Pennsylvania State System of Higher Education (PASSHE) a. The October 17, 2013, Board meeting minutes state the following:

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1 Pennsylvania Department of the Auditor General Bureau of Special Performance Audits 302 Finance Building Harrisburg, PA Information Request-10 Page 1 of 3 Requested of: For: Pennsylvania State System of Higher Education (PASSHE) Special Performance Audit of PASSHE Date of request: February 9, 2015 Requested by: February 17, 2015 a. The October 17, 2013, Board meeting minutes state the following: Governor Henry presented the report on behalf of the Finance, Administration, and Facilities Committee. The Committee reviewed three information items: Official Residence Renovation, California University of Pennsylvania; Demolition of Harley Hall, Shippensburg University of Pennsylvania (Attachment #8); and Funding Review Task Force (Attachment #9). Another information item not on the agenda was the Weapons Policy. While we can see that the Board was presented with an information item on the California University Official Residence Renovation, there is no mention that the Board voted to approve this renovation. Did the Board of Governors ever vote to approve the renovation of the president s residence? No. If yes, when? If no, why not? The applicable Board of Governors (Board) policy does not require a vote; it only requires consultation with the Board. See Board of Governors Policy A: System Reserve Allocation and Expenditure Criteria. It should be noted that the official residence at California University was in very poor condition. As pointed out in the attached Board agenda item, it has not had a significant renovation since 1930, and minimal work has been done to the residence in the last few decades. Much of the work that was done over the years was inferior; it was not ADA accessible and did not comply with current codes (in some cases, it was a significant life safety risk). It also had severely outdated and damaged plumbing, electrical, and mechanical systems. As a result of the conditions, the 4,629-net-square-foot apartment had to be completely gutted down to the studs, and the systems mentioned above, windows, the complete kitchen, fixtures, and all finishes had to be replaced.

2 Pennsylvania Department of the Auditor General Bureau of Special Performance Audits 302 Finance Building Harrisburg, PA Information Request-10 Page 2 of 3 In addition, the Office of the Chancellor identified the need to replace or upgrade the residence as early as 1990; however, the university president chose to postpone any major renovation or replacement. This residence is also the only official residence in the State System that is an apartment in a major academic/administrative building (South Hall). A university president serves the campus community 24/7. By living on campus, the president is readily available to perform his or her daily duties and to respond to any situation. The official residence also serves an important role in the life of the university, with the public space being available for important campus events. Because of this, the Board of Governors is committed to ensuring these residences are maintained appropriately so they may serve the entire campus community. It is most cost effective to complete required major renovations at a time when the facilities are vacant usually between presidencies. The renovations to South Hall certainly were appropriate, timely and were designed to last for years to come. The building is historic, and the renovations were made so that this important property continues to be a valuable asset at California University. The project was necessary, and the Office of the Chancellor stands by the decisions that were made to carry out the project. The attached fact sheet provides background on the project. If necessary, additional documentation and/or photos of the residence can be provided, or a site visit to the renovated unit can be arranged. b. Did California University s Council of Trustees vote to approve the renovation of the president s residence? If yes, when? If no, why not? Renovation of the official residence was taken to the University s Council of Trustees for review and support in December 2013, after the Board was advised of the project and approval was granted by the Office of the Chancellor. The Council of Trustees received a full description of the work to be completed and the cost estimate of the project. The Council of Trustees was in full support of the renovation project due to the poor condition of the official residence at that time. At California University, the Council of Trustees only formally approves renovation projects submitted for Commonwealth capital funding or projects that require System bond financing. Since this renovation was paid for by System Reserve funds and University operating funds, no formal approval was needed by the Council of Trustees.

3 Pennsylvania Department of the Auditor General Bureau of Special Performance Audits 302 Finance Building Harrisburg, PA Information Request-10 Page 3 of 3 c. The renovations for the California University s president residence were budgeted at $860,000. Please provide the breakout of how much money would be used from various sources of revenues. For example, news articles state that PASSHE provided $650,000 for these renovations. What is the source of that $650,000? (Capital funds? Other?) In accordance with Board of Governors Policy A: System Reserve Allocation and Expenditure Criteria, the project was funded for $650,000 using System Reserve funds. The amount of $650,000 has customarily been the acceptable limit of investment from this fund source during a renovation. Funding above that amount must come from university sources. The State System believes that the information item on the Board agenda satisfies the written report requirement in the policy. What is the source of funds used by California University to fund the remainder of the project its E&G funds or other sources? The remainder of the project was funded with the University s Educational and General operating funds and general purpose funds owned by the University, which were housed in the Foundation for California University. d. Please explain the level of expense details the Board of Governors was provided when it decided to allocate $650,000 for this project? In other words, did the Board approve an overall figure or did it approve this funding level based on detailed expenses, such as materials and furnishings? The Office of the Chancellor received a description of work and detailed cost estimate from the University. The Board was provided with a general description of the work and the proposed funding amount from the System Reserve funds. e. Please provide a copy of all documents given to the Board of Governors prior to the allocation of $650,000 to California University for this project. The only document provided to the Board was the attached agenda item. f. When did the renovations for this project begin? When did they end? The construction phase of this project began in June 2014 and ended in January 2015.

