spanier was forced to resign. Football coach Joe Paterno was fired. The athletic director was put on administrative leave and remains there. The chief financial officer quit.

The Penn State Board of Trustees hired Freeh’s firm to investigate the entire episode. The investigators were given total independence and access to all Penn State personnel and documents.

 

SLIDE 3

In July, Freeh released his report and he found that the president, the senior vice president of finance, the athletic director, and the head football coach had “Repeatedly concealed critical facts relating to Sandusky’s child abuse from the authorities, the University’s Board of Trustees, the Penn State Community and the public at large.”

He found, bluntly: “Total and consistent disregard by the most senior leaders at Penn State for the safety and welfare of Sandusky’s child victims.” In response, the NCAA weighed in. Penn State’s football program was penalized with a four-year prohibition against post-season play; with the loss of scholarships; with the vacating of past wins; and with a $60 million fine.

 

SLIDE 4

So, what can we learn from Freeh’s report and recommendations? I want to focus on his key observations:

  • A failure of leadership at the highest levels
  • A culture that valued image and reputation above the safety of children
  • A culture that allowed athletics to exist outside University norms
  • An absence of accountability by senior leaders to the Board of Trustees
  • Absence of Board engagement
  • A weak and underdeveloped organizational structure

But, Madam Chair and Regents, this scandal involved people with jobs and responsibilities much like ours at a university that is similar in scope and size to ours.

 

SLIDE 5

Freeh provided more than 100 recommendations in seven categories, plus recommendations on measuring change and monitoring improvement.

While many of his recommendations are specific to the Penn State structure, I can report to you that more than half of Freeh’s recommendations are in place at Minnesota and another one-third of our policies and practices are partially aligned with his recommendations. The remainder are not applicable to our organizational structure and circumstances.

But this is not a one-size-fits-all solution. We can’t just mirror Penn State.

We need policies, processes, and governance structures that fit us. I am confident that we have a system that would have detected and reported the Sandusky crimes early on.

The opportunity here is for us to examine all that we do to be sure that we are protecting children who come to our campus for many, many different reasons.

Rather than detail his many recommendations one-by-one, I would like to focus our discussion on four important areas.

 

SLIDE 6

They are…

  • Creating and managing a culture of compliance on campus
  • Board of Regents responsibility and oversight
  • Administrative structure
  • Protecting children on our campuses

 

SLIDE 7

According to the Freeh Report, many cultural and administrative deficiencies at Penn State enabled the behavior that led to the cover-up for years of the sexual abuse of children. At the University of Minnesota virtually all of Freeh’s recommendations in these areas are addressed.

Unlike Penn State, at Minnesota we have:

  • An institutional compliance officer
  • A well-established Office of General Counsel, with an independent representative to the Board
  • A vice president for human resources
  • An independent internal auditor
  • A fully staffed Athletics Compliance Office that is independent from the Athletics Department

Our codes of conduct emphasize the University’s commitment to integrity, ethical conduct and maintaining a culture of compliance. They go far beyond athletics or children, and encompass our guiding principles and values, and standards of conduct, including conflicts of interest, teaching and research obligations, business interactions, and stewardship. In those ways, we are different from Penn State. And we have a strong culture of compliance with clear compliance responsibilities assigned to our senior leadership team.

 

SLIDE 8

We also have a culture of compliance with regard to federal law. Freeh discusses in great detail Penn State’s failure to comply with the Clery Act. In effect since 1990, the federal Clery Act’s purpose is to ensure that students and their families have official crime statistics available to assist them. It also requires colleges and universities to:

  • Issue timely warnings when crimes represent an ongoing threat to safety
  • Maintain and publish campus safety and security policies, including emergency, missing student, and fire safety policies
  • Maintain crime and fire logs
  • And to publish and distribute an Annual Security Report containing policies and crime statistics

We examined our compliance across all of our campuses this year. We found we do a very good job complying. We found strong compliance with reporting the crime statistics to the federal government on all of our campuses. However, while we do an excellent job reporting on the Twin Cities campus, our processes for sharing those reports broadly with students and families were not standardized across all of our campuses. As a result of our review, we’ve made improvements to standardize and strengthen our compliance processes across all campuses.

We established a template Annual Security Report to use on each campus.

We provided a master list of Campus Security Authorities (CSAs), which each campus will tailor to fit its circumstances. (CSAs are the employees responsible for providing the Clery crime reports and include police, housing, student conduct officers, coaches and athletic director, faculty advisers of student groups, etc.)

We are now providing template letters to CSAs to request all crime reports.

We have implemented web-based training for CSAs. Later today, in the Facilities Committee, Vice President Wheelock, Chief Hestness, and others will be providing an in-depth report on public safety at the University.

 

SLIDE 9

As a result of our own experiences here, we have a vigorous structure to address NCAA compliance. As Board, you delegate authority to the president to oversee athletics. You own an important governance role. As a result of Board of Regents policy on intercollegiate athletics, we are diligent in reporting violations.

Our strong, independent compliance function would not be effective without a strong athletics director to help carry the message and be accountable.

Here are some examples of the types of relatively minor NCAA secondary violations we diligently report:

  • We reported that a student-athlete tweeted about two recruits on two consecutive days.
  • One of the recruits had verbally committed to the U and the student athlete thought it was permissible

          o The post was removed within hours.

  • We reported that, in violation of NCAA rules, a coach called a prospect two times in one week.

          o The coach was prohibited from calling the prospect for two weeks.

