HOUSE OF REPRESENTATIVES COMMITTEE ON APPROPRIATIONS

2001-2002 Appropriations Hearings Pennsylvania State University

* * * *

Stenographic report of hearing held in Majority Caucus Room, Main Capitol Harrisburg, Pennsylvania

Tuesday February 27, 2001 11:30 a.m.

JOHN E. BARLEY, CHAIRMAN Gene DiGirolamo, Secretary Patrick E. Fleagle, Subcommittee on Education Jim Lynch, Subcommittee on Capitol Budget John J. Taylor, Subcommitte/Health and Human Services Dwight Evans, Democratic Chairman

MEMBERS OF APPROPRIATIONS COMMITTEE

>n. William F. Adolph Hon. John Myers >n. Matthew E. Baker Hon. Steven R. Nickol m. Stephen Barrar Hon. Jane C. Orie >n. Lita I. Cohen Hon. William R. Robinson >n. Craig A. Dally Hon. Samuel E. Rohrer >n. Teresa E. Forcier Hon. Stanley E. Saylor m. Dan Frankel Hon. Curt Schroder in. Babette Josephs Hon. Edward G. Staback HI. Frank LaGrotta Hon. Jerry A. Stern HI. John Lawless Hon. Stephen H. Stetler HI. Kathy M. Manderino Hon. Jere L. Strittmatter HI. David J. Mayernik Hon. Leo J. Trich Jr. HI. Phyllis Mundy Hon. Peter J. Zug

Present: ael Rosenstein, Executive Director Reported by: Soderberg, Democratic Executive Director Dorothy M..Malone.RPB

Dorotks M. Malone l^tgifUraJ Prof«ftional Rtpo'tar 135 S- L»«J'« Str««t f-| wmmalftown. Ptnntijlvania 17036 resent: (Cont'd)

Randolph, Budget Analyst

Dofotki, M- M«lone RegirUrcd Profatrional Reporter 135 S- Lan«lic Str^i 17036 INDEX PAGE GRAHAM B. SPANIER, President, Pennsylvania 4 State University

Also Present; Darrell Kirch, CEO, Milton S. Hershey Medical Center Dr. James Thomas, Dean, School of Information, Sciences and Technology CHAIRMAN BARLEY: I'd like to call the hearing to order. I have no intentions of tolerating anyone being out of order here today. We have security and they will be asked to remove any individual that is out of order in any way, shape or form. So, that is going to be the ground rules before we begin. That will include rude conversation, talking as is going on at the moment by some. I conduct hearings that are very fair. I conduct hearings that are courteous to those making presentations and to those that have questions to ask. I will conduct this hearing in that same fashion. So I do not expect conversations, private conversations to be taking place by anyone, guests or others. Thank you for your attention. Thank you very much. We are here for the annual budget hearing for Fenn State University, our land grant institution, one of the finest land grant universities in the country. As someone who has been actively involved in agriculture, I appreciate what Penn State has done for that community and what they have done in many other areas. That doesn't mean I agree always with some things that do take place there, but I certainly have appreciated what they have done for the Commonwealth and what they have done for many, many young people here in Pennsylvania. We have the President of Penn State with us today, President Spanier. Welcome. I appreciate you being here, and as always, we await your presentation and then I will entertain the opportunity for members to ask questions of you. So thank you very much for being here today. I will give you the opportunity to have your opening statement now. Welcome, President Spanier.

PRESIDENT SPANIER: Thank you very much. As always it is a pleasure to be here. We are very apprecia­ tive of the support that Penn State University receives from the Commonwealth of Pennsylvania, the annual appropriation from the Legislature of Pennsylvania. I do have a written opening statement which has been distributed to you. So I will not read that, but simply allow you to have that in writing. There are two individuals who I would in particular like to introduce today because they are the chief executives associated with two of the initiatives for which we seek enhanced funding this year. First of all, I would like to introduce the new Chief Executive Officer of Milton S. Hershey Medical Center, he is the Senior Vice President for Health Affairs at Penn State and the Dean of our College of Medicine, Darrell Kirch. Darrell, would you stand up so they can see you? Darrell just joined us this year from the University of Georgia where he held a similar position. He is a distinguished neuroscientist and a psychiatrist, eminent researcher and scholar in his field, practitioner of considerable experience. And we are very, very pleased to have him as a part of the Penn State family now. I hope to have the opportunity during the course of the hearing to make reference to some visual aids and one of them will pertain to our College of Medicine. I would also like to introduce to you our relatively new Dean of the School of Information, Sciences and Technology. Dr. James Thomas was formerly the Senior Associate Dean of the Smeal College of Business Administration. And he has provided the outstanding leadership for our new School of Information, Sciences and Technology which has truly become a great Pennsylvania asset in a relatively short period of time. I hope we will have the opportunity to talk about some of the work Dr. Thomas has initiated and how that is benefiting the Commonwealth. In addition, I would like to point out in the audience here are some members of the Penn State staff and some students from the university who are involved in student government and student organizations and we are very pleased to have them here as well. I would be pleased now to open it up for your questions. CHAIRMAN BARLEY: Thank you very much, Dr. Spanier. I will now recognize my counterpart, Representative Evans. I do not have any specific questions of you at the present time, Dr. Spanier. I will recognize Representative Evans for an opening statement. REPRESENTATIVE EVANS: Thank you, Mr. Chairman. Welcome, Mr. President. PRESIDENT SPANIER: Thank you. BY REPRESENTATIVE EVANS: Q Mr. President, obviously, probably the increase that the Governor has recommended to you is probably something that you don't think that you are particularly satisfied with. Exactly what would that mean to tuition for the students in September if you are not able to, the General Assembly decides not to increase what the Governor has recommended to you? A Penn State has two principal sources of income for our educational programs, legislative appropriation and student tuition. Right now they are in about a two to one balance with tuition providing two-thirds of the funding and the legislative appropriation one-third. We asked the Governor and now ask the Legislature for a 4.25 percent inflationary increase on Penn State's base budget appropriation. What the Governor has recommended, however, is to back out of our budget seven million dollars of funds that we received last year that we were anticipating would be folded into the base budget this year. They were programs that were designed in partnership with many individuals in Harrisburg to enhance economic development and to support workforce development. Two million dollars of those were at the Pennsylvania College of Technology for workforce development initiatives and the other five million dollars are at Pennsyl - vaniaState University elsewhere in the system to support initiatives such as the life sciences, information sciences and technology, material science, environmental science, children, youth and families, areas of great importance to the Commonwealth right now.

The Governor then recommended a three percent increase on the remaining funds. The net impact of all of those pluses and minuses is that we have been recommended for a budget increase of 62/100 of one percent. Even with the budget that we have proposed, we were looking at a tuition increase of over six percent for reasons that I would be happy to explain if time permits. Q Can you translate that six percent, that six percent means what in terms of dollars? Exactly what would that mean? A That would be a six percent increase on a base lower division tuition, most typical tuition rate, which is now about $6,500 in round numbers. That would begin to move our tuition close to $7,000 a year. If we do not receive the appropriation that we have requested, it would put additional pressure on the tuition side despite cost-cutting and reallocation efforts that we are engaged in. I cannot say until all the numbers are in how much additional tuition increase that would mean, but surely it would go higher than is now proposed and we would certainly like to avoid that.

Q The Chairman raised an issue about agri­ culture. Obviously, I have spent some time visiting Penn State and looking at your lab and some of your research. What type of dollars has the research element at Fenn State brought in in terms of the federal government or any other entity in terms of enhancing the program there? A This past year Penn State's research expenditures were $440 million. That was a $47 million increase over the previous year which I am very proud to say it is one of the largest single year increases in the history of American higher education. The single largest source of funding for those research expenditures is the federal government from agencies such as the Department of Defense, National Institutes of Health, National Science Foundation, Environmental Protection Agency, NASA and U.S. Department of Agriculture to name some of the key ones. Most of our research funding comes from sources outside the University and one of the areas would be our agricultural research appropriation which is a separate line item in Penn State's budget which comes from the Commonwealth. We do have a special problem there in relation to the appropriation because the three percent increase that was proposed on that budget falls a little short, of course, of the 4.25 percent increase that we need and that deficit to make up for a modest salary increase and the rapidly escalating cost of employee benefits, particularly health care benefits, would put us In a position of having to internally cut or reallocate some additional programmatic funds to make ends meet there. So we are worried about the Governor's recommendation from an agricultural research standpoint as well.

Q The Ag Extension Program is a program that does work particularly in Philadelphia. Tell me how is that program proceeding, the Ag Extension Program? A It is going extremely well. Several hundred employees at Penn State are involved in Cooperative Extension Service. We have offices in all 67 counties of Pennsylvania and the Cooperative Extension Service is a partnership between the federal government, the state government and the county government. You may recall that I made Cooperative Extension a priority for Fenn State when I became President, because between 1990 and 1996 there were no increases at all in that budget which had the effect of reducing the overall funding and our employee base by about 20 percent. In two years you were very helpful to us, in the first year and the third year of giving us an additional appropriation for Cooperative Extension Service which then allowed us to make up for some of that lost ground. We are now in a mode where we have redeployed our resources. We have assessed the entire Commonwealth of Pennsylvania and what the needs are for services from Cooperative Extension and that has been going very well. So we are very hopeful of maintaining quality of service that we are providing across the Commonwealth. The most significant change we made in the Cooperative Extension Service was to build on the historical base that we have in agriculture and include all of the other disciplines of the University as appropriate to contribute to our agricultural and cooperative extension enterprise. And that has been a very positive development both for the University and for the communities we serve. Q Chairman Barley and Majority Leader Perzel and I on the issue of education were raising some questions with the Chancellor about teacher education and the need and critical need, there is kind of a shortage in certain areas in Philadelphia, i.e., issues like math, science, foreign language, those areas. My question is what is Fenn State doing in the area of teacher education in terms of trying to find ways to recruit teachers and nurture them? Because there is a real challenge. It is not a crisis unique to Pennsylvania. It is in the nation. In the next five or ten years how do we get more people into the classroom? I don't obviously expect the University to magically have the answer to keep people, but I am just curious have you given any thought to what is happening, because obviously primary and secondary schools are very important to higher ed? And I am always raising these concerns is higer ed thinking about what is taking place in the primary and secondary levels. A Well, it is an excellent point. Penn State has a very good, very fine College of Education. So we are interested in the same issues. The enrollments in our College of Education at Penn State are pretty much at the maximum. It is very selective to get in. So only the very best students can get in. At Penn State virtually all of our education graduates are getting jobs in the teaching profession and a very high proportion of them are staying within the Commonwealth of Pennsylvania. We also have a lot of partnership programs through communities around the state. Our PEP Program, for example, goes into the areas where there are students who have been disadvantaged or from historically under- represented areas and where preparation for college and academic achievement has not been at the level it might be in some other parts of the state. And so we have had some good success around the state in that program working with school districts and communities to get more students ready for college. There is more that we can do. But right now we are pretty much completely full given the funding and staffing levels that we have. And as you know, over the last several years there has been a lot of discussion in Pennsylvania about whether we are producing too many teachers or not. Whether we were graduating as a state too many individuals who were not getting jobs as teachers. Now that has not been the case at Penn State. Our graduates have gone on very quickly to obtain teaching positions. So we are finding that there is a marketplace out there for them in certain areas of the state and in certain disciplines the need is particularly great.

Q My last comment. Mr. President, obviously, at a hearing such as this we receive all kinds of issues and concerns from our constituents. And speaking to a colleague of mine, Representative Myers, African-American students we have got some concerns about certain items taking place on the campus, certain letters, certain things of that nature. I know he is going to ask you more specific questions. 1 am just kind of concerned about exactly what is occurring on the campus relating to African-American students. 1 saw some of the letters that were sent. Would you like to speak to that? Would you like to give me some idea of what is happening? What you, as President, and the Administration are attempting to do to make sure that African-American students are welcome on the campus?

A Yes. I would be happy to give you a brief answer now and then we certainly could talk about it in more detail later. I share the same concerns that you do. Racism is a pervasive problem in our society. It is personally distressing to me. I have no tolerance for it. I have spent my life and my career doing everything I can to combat racism. Universities are a microcosms of larger societies around us. So we are certainly not immune to a range of incidents that occur. In many ways we may see more of it because we have so many thousands of individuals in relatively close quarters in a university community.

This past year we have seen some incidents of hate mail and anonymous mail that has been sent to individuals at the University. The year before someone sent an electronic mail message to a number of individuals containing very hateful and vile language. We do what we can from a law enforcement standpoint to try to stop things like that and to track down the perpetrators. But equally important, of course, is paying attention to the issues of racism, justice, equity, the climate on our university campuses, all 24 of them. So it has been a significant topic of discussion for us. It is an area we have worked on. We have a lot of staff specifically dedicated to dealing with such issues and it will continue to be a priority for us.

REPRESENTATIVE EVANS: Thank you. BY CHAIRMAN BARLEY: Q President Spanier, just a very brief follow up. The areas of Ag research and Ag extension, as Representative Evans indicated, I understood you to say they are critical areas. That continued increases in funding are necessary to keep the programs viable and moving forward; is that correct? A Yes. As I mentioned in two years back, we had asked for special consideration in that area. This year we are simply asking for those two line items in our budget to receive the same 4.25 percent base budget increase that we are asking for the rest of the Penn State budget and that needs to occur after the restoration of the seven million dollars that was removed. If that happens, we will be able to meet the basic salary increases, employee benefits and other commitments that already exist in those two line item budgets. We have not this year asked for an additional special appropriation as we have before in those areas, because this year we are focusing on two other areas of special priority, our School of Information, Sciences and Technology funding which is very important to the Commonwealth and our College of Medicine which is also extremely important. We have one other area that we have asked for in our budget, environmental compliance. That is not in response to any order that we are out of compliance, but it is to help us to begin to come into compliance with new mandates that we expect beginning in this coming year. So those are three areas we have asked for additional funds. What we are asking for in those two line item budgets is the 4.25 percent increase rather than a three percent increase that will be helpful to us. CHAIRMAN BARLEY: Thank you. I now recognize Representative Strittmatter. REPRESENTATIVE STRITTMATTER: Thank you, Mr. Chairman. Welcome, President Spanier. Mr. Chairman, I ask in order to comply as are viewers and people sitting in the room, we have a five-minute rule on ourselves, in order to facilitate Representative Lawless' situation, an important situation and concern that he has brought to all of us, in order to see the video, I am going to give my time up without asking a question so that Representative Lawless can have time to ask questions. I would ask, Mr. Chairman, that you run the video. 1 would ask the people at home, I haven't seen the video, but I believe it. is going to start off with parental concern notice. So I am saying whoever these people are who listening to this now, the parents might want to adjust the sound or change the channel if you have young children. Thank you.

