Is This Why We Paid Them the Big Bucks? Penn State, Scandal,
and Who Will Be Next

by Ellen Dannin,
Pennsylvania State University

Employment Policy Research Network (EPRN)
July 15, 2012

http://www.employmentpolicy.org/topic/blog/why-we-paid-them-big-bucks-penn-state-scandal-and-who-will-be-next

It is unlikely that the key findings from the Freeh report on
the Penn State child abuse scandal will make the news.  Those
findings and recommendations are about how to prevent future
failures of governance and administration - rather than
focusing on personalities. That is not to say that the big
personalities at Penn State - Joe Paterno, former president
Graham Spanier, and others not named here - did not play key
roles in the events that caused so much personal suffering and
led the school over a cliff.

It's easy to assume that it was only conditions unique to Penn
State and specific people there that led to the lurid events
of the past year. However, at this time, we see similar crimes
taking place elsewhere and similar failures of leadership,
organizational management, and responsibility.

So before getting into the wonkish details of the Freeh
report, it's worth a brief consideration of those two men.
Paterno and Spanier definitely fell into the category of men
who got paid the big bucks. Joe Paterno's total compensation
in 2011 was $1,022,794, and Graham Spanier's pay was $813,000.

We have all heard said of someone -"That's why he gets paid
the big bucks. " That used to mean that we expected a person
in that position to be able to make hard decisions, to make
them for the good of the organization, for the good of
society.  We do not pay the big bucks for the challenging but
fun parts of the job. Those parts have their own reward.

But, although Paterno and Spanier (and others), got paid the
big bucks, they did not step up to the responsibilities of
people who deserve to get paid the big bucks.  They did not
make the hard decisions, and they flinched when it came to
facing uncomfortable obligations. But that is what a leader is
supposed to do - to have courage and a strong moral compass.
Instead, they played the role of cheerleaders, boosting morale
and making the institution feel good about itself.

Meanwhile, behind all that cheering, the wagons had been
circled when it came time to acknowledge that one of the inner
circle had violated the law and the trust placed in him.

So, years later, here are some of the wonkish - and shocking
-- details of what the Freeh report found and recommended. The
report identified two key offices that were left without the
staff and resources necessary to do their jobs - the  General
Counsel's office and the Human Resources department. Had they
been properly funded and staffed, this decades long crime
might have been stopped years ago. Instead, according to the
Freeh report, "The University has no centralized office,
officer or committee to oversee institutional compliance with
laws, regulations, policies and procedures; certain
departments monitored their own compliance issues with very
limited resources. "

It is hard to believe, but Penn State had no General Counsel's
office until 2010. Instead, it contracted out most of its
legal work to McQuaide Blasko, a law firm in Centre County,
Pennsylvania. That outside legal counsel had a serious
conflict of interest in the case of Jerry Sandusky, because it
was also legal counsel for Jerry Sandusky's Second Mile and
sat on its Board.

When a General Counsel's office was established in 2010, it
was led by Cynthia Baldwin, a former state Supreme Court
justice. It had only two attorneys at University Park and two
at Penn State Hershey. The university website does not make it
easy to identify the attorneys in the GC's office, but the
linked in account of one shows only some experience in
corporate law practice and litigation groups at a Pittsburgh
law firm and a clerkship for Justice Baldwin. The Freeh report
notes, "Baldwin did not seek assistance or advice from an
attorney experienced in criminal investigations or conducting
internal investigations."

Having only two attorneys at University Park and two at Penn
State Hershey meant that the office was severely understaffed
and lacked the wide range of expertise necessary to provide
competent advice. In addition, four attorneys is far too few
for such a large organization with campuses throughout the
state.  Penn State's General Counsel is responsible for
overseeing all legal affairs of the University, including the
Milton S. Hershey Medical Center and College of Medicine
located in Hershey, Pennsylvania, the main campus at
University Park, 19 campuses across the Commonwealth, and the
on-line World Campus.  Not only is the office understaffed, it
is unclear how many of the staff have experience working in
the general counsel's office of a major university.

