PENLEY RESIGNS Provost acquires CSU helm

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Nov 062008

101608_penleyucaBy Aaron Hedge and J. David McSwane

In a shocking mid-semester announcement, CSU President Larry Penley resigned Wednesday night, ending a five-year tenure underscored by his CEO approach to leadership and squabbles with students, faculty and state officials.

“I believe that my leadership has contributed to significant progress for Colorado State University,” Penley said in a statement. “But I want to be free to pursue other leadership positions in higher education. This resignation will allow me the flexibility to do so.”

In a closed-door meeting between presidential cabinet members and the council of deans, Tony Frank, senior executive vice president and provost, announced that he is taking over as interim president effective immediately.

“The important things right now are to focus on smooth continuity of transition for the university,” said Frank, who has worked at the university for more than 15 years. “President Penley has served this institution very well.”

“He leaves the university in an excellent position,” he added. “All of (the) fundamentals are very, very sound, and the president deserves a great deal of thanks for that.”

Penley is currently taking vacation leave and will officially vacate his post Nov. 30, Frank said.

The president and chancellor’s abrupt departure comes two days after an evaluation committee, consisting of voting members of the CSU System Board of Governors, met with Penley as part of an annual evaluation.

And late last month, John Lincoln, Penley’s No. 2 as executive vice president, also announced his resignation.

Outside his house in south Fort Collins Wednesday night, Penley declined to comment about his departure, saying: “Sorry, I don’t have anything to say.”

Blanche Hughes, vice president for Student Affairs, said Penley’s resignation came as a surprise to the administration but declined further comment.

Frank learned of the news earlier Wednesday, he said, and accepted the BOG’s proposition that he temporarily lead the university.

The BOG should begin searching for a new president sometime in the near future, Frank said, and although it’s “very early” to say, he could be a candidate for the position.

Doug Jones, the chair of the BOG, said Frank is a top contender for the job.

“Tony Frank knows this campus as well as anyone,” he said. “We will not miss a beat.”

Richard Eykholt, chair of CSU’s faculty council, echoed Jones’ statement, expressing confidence in Frank’s ability to take over the helm of the state’s second largest university.

“(The faculty) has complete confidence in Tony to continue to move the university forward. We’re very optimistic in how we’re going to proceed,” Eykholt said.

Taylor Smoot, president of the Associated Students of CSU, said when it comes to communication between the president’s office and students, CSU was “a laughing stock” compared to other schools. He said under Frank’s leadership, students will have more say in the university’s business practices.

“Tony Frank is the best person for this position,” he said. “He shows up. He’s the man.”

Penley’s final semester

In his time at CSU, Penley drastically overhauled top-level administration, adding more than a dozen VP-level spots with hefty budgets and salaries while the academic colleges and library saw a much smaller growth in financial support.

During that time, several key financial overseers left the university — three on the same day — accepted large financial incentives and signed confidentiality agreements, an eight-month-long Collegian investigation found.

And just weeks before his resignation, top student government officials formed an official financial oversight committee to evaluate Penley’s fiscal management of the university.

The group promises to present their investigation’s findings to state legislators who have called for more transparency in the university’s financial reporting.

Recently re-elected State Rep. John Kefalas, D-Fort Collins, said in an interview earlier this semester that, overall, he was pleased with Penley’s leadership of the university but stressed that students and taxpayers should know more about how the university is using tuition and tax dollars.

A tumultuous presidency

In an interview earlier this year, Frank likened Penley to a chief executive officer of a major company, citing the need for aggressive fundraising efforts for public universities as state funding continues to fall short.

And if Penley was the CEO, Frank would be the chief financial officer — the guy who lost his job if something went wrong, Frank joked.

From the perspective that the university is a product and students are consumers, Penley led the school like a business — beefing up marketing, initiating the branded “Superclusters” initiatives, rubbing elbows with potential donors and sponsors from across the country and, recently, pushing to establish CSU as “the green university.”

While Penley’s tactics were lauded by many — as under his leadership the CSU budget and research expenditures increased substantially — some were opposed to the president’s financial philosophy and direction for the university.

Throughout his tenure, CSU faculty members criticized the president as focusing too much on saturating administrative budgets and competing for research grants, which are restricted funds and usually can’t be spent outside that specific research project.

Citing a lack of communication with the CSU community, student government officials and faculty members questioned Penley and his administration.

John Straayer, a long-time university political science professor, has publicly criticized the administration and has charged Penley with neglecting the instructional side of the university.

“I don’t think it comes out in the wash,” Straayer said earlier this semester. “As the burden has been shifting more and more on students, large chunks of that money aren’t going to the instructional side … I think that’s questionable.”

“Where is the academic core of this place?” he added.

During Penley’s time at CSU, he launched an award-winning national advertising campaign, increased freshman enrollment by record numbers every year since 2004 and brought an additional $200 million to the CSU budget.

Inaugurated in 2004, Penley brought an all-business approach to leading CSU and emphasized the importance of establishing new revenue streams as Colorado was falling to the bottom of the barrel for funding in higher education.

Penley established himself shortly after arriving at CSU’s helm as an active champion of the university’s technology transfer programs, which bring university research findings to the market, coining them “Superclusters” and actively campaigning on a national level to bring visibility to them.

But bringing more light to the research entities comes with a heavy price tag.

Last year alone, CSU spent $303 million on research initiatives, with a substantial amount — $45 million — of that money coming from the university general fund, which is essentially a bucket of money that primarily comes from sharply increasing tuition and fees.

At the same time, Penley significantly shored up the guts of CSU administration by funneling millions of dollars that could have gone to academics into vice presidential and other top-level budgets.

And the trend of ongoing administrative top-loading and heavy spending on research has been highlighted by highly-publicized controversy as Penley engaged in public battles with students, faculty and state lawmakers.

In 2007, student leaders cried foul as Penley introduced a last-minute clause into the Long Bill, which dictates university budgets, that would have effectively increased tuition at CSU by more than 40 percent.

Student leaders organized on campus and at the Capitol in opposition to Penley’s last-minute amendment to the document. And the revision was consequently killed in the state legislature.

In the wake of the Long Bill controversy, Penley and Gov. Bill Ritter publicly clashed about how to address funding shortages for the school — tuition hikes being the last resort according to Ritter. Penley accused Ritter and other state lawmakers of striking down CSU’s ability to fund itself in Colorado’s tight fiscal situation.

What’s next for CSU?

Frank said while the university awaits a new president to take over, it’s business as usual.

“I think if we all do our jobs right, and I’m confident that we will, it should not have much of an impact,” Frank said. “No one person makes the institution run the way it does. It runs because of the hard work and effort of (everybody).”

News Managing Editor Aaron Hedge and Enterprise Editor J. David McSwane can be reached at

A hefty investment, research draw visibility, critics

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Sep 232008

By Aaron Hedge and J. David McSwane

As Colorado ranks dead last in funding for higher education, and after public disagreements with Gov. Bill Ritter and legislators on how to best increase the school’s budget, CSU President Larry Penley has turned to marketing the university as a world-class research institute to bring money — and attention — to the school.

And as the push continues, CSU’s research expenditures surpass that of peer institutions by 27 percent — a notable accomplishment considering three years ago the university was at the bottom of the list. But CSU now falls about 6 percent behind in instructional spending, according to university officials.

Expensive TV commercials, magazine ads and billboards brand the university as leading the way in environmental problem-solving, and Penley looks to feature articles in Newsweek