CHAIRMAN BARLEY: At this point I would like to ask the technical crew if they would roll this video that is prepared for the members of the Appropriations Committee to view that. And I will, again, expect to maintain decorum and the proper reaction here in the conference room. (Presentation of video.) CHAIRMAN BARLEY: At this time I recognize Representative Lawless. REPRESENTATIVE LAWLESS: Thank you, Mr. Chairman. Dr. Spanier, I'll get to the tape and I know that you attended after I left. I understand that security called you and notified you that I was leaving and you could come down. BY REPRESENTATIVE LAWLESS: Q I want to go back on something that has already been touched upon and I want to make this clear. This is a difficult subject for me as I have gone through in my mind. Concerning your e-mail, who pays for FSU.EDU domain and do the students receive that free? How is it policed? A We have about 110,000 users on our electronic mail system. We transmit about two million electronic mail messages a day through our server which is funded by our students information technology fees. Q And who polices this? A We don't — Q If you are in the business world today or if you work for the Commonwealth of Pennsylvania and you send messages that are either pornographic or vulgar or if you say things like the C word or you say things like the N word, I know in Pennsylvania you will lose your job. How is that policed on your campus? A We don't monitor the electronic mail traffic and we don't police it. We do have an Office of Computer Network Security. When we receive complaints brought to our attention by individuals about the possible misuse of the system, then the people who work in that office contact the users after investigating the situation, and as applicable under federal law, we would deal with such an issue. Q Would they lose their use of e-mail? A We have had some cases of individuals who have lost the use of their e-mail privileges. Q But generally speaking it is not very well policed? A We don't monitor our electronic mail traffic, no. REPRESENTATIVE LAWLESS: I told you it is difficult for me to talk about, but for those who have known me over the years, I have a disfigurement on my face. One eye is lower than the other. I am not apologizing for that. It happened to me 15 years ago as a survivor of a brain tumor with reconstructive surgery. Let me give you input on what your students think of me, recent e-mails. "You are one sick bastard. You are probably one of these asses that applied to Fenn State. Because you are such a dimwit you got rejected, ends up going to West Chester." I'm sure my State System people will love to hear this. "Or some second class university and have been pissed off at Penn State ever since. Yes, maybe that is exactly what happened."

Next one, and these students have to be given credit, they give their names. "Your flagrant bashing of Penn State's Sex Faire is clearly appealing to the ignorance of your constituency. This is irrespons­ ible. And your threat towards Penn State funding is criminal. You are just hurting students, you selfish bastard. I suppose the likelihood of you acting responsible in this situation is about as likely as your eyes move in the same level."

I will get to my further questions as soon as I get myself together. Thank you, Mr. Chairman. CHAIRMAN BARLEY: I now recognize Representa­ tive Staback for purposes of some questions of the President. REPRESENTATIVE STABACK: Thank you, Mr.. Chairman. BY REPRESENTATIVE STABACK: Q Good afternoon, Dr. Spanier. A Thank you. Q Dr. Spanier, as part of your budget request for the coming year you included a new category that you alluded to earlier that is labeled Environmental Compliance. Now in that category you are reuqesting a special appropriation for some two million dollars to support environmental protection initiatives. And one of those initiatives jumps out at me, and that is remediation of contaminated land owned by Fenn State. Can you tell me how much land that you own that is contaminated? How is it contaminated and what needs to be done to clean it up? A Fenn State has ownership of thousands of acres of lands, around 24 campuses. We have extensive agricultural lands associated with the College of Agricul­ tural Science and Forestry. I think the contaminated lands are very modest in scope. We are not under any State Department of Environmental Protection or EFA orders for any cleanups or spills that have not been attended to. But the reason we have asked for these funds, and we also have a capital funding request in that budget as well, is because the standards have changed for what is defined as contaminants, how many parts per million of certain chemicals or materials are allowed in buildings, groundwater, in sites that have been worked over the years for various purposes. And Penn State feels the need as responsible citizens to get out ahead of this and to be in compliance with the new standards that have come on line. So this funding request is to help us meet those needs as a responsible member of the community. It is not to fix a particular problem that we are under a current mandate to change. But as I say, the standards are changing and as new guidelines are coming into effect, and they are changed all the time by the Environmental Protection Department in the state and by the U.S. Environmental Protection Agency, we need to be prepared to keep up with that and that is why we seek those funds. REPRESENTATIVE STABACK: Thank you, Mr. Chairman. CHAIRMAN BARLEY: I now recognize Representative Fleagle. REPRESENTATIVE FLEAGLE: Thank you, Mr. Chairman. BY REPRESENTATIVE FLEAGLE: Q President Spanier, I noticed that you have $10 million for a new item entitled Medical Education Special Funding. And that money is requested because of declining Medicare and Medicaid reimbursements. And I hear this a lot in hospitals, ambulance squads are being hit with this. What did our Pennsylvania congressional delegation tell you when you asked them why that was being cut and did they know the implication was that $10 million was 25 percent of this tuition increase, more than 25 percent of this tuition increase?

A Several things have happened at the federal level and that is one big part of the formula here. At the federal level two significant things have occurred. One is a continual redefinition of Medicare reimbursement. Medicare and Medicaid changes over the years have made it increasingly difficult for the national health care industry to keep up with rising costs. Certainly they created additional efficiencies. But academic health centers have been hit particularly hard. Q Well what did our — I know you have very effective lobbyists. What did our congressional delegation tell you or tell those Penn State lobbyists why they were doing that and did they know the implication of that, the fact that we at the state level would get hit with $10 million worth of additional costs or tuition would go up? A Well, I don't think that is quite as simply explained as the changes at the federal level resulting in a $10 million deficit. What happened is that the Balanced Budget Act of 1997 has had a major impact over several years now and has continued to be projected to have an impact of millions of dollars, more than $30 million overall on a cumulative annual basis at Fenn State. So the Balanced Budget Act, I can't tell you why any individual voted for that one way or another, but the Federal Balanced Budget Act of 1997 has substantially contributed to this problem, along with the reimbursement situation, but in addition it has resulted in the growing penetration of reduced fee for service care and managed care which has resulted in the profit margins, since we are nonprofit, really the excess of revenues over expenses virtually disappearing. And that is how we used to run the College of Medicine. Q But I guess my point is that we have, we at the state level now have to come up with $10 million to supplement your budget because of something the feds did and they in a sense have abrogated their responsi­ bility. A I would agree with that partially, yes. What happened at the federal level that substantially contributed to this problem, and it is more than $10 million, it is over $30 million. And we have asked for $10 million a year on a cumulative base budget basis for three years. So we actually need $30 million to plug this g.ap. But it is not all the fault of the federal government. There are other forces occurring at the same time. The rising cost of pharmaceuticals, pharma­ ceuticals are doing absolutely wonderful things, but they have gotten to be very expensive and the rising cost of the instrumentation and the medical procedures that are available now, which we use for diagnostic and treatment purposes happen to be very expensive. Q Okay, I hate to interrupt you. I have another question. But I just wanted to point that out that the feds have abrogated their responsibility. The second question I have, and I asked the Chancellor, Chancellor McCormick when he was here. One of the biggest problems we have in central Pennsylvania, I'm sure it is this way in eastern and western portions of the state too, is the lack of health care professionals to fill slots. We have ambulances diverting from hospitals and hospital critical care units closing down temporarily because they can put the beds in there but they don't have the professionals to fill the staffing needs. What initiatives has Penn State taken specifically and what quantitative goals do you have over the next year and five years to fill that void?

A Penn State has an array of academic programs to deal with that particular issue. Of course, we have our program training physicians. We admit about 110, 120 medical students each year. We have a program, entire College of Health and Human Development, which turns out professionals in health planning and administration, nutrition, kinesiology, human development and family studies and other health related areas. We also have a very large School of Nursing which is not only training baccalaureate degree nurses from the beginning of their education to the end of their degree, but we also have a very substantial extended nursing program whiph takes individuals who are trained at one level of nursing and moves them up to a higher level. We do have a nursing shortage in Pennsylvania right now. We have shortages in some other disciplines. We offer some of our campuses occupational or rehabilitation therapy services. So we do kind of cover the gamut on the -- Q Could I ask, but my time is up, let me just ask if you would submit in writing to the Chairman for dissemination to us the one-year goal of increasing the health care component of workers and perhaps a five- year goal from the facilities that you currently have? A I would be happy to do that. REPRESENTATIVE FLEA6LE: Thank you, Mr. President. Thank you, Mr. Chairman. CHAIRMAN BARLEY: I now recognize Representative Myers. REPRESENTATIVE MYERS: Thank you, Mr. Chairman. BY REPRESENTATIVE MYERS: Q Mr. President, my colleague, Representative Lawless, started talking about what appears to be blatant sexism on the campus, and in conjunction with that, information has been brought to our attention there also appears to be rampant racism on the campus at Fenn State. Since, say, September to now do you have any idea how many hate racism letters have been sent to African-American students at Penn State as well as faculty members? A If you are referring to the anonymous hate mail — Q Signed or unsigned. A There were four such mailings that I am aware of, but they may not have all been brought to my attention. Q Since we are talking about budgets have you determined any amount of resources that need to be applied to try to reduce the level of racism at Penn State and what is that figure? A We have a very broad array of programs and devote substantial resources and staffing to that area. We do have some materials assembled. I don't have them with me now, but I will be pleased to have those delivered to you very shortly to describe the funding that we put into those programs, a listing of each of the initiatives that are currently underway. Q That would be -fine. I got to speed up, I only have five minutes. A Okay. Q Speaking about allocating resources to specific initiatives, I understand you signed a document along with other faculty members, administrative, and students saying that the diversity of educational programs at Fenn State did not meet the needs of African-American students and that you were committed to seeing that there was a change to ensure that diversity education would be increased and the quality would be increased. Are you still committed to doing that, and if so, what is your strategy?

Let me go to my next question. The other issue — it reminds me of something, almost like putting the wrong man on trial. It reminds me of sending my child to a school and when she gets there, the school is on fire and she is asked to sit in the fire and try to learn and graduate. What types of initiatives and how much money, again, I am asking this here in the budget hearing, what types of initiatives are you bringing on board, and maybe at some point you can give us specific lists, to ensure that our children are safe on your campus, that they feel safe on your campus, that racism and sexism and classism is being addressed? There are many students here today, and I am sure they are here not because of the marketing brochure that says, well, come on to Perm State. Perm State has all these great schools, has all these great programs and we will embrace you and we will teach you and we will educate you. And when they get there, they get thrown in the nest of racism, sexism and classism and then they are expected to learn, grow and develop and learn to their fullest potential. So if you could explain to me and to us what is being done so that that element is being addressed and at some point will not exist? I am sure none of us in this room want to send our child to a learning environment to matricu­ late in a burning building. And racism and hate and classism, in my opinion, is tantamount to the fires of destruction. So we are literally, in my opinion, sending our children to a burning building. I want to know what you are doing to put the fire out and how much you are going to spend on it?

A Let me begin by saying I share your frustration and I feel precisely the same way you do. So to answer your first question, yes, I will continue to be committed to that agenda, as is the case for all of my colleagues and the administration. What we did a number of years ago is to set up a separate office within the University, and the person who heads it up is at the vice provost level, a senior member of the University administration, is called the Office of Educational Equity. He is the Vice Provost for Educational Equity. He has a staff whose responsibility is specifically dedicated to dealing with these issues. Q Is he the one that oversees African- American studies? A No, that is an academic program in one of the academic colleges that is degree granting program. Q So we have no resources going there? A We have resources -- Q We have to put in an increase for that? A Yes. We have, first of all, academic programs and courses in the curriculum that deal with such issues. Then we have programming through student affairs, which are educational programming and out-of- classroom experiences. Then we have the Educational Equity Office that is involved in programming, matters of campus climate — Q My time is up now. I want to put on the record that you have agreed to meet with the delegation so that we can address these issues -- A Yes, I look forward to that and we will share those materials also with you in advance of that meeting. REPRESENTATIVE MYERS: Thank you. CHAIRMAN BARLEY: Dr. Spanier, if you would please, any material that you have, whether it is Representative Myers or any other member of the Committee if you would just direct that through my office, the Chairman's office and then we will disseminate copies of that to every member of the Committee for their benefit. Just a process I guess that I would appreciate if you would follow that. DR. SPANIER: I would be pleased to do that. CHAIRMAN BARLEY: I now recognize Representative Rohrer. REPRESENTATIVE ROHRER: Thank you, Mr. Chairman. BY REPRESENTATIVE ROHRER: Q Dr. Spanier, I would have questions relative to the budget, but I am going to move to those questions which I think are more important and has to do with a policy that allowed what we saw on this screen and what has allowed other episodes such as this to transpire at the campus at Penn State. I hope you are embarrassed, because I am angered and I am very embarrassed. And I have to say this is the first time that I remember since I have been here that anything of this type has been paraded to this extent. Your policies which have allowed this to happen have now made it across the state and across the country. I think that is absolutely horrendous and a shameful thing. I'm a little perturbed I guess at a couple of things, not just at what took place, but what appeared to be almost a necessity to drag the administration to the point of even getting to the point of offering some kind of apology for this episode and these things that took place. The administration, those who have spoken on behalf of Fenn State have gone to the extent, and you did in your own letter to us, to basically make it appear to be much about nothing perhaps, a little distasteful perhaps, more of a problem than Representative Lawless took a picture of it, than the problem that occurred and that disturbs me. In your letter that you sent to the House members, let me read just a couple of things because I think to me, I mean, it is significant. You said, "I want to apologize to you as I have to others for any discomfort or confusion caused by the actions of some of our students."

I have to say it didn't cause me discomfort, it caused me great anger. And I wasn't confused by it. It was very clear what was taking place and it was reprehensible. You went on and you made some statements to the extent that, you say, "In this context we stand behind the rights of student organizations to sponsor events such as this. Even those with provocative and ill-chosen titles." The titles, provocative titles, to me are less of an issue than what was actually taking place. You go on and say, "Part of these programs were in poor taste in my opinion." You talked about titles and posters being beyond the bounds of good taste. You said, "I found components of each of these events offensive and embarrassing to Penn State." Now, the reason I read those words is because essentially the most that you used to describe were beyond good taste, embarrassing, ill-chosen perhaps. I found it very conspicuous I guess by its absence that there were no such adjectives that I would have used, and I would think the majority of the people in this state in the gobs of letters that I have received, such as debauched, wrong. There was no mention of moral let alone immoral. I am very curious why you chose not to use terms such as immoral, debauched, wrong, to describe the actions that took place here and in other events in the past? A Well, let me begin as I did yesterday with the Senators. Again, as I attempted to do in that letter, extending my apology to members of the House of Representatives who may have been offended or angered by what you saw and what you have learned about that event. We have over 80,000 students at Penn State and 20,000 employees. I find myself in a position where I am often apologizing by e-mail or letter or in person to individuals who are unhappy with actions by one or more of our students or members of our staff.