  • We reported that we inadvertently paid $9.95 for Internet service during a prospect’s campus visit and stay at a hotel.

          o We issued the coach a letter of admonishment and required the prospect to pay the amount to a charity of choice.

          o This item will be included in future compliance education sessions.

  • We are very proud that we have not had a major NCAA violation in a decade.

 

SLIDE 10

As you know, you have a strong Code of Conduct policy as Board members.

First adopted in 1996, and twice amended, it emphasizes the University’s commitment to integrity, ethical conduct and maintaining a culture of compliance. And, of course, you are appointed by our Legislature after a rigorous screening process in which your duties and responsibilities are thoroughly discussed.

Penn State is different. Penn State’s 32-member Board of Trustees is composed of:

  • Five trustees who serve in an ex officio capacity by virtue of their position within the University or the Commonwealth of Pennsylvania, including the governor and some state commissioners;
  • Six trustees appointed by the governor;
  • Nine trustees elected by the alumni;
  • Six elected by organized agricultural societies within the Commonwealth; and
  • Six elected by the Board of Trustees representing business and industry endeavors.

In my view, this is an unwieldy board structure. It is worthwhile keeping this board structure in mind when realizing Freeh’s criticism of the Penn State Board.

He points out that Board’s failing in its duty of oversight and to reasonably inquire about, and require, detailed information from its president. The board oversight recommendations in Freeh’s report are very consistent with our practices here at the University of Minnesota. They stress transparency.

They focus on strong, independent lines of communication, both with senior leaders, but also with the broader University community. And they focus on ensuring that board members have information about organizational compliance, reporting, and crimes on campus, among other risks.

In my view, the communication and relationship between the University of Minnesota administration and this Board of Regents is regular, robust, and well developed. I hope you agree. You have an Audit Committee, a Litigation Review Committee, and regular briefings for Board leadership on legal and compliance matters, as well as risk.

The oversight level is appropriate and we address difficulties directly as they arise. However, this is quintessentially the Board’s responsibility to gauge the correct level of information and oversight. Like Penn State’s Board, you have a responsibility to ask questions and to be as informed as possible.

Freeh did make one recommendation that can apply to us. That is, to conduct an informational session with the Board on Clery Act compliance and reporting.

As I noted, while we do have strong compliance in this area, such a session can be readily accomplished, if the Board wishes.

Let me add one other note. Just Tuesday, the Association of Governing Boards of Universities and Colleges, or AGB, released a report titled “Trust, Accountability, and Integrity: Board Responsibilities for Intercollegiate Athletics.” It calls nationally for enhanced board oversight of college athletics. We were one of the 143 institutions that participated in the surveys that helped to develop the AGB report. The report cautions that as intercollegiate athletics departments increasingly operate like businesses, boards must act to ensure an appropriate balance between athletics and academics in their institutions…or policy makers or regulators will do it for us.

Regent Allen is a member of the AGB’s Intercollegiate Athletics Project Advisory Group. Regent Allen, thank you for your important work on this critical national board. I will ask you to add some comments in a few minutes.

 

SLIDE 11

Penn State’s administrative structures appear to have grown up organically over time and, as we now know, were not very mature or effective. The Freeh recommendations largely focus on best management practices: records retention, hiring practices, operational effectiveness and efficiency, effectiveness of search process, and setting compensation. We have just begun to work on one area that was called out.

We are moving in the right direction. That is to have functions report centrally to get greater compliance with institutional processes, practices, policies and rules.

This aligns with my recent “dotted line” reporting decision, which is part of our ongoing Operational Excellence efforts.

 

SLIDE 12

Finally, let’s move to the fundamental issue here: protecting children. It is a significant focus of the Penn State report and a critical area for us to carefully review. We have thousands of children who visit our campuses every year.

The University professionals who lead programs for children and minors are aware of the need for protecting the safety and security of children. The University does NOT have a history of sexual assault reports against children on any of our campuses.

While we do a significant amount to educate employees about their obligations under University law and policy to report crimes or suspected crimes against children, we must do all that we can. We do follow University policy and state law on reporting. We must remain vigilant.

 

SLIDE 13

In response to the Penn State scandal, we conducted training and awareness with senior leaders and athletics department personnel. That training emphasized that any University employee who is aware of, or a witness to, the abuse or neglect of a child is expected to report it to law enforcement immediately.

Our programs for children are decentralized and varied in terms of size, scope, time of year, duration, and sponsors, etc. Standardizing our practices and ensuring that everyone who hosts children on campus is aware of them, is complex, but we must and will ensure children’s safety.

To that end, I will convene an ad hoc committee to review and develop new, system-wide policy on the safety and protection of children on our campuses.

The committee will also determine whether additional operational changes are needed.

It is my expectation that we will present that policy to you by the end of the academic year.

 

SLIDE 14

I have two closing observations. One thought is cautionary. The other is prospective.

No University, including this one, is immune from lapses of judgment, disregard for accountability, or the irresponsible actions of individuals. What we CAN do is have in place appropriate administrative offices, policies, and educational programs to ensure against these events. In my view, we HAVE those structures in place as a result of our planning and interactions with this Board.

However, we must remain alert and humble.

We must keep each other on our toes, and keep committed to our principles of ethics and integrity. You must feel free to question me and other leaders, and be confident that you will receive candid answers. Freeh’s report found that Penn State leaders supported a culture that valued image, reputation, and athletics above the safety of children. That is unacceptable and we can never allow that to seep into the University of Minnesota community.

As for our future, our senior leaders and I pledge to be mindful at all times of the significant responsibility we have for ensuring the continued integrity of this great institution.

With that, Madam Chair, I invite your questions and a conversation.