4 PA State System of Higher Education Board of Governors Effective: May 15, 1984 Page 1 of 2 Policy A: System Reserve Allocation and Expenditure Criteria See Also: Adopted: May 15, 1984 Amended: April 15, 1986; July 13, 1989; October 21, 1993; January 16, 1997 A. General Policy All revenue, allocations, and expenditures pertaining to the System Reserve shall be approved by the Board of Governors. On the first day of each fiscal year or as soon thereafter as practicable, the Board of Governors shall allocate from the appropriation made to the State System of Higher Education by the General Assembly an amount to the System Reserve that will restore the reserve balance to a level not to exceed $1,500,000. Interest earned on the invested balances of the System Reserve shall be credited to the reserve on a monthly basis. Funds allocated to the System Reserve shall be used to further the legitimate objectives of the State System of Higher Education as identified by the Board of Governors. To provide adequate funds for emergencies and/or contingencies, the balance in the System Reserve in any fiscal year may not fall below $500,000. Proposed expenditures that would result in a balance of less than $500,000 shall be limited to Acts of God or similar contingencies at the discretion of the Board of Governors. B. Criteria 1. All requests for allocations from the System Reserve shall require the prior formal approval of the Board of Governors. All requests for allocations shall be made in writing and shall include, at minimum, an itemization of proposed expenditures and a narrative justification for same. 2. Requests for allocations and subsequent actual expenditures from the System Reserve shall normally meet the following standards: a. Ordinarily, proposed expenditures from the System Reserve shall benefit three or more universities;

5 b. Proposed expenditures shall not incur or require long-term or ongoing financial commitments out of a university budget; and c. Benefits accruing to the State System from a proposed expenditure shall be delineated and quantified where possible. 3. In addition to the criteria provided for in B.2, allocations may be made for the life cycle renovation, expansion, new construction, or acquisition of presidential housing. Expenditures for life cycle renovation may be approved by the chancellor after presentation to, and consultation with, the Board about the necessary repairs. The chancellor shall make a written report of the consultation to the Board. 4. Expenditures from the System Reserve shall be auditable. Universities receiving System Reserve allocations shall take all necessary and appropriate steps to provide audit trails for expenditures from these allocations. Page 2 of 2

6 California University of Pennsylvania CALIFORNIA UNIVERSITY O F P E N N S Y L V A N I A A proud member of Pennsylvania s State System of Higher Education. the University home the President s residence at California University of Pennsylvania

7 presidents residence booklet:layout 1 1/22/15 3:42 PM Page 3 California University of Pennsylvania a university president serves the campus community 24/7. By living on campus, the president is readily available to By the numbers south hall area 19,901 square feet (includes residence) south hall age 139 years residence area 4,800 square feet residence age 118 years perform his or her daily duties and to respond to any situation. the official residence also serves an important role in the life of the university, with the public space being available for important campus events. Because of this, the Board of Governors is committed to ensuring these residences are maintained appropriately so they may serve the entire campus community. it is most cost effective to complete required major renovations at a time when the facilities are vacant usually between presidencies. the renovations to south Dr. theodore B. noss and family on the steps on the porch of the President s residence. the porch of the President s residence, January hall certainly were appropriate, timely and were designed to last for years to come. Kenn marshall, spokesman Pennsylvania s state system of higher education now serving about 8,000 undergraduate and graduate students, California University of Pennsylvania is a proud member of Pennsylvania s state system of higher education. learn more about Cal U at 2 California University of Pennsylvania the University home 7