Q Let me interrupt; we are on limited time. I understand your position, and because of your position, it falls in your lap. And to that extent I am wondering why. Let me ask you this? Do you believe that those actions that took place, both the intent of that event and so forth that we saw, in your opinion, is it wrong and is it immoral? A Well, if I could be permitted a moment, Chairman Barley. CHAIRMAN BARLEY: Go ahead. You may continue your response. PRESIDENT SPANIER: I am trained as a family sociologist and a marriage and family therapist. So in my discipline I am exposed to these materials quite a bit. My wife and I attended that Sex Faire and I found it, I found many of the materials personally offensive. I was trying to communicate that in the letter. So, some of my reaction to some of what I saw there is similar to yours. But having said that, and I also need to 8ay and to perhaps clear up a misconception, that we have 500 student organizations at the University and it is incorrect that the administration of the University sponsored, sanctioned this event, that was aware of its specific contents, and even had we been so, we are always in a difficult position, as I know all of you appreciate and some of you have communicated to me, of drawing the right distinction between protecting free speech on the part of our students or anyone else in the community and community standards. So it is very clear that to many individuals there is a perception that community standards were violated here even though there was a sign on the door there was adult material. Nevertheless, we are always having to get the best advice we can about what is appropriate to happen here. As Attorney General Fisher said yesterday, and as I think the Governor has said very eloquently in his recent letter to me, this is always a very difficult line to walk. And I have to do that every day as does the Governor and the Attorney General and others. And while we did not sanction this event, I accept your statement that it occurred in a university where I have some considerable responsibility. We have thousands of students who are at the point in their lives where they put on any variety of programs, and this particular program given the attention it has received has caused us to rethink a few aspects of it that I think did cross a certain boundary. I will just mention what they are. First of all, the so-called tent of consent was something that came — it was one specific thing that came to my attention ahead of time, and when we checked with legal counsel and our Student Affairs folks met with the students a day or two beforehand and learned what was intended, we determined that that did cross the line and we closed that tent down.

Secondly, I need to say that we had a situation in an earlier event where a banner was put up on a balcony by students that I considered it had been inappropriate. Had I seen it up there I would have taken some action. Fortunately I think it only ended up being there for a few hours. But as a result of that we have already changed the policy for placing banners on campus. Students in the past have been able to put up their own banners, but the new policy states that the banner must be reviewed, approved and hung by the University. This will allow us to screen words that might not meet community standards and applies to all locations where banners are allowed. We are also reviewing the current system used to make room reservations for student events. We are looking into a process that would require student groups to register for the use of space on campus and state the types of activities that would take place during the event. And finally, we are considering a plan to limit access to some programs to university students only who would have to show appropriate identification to enter. This would eliminate the possibility of high school students going into events that would be inappro­ priate for young people. These actions, which are already in the works, are very consistent with what has emerged from the Governor's concerns. And so 1 feel reasonably confident, with some policy changes and with a greater degree of counseling and advising from our Student Affairs staff, we might be able to put this behind us. Again, just let me say that I am very sorry for the consternation, confusion and anger, other emotions that this has caused for so many individuals. We will do our best to try to get the right balance between the observation of community standards and protecting the fundamental freedoms that our founding fathers have guaranteed for all of us surrounding expression and freedom of speech. REPRESENTATIVE ROHRER: Can you recognize me in the second round? CHAIRMAN BARLEY: Thank you, President Spanier. I now recognize Representative Josephs. REPRESENTATIVE JOSEPHS: Thank you, Mr. Chairman. BY REPRESENTATIVE JOSEPHS: Q I am going to follow up a little bit, two subjects, a little bit of what my colleagues, Mr. Evans and Mr. Myers have been talking about. I am very interested in terms of your student body, how exactly — what demography is in terms of cultural group, race group? It is hard to define what we are talking about nowadays, as the census people know as well. And I don't need to have that answer here orally at all, but again, I am looking, for instance, at a chart that the State System of Higher Education put out where you can tell from '91 to 2000, five groups, racial groups, how many people applied, how many were accepted, how many were enrolled. I would be interested very much also in graduation rates, in comparable kinds of figures not only for your student body but for your faculty. In terms of your faculty for people who are in positions of special responsibility in terms of their race or cultural background. And if you would forward that information to the Chairman of the Committee, I think we would all find that very interesting and I think it would be part of the ongoing discussions that you are having with students and with other public officials who are concerned about the incidences of racism on the campus. A Yes. That would be a part of that data packet we will provide. Let me just give a brief demographic profile. As I mentioned, we have 81,000 students on our 24 campuses right now. About 85 percent of Fenn State students, undergraduate students, are from within the Commonwealth of Pennsylvania. We receive about 80,000 applications for admission to the University each year now. That is undergraduate, graduate and professional.

If you look from 1990 to today, we have about a 70 percent increase in the number of minority student8. If we look more specifically, for example, at African-American students, that is a 50 percent increase, Hispanic 113 percent, Asian and Pacific Islanders 76 percent and Native American 41 percent. Q That is about what the SSHEA people have also. A Yes, so that would be our profile over the last decade. Q And faculty also would be very important to me as well as other employees of the system. But I wanted to get to another question, and I apologize for cutting you short, but the Chairman runs a tight ship and I'm trying to be a good sailor. I would like to have a short description of what students, what faculty, what management has done to raise money for the institution from its own private sources? A We had a record-breaking year in philan­ thropy last year. Penn State raised $171 million of private support. Over the last several years we have been growing quite substantially and it is part of what is called our grand destiny capital fund-raising campaign where we had a billion dollar goal raising private funds. We are at about $900 million right now. So, we still have a ways to go, but our progress has been very positive. The single largest piece of that campaign goal is for scholarships for students. That is very important to us right now. The average Fenn State student is graduating with a debt of over $17,000 a year. We are also raising funds for the recruitment and retention of very excellent faculty to support these students. We have some building projects that will be provided by this philanthropy. In some cases in conjunction with state funding or funds that are being borrowed by the institution. So those are some examples of what we are doing with the funds we are raising and the progress we are making. Q And who are you raising them from and what parts do the students play? A The largest share of the new funds comes from our own alumni. We also have friends of the University who take an interest in Penn State who provide support. And we have a good deal of support from corporations and foundations. Adding all of those up adds up to the $171 million last year. REPRESENTATIVE JOSEPHS: Thank you. Thank you, Mr. Chairman. BY CHAIRMAN BARLEY: Q Dr. Spanier, just to clarify a point you made. You have a goal of one billion dollars and is that for, did I hear you say, capital purposes and not necessarily — A Well, we call it a capital campaign. What that means is we have a goal of raising one billion dollars from private sources over a period of seven years to support the entire range of philanthropic needs at the University. Only a small portion of that is for construction projects. Q What year are you in? Of the seven year campaign where are you in the process? A We are in the fifth year, nearing completion of the fifth year. Q Did I also understand you to say that you have already raised in excess of 900 million? A That is correct. Q Congratulations. A Thank you. We have been working hard on it. Q We will hire you as a fund-raiser. A We have been working very hard on it and we have an excellent development staff. I should tell you that about $70 million of that has come from members of our Board of Trustees. Last year we had almost 120,000 alumni who contributed — 120,000 gifts. And three years ago for the first time Penn State became the leading university in the United States in the number of alumni contributing something to the University each year. Harvard had had that spot for a long time and we passed them up. So, about 75 to 80,000 of those gifts are actually from Penn State alumnus as I recall. Now it is true that Harvard alumni are giving more than Penn State alumni in actual dollars, but that is a goal we can set our sights on for the future. Penn State has more than 400,000 living alumni. So we have a lot of Penn Staters out there and they are very loyal and they have been very generous with us. Q Well those of us that run for public office and have the dreaded obligation of raising money, we appreciate the five and ten dollar contributions just as much as the larger ones. We appreciate all of them. A So do we. CHAIRMAN BARLEY: Representative Baker is now recognized. REPRESENTATIVE BAKER: Thank you, Mr. Chairman. BY REPRESENTATIVE BAKER: Q Good afternoon, Dr. Spanier. Dr. Spanier, I would like to preface my remarks first and foremost by saying I have always been a strong supporter of Penn State. I have no children that attend Penn State campuses. I don't have a campus in my legislative district and I have been very Penn State proud over the last five terms.

With that said, however, after viewing what I just saw I do believe that this causes no little shame upon Penn State. And I am concerned about what, not just what I saw, and I, too, am very disappointed, not in just some aspects of what transpired at this so- called Sex Faire, but the entire Sex Faire, the whole event. In some remarks, I have been reading a lot, I have been following some of the e-mails. I have been watching the press as they report various letters. I have read the Governor's letter in response to this whole issue, the most recent Governor's letter, and on the whole I believe it is very balanced. But I am still concerned about a couple of issues and I am glad you said it exceeded the bounds of good taste. But then you went on and said, "The University stands behind the right of the student organization to sponsor events even those with provocative and ill-chosen titles." I am curious about what the University means. Is that the administration, is that you, is that the faculty, is that the trustees and the students? I know that hindsight is better than foresight, but sometimes we say things that we don't necessarily totally embrace later because we have learned and we have grown from what we have said and what we have done perhaps. But I am concerned about some of those things I just saw. I looked up what pornography was, for instance, this morning in the Oxford Dictionary. And based on what I just saw this is what it says, "Writings or pictures or films, etc., that are intended to stimulate erotic feeling by description or betrayal of sexual activity."

Now as you know, standing up in the middle of a movie theater, crowded movie theater, where there is no fire and someone shouts fire is not protected speech. And as you also probably know in some cases pornography is not protected speech. So we have to be very, very careful at what we do and what we say. And I am very concerned about, and I agree with the Governor's letter, when he intimated that perhaps community standards were violated here with this particular event. I'm concerned — I know you have been very receptive of what the Governor has said in his letter and I believe that you are very genuine in taking many of his suggestions that were contained in his letter. So, I am concerned in order to hold future student activities inviolate of community standards and consistent with them, I would like to know what exactly procedures or new guidelines may be implemented for the future or I daresay we will be back to this table discussing this issue again. Obviously we have a concern here, many of us, because we do support, many of us your budgets and have every single year. I have, this will be my fifth term, and I will support your budget request but I will tell you that this controversy will not end if these kinds of things continue. We have a public policy, legitimate concern here when we provide nearly one-third of a billion dollars to Fenn State University. That is a legitimate concern of these members. I for one have always been supportive and very curious as to what new procedures, what new safeguards may be implemented consistent with community standards and also at the same time upholding the first amendment. A Well, I'm not sure 1 can add much to the summary I gave a moment ago about what we can do at this point. But we will certainly continue the discussions along the lines that I have outlined. I am often put in the position of having to speak for all of our students or all of our employees. And in a university most of the students and employees would prefer to speak for themselves and not have me presume to take their position. There are very diverse views among our faculty and students on these issues being raised today. So it is not really possible for me to capture them in one coordinated response. I told you what my personal feelings are and I have also said that I am very personally committed to the Bill of Rights and the concept of free speech. Great universities, if there is anyplace in our society where we should not avoid controversial ideas, it would be in a great university and we teach our students to understand and deal with them. I suspect in part what we saw here was the students involved, and we are talking about six, eight, maybe a dozen students, I don't know the precise number, is a very small group of students who took it upon themselves on their own initiative and without any consultation with us, certainly not me or any of my close colleagues, to put this event on in a residence hall function room as they saw fit. So the question for us and the question that we have even in our own communities around the state is to what extent should we and can we control what happens at any kind of event. We have business establishments and many of our communities and many of your districts that sell material that is much more explicit than what was on display in that function room. I think our laws have allowed that to exist in the same way that laws allow certain things to happen at universities ^nd in. many other places that make some individuals feel uncomfortable. I am not saying it is right and I am also not wanting to presume to be an expert on constitutional law or the First Amendment. I think all I can add is to say that I do fully understand your perspective. I know it is shared by others. And we will do the best we can at the University to get these different perspectives on the table and working together as well as possible. REPRESENTATIVE BAKER: My time is up. Thank you, Mr. Chairman, Dr. Spanier. PRESIDENT SPANIER: Thank you. CHAIRMAN BARLEY: I'm looking at the court reporter. We have at least an hour to go. She is very good at sign language and she is indicating that she needs a break of at least five minutes. We will recess for five minutes. (Brief recess.) CHAIRMAN BARLEY: Okay, if the members would please return to their seats and the audience would be seated. I appreciate the attention that has been paid and the courtesies that have been extended by the audience. You have been very good and I appreciate that. We are at least midway through the hearings. I apologize for taking a little longer than I indicated for the break, but we will now complete the hearing. With that, Representative Manderino is recognized for questioning. REPRESENTATIVE MANDERINO: Thank you, Mr. Chairman. BY REPRESENTATIVE MANDERINO: Q Good afternoon, President Spanier. Here is my tough question before I get into my comments on the Sex Faire. As a Penn State grad, I am very concerned about the affordability of the University. And my recollection is every year when we come here that the anticipated Penn State tuition increase is higher than all of the others, including this year where the State System is anticipating A.8, Temple and Pitt 5 and Penn State estimated 6.2 or more. So, I want to hear a response to that at the end of the rest of my statement. But knowing this incident and the videotape was going to be shown, I guess the lawyer in me went looking to see what Penn State can do. And I really feel for the position that you are in and what you are being asked by certain individuals to do and you are trying to balance that within the legal parameters. And so I just want to put this in a little bit perspective for the members of the Committee and whoever in the audience cares to know. Nothing is new in this world. This ia not a new incident. And I want to share John Doe v. University of Michigan, because it is going to sound very familiar. And this deals not only with the Sex Faire, but concerns that folks have about racism and racial harassment on your campus. I preface this by saying I am not afraid to raise these issues because I think any of my constituents who know me and vote for me know that there is no tolerance in me for racism and for sexism. On the other hand, there is a really high respect for freedom of speech and our First Amendment rights both to speech assembly and religion. And I think those are in danger with some of the questions here. University of Michigan, very similar to Penn State, was before a House Appropriations Committee back in 1987, a hearing on racism because of racial incidents and racial remarks that were happening on their campus. And after the hearing at which you would expect all the testimony being very critical of the university, the Chairman of the Appropriations Committee says, "We Michigan legislators will not tolerate racism on campus. It has no place in this day and age," which I agree with. "Some things are going to have to change on the university campus." The Committee members demanded to meet with the university and said, "Holding up funds as a club may be part of our response, but we will predicate that on how the university responds." The university responded with a very well thought out, deliberative, worked on by all different levels of committee three-tiered approach to their new policy with regard to these kinds of speech and actions on campus. And let me just bring you to the very end of what the court said. "Although the line is sometimes difficult to draw with precision, the court must distinguish at the outset between First Amendment protection, the so-called pure speech and mere conduct and those things that are illegal." And it talked about battery and assault for purposes of ethnic intimidation, clearly illegal. Vandalism and property damage for the purpose of that intimidation, clearly illegal. However, the dissemination of legally -- and the dissemination of legally obscene materials is also criminal under this state. But I would caution folks to remember that pornography is not illegal. Otherwise you wouldn't see Playboy magazines on the news­ stands that's clearlyepmething that has been found to be legal. What the university can't do according to the courts is to establish an anti-discrimination policy which has the effect of prohibiting certain speech because it is disagreeable, the ideas or message sought to be conveyed. Nor could the university prescribe speech simply because they found it to be offensive even gravely so by large numbers of people. And so I understand where you are coming from. There is one other point I want to make on the First Amendment. This comes from the United States Supreme Court preeminent case on the subject matter, Texas v. Johnson, that dealt with flag burning. And the majority opinion says, that there is a bedrock principle underlying the First Amendment is that government may not prohibit expression of an idea simply because society finds the idea itself offensive or disagreeable. And in concurring with that, Justice Kennedy made a wonderful point. That sometimes the hard fact is we have to make decisions on the court that we don't like. We make them because they are right. Right in the sense of the law and the constitution as we see them even though we dislike the action it took. What the opinion said in there, and I just want to point out because no one has made it yet, is that the way to preserve the flag's special role in society is not to punish those who do that but to persuade them that they are wrong. And it is my understanding that there was a counter demonstration that happened on campus by the Christian Ministry organization the night of the Sex Faire. I read that in some editorial column. And I think that is an appropriate response from the students involved. I was a Penn State student. I was very involved, not in organizations like Womyn Concerned, but I was very involved in Intervarsity Christian Fellowship, a student run but on-campus organization. We held our events on campus. We had our social affairs in campus buildings. We had coffee houses not only for the purpose of our own entertainment and christian music, but for the purpose of evangelism and outreach of a message of Jesus Christ. I am sure that message offended some students. But I hope that you will defend my right as a student and a student's right who have another message as well as you would defend these. A I thank you for those comments. I will do so. Let me also thank you for bringing attention to the fact that there are hundreds of student organizations at the University. Our students do some wonderful things and I am very proud of what we see on our campus. I have a wonderful letter, which I would be happy to share with you, from the campus clergy giving their perspective on this event and thanking me for my support of their efforts. We are very proud that we have raised, completely with private funds, nine million dollars for a new spiritual center on campus which will be associated with our existing Eisenhower Chapel. It will be the largest at any public university in the country. We have thousands of students involved in things like the dance marathon which is one of the most recent events to have occurred on campus. Just a matter of days ago thousands of our students parti­ cipated in the raising of $3.6 million for children with cancer, support of their families and for cancer research programs at the Milton S. Hershey Medical Center. It is the largest student run philanthrophy in the world. And this year they broke last year's record-breaking goal of three million dollars.

So I would hope that whatever views we have of certain recent events that we can appreciate the larger perspective. That we have a very diverse community with people of all races, genders, political persuasions, religious backgrounds and there is a lot of good that happens at the University and we must keep that in mind as well. And I thank you for mentioning it.

CHAIRMAN BARLEY: I now recognize Representative Cohen. REPRESENTATIVE COHEN: Thank you, Mr. Chairman. BY REPRESENTATIVE COHEN: Q President Spanier, I hate to change the subject, but to use your words I would like to get back to the larger perspective of the reason that I think we, as members of the Appropriations Committee, are here and that is to discuss the meaningful work that the Univer­ sity is doing and some of the funding and why we are privileged to fund the University. You have mentioned in your written statement that you passed out to us, items, and you introduced the two gentlemen from the Hershey Medical Center and also from the School of Science and Technology and your written remarks are very impressive. If you could within the very short period of time talk about that. But I also read about, if I may call it a lion heart. A Yes. Q And exactly what this is because I find it to be absolutely astounding in a positive manner. A Yes. Well thank you for raising that. To summarize again, we have asked for the seven million dollars to be, that was added to our budget last year, to be continued on a permanent basis, the 4.25 percent increase. And I will comment on two of our top priorities, our two top priorities for additional funding. At the Senate Appropriations Hearing Committee yesterday I actually had on the table with me something called the left ventricular assist device. It is the first device that will be totally implantable that will allow — there is potentially four million people who could be affected by this new scientific development called the Lion Heart that was developed at the Milton S. Hershey Medical Center. And by the way, we expect that possibly within a matter of days, if all the stars are properly aligned, that we will see the first operation in the United States, the first in the history of this country, on a patient that will install this device and in a very high risk situation, however, I might add, because these are people whose hearts are failing or have failed. This will give them the possibility of continued life. I could not bring the visual aid today because we have our physicians and residents training on this. And besides I told them they might need it ready for me after this hearing. (Laughter.) Just in case I needed that. So it is back at the medical center as we speak. But I did bring brochures and I will give them to you after the hearing. But I appreciate your mentioning that because it does speak to the importance of what we are trying to do in the College of Medicine. As Representative Fleagle I believe mentioned earlier, we have been hit from all sides, we are not the only academic health center in this situation, but we have been hit from all sides. And Milton S. Hershey Medical Center and our College of Medicine is one of the great jewels in the Commonwealth of Pennsylvania. It is in jeopardy if we don't receive some additional funding from the Commonwealth to support the College of Medicine. We are committed to and we will operate our hospitals on a self-support basis even though we are required by law to take indigent patients and even though we are providing care at the very highest end, which is extremely expensive and is not being reimbursed relative to our costs. But we don't have one of the two things that every other, almost every other College of Medicine in the United States has. There are 125 of them, 75 publics. We rank 75th in support among the public colleges of medicine. We are too young still, we are only about 30 years old, to have a huge endowment that came in associated with the medical center. And we don't have the average of 40 to $50 million in state support that is the average nationally among the colleges of medicine. Ours is about five million dollars. So we are in desperate need of assistance from the Commonwealth to help continue these programs at the Milton S. Hershey Medical Center. We have done a wonderful job of sponsoring the area health education centers. We are truly a statewide enterprise and a statewide College of Medicine. We are putting primary care physicians into areas where they are needed throughout the Commonwealth and we would ask for your consideration of that item. This is a model of our new School of Information, Sciences and Technology. And that curve shaped building right in the middle of the model is a very architecturally unique building design that is that way for a particular purpose, because it ties together Fenn State's west campus and main campus. And this building will be the statewide headquarters so to speak. For what I mentioned earlier has truly become a Pennsylvania asset. When the Governor supported that initiative initially, he asked us specifically please make this a Pennsylvania asset and so we now cooperate with colleges and universities throughout Pennsylvania. Sixty some already have been in for discussions about how we can help them. In our Penn State world campus, which is our virtual university, our most popular program is the webmaster certificate. It is part of an overall program that reaches 3,000 individuals already only after its second year of existence. And in its second year of enrollment in the School of Information, Sciences and Technology, we already have across our world campus associate, baccalaureate and beginning graduate programs, 2,000 students enrolled. This is not a tiny little program like you might see in some states to add a few specialized workers into the information technology field. This is the future of Pennsylvania. We decided that we would do this in a major way and we are committed to dealing with the very substantial workforce needs of the Commonwealth of Pennsylvania to be a growing hub for employers in the area of information, sciences and technology. These students all have jobs waiting for them already. They are involved in internships and summer jobs, most of them throughout Pennsylvania. So this is going to be a very important development for us. And we have asked for two things here. For the four and a half million dollars that was given to us a couple of years ago to be put into the base budget. And initially when we made that request, we said when fully rammed up, this would be a nine to $10 million enterprise and we have asked now for four million dollars to take that next step. If we get that, I hope we won't come back to you, we won't need to come back to you for several years. We are committed at that point to using our tuition revenues and support from business and industry and philanthrophy to get the rest of the job done. REPRESENTATIVE COHEN: Thank you, Mr. Chairman. I just want to remind my fellow members that it was the Hershey Medical Center that gave extraordinary, beyond extraordinary care to our colleague, Al Pattec. Thank you, Mr. Chairman. CHAIRMAN BARLEY: That is correct. I now recognize Representative Nickol. REPRESENTATIVE NICKOL: Thank you. BY REPRESENTATIVE NICKOL: Q First, I would like to start by thanking Penn State. I represent an area which includes the northern end of Adams County where we had an outbreak of Plum Pox Virus. And your Cooperative Extension Services in that county and your Ag Research people connected to the Fruit Lab in Biglerville have just been phenomenal in support of the community. I think a lot of people, when you think of Penn State, you think of University Park and some of the campuses in the communities. I don't have any of those in my district, but your efforts have been very helpful in support of my constituents and I do appreciate those. A Thank you for mentioning that. Q I would like to focus on one item in the budget. I note there is a significant increase in the cost of employee benefits at Penn State. And in your budget presentation you give us one reason for that. The increasing number of employees are participating in TIACREF, the alternate retirement plan you make available. A Yes. Q I am curious, how do your employees, in rough percentages, how do they break down in the participa­ tion in the State Employees Retirement System, which we fully participate in and how they participate in TIACREF? A Okay, that is an excellent question. Just a word of background there. Not everyone may realize, we all know that the Pennsylvania Employees Retirement System is a defined benefit program depending upon your years of service and the salary in your last three years and variables of that kind determines your retirement benefits. TIACREF is a defined contribution program. In other words, your retirement portfolio is based entirely on what you and your employer have contributed over time. And the reason that this is the predominant retirement program throughout American higher education is because university faculty tend to be fairly mobile. And it is a portable system, whatever university you might be working at at any point in your career, the benefits are movable. So what we have found over time is that the number of Penn State employees who are in the State Employee Retirement System has remained very high among staff who tend to be more location bound and who are not as mobile. But on the faculty side there has been growing movement over the last 28 years I think that it has been in effect, been growing movement towards the TIACREF program. We still have thousands of employees on the state program, but we also have, particularly on the faculty side, a pretty good number of employees in the TIACREF program.

Q Do you know roughly the approximate percentage breakdown? A I think right now we just passed the 50 percent point. That is my recollection. But I want to get back to you on that. We will let you know what the breakdown is. But I believe right now we have a slight majority in TIACREF, but close to half still I think in the State Employees Retirement program. Q As an employer what percentage of payroll do you pay in support of members who are — of service, the State Employees Retirement System at present? A We pay whatever the defined rate is that is told to us by the State Employees Retirement System based on their actuarial analysis of what is needed in a particular year. The last three years that number has gone down. It is pretty low right now and that has been very helpful to the University of course as the amount we have had to contribute has gone down. What we are scared to death about is it can't go down any further and it can only go in one direction and that is up. And when that happens where we will find the money in our budget to do that.

Q I believe it is at zero percent right now. So you make no contributions. A I don't think it is quite at zero. It is not very far above it. Q What percent do you pay for your employees or participants in TIACREF? A 9.29 almost since its inception, certainly for a good number of years, a good number of recent years. Q Your new hires I gather are moving toward TIACREF. As I understand the premise of offering this alternative plan and one of the important things to the Commonwealth is retaining a parity in benefits, a contri­ bution of almost defined benefit to be kind of an equal commitment of public dollars on behalf of all employees, but it looks, from what you are talking about, the results have not necessarily been that. I am curious, as you see it, has the state set the employer contribution rate for alternate retirement plans at TIACREF at a level where benefits are no longer comparable between the two systems?

A No, I think the benefits, as nearly as you can compare a defined benefit program, the benefits,the rates are still analyzed in a way that allows us to be as comparable as possible. So I think the outcome is we are treating our employees as fairly as we know how. What has happened is because of what is happening in the stock market and actuarially what has been determined in the State Employees Retirement System, they have had enough money in the bank, so to speak, and the earnings have done well enough that they have been able to lower that rate. But that could very well change, of course, as we move forward. REPRESENTATIVE NICKOL: Thank you. CHAIRMAN BARLEY: I now recognize Representative Robinson. REPRESENTATIVE ROBINSON: Thank you, Mr. Chairman. Thank you, Mr. President. Mr. President, let me give you a jocular moment and suggest to you had Penn State won that football game against Pitt perhaps their fortunes would be much better than they have been since then. It seems like there has been a lot of piling on since that game. Things ren't very happy in Happy Valley. I guess things will return to normal once Penn State wins another national championship. I think one of the things we are talking about here today is an issue of accountability. As you know, this is something that I have raised with you and the other presidents of our Commonwealth universities. I won't travel over that ground again, and I appreciate your help and Dr. DiEugenio's help and staff in addressing some of those concerns. I will save that for another time. Let me get serious and suggest that I am not a lawyer. I am a political scientist. And so I have been researching too as my good colleague, Kathy Manderino, did in reference to the Sex Faire. It seems to me we need not give any comfort to racism or racists because First Amendment right, free speech, does underpin racism very much so. And that should not give any of us any comfort anymore so than lawsuits would suggest people who are racists to say and do as they please. Because often times racists' attitude and comments lead to racist behavior and those who have been victimized physically by racism get no comfort in knowing that it is okay for a racist to call you names or perhaps feel that they can take actions. So I would hope in your deliberations in trying to struggle with both these issues around sex and race that you not be deterred. Because at the end of the day there is a political solution. And all of us who are elected has suggested to you that there is a political solution and that should not be lost on you or any of the other presidents or anywhere else that have to wrestle with these issues. So I hope that you put this all in perspective.

I also want to follow up on Representative Myers* concern about what is happening on some of our campuses race-wise and relate that also to what is happening on the branch campuses. You have a lot of branch campuses as does the University of Pittsburgh and I believe Temple has some. We need to know when you send your information to the Chair what is happening on the branch campuses and how you are addressing this. I believe in addressing issues first by who writes the policies. I need to know what your Board of Trustees, not you, your Board of Trustees, how they are addressing this issue of racism relative to any policy they have in place and then how you, as the President, are carrying out the responsibility, are carrying out that policy. That needs to relate also to if there is an effort to recruit, retain, train faculty other than live-in faculty, how do you do that? How do you make that happen and what are the challenges are you meeting? What policy is driving that? And you can share that information through the Chair. I won't take up a lot of your time today.

One last thing I would encourage you to do, and that is to take seriously the potential benefits of more sports competition among our Commonwealth schools where it is appropriate in the context of the Pitt/Penn State rivalry. I would hate to think other states and other universities are smarter than we are in trying to address that competition issue. In Mississippi there are four major universities. They all play each other. They all do well nationally in the rankings and they keep a lot of money in Mississippi. I am concerned about Pennsylvania, not Mississippi. And I don't want to 00

see Penn State go to Mississippi and play a game if they can stay here and play Pitt. And I think our President, as well as our Legislature, can work together to make that happensoutside of any legislative effort. That is where the law, perhaps it doesn't solve the problem, but the politics does and I would encourage you and your presidents to seriously consider that and to look at the benefits that might come to this Commonwealth. I think that some of the shortsightedness on the part of some people in the west in the past perhaps has brought us to a point where we can't get the cooperation we need across the state on this issue. But forgive us. Sometimes those of us out on the frontier are not as visionary as people in other parts of the state. But I think there are those who will work with you in this regard. One last comment if I might, and that is certainly at Penn State you not only have some excellent programs and excellent faculty, but you are in a very unique position because you are so big and you are so important. And it is much easier for us to expect you to lead the way, and I do, and I hope that you will continue to lead the way as the biggest and also as the best. Thank you, Mr. President, and thank you, Mr. Chairman. CHAIRMAN BARLEY:. Representative Saylor. REPRESENTATIVE SAYLOR: First, before I start off with questions today I want to thank you and the University for your support of our York campus, the new addition of our library and classrooms. And also, I want to join the Chairman in commending Penn State University for your support of our agricultural program across the state as well as in York County. What I would like to do is bring attention and maybe an explanation on a new program, we just got a brochure, I think most legislators did, on the PENNTAP Program. Could you talk a little bit about what is going on with that program, talk a little bit about the funding and so forth. A Yes. PENNTAP stands for the Pennsylvania Technology Assistance Program and it is a unit that is part of Penn State that seeks to assist businesses, companies throughout Pennsylvania with technical needs that they have. My recollection is that last year we served about 600 companies with technical needs that they have and we do a pretty good job of quantifying what the economic benefit is to those companies. It is in the millions of dollars every year. So it is a very sound investment on the part of the state and Penn State is very much appreciative of the opportunity to be able to host that enterprise.