Fortunately, the new General Counsel, who has just come on
board, has been vice president and general counsel at Johns
Hopkins since 2005. He has announced plans to hire more
lawyers, in particular, lawyers with much needed specialties
in faculty issues, general employment, intellectual property
rights, and regulatory compliance.

The situation in the Human Resources department is also of
great concern.  It is headed by an Associate Vice President,
when it needs to be headed by a Vice President who has the
clout to ensure compliance. Instead, each school and large
departments have their own HR staffs and a tendency to "relax
or opt out of university rules and procedures.  The Freeh
report observed that the university had over 350 policies and
related procedures, but its oversight of compliance was
decentralized and uneven. In the case of the Department of
Intercollegiate Athletics, which has approximately 800
student-athletes, its compliance office was significantly
understaffed. The cost of that understaffing and disarray has
not yet stopped rising.

Also understaffed was responsibility for compliance with the
Jeanne Clery Disclosure of Campus Security Policy and Campus
Crime Statistics Act (Clery Act).  Failure to comply with this
law's mandate to report information about crime on campuses
and in surrounding communities can lead to large fines and
suspension from participation in the federal financial aid
program.  Given the stakes, one would think Penn State would
have ensured that this responsibility was taken seriously.
Instead, Clery Act compliance was given to a sergeant in the
University Police Department who was given no formal training
until 2007 and was able to devote only minimal time to Clery
Act Compliance.

If more evidence was needed that this was not an issue that
mattered to the university, the report finds that "no efforts
were made to finalize or implement the university's Clery Act
policies as late as November 2011," even though compliance
with laws and regulations was identified as one of the
university's top ten risks.  The failure to allocate some
small percentage of the pay given to Penn State's top earners
to Clery has cost the university dearly.

Instead, the university operated under its own rules, which
could be easily flouted by some people.  For example, the 
university's rules required having a memorandum of agreement
for all third parties who used university facilities. That
requirement should have included Jerry Sandusky's using Penn
State facilities for youth camps at various campuses.
However, those rules seem not to have applied to Jerry
Sandusky. As a result of not enforcing those rules, Sandusky
was able to make contact with, and sexually assault,
several young boys on Penn State campuses.

The Freeh report tries to address this and other problems by
recommending that the position of Associate Vice-President for
Human Resources be upgraded to Vice-President and that the VP
report directly to the president.

So far, the lessons learned appear to be narrow ones focused
on the immediate misdeeds of child abuse. That is not to say
that child abuse was not a problem. But the misconduct would
have been stopped much earlier had there been an ethos of
accountability and honor.  It should have been stopped by the
ones who got paid the big bucks.

So when we hear the refrain - We Are . . . . Penn State - we
need to face up to who we are at Penn State.  And how we must
do much, much better.  More of us are Penn State than we might
think.

[Ellen Dannin is the Fannie Weiss Distinguished Faculty
Scholar and Professor of Law at Pennsylvania State University.
She joined the Penn State Dickinson School of Law faculty in
2006 after teaching at Wayne State University Law School and
in San Diego at California Western School of Law.

Dannin writes primarily in the areas of collective bargaining,
privatization, New Zealand labour law, and legal education.
She is a prolific writer of both scholarly articles and
popular pieces. She is the author of Taking Back the Workers'
Law - How to Fight the Assault on Labor Rights and Working
Free: The Origins and Impact of New Zealand's Employment
Contracts Act.

Before entering teaching, Dannin was a trial attorney with the
National Labor Relations Board. She regularly teaches courses
in labor law and employment law and has taught various labor
law seminars and public sector labor law.

Dannin earned her bachelor's degree and J.D. from the
University of Michigan.]

[Many thanks to Prof. Dannin for sharing this Portside
readers.]

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