8 presidents residence booklet:layout 1 1/22/15 3:42 PM Page 5 all state system universities provide housing for their respective presidents. in its previous condition, the residence at Cal U would not have been an attractive option for an incoming administrator. it is more efficient and cost-effective to complete an extensive renovation project when a dwelling is vacant. typically, state system schools complete such projects after a president leaves office. the current renovations are intended to be lasting improvements. Costs in october 2013, the office of the Chancellor approved a budget of $860,000 to renovate the residence at Cal U. the state system contributed $650,000 of that amount, or more than 75 cents on the dollar. the remainder comes from the University s e&g (education & General) funds. the renovation project was completed within budget. separately, capital improvements were made to south hall. these included replacing the leaky roof, which dated to the 1950s; re-pointing exterior brickwork in key areas and replacing more than 100 deteriorating bricks; and replacing the main sewer line to the building, which showed signs of longstanding damage. south hall capital improvements totaled approximately $250,000. the University home the President s residence at California University of Pennsylvania California University provides housing for its first family in a two-level apartment within south hall, one of the oldest buildings on campus. south hall was constructed in 1876 and expanded in the residence was added between 1897 and Cal U is the only university in Pennsylvania s state system of higher education that houses its president in an apartment rather than a stand-alone dwelling. in addition to the residence, south hall houses the offices of social equity, University Development & alumni relations, marketing & University relations, and the Government assistance Contracting office (GaCo). 6 California University of Pennsylvania the University home 3

9 presidents residence booklet:layout 1 1/22/15 3:42 PM Page 7 the renovation the residence was thoroughly renovated in 2014 for the first time in many decades. at the same time, capital improvements were made to the building s infrastructure and the exterior of south hall. the lower level of the residence is public space, where the University President can hold official functions and entertain guests. the upper level is the family s private area, including bedrooms, bathrooms, a tv/sitting room and a small personal office. Wherever possible, the historic building s original architectural elements were retained or restored. at the same time, modern amenities were installed, such as insulated windows to replace leaky panes, some dating to the 1800s; modern hvac to replace an inefficient boiler system and window air conditioners; and a handicapped-accessible restroom, as required by law. the interior design reflects a theme of simple elegance and an awareness of the building s long history. Because the apartment may not be renovated again for many years, durable and timeless materials were used throughout. the University served as general contractor, and many skilled Cal U craftsmen contributed their expertise to the project. the furnishings much of the furniture in the residence was donated by the estate of floyd r. Ganassi, a fox Chapel businessman and philanthropist whose daughter, annette Ganassi, serves on the California University Council of trustees. the kitchen cabinets and some furniture used by previous residents remain in place; other pieces were moved from University storage or other campus locations. a few pieces of furniture were purchased to complete the interior design. Draperies were custom-made for the residence and funded through a University account housed at the foundation for California University. area rugs were cleaned and reused. the original chandelier hangs in the dining room. the Jones family contributed many of the photographs and other artworks on display. Why renovate the residence now? like California University, the state system of higher education has an interest in seeing that all campus buildings are well maintained. the building had major deficiencies and needed repairs. Grandfather clock donated by the Class of California University of Pennsylvania the University home 5

10 ITEM #4 Finance, Administration, and Facilities Committee Meeting October 16, 2013 SUBJECT: Official Residence Renovation, California University of Pennsylvania (INFORMATION) UNIVERSITIES AFFECTED: California University of Pennsylvania BACKGROUND: The official residence at California University is in need of renovation, and the university is seeking a System Reserve allocation to fund the project. The official residence is an apartment of 4,629 square feet in South Hall. In addition to the residence, the building also contains university administrative offices. South Hall was constructed in 1899 and has been maintained fairly well, although there are no records of any whole building renovation. This project will address only the portion of the building containing the official residence. The last documented significant renovation of the residence occurred in Since that time, a few minor renovations have occurred with the last one taking place in The primary goals of the proposed renovation are to correct significant deferred maintenance and life cycle renewal issues, and improve accessibility in accordance with the Americans with Disabilities Act (ADA). Specifically, the work includes a partial roof replacement; brick repointing; termite damage repairs; asbestos abatement; mechanical, electrical, and plumbing system repairs; and updating of interior finishes, bathrooms, and kitchen. Board of Governors Policy A, System Reserve Allocation and Expenditure Criteria, permits expenditures from the System Reserve for life cycle renovation of official residences, not to exceed $650,000, with the chancellor s approval after presentation to and consultation with the Board. Supporting Documents Included: N/A Other Supporting Documents Available: Project Planning Documentation Reviewed by: N/A Prepared by: James S. Dillon Telephone: (717) Board of Governors Meeting Agenda Page 52

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