It also ties into our other technology transfer enterprises at the University. We have, for example, intellectual property office where we take Penn State inventions and turn them into something that can be commercialized to benefit business and industry in the Commonwealth and beyond. We have small business assistance. We are increasingly working in the area of entrepreneurship. We just opened up an E business research center, a partnership between our College of Business Administration and the School of Information, Sciences and Technology. Penn State's research programs have gotten to be very extensive over the years, but many of them have had a very applied focus. So enterprises like PENNTAP, Ben Franklin Partnership I think is another one you are all familiar with, gives us an opportunity to reach out into the communities of the state and in a further way promote economic development. Q Do you have an idea of what you have done for job creation as far as the PENNTAP Program? Any idea what new jobs have been created? Do you keep statistics on that at all? A Yes, we do have statistics on that. I think probably, well, I probably shouldn't try to recall the number. It is in the thousands of jobs that have been created directly as a result of those programs. I know we can tell you what it is so we will get you that information. REPRESENTATIVE SAYLOR: Thank you. CHAIRMAN BARLEY: I now recognize Representative LaGrotta. REPRESENTATIVE LAGROTTA: Thank you, Mr. Chairman. BY REPRESENTATIVE LAGROTTA: Q Mr. President, thank you for being here. I am sure there are places that you would have rather been today. I would like to begin, before I ask a question about a separate matter, by saying that I am not aware like Kathy Manderino or a scientist like my friend, Bill Robinson. What I am is a citizen of Pennsylvania who sees one of the finest universities in the country being spotlighted today as a place that is less than appropriate. And I think that is an unfair characterization of Penn State. There is no doubt in my mind that I was discomforted by the video. And I don't know what the right word was. I thought it was wrong, immoral, insensitive. I thought it was sexist against women as opposed to being some of the messages those misguided women were trying to deliver.

But I am comfortable with what you have displayed in terms of how you are handling it and how you are going to handle it in the future. And as someone who has been vilified and treated wrongly because I am a Catholic and because I am an Italian-American, I think racism is reprehensible. And I am sure there are incidents at Penn State where African-Americans and other ethnic people of color, etc. are treated unfairly. But I am also sure that it is not something that you sanction or something that you do anything less than try to prevent as the President as does all your staff. So I am comfortable with what Penn State is doing to deal with some of the problems it has. I think the real sad thing is that most people that are watching this on television or are going to read about this in the newspaper haven't had a chance to meet some of the students that have come here today from Penn State. I met some of your student government representatives and some of the African-American students were not able to get in here because the seats were all taken. And those students are bright, articulate. They are being well educated, and if I were the President of Penn State or a faculty member or their parents, I would be extremely proud of them to say they are my kids, they are my students, they are my alumnus or alumni, depending on whether they are male or female. So I wanted to make those points very clear and I would hope that the people that are watching this or reading about this in the newspapers will not get a mistbkea impression about the mission of Penn State University. I would like to use what remaining time I have to ask you about the extension campuses of which there are part of three in my legislative district. And I think that some of these side shows today have taken away from the fact that Governor Ridge wants to take money away from Penn State. And I personally am committed to try and help restore those funds. But I want to ask you what the impact of the Governor's budget reduction would be on the campuses in my district? A Let me first thank you for those very supportive comments you made about me and my situation and our students. There may not be another university president that spends as much time with his or her students as I do. I am at events almost every day and go as often as I can and I will just reiterate the pride that I have in the students at the University. I will be at an event starting later this afternoon as a matter of fact. So I am very grateful to you for recognizing that. And on the question of how the funding will affect our campuses, Penn State is different than any other university in the country. We have kind of a unique system of governance and a unique organizational structure. We are not really a system. We are one university geographically dispersed. So, at our numerous locations throughout the state, these are not independent enterprises operating completely separately. Fenn State makes one budget request and it is an integrated request that has implications for all of our campuses. So that the concerns that I expressed earlier about the budget would apply equally everywhere. We are a very economical university. The quality of the education that the students receive in relation to the costs they pay is among the best in the country. We do have several pressures on our budget that we don't have an awful lot control over. We are only proposing a modest salary increase, but as good as we have been about holding the cost of health care down, we still nevertheless have anticipated health care increases that are about 12.5 percent for the coming year, way beyond any normal inflation. We also have one of the largest libraries in the United States because we are a large research university. The cost of library materials, subscriptions to journals and the electronic database that is now such an important part of the library have gone up at a double digit inflation rate. And the costs of information technology are very profound and we are a university that really needs to be and is on the leading edge in the area of technology. So these are some of the pressures that make it very important that we receive the request we ask for and I hope you can help us make that possible. CHAIRMAN BARLEY: I now recognize Representative Adolph. REPRESENTATIVE ADOLPH: Thank you, Mr. Chairman. BY REPRESENTATIVE ADOLPH: Q Good afternoon, Mr. President. A Good afternoon. Q It has been very uncomfortable sitting here going through the video and listening to my colleagues discuss morality. When I was a freshman in college, a small catholic college in Memphis, Tennessee, Martin Luther King was shot about a half mile away. One of my roommates was an African-American basketball player. And when he heard it in the news he broke down and cried and shared a lot of stuff with me. He was a basketball player from Mississippi. Several months later there was Ku Klux Klan rally in Memphis, Tennessee. And boy we were ready to go get them. Because I felt that to be really offensive. The Ku Klux Klan was going to march right down the parkway in Memphis. And I found out at a very early age, I was only 18 at the time, that they were allowed to do that. And every time I see the Ku Klux Klan, I have all types of feelings, emotional feelings that go through me. And I don't think they should be allowed. But I am not a constitutional lawyer. I am not on the Supreme Court. And it infuriates me. I didn't get that upset regarding the bookstore commentary. However, I wish it never took place. I have two kids going to Penn State, very proud, and doing quite well. I always think the finished product is what's important and Penn State puts out great products. And I accept your apology. The letter that you sent, I accept it and I hope my colleagues can move on. I know they put a lot of work and this is something important to them. But I spent many, many days on Penn State campus and had a lot of great times, just like a lot of college campuses. Everybody knows me here and I am going to the St. Joe's basketball game tonight. I will be there at 9:30 and I am a rah, rah basketball player at St. Joe's and a Penn State football fan.

Now, things go wrong on college campuses. Things go wrong in the State Capitol. Things go wrong in a lot of places. But I think the punishment should fit the crime and suspending the appropriation for Penn State over this matter, even as offensive as it was to a lot of people, I don't think fits the crime. Enough said. The other thing is what is the tuition increase going to come to this year? A Well, it depends on you. Q Don't blame the tuition increase on me.

A No, no. As I mentioned before, it you take all of Fenn State's budget, the whole budget, everything included, about 15 percent of our budget is from legisla­ tive appropriation. But if you take those educational programs that relate to our undergraduate students, it is about two-thirds tuition and about one-third appropria­ tion. So, to the extent that the appropriation falls short of what we requested, it puts additional burden on the tuition side. Now, if it does fall short we will, I will pledge to you that we will do our very best not to raise tuition much more than we have already proposed, but it will almost certainly have to go up a little higher. In any event, we are going to be in a zone where we are pushing about $7,000 a year for tuition next year and that is pretty high. Q Chancellor McCormick talked about the oppor­ tunity of PHEAA grants and PHEAA loans for the students. Do you have a percentage, Dr. Spanier, on that? A Yes, I do. Let me just give you a quick overview. Penn State overall provides $446 million in student financial aid each year. That was last year's number. Close to three million of that comes from the federal government, about 48 million from the state, 73 million from within the University and then there is some private sources of support. Of those last two categories involved, philanthropy fund-raising that I talked about earlier. We have about 21,000 students, 21,000 of our students who receive FHEAA grants at some level at about, I mentioned 47, $48 million. FHEAA allows a maximum grant of $3,200 to a student but our average grant per Fenn State full-time equivalent recipient is about $2,400. So we do have, that is a considerable number of students benefiting from the PHEAA grant program. REPRESENTATIVE AOOLPH: Thank you. ACTING CHAIRMAN FLEAGLE: Representative Frankel. REPRESENTATIVE FRANKEL: Thank you, Mr. Chairman. BY REPRESENTATIVE FRANKEL: Q Welcome, President Spanier. First, I want to congratulate you because, as I take a look and I wish we could spend more time on this, this statistical snapshot you have provided us is an impressive record that you have had in the last five years at Fenn State. And I think it is endorsed, obviously, by the success you have had in your fund-raising, very ambitious fund- raising, that obviously is reaching a successful conclusion that shows the esteem that you are held throughout the state. And I don't think that today's proceedings should diminish that whatsoever. I also think that in the context of what has transpired today, the incidents at Fenn State, that your response has been measured and restrained and I think it is very reasonable in terms of the adjustments you want to make in your policy. I think they are appropriately so, because I think ultimately when wrestling with the issues of the First Amendment, free speech, it is a very delicate area. And universities are places I think where young adults especially, who have an interest in changing things, have a passion for ideas and issues often act those things out with misguided enthusiasm. And these women who were involved in this issue had an agenda, an agenda that many of us could understand that dealt Aids prevention, sexual reproductive health and HIV acquaintance rape, date rape, issues that have been challenging for all of us. It was expressed in and articulated in a sensational way, which I am sure they thought would bring attention to the issues they wanted, but unfortunately brought attention to the wrong things and was not successful on campus in terms of succeeding and attracting any measurable degree of student interest in those issues. And I think they failed. And I think the outrage of many of my colleagues is very understandable because it was offensive. But at the same time even in society and the University is probably as much a part of that as anywhere where there is this kind of tolerant atmosphere where a marketplace of ideas transpire. That sometimes, you know, we have to be tolerant of these things and it is understandable.

I went to college in the 1970's, early 1970's. We dealt with Viet Nam, Watergate, the advent of feminism and I think the passion for many of us who were politically active at that time, looking back and recognizing hindsight and some of the ways we may have expressed ourselves, we may have regrets. And my guess is that many of the young women who were involved in this, as they enter their careers, start families, may look back at this experience and understand how inappro­ priate and offensive it may have been to many other people.

But I do want to say there are other things that take place that we are tolerant of that may affect other sensibilities. I mean, clearly I know that are on campuses and in my mail, I often encounter pro-life organizations who would like to present you with videos and photographs of aborted fetuses. I understand the passion that many people have for that movement. I find those offensive as well and they may be not viable ways of expressing and bringing attention to those issues. We wrestle with those issues all the time in our society and ultimately our judicial system and even those, the majority of us in public life come down on the side of tolerance and supporting the First Amendment even with all the difficulties it presents us. So I do want to, it is just really a comment, congratulate you I think on the way you are going to adjust your policies. I think they are measured and restrained. I look forward to dealing with Penn State in a different environment as you move forward because you certainly deserve it considering the success that you have had at this institu­ tion that we all look forward to sharing with you again. Thank you.

A Thank you very much for those comments. I really do appreciate them. CHAIRMAN BARLEY: Representative Schroder. BY REPRESENTATIVE SCHRODER: Q Good afternoon, Dr. Spanier. I don't mean to suggest that the video we saw here earlier today is necessarily characteristic of Penn State and everything that Penn State stands for. Nor does it reflect on the entire student body by any means nor on all the great accomplishments that Penn State has achieved over the years. Nonetheless the event did happen and I think there are serious issues raised that are properly before us including Penn State's response to the event and overall attitude concerning the event issues that it raises. I guess just for a moment wanted to explore the realm, if you will, of free speech as it exists on Penn State campus by asking a couple of questions. Would a campus organization be allowed to, say, show a pornographic triple X movie in one of the campus auditoriums?

A I don't know the answer. I don't think that has happened for a long time. So I am not sure it has come up as a question. Q Is there any policy that excludes it or is there no policy on that? A I don't know the answer to that. Q What about the adult bookstore that wanted to display its wares in that same dormitory that we saw earlier or display catalogs. Would the University permit that? A No, we don't because we have a well defined contract with a particular bookstore and I think there is pretty good protocol for what they will and will not carry. So again I don't think that is an issue for us. Q I understand that response. Let me rephrase the question a little bit. What if a campus organization invited, say, a store in or some vendor to display those types of wares. Would that present a problem? A I think it would present a problem in the same way this particular episode that we have been talking about today has presented a problem. Q Well, I guess the point that I am trying to make and I hope I'm getting across, you acknowledged earlier that certainly racist, hate filled e-mails and letters are not allowed and not tolerated by Penn State and your administration, and properly so, as they go beyond the bounds of accepted free speech. So, it just seems to me that we need to acknowledge that there are in fact reasonable limits on the right of free speech, a very important right, to all of us. Students certainly have it, but there are reasonable limitations, some of which you have acknowledged here today on that important right. It just seems to me that, you know, there is a question in my mind as to whether those limitations are being applied equally on that campus. I would certainly hope in light of the changes you have enunciated here today, that this will change and that there will be improvements certainly in the review of these type of activities when they come up and certainly we will be watching very closely to see how that policy is implemented.

A I think I do understand what your point is, but I think it relates to two levels. Certainly at the one level we are very mindful of what the law says we can do and what the court precedents are that set the framework for the implementation of free speech standards. We are very familiar with the time, place and manner standards and we have some sensitivity to what is and is not our ability to regulate content. So we have lawyers around who can advise us on the legalities but I think you are also referring to really another level of consideration apart from what the law allows. There are views about community standards and propriety and we do have a population of thousands of students who some would say are adults. Legally they are all adults, but others would say are in a transition from adolescence to adulthood. There is always the question that student affairs professionals struggle with as to how much to consider students adults, which includes allowing them on occasion to make a mistake or bad judgment and how much the University should be involved in actually directing or deciding what a student organization may or may not do. So, we certainly are mindful of our responsibility to look at both of those kinds of questions and deal with both sets of issues. And we will continue to do so I assure you.

REPRESENTATIVE SCHRODER: Thank you, Mr. Chairman. ACTING CHAIRMAN FLEAGLE: Representative Lynch. REPRESENTATIVE LYNCH: Thank you, Mr. Chairman. BY REPRESENTATIVE LYNCH: Q President Spanier, thank you for your perseverance and attentiveness. Jokingly a couple years ago I mentioned to you the way to end your budget woes and that would be to terminate the contract with Joe Paterno and let him run for Governor. I would support that cause. I have a follow-up question for Representa­ tive Myers who is not here, and if you have a response to this, I would appreciate you get the response back to the Chairman, not back to me. And that is, I see this statistical snapshot here for 1994 to the year 2000 that the percent of African-American enrollment, the percent of the total in 1994 was 3.3 percent. It increased in the year 2000 to 4.3 percent. The question I would have that I think Representative Myers might be interested in is how does that equate to other similar universities? You may have this information. If you do, we would like to have it. If you don't, could you provide that informa­ tion? I think we would be interested in having that.

And the second question I have, and that deals with your endowments. Can you tell me what percent of your endowments are used for your annual operating budget? A I will take the second question first. None of our endowment is used for operating budget. Unlike many universities which are much older than Penn State or even if they are not older started in the business of private fund-raising earlier where a good portion of their endowment is unrestricted and where they do indeed use it for operating expenses. Penn State began fund- raising much more recently and well over 99 percent of all the funds ever contributed to Penn State have been contributed for very specific purposes. So we have a covenant with the donor if they say that this is for a scholarship in engineering, that is how we use it. As far as I know none or essentially none of our endowment is used for operating expenses. Q Is it a fair request on my part to ask you if you could break down, and this may be privileged information, I don't know, but you have for your endowment for the year 2000, 1.U03 billion dollars? A Yes. Q Is it fair to ask you to provide to us, through the Chairman, a breakdown of where it has been earmarked for or is it too privileged? A No, no. It is not very privileged. It kind of depends on the level of detail that you might be interested in, but I think on a general level we can give you very useful information and how much of that endowment supports scholarships versus faculty positions versus building program support for, I know we have that information. We would be happy to share that with you. REPRESENTATIVE LYNCH: And that is the type of detail I would be personally looking for. Now, I want to close with just a little story if I could involving the situation that a lot of people are here about. The First Amendment, a big uabrella. And I am just going to relate in a way that I can here why some people feel about this the way they do. It is a big umbrella with a lot of holes that have been shot in the unbrella principally through the group such as ACLU. And I don't mean to imply that you, the University or I think your policy in regard to the ACLU, I use them as an example, and there are litigations in the courts. Sometimes I joke

they have become so open-minded that their brains have fallen out. But having said that, I would like to relate a debate, if you will, that happened several years ago between the then president and director of the ACLU, Ira Glass, I don't know if he still lives, I have no idea, and a talk show host named Dennis Prager (phonetic). I don't know if you have had the opportunity to hear Dennis Prager. I think he's from California and is a very devout Orthodox Jew who has a very strong understanding, in my opinion, of morals, and religion as it relates to society and government. And he was in this debate with Ira Glass. He mentioned to him, you know, he said a lot of people despise you and what you stand for. And he said, well why should you despise us. We are the American Civil Liberties Union. We are here for the freedom of people. We are what the people want and he said, let me prove my point to you, Prager said. Let me ask you on two litigations, and the first one was have you been successful in the litigation of removing the Ten Commandments from the public schools. And Ira Glass responded, yes, we have. Second Prager says have you also been successful in the litigation that allows students in Maryland to wear obscenities on their shirts while attending school? Glass said yes. Prager said now you know why so many of us despise you. I don't care what the law says. Sometimes, I think the law, it is not what our founding fathers wanted sometimes. And sometimes we have to go past what we are allowed and not allowed to do and what we think is best. Thank you, President Spanier. CHAIRMAN BARLEY: I now recognize Representative Stern. BY REPRESENTATIVE STERN: Q Good afternoon, President Spanier. I live right down the road from State College in Happy Valley, down the 1-99 corridor. It is Blair County, Penn State Altoona in the confines of the legislative district that I represent, Blair and Bedford County, rural community. And one of the things that you had touched on previous and I wasn't going to comment and I wasn't going to take the microphone today to belabor points that have been made here earlier. But I think it is important enough that I do share some concerns with you and share some thoughts on behalf of my constituents the people that have been in communication with me through letter or by e-mail, whatever, or contacted me on the street. And something troubled me earlier whenever you mentioned the Governor's letter that he sent to you. I just received a copy of it a little while ago. The Governor sent you a letter yesterday and suggesting that you should offer a plan to the General Assembly to remediate some of the issues that were touched upon here in concurrence with the video that was shown earlier. And also for another event that had been held at the University before that in November. And being respectful of the rights of academic freedom, rights of First Amendment, free speech and so forth, I think we also need to balance those interests with those of community standards as well. And one of the things in the Governor's letter stood out to me is that he indicated to you that he also knows that common sense restrictions can and should be placed on some of the freedoms that we were talking about before­ hand. We need to use, for the lack of a better term, common sense when applying some of these situations, whether it be at University Park or wherever it may be in the Commonwealth. And as the Governor has indicated, he believes that if aspects of both of the events, if there were a common sense restriction put in place, they should have and could have been applied in this situation. There again the Governor mentioned in his letter to you that he took offense with the event that was held last November under its proposed title, and on the other hand, as a result of that event, Fennsylvanians had no desire to attend that event or hear that particular word nonetheless was subjected to it. I agree with the Governor that was a violation of their rights as well.

I know that you have set forth policy here that you have indicated previous. One that you will put forth that will not only recognize academic freedom but also recognize free speech. I think that is one that has to be balanced with the local community standards. And I am only 45 minutes away from State College and I would hope that those community standards would be balanced with community standards similar to what we would find in Blair County and Bedford County, rural Pennsylvania. We have important business. Penn State University does far, far too great of work for this Commonwealth and everything that you do and everything that your professors and the education that you provide to the 80,000 plus students that attend Penn State University can be marred in these events. I felt it was important enough today to bring that to your attention and to comment about that and let you know. A Thank you. REPRESENTATIVE STERN: Thank you. CHAIRMAN BARLEY: Thank you, Representative Stern for your observations. I now recognize Representative Mayernik. REPRESENTATIVE MAYERNIK: Thank you, Chairman Barley. BY REPRESENTATIVE MAYERNIK: Q Good afternoon, President Spanier. A Good afternoon. Q As President of Penn State you are the figurehead, leader role model. In the execution of your duties you are charged with the responsibility of accountability, the oversight of over 80,000 students, over 20,000 employees, a total of 100,000 individuals. And today you are before us requesting over $360 million in taxpayers' dollars for your institution. I was listening to the queries earlier this afternoon of Representative Rohrer, who is sitting beside me. At the end of his time he had asked you a question that I really didn't hear a very succinct answer to. And to refresh your recollection, the question was do you find that videotape and the information contained therein to be wrong? And I ask you if you would very succinctly answer yes or no. A I think I answered that very early in the hearing by saying that even though in my case I am often exposed to such materials in my discipline -- Q Just a yes or no answer. A I said that I found it offensive, embarrassing and I was personally uncomfortable with it. I don't — I think that is a fair answer. Q So, am I proper in assuming that to condense that answer, your answer would be it is wrong; is that correct? A Is what wrong? You are asking did I find the videotape wrong? Did I find the event wrong? Q Well President Clinton, our former President Clinton went through this with what is is. I'm just trying to boil this down. A And I am not trying to be evasive at all. I am just trying to give you an honest answer. Q All right, let me do it again then. Did you find the information presented in that videotape as you had seen it, the activities to be wrong, yes or no? A I'm sorry. I'm just not understanding very well what you mean by wrong. I told you I found it offensive. I told you I was personally uncomfortable with it. I wish the event never would have happened. Had the students asked me, I would have told them please don't do that. It will embarrass the University. I hope it never happens again. If that is what you mean by wrong, yes, that is wrong.

Q Do you find it to be immoral? A I don't think my personal view of morality is what should be a subject of this appropriation hearing. So I don't plan to answer that question. If that is what your intent is is to make this a test of my personal morals on the basis of an event sponsored by six or eight or ten students at Penn State that I did not plan, that I did not have any direct knowledge of. Q Mr. President, I agree with you and I am not asking for your personal opinion on it. But as the executive officer who is charged with the duty and responsibility and accountability of the oversight of over 100,000 individuals in this Commonwealth and receives over $360 million that you are asking for today, I am asking for your professional opinion do you believe that to be immoral? A I have answered the question. I don't think I can answer it any better than I have. I am sorry. Q You are charged with the oversight and policy setting for the parents who send their children to you for education. I believe when we hire a CEO that we are looking for what is in their heart, what is in their mind and where they will lead us to. Can you give me some insight as to what is in your heart and what is in your mind? A Yes. I am a very open person. I would be happy to tell you what is in my heart. I have a woman I have been married to for 29 years. I have a 16-year- old daughter. I have a son who is a student at Penn State. I am very concerned about the kinds of issues that we are talking about here. So, I have concerns about what I saw. I told you that I was concerned. I told you that I was uncomfortable. I believe in the way I described earlier — Q I appreciate that. My clock is ticking and I need a very succinct answer. A I have given — Q Does that exceed community standards? A I think that much of what occurred there does exceed community standards and I think I have said that. REPRESENTATIVE MAYERNIK: My time is up. Thank you, Mr. Chairman. CHAIRMAN BARLEY: Do you need a second opportunity? REPRESENTATIVE MAYERNIK: Yes. CHAIRMAN BARLEY: Actually, you are the last member that asked for the first round. So I will allow you to just complete before we start the second round. REPRESENTATIVE MAYERNIK: Thank you, Mr. Chairman. BY REPRESENTATIVE MAYERNIK: Q I just find it odd, Mr. President, that you want to wash your hands of this and don't take a position when the position really lies — I mean, that is part of the crux to the problem that everybody is trying to get an answer from you of do you believe it to be immoral or wrong what goes on there. And to me it is a very simple question. Members of this body sit here. We answer to 60,000 people. And those 60,000 people collectively are 1.3 million people in this Commonwealth who pay taxpayers' dollars on your institution. As a result, we are asking you the questions that our constituents ask us. And if we don't come up with an answer, they wonder why is it we can't get an answer — A Let me, I feel like I have answered it several times. Let me try from a different angle. As I understand it, the purpose of the event was to provide a broader set of information to interested students on rape, sexually transmitted diseases, violence against women, and I think these are very commendable goals. So I want to make it very clear that to the extent that that event had that as a purpose and to the extent that they were able to communicate that message adequately to people, that was a worthy goal. I do not find anything wrong with that. I don't find it immoral. I encourage it. We have a very broad array of programs in that direction. I do believe on the other hand that the language that was used for an earlier event was totally inappropriate. 1 can't excuse it in any form. I hope to never see something like that again. I believe that the way in which the organizers chose to communicate these very worthwhile goals, with the language they used and the form that they used it, was offensive to many people including me and I do believe that that was wrong. And I hope that we can find other mechanisms to communicate important issues without having to do it that way. Q So you do believe it to be wrong? A I have used that word twice to describe what I believe to be wrong. REPRESENTATIVE MAYERNIK: You used inappropriate once and wrong the other time. That concludes my questions, Mr. Chairman. I don't think I am going to get an answer. Thank you very much. CHAIRMAN BARLEY: Are there any members that did not have an opportunity, a first opportunity to seek to have a first opportunity? (No response.) Everyone has had a first opportunity. I now recognize Representative Lawless for a second opportunity. REPRESENTATIVE LAWLESS: Thank you, Mr. Chairman, and thank you, Representative Mayernik, for your lirect questions. Yes, you never did receive the answer you were looking for. BY REPRESENTATIVE LAWLESS: Q I have another question, which again my colleagues may consider and I would like to hear whether you think it is wrong. This is a newspaper report of the first event. In fact, for those who may be listening on FCN, Dr. Spanier, could you tell me the name of the first event?

A No, I do not intend to do that. It is not a name that I approve of and I wouldn't use it in public regardless of who is listening or what warning has been given. It is not in my day-to-day vocabulary. Q Was the name that you will not say and not approve of posted on bulletin boards in a building on your campus, the CEO of Penn State University, a name you admittedly say you do not approve of? A Yes, it was. Q Do you agree that you should have done something about that? A Yes. And had I known about it something would have -- Q Let me ask you if something is wrong. This is a newspaper report. And I would like to also know if it was wrong and what the educational value is? The C Fest. I don't use that word either, but unfortunately we have to have this dialogue because you allowed it to occur. Following a graphic description of lesbian oral sex, a film she had made on big screen television titled "Butt F ing Butt." On screen were paper puppets acting out crude sexual practices and purporting what is described in the title named "Paper Rabbit." Walking in the host building, and this is not even where it is happening, walking in the hlost building's door, potential audience members and the other students just going about their business were unwittingly confronted with a four-foot tall ceramic model of a vagina. Conference organizers would then offer what appeared to be fruit juice poured from a spout just underneath the "Clitoris" to passerbys by asking, look, would you like some p y juice? Do you find that violating the freedom of passerbys? A Well, you said that I allowed this to occur. I was not involved in any way in the planning of that event and so I just want to make it very clear that the same organizers of the event we have been talking about this afternoon and this morning I believe were the principal individuals involved in the organizing of that event as well. I'm not going to defend that event — Q Sir, I have asked you a question. I really would like you not to go on and on. We want to know what the educational value of that occurrence was and was it, in your opinion, wrong? A I don't have an answer to what the educational value was. You would have to ask. the organizers and what was in their minds. But it is certainly

Q We all make judgments as leaders. I have to make judgments and take back to my district what is right I believe and what is wrong. When I vote on legislation I vote what is right, what is wrong. It is not my personal opinion. It is my legislative opinion. As CEO of Fenn State University is that what I just read to you wrong? A I am telling you that as CEO of Fenn State University I did not make a decision — Q Now that you know it is there. A Now that I know that it is there, I think I told you before. Q What was the educational value? A Well, I don't know. I don't know. It was not an educational program that I would have initiated. Q I would also like to know, it has been repeated that this is a six, eight or ten student event. Well, for any of those who saw the video, I have a full hour video that I will make available, it sure looked like there were more than six or eight, ten people there. I understand there was 200 people there. In fact, the organizers themselves said there were several hundred people there. A Well, I think — I was referring to the number of people who put the event on who organized it. Many of the people were there because you were there. Q Furthermore, I would like to make it clear today that it was stated by you that these events were not sanctioned by the University. I have on the tape, on the hour tape, Mr. DeEugenio sitting right there and I asked him the question. I also asked the question of Mr. Asbury from your University. Both indicate that these were sanctioned events on tape. So, is it not sanctioned by the CEO and is only sanctioned by the government related lobbyists? Fenn State has a lobbyist, by the lobbyist.

A Well, I think what meant was by sanctioned was that the students received permission from the residence halls or someone in our student activities area to use the room for an event. I presume that is what we mean by sanctioned. Q So after you were notified of the first event, the C Fest and displeasured myself in the letter I wrote to the Legislature, you continued to allow Sex Faire to go on; is that correct? A Again, I don't think it is an issue of whether I was consulted on planning of the event or whether I was asked or whether we would allow it to occur. We have 500 student organizations. We have several hundred events every month; maybe two, three dozen a day in some cases. Q Are there faculty present at these events? A Generally not. Q Are there papers that are rated, this is an educational event. Are there faculty there? Are there papers that need to be written? Is there any edu­ cational value that comes out of it? A No — Q The first event was $10,000? A These are extracurricular activities and rarely involve faculty members. Q The first event was $10,000. I was not present at that one. Do you know how many people attended that one? A No, I don't. Q Do you have anybody here on your staff who could tell me that? A I don't think so. Q Look that way. A I don't know. Is anybody aware? CHAIRMAN BARLEY: If that information is available would you please provide it? DR. SPANIER: Yes, we can provide it. REPRESENTATIVE LAWLESS: That would be great. BY REPRESENTATIVE LAWLESS: Q I want to get back to my original opening statement about the e-mails I received. And I am very concerned about the type of students you are accepting. I have a disability. And that is the way someone who is an upper classmate — by the way this one gentleman who wrote me about my disability characterizing that is why I couldn't act efficiently here. That student is within a year of going to be entering or applying for a teaching job in secondary education once they leave Penn State University. Do you think for one minute there is a school district that is going to put up, when he disagrees with a young man or a young woman in a high school classroom, that he can make those kind of comments, call that person a bastard, go after their disabilities publicly? Do you think for one minute — I mean, you tell us about your diversity. You tell us about your sensitivity courses. He is using a tax paid building EDU, you are not policing it. Do you really think this young man is ready to enter a classroom next year in one of our Commonwealth schools? A Let me apologize, first of all, that a Fenn State student sent an offensive message like that. It is very inappropriate. And when you on Sunday sent me a copy of his e-mail, we have been in touch with that student and made it very clear how inappropriate that was. Let me read to you an e-mail that he then sent me afterwards on Sunday. "Dear President Spanier: We recently met at the last fireside chat. I was in the back of the room. I am writing because this afternoon at about 2:30 Representative Lawless called me at home and threatened me. Last night I sent him a strongly worded e-mail voicing my opinion. In the e-mail I insulted him and I admit that I shouldn't have. I have sent an apology to Mr. Lawless for the insult. "I am e-mailing you because Representative Lawless threatened me for about a half an hour screaming and yelling by saying he would prevent me from getting a job after college and ruining my reputation in college which terrified me. I have spoken with my parents and they were horrified. Mr. Spanier, I am so scared. All I did was voice my opinion to a Representative who has influence on the funding of my school. Can he do this? I would like to speak with you about this because I don't know who else can help me. I don't think Representative Lawless should have called me at home this Sunday and I am sure he shouldn't threaten me for voicing my opinion. I would appreciate anything you can do because I feel powerless in this situation and my First Amendment right is in jeopardy." I also — Q I would like to respond to that. A If I could just add one last — Q No, let me — CHAIRMAN BARLEY: Whoa, Dr. Spanier. DR. SPANIER: I just wanted to say I have one other concern about this, and that is, within about an hour of your phone call, this individual began to receive now at least three e-mails from outside the University from individuals he did not know asking about his family, where he is from, what district he lives in, etc. This is a student who is very scared right now and I just hope whatever differences of opinion we might have about an event like this and whatever emotion has gotten wrapped up into it, that we — we have 18, 19, 20-year-old individuals. Some individuals in their youth and in their exuberance and whatever is in their mind, they have gone off and they have conducted events like this that some people are very upset about. Some people have expressed opinions and they don't do it in a very good way. They have insulted folks. I know this as well as anybody. I get e-mails every day like the kind you got and I know how hurtful it can be to receive something like that. But I hope that we can all just rise above these kinds of issues and get on with our business.

REPRESENTATIVE LAWLESS: Let me respond to that. I called that gentleman. I spoke with him for maybe six or seven minutes. I asked him about the issue. I asked him what he thought of the issue. I asked about his e-mail. I asked him what he meant by the sentences that he wrote. I asked him what he meant by calling me a bastard. The only threat that I made that young man is that I would see that every school district in this Commonwealth would see the type of behavior that he sent to a Representative of the Common­ wealth of Pennsylvania who disagrees on his issue. He told me he thought that was a threat. If that is a threat, that is for sure. It is not a threat, it is a promise. We cannot have people entering in, with that kind of attitude, entering into the working world with our young people, where you know what, we will have lots of campuses like yours with Sex Faires and C Festivals. It is about time you take some leadership. And I tell you what I will further do. Just to show you what kind of individual that is, how he is running scared. You are playing his spin doctor right now. Okay, I will make my phone records available so that you can see the length of that phone call. So I just want to say I'm getting tired of hearing the spin to that. I hear words on this issue, okay, Representative Rohrer, Representative Mayernik, I hear words like we are looking into. We are considering. We are trying when it comes to getting a new policy out. Representative Stern I believe asked you, the Governor asked you to come back to the Legislature. When will you be back to the Legislature with that policy? PRESIDENT SPANIER: Let me say that I am not here to pass judgment on your relationship with that student or to spin doctor the interaction. I have tried in answering questions over the last three hours to be as honest with all of you as I possibly can. We will be happy to return to the Legislature at any time. We will provide to Chairman Barley all of the information that has been requested today. CHAIRMAN BARLEY: I now recognize Representative Rohrer. REPRESENTATIVE ROHRER: Thank you, Mr. Chairman. BY REPRESENTATIVE ROHRER: Q Dr. Spanier, when I began with my first question a long time ago now, I asked the question that I did because I thought it went to the heart of the matter. And we can sit here all day long and talk about a lot of things, but until that issue was addressed which I think you have answered, unfortunately, as I suspected. Because had you answered that what took place was wrong or immoral, then you would have an obligation to do something about it. Because you feel that it is, you condone it, and the strongest things that you can say about it is perhaps inappropriate. In your letter that you sent to the House members at the closing of it, you said, I pledge to have our staff work with the students to help them plan events that retain their educational value, not defined, but at the same time minimize the shock value that has been the hallmark of recent programs. When I read that, frankly, when I read that letter it disturbed me more than if the letter had not been sent. Because if that is all that a change in policy is to do, to minimize the shock value, we have missed the whole point. And we will be sitting here next year just as we did last year addressing the same issues. And as we talk about the need to balance the First Amendment, and you have said and I agree personally, that we must support our constitutional rights and protections. I find that our society, and frankly as you are espousing, an attitude that frankly does not really understand the Constitution, either the First Amendment or the foundation upon which it was established. All of us, whether we be in public office or head of institutions, are not here to provide, frankly, just fiscal leadership or whatever, but we are here to provide moral leadership. And I believe by the inability to define moral, moral leadership has not been provided just as we haven't seen it provided in Washington and that is a problem. If I were to wrap this up somewhat I would say, a person, any person, ought to take a walk right up, two floors up here to our State Supreme Court Chamber and look at the wall that is behind the chair upon which rests the Ten Commandments. And then right beside them is a history of law, international law, maritime law, common law, statutory law. That is called the Octave. There is eight sets of law. But do you know what sits on top of that wall and underneath all those other laws we deal with, it is the Reference to Divine Law. That is a higher law than any statute we passed. That is what undergirds and gives us our moral compass. And I sit here and I say without a recognition that there appears to be no moral compass, I have no hope for any kind of policy that will be forthcoming, be it next month or two months from now, that it will have all addressed in a serious fashion the problems we are talking about. You guys happen to be under the lights today, but I think these kinds of things occur on many educational campuses. But the problem, the root is the same. And as far as I am concerned until there is some significant change in identification of this issue, I am not in favor of continuing funding. Cut it completely out, I don't know about that. That is debatable. But obviously and sincerely I think that this underscores a larger problem that you have espoused. You can take it orally across this Commonwealth and across this country and until we recognize that that is the issue, we will be forever doing just what we are doing today. I don't want to be doing this in future appropria­ tion hearings. A Well, if I could just make a concluding comment as well. I understand what you are saying. Let me say, first of all, that the letter that I sent all of you was not intended to be a definitive statement or treatise on all of my thoughts on that matter. It was just an update at one point in time and my initial reactions to it. I know it is not being heard maybe in a way some of you would like. But I have tried to say about what happened I felt was wrong. I don't feel everything was wrong. I have given you my personal views on parts of it that I felt was wrong. But let me try to just end by giving you a broader perspective on my thinking and how it affects my leadership at the University. When I became President of Penn State nearly six years ago now, I set as one of my principal agenda items trying to change the climate on campus. And I have said from the beginning, and I have done it in interviews even as recently as this week, that the principal challenge facing universities like mine today is not so much about budgets, it's not about things people would usually expect us to comment on. The principal challenge facing higher education today is the issue of character, conscience, citizenship, social responsibility among our students. These are issues that very much go to the question of the moral compass that is out there. As a leader of a very large enterprise with a tremendous diversity, I don't presume to know what is the right moral decision in every situation for all of 100,000 people I am somehow asked to speak for. But I do know that the issues of citizenship, character, conscience, social responsibility are extremely important today and have not received the level of attention that they have. So, through many, many programs at the University over the last few years and through our support of our spiritual center, our work with campus clergy, what we do in our Student Affairs programs and extra­ curricular events and through what I can do through my own public statements, I try to provide as much leadership in that direction as possible. And I say this in conclusion only in the h apas that it lets you know that these are issues that I do care about very deeply and we will continue to do our very best of walking this line and achieving the best possible balance that we can. Thank you. CHAIRMAN BARLEY: I now recognize Representative Frankel. REPRESENTATIVE FRANKEL: Thank you, Mr. Chairman. CHAIRMAN BARLEY: Mr. Frankel, if you just suspend for a moment, the court reporter is tc near a point of exhaustion. How much time do you need; at least five. We will reconvene at 2:50. (Brief recess.) CHAIRMAN BARLEY: I would like to ask the members to be seated please. I now recognize Representative Frankel. I would appreciate if we could have everyone's attention please. Representative Frankel, you may proceed. REPRESENTATIVE FRANKEL: Thank you, Mr. Chairman. BY REPRESENTATIVE FRANKEL: Q Doctor, I guess this last series of remarks by many of my colleagues just is very troubling and kind of badgering, that I have been listening to. Hearkening back to another era in American politics, the 1950's in some respect, I think that is unfortunate. From my own perspective these were troubling events. They were offensive to me personally. But the alternative that is painted here by many of my colleagues is that we ought to be sponsoring an academic environment that is entirely sanitized, and those courses exist for people. You can go to Bob Jones University. You can go to the University and you can have that type of education. But many of us at home I think, that by the time our children reach the age of 18 where they can vote, that they have come to the point in life where they are exercising reason and judgment. Sometimes they make those mistakes. But universities are places where that is the place that you can do those without having the kind of consequences J.J.4

rou might suffer later in life. And I much prefer my personal perspective and environment that isn't santized. rhat those moral challenges may be presented to my children. tfhat I would hope is they would make the right judgments about what to attend, what not to attend and what to par­ ticipate in and what not to participate in. If they make an srror in judgment they will figure it out and go on, hopefully, as I think most graduates of Penn State University do Lead constructive lives and contribute to our society in the way so many Penn State graduates have done. So I have been very troubled listening to much of this because I think it really is way overblown. That is just a comment.

As a courtesy to one of my other colleagues who is not on the Appropriations Committee, Representative Tom Petrone, who is sitting here, he asked if I would read a letter that he wrote to a constituent. "I am writing this letter to you in hopes of putting your concerns at ease on the controversial events that occurred at Penn State Uni­ versity on February 3, 2001. Let me assure you that I realize the importance of students living, working and studying in a healthy atmosphere. One of the many reasons I care about this incident is because my daughter, Krista, spent six years at Penn State receiving what I consider to be an exceptional education. During those years now I had the benefit of spending a great amount of time of visiting and experiencing the quality of lifestyle of those students at Fenn State University." And he goes on and provides a copy of your letter and your response. But my guess is that Representative Petrone's experience is one that is reflected by many, many parents including those parents of Fenn State students currently on campus who have faith and trust in their children's judgment. Willing to accept some of the exuberance that you talked about that may be misplaced and we all have experienced at some point in our lives and things that we feel passionately about and made mistakes in the way those things are articulated occasionally. But anyway, I think that, I feel that Fenn State is, hopefully, will not be tarnished in this process as it deserved to be. Because I am proud as a legislator in Pennsylvania, extremely proud, to have Penn State as a part of our state and a part of our appropriations and I look forward to furthering and making sure that Penn State secures the appropriate resources it needs to continue its good work. Thank you. A Thank you very much. CHAIRMAN BARLEY: I now recognize Representative Manderino. She passes. Representative LaGrotta. REPRESENTATIVE LAGROTTA: Thank you, Mr. Chairman. BY REPRESENTATIVE LAGROTTA: Q President Spanier, what I am not proud of is the way that you have been treated and the institution has been treated this morning into this afternoon. And I will be as brief as I possibly can in light of what has to go on later on today. But I will ask you this. Is there a policy or will there be a policy in place for organizations to request use of buildings in writing? A Yes. Q There is a policy in place. Do you personally review every one of those? A No. Q You don't. A I review none of them. Q So, in the same way there is a policy in place for us to request uses of rooms in the capitol which Speaker Ryan, or President Pro Tern Jubilere or Governor Ridge do not review, you do not review them? A Correct. Q Had you been aware in advance of some of the things that were going to happen would you have, I know this is hindsight, but would you have involved yourself more? A Well, I would have asked our Student Affairs staff to take a much stronger role in talking this through with the students. We would probably continue to allow them to have such an event, but to work with them in doing it in a way that would serve their purposes but bring credit to the University to get a better degree of balance. Q I understand. Mr. President, one of the questions, and I am going to say that you were harangued about, was what was right, what was wrong and what is educational. Do you have pep rallies at Fenn State? A Yes, lots. Q I was going to say, based on last year's football team, you probably should have a couple more. (Laughter.) What I am asking is is there anyone here that sees anything educational, and I will ask you directly, about a pep rally? A Well, we do some things just to build school spirit. Q But what I am saying to you is is that a prerequisite for using what happened at your campus, that it be "educational"? A No, actually, while many of our events are educational, lots of them are just for social purposes and we see that as important as well. And the fact is that these 500 student organizations I talked about, and that by the way, is just at the University Park campus. There is hundreds of others collectively around the system. The students can get together and talk about most anything they would like to. I, in fact, am involved with the Fenn State Performing Magicians. That is the one student organization I am directly connected to and they just get together and do magic. Q Bet you wish you could have disappeared today. Last question, Mr. President, and then I will defer to the Chairman. I really don't — I lost my train of thought is actually what I am trying to say. So I guess that will be my last question. (Laughter.) You got me on that magic. I remember, sorry. Was there any state tax money used to finance this Sex Faire? A Not to my knowledge. With one exception, Representative Lawless did ask us to provide police protection for him and for those he brought with him. So we did have to assign some security forces to be avail­ able for him. But in terms of the event itself, that was paid for out-of-pocket by the students. They said $50. It was actually not even held in a state supported facility. It was held in a residence hall that the students themselves paid for entirely. I mean not only the cost of the building but the utilities, the maintenance and every other aspect of it. So I think, with the exception of the security, no, no taxpayer dollars. Q So we didn't pay for it and it didn't come out of last year's appropriation and to your knowledge with your expectation we won't pay for it out of the appropriations request account? A Well not in these kinds of circumstances, no. But let me say there are student events, many student events, that occur on campus where it could be said that there is some taxpayer support. Most of our student events are actually funded by the students themselves through a fee that they decide on which is called a student activity fee and is allocated through a student government organization that oversees the distribution of the fees. The staff and administration of the University are virtually uninvolved in that process. REPRESENTATIVE LAGROTTA: Well, Mr. President, thank you for coming and tolerating us today and for answering the questions as well as you possibly could under the circumstances. Thank you. PRESIDENT SPANIER: Thank you. CHAIRMAN BARLEY: I now recognize Representative Trich. REPRESENTATIVE TRICH: Thank you, Mr. Chairman. BY REPRESENTATIVE TRICH: Q Dr. Spanier, let me begin by indicating primarily based on geography. My kinship would be in western Pennsylvania, Washington County and the University of Pittsburgh. If you recall back not that many years ago, we first attended a caucus meeting in this capitol having just come on board at Penn State. We jokingly had talked to you about your feelings about Joe Paterno, who happened to speak at the Republican National Convention a few months before that. I know our Chairman appreciated that, but there were some of us who chose not to appreciate that. So I have not always been in agreement with Penn State. On a very serious note, and although I was not prepared to make remarks today, I truly wanted to listen to your explanation. I think you have done a fine job in doing just that. I believe that based on some of the comments made by some of our colleagues, the silence would have been an indicator that we supported that same rule of thought. I can assure you as someone who has a youngster in college now and daughters who will be in college over the next couple of years, twin daughters, I don't really want you to make judgments on the morals of Penn State. I want you to be a good President of Penn State and I think you have proven that. You have done just that. I believe that morals are taught at home and morals must be developed within each individual. That is not the responsibility of Penn State. It is not the responsibility of government in Washington or in Harrisburg. I would ask you to continue to do the fine job that makes all of us very proud of 99.9 pecent of everything that goes on at Penn State. I still want you to play the Pitt Panthers on occasion — (Laughter.) But we know that you are doing a good job running that University. And seriously, you have had a long day today. I think you have done an admirable job in trying to answer our questions. And again, contrary to perhaps some of my colleagues, I have complete confidence in your ability to keep that institution being the kind of institution it is. And I very much accept your apology on behalf of the University for some of the embarrassment this may have caused. So, again, thank you and I appreciate your taking time to be with us today. A Thank you very much for those very kind comments. I do appreciate them. CHAIRMAN BARLEY: I now recognize Representative Stetler. REPRESENTATIVE STETLER: Thank you, Mr. Chairman. I really wasn't going to say anything either today, but as I watched things unfold I thought maybe an editorial comment might be appropriate. And I guess my best thoughts would be to say what Representative Frankel said and Representative Trich said represent my thoughts completely. I have the ultimate confidence in the leadership of Penn State. I will say though I get very nervous when I sit in this House and have our colleagues pass moral and ethical judgment on outside institutions. I mean, our track record over the past term was not one of a stellar nature and certainly we could improve on how we behave and how we represent the Commonwealth as elected representatives.

So, almost with a grain of salt I think you should take some of the criticisms that were put forth today. And I guess I give one word of caution, and that is, don't overreact to what some of these people have recommended to you today. Because I am concerned that the pendulum will swing once again in the wrong direction and that free speech would be affected as a result of that. I'm a child of the '60s. And when I think of what President Austin (phonetic) let us do in hanging things out of our dorm windows and protesting the war, that was nothing compared to what you experienced at Penn State. And I'd have to say we were wrong probably with our choice of words at that time too. But he did not overreact and I think we are better people as a result of that. So, when you go back and review this policy about hanging out banners, be careful. Because the first banner you may have to take down is one that says Impeach Graham Spanier. (Laughter.) So, what I am saying is be careful of the rules you set. PRESIDENT SPANIER: We have to allow that one to remain. (Laughter.) REPRESENTATIVE STETLER: That could be the first one out there by some of these people who disagree with your policy. I admire the job you do up there. PRESIDENT SPANIER: Thank you. REPRESENTATIVE STETLER: And I think the kids that come out of Penn State are good kids and they have received great basics, and I agree with Leo, it is not your job to teach morality. It is your job to prepare kids to be great participants in our society. Thank you, Mr. Chairman. PRESIDENT SPANIER: I appreciate that. Thank you. CHAIRMAN BARLEY: I now recognize Representative Strittmatter. REPRESENTATIVE STRITTMATTER: Thank you, Mr. Chairman. BY REPRESENTATIVE STRITTMATTER: Q Thank you, Dr. Spanier, for your indulgence. I won't criticize the other members as some members have been doing. I would just like to bring it back to the fact it is an appropriation hearing. The people I heard from, over the past weeks, have been very concerned with what is going on there with the $360 million. We heard today that even the endowment of one billion dollars, I mean, that doesn't go to this, that it is somehow set up that the $360 million equates into a tuition increase or not. But yet the $360 million is only 15 percent of the budget. So I know many constituents I have they are concerned, as we did with other universities that have large endowments, then it went for specific purposes, and that is what I heard from my constituents. So I think it is a great concern to you about how you get the $360 million, if you get the $360 million and what shape that, you know, would be given to you. What kind of flexibility you would have. Because as we talked about each individual, 360 million, if you just took it by our citizens, that is $30 for every man, woman and child in this state and they have some say in the way they would like to have that done. They also, the parents have talked to me, they are very concerned that, yes, they believe in free speech. And yes, they want to have their children grow, but they want to have it in a safe environment. They don't want to have it in something is going to be different than what they expect of Penn State and what you have grown to be. If that's different, maybe there should be a letter go out saying that Penn State isn't as great as what we said. We are really, it is all relevant and there are new standards. The standards might be — where we do have standards, they might be low to make sure we include everybody. I think a lot of people are very concerned about that, you're evaluating that. So that is why, I think I heard the Governor say, well, we are going to take it seriously. I really think you should from the responses I have gotten. I think that is why the members did take it seriously today. On the question of the money for the events, I believe one of- them did cost $10,000. You said there were no out-of-pocket expenses. A Yes. The earlier event received funding from that student activity fee. Q Right, and they want to include this student activity fee, that is what the constituents were asking me. I believe it is true, I don't think you can be a student at Fenn State and not pay the student activity fee; isn't that correct? A Yes. Q I mean, it is like buying a car. I'm sure that, you know, people have trouble with the tires, and let me say, I didn't have anything to do with that. Where, you know, I sold you the car but I didn't think of tires. This is where it goes together. I think to be a Penn State student this all gets wrapped together and what they feel that they are expecting when they are sending their children, you know, their greatest asset, God's greatest asset away many times for the first time, 18 to 22 years of age away, out into the real world. And they are expecting you to be I think more paternalistic than you would like to be. But I think that that is a role that 12 million citizens would like you to be is to be more the father figure, you know, while the students are there. You would rather err on that side than have the lawsuits come about the fact about being too protective. And I believe that that is something you should look at and very seriously as to what the people think when they are entrusting their children and their greatest asset and their future, everything that is dear to them, to you. My constituents, I guess what they would ask me to do too is to say, and this is being facetious, but I think that they would ask me to ask this question. What does the word that I spell say, w-r-o-n-g, w-r- o-n-g, what does that spell, w-r-o-n-g? A What does the wrong spell? Q Correct. That I think was just blaring which, you know, many times we get caught in the three hours or four hours, I think that is what they would be asking me to say. Doesn't he know what the word wrong is? Doesn't he know if there are some standards? You know, you turn around by just one percent of the time, and all of a sudden you get 180 degrees turnaround. We don't want to (inaudible) but at the same time we want to — I think every spirituality, whatever it would be, would encompass the golden rule. Do unto others as you would have them do unto you. I think many times this is very offensive and people of all faiths have complained to me that that would happen. So I thank you very much for listening. I know that you will take it very seriously. A Thank you for that perspective also. CHAIRMAN BARLEY: Are there any additional members seeking recognition? (No response.) Seeing none, if any members re-enter, they will not be recognized. I recognize the final member. However, I have a very few closing comments I would like to make. I tried not to interject myself into the discussion today. I do represent 60,000 constituents in the legislative district I represent as well. I also have the honor of being chosen by my colleagues to chair this Committee. I appreciate that as well. We heard a lot of opinions offered today. The concerns and the support that we heard was not partisan. It was bipartisan, democrats and republicans had strong opinions on this issue in all respects. I believe the Governor's letter referred to common sense. I think that is appropriate. I think that was brought up in a few comments here today. I'm going to relate something personal that happened in my life today. It involved Fenn State. I have two sons. One graduated from Fenn State, the other one attended Fenn State, actually had the privilege to wrestle varsity, be a varsity wrestler at Penn State. I'm proud of that. My oldest son is a graduate of Penn State. Occasionally, occasionally calls his father for some advice. He operates a very successful agri-business and has a degree in agriculture from Penn State. He called me this morning because, you know, in the course of his business he is thinking of making a major decision and asked me who I would recommend as someone he could turn to for some advice in this particular arena, and I mentioned one or two individuals. The final individual I mentioned was John Swartz, who happens to be the now county extension agent in York County, just transferred from Lancaster County.

My son said, oh dad, it was kind of like why would you have to remind me to call him. That comes natural to me. I wouldn't think of making a decision without contacting the county extension agent who had experience in the area. That is a very, very positive, it is a real testament to Fenn State to what your mission has been, and that was a personal experience that I wanted to share today of something very positive, not only to me but to my family and I think to all, to agriculture overall in Pennsylvania. There are aspects of what we heard today that are hurtful. There are things that were brought out today that I am embarrassed by, whether it was in the film or otherwise. There are some things that X am ashamed of that have taken place on the campus. I believe that there are things that, by your admission certainly you were not proud of them. I think you mentioned you were embarrassed by them. I have no reason to doubt your sincerity on that. There is a principle, I call it the Sam Walton Principle, founder of Wal-Mart, and I have heard this mentioned several times. That it takes 20 positive experiences in a retail outlet to offset one negative experience. Or you can reverse that and say one negative experience requires 20 positive experiences to offset the damage done by a negative experience. I don't think any of us today can deny that what we were exposed to and what took place was not a negative experience or a blemish to the reputation of Penn State. And I think we all must work diligently to correct that. My father is almost 90 years old, and I from time to time recall some of the advice that I was given by him and I remember one thing today that I will recall him saying from time to time. There is no right way to do a wrong thing. I believe there were things that were done that were wrong. I protect free speech. There are people that have differing opinions about me right now. I protect and I uphold their freedom and their right to express that. But I do think that we have standards here, whether they are community standards, whether they are moral or whatever, that we do have an obligation to take very seriously.

So I am just going to close by saying, you know, fool me once shame on you. Fool me twice shame on me. I am not suggesting you attempted to fool anyone. But I think we have been fooled a bit by what happened there. I hope that we do not have to spend four hours in subsequent years debating these kinds of things. Penn State is better than that. They deserve more than that. They have the ability to do far more good for this Commonwealth than anything else. And so I have confidence in what you said today. That you are going to make these changes. I appreciate your commitment and we will be working together to make that happen. You indicated you are responsible and you speak for 100,000 individuals. We, to an extent, represent 60,000 individuals in our legislative districts. Certainly they will not all agree with us and the 100,000 you represent will not always agree with you. So it is a fine line we all need to work on. I wish you the best and thank you for being here. Thank you for your professionalism. We will take a recess and reconvene at 3:30. (Whereupon at 3:20 p.m. the hearing was concluded.) (The prepared testimony of Graham B. Spanier, President of Penn State University, was as follows:) Penn State is grateful for the state support it has received in the current fiscal year that is enabling the University to make important progress on initiatives in information sciences and technology, workforce development, and agricultural research and cooperative extension. We are eager to continue our partnership with the state and build on these successes to meet the challenges facing the Commonwealth in the future. The Governor's budget recommendation must only be seen as a starting point for discussing the needs of our University and the Commonwealth in developing a highly educated and productive workforce to enhance the state's competitiveness. The Governor's budget does not include the continuation of $7,000,000 in funding for key elements of last year's appropriation, nor does it address our special requests for this year, namely critical funding for our College of Medicine and for our School of Information Sciences and Technology. The budget proposes a three percent increase in the remaining items in the Penn State budget. Overall, the Governor's budget reflects only a .62 percent total increase from our 2000-2001 appropriation. We are hopeful that the Legislature will unite in bipartisan support for an appropriation that more adequately recognizes the contributions Penn State makes to the citizens of the Commonwealth, and the critical needs that are before us. As the knowledge needs of society rapidly expand, higher education has a more important role to play than ever before. Our new interdisciplinary School of Information Sciences and Technolgy is an excellent example of Penn State's responsiveness to Pennsylvania's needs. The School of 1ST, which opened its doors just last academic year, currently has more than 1,400 students at 19 locations throughout the Commonwealth. We have worked closely with public and private colleges and univer­ sities and with industry partners throughut the state on a number of programs. We already offer seven different 1ST certificates, and 1ST on-line courses are currently taught at colleges and high schools around the state. We sponsor a website for all faculty in Pennsylvania institutions focused on technology and e-learning, and 1ST is the academic home of the e-Commerce Center at Penn State Harrisburg. Fenn State's School of 1ST is truly an asset to all of Pennsylvania. We have made unprecedented progress in a short period of time with the encouragement of the Commonwealth and with the assurance of continued state support. Without moving existing funding to our permanent base for 2001-2002, and without the additional funds requested to sustain our progress, the ability of the school to hire top faculty and deploy programs on an ongoing basis is seriously jeopardized.

Among the most pressing challenges of our state and our nation is affordable and high quality health care, support for the most advanced medical innovations and procedures, the viability of teaching hospitals, and the support of the colleges of medicine that provide the foundation for academic health centers. Penn State's Milton S. Hershey Medical Center is the only academic health center in Pennsylvania between Philadelphia and Pittsburgh; it is the only children's hopsital in central Pennsylvania; it is the sole level- one trauma center; and it has the lone poison-control center in the region. These services would not be available to residents of a large part of the state without the expertise of physicians associated with the College.

Frankly, the future of our College of Medicine is in danger because such colleges can no longer be supported by profits from clinical enterprises, which no longer exist. Most of the nation's medical schools either have a substantial endowment or significant state appropriation to support their medical schools. We have neither. To continue our longstanding compliance with federal and state environmental regulations, additional assistance from the Commonwealth is needed. Increasing environmental regulations combined with the rising costs of compliance are making it difficult to keep pace. In order to remain good stewards of Pennsylvania's resources, additional funding is crucial. Penn State also hopes to continue partnering with the Commonwealth in workforce and economic development areas. The educational programs offered by Penn College have been a phenomenal success - producing critical workers for the Commonwealth and its economy. Nearly 100 percent of our graduates have jobs or are continuing their education and 86 percent of Penn College graduates remain in Pennsylvania. The University's recent academic initiatives have focused on areas of strategic importance to Pennsylvania - the Life Sciences, Materials Science, Environmental Studies, and Children, Youth and Families. The progress we have made in these areas is a key force in the ongoing development of Pennsylvania's industries and also provides substantial support for Pennsylvania's urban and rural communities and families. The funding we received last year for these critical areas was eliminated from the Governor's budget. Commonwealth residents continue to see Penn State as a top choice for higher education. Our educational programs at every level are in great demand. This past year, Penn State received just under 82,000 applications for admission, including more than 60,000 undergraduate applications. Nearly 22,000 students applied for limited spaces in our graduate and professional programs, including over 1,800 students applying to Penn State's Dickinson School of Law and more than 6,000 students applying for 110 spots in our medical school. Our new Penn State World Campus, dedicated to distance education for location-bound students, already has over 3,000 enrollments. Your investment in Penn State is important by any measure. Penn State is one of the most efficient universities in America and has reallocated nearly $84 million and eliminated or merged 62 programs since 1992. Our budget plan for 2001-2002 includes further budget reductions and reallocations to selected areas of critical need. We have one of the model long-range planning processes in higher education, assuring both efficiency and quality as we strive to serve the public better. The states with which Pennsylvania competes are investing heavily in higher education. Further investment in our University by the people of the Common­ wealth through their elected officials will return far more value than the dollars involved. I pledge that every part of Penn State will work to promote Pennsylvania's progress and leadership and that the members of our academic community will be good stewards of the funding the University receives. If you support us at the level we need and deserve, I promise that it will be one of the best investments the Commonwealth can make.

I hereby certify that proceedings and evidence taken by me in the within matter are fully and accurately indicated in my notes and that this is a true and correct transcript of the same.

135 S. LanWLs Street Hummelstown PA 17036

The foregoing certification of this transcript does not apply to any reproduction of the same by any means unless under the direct control and/or supervision of the certifying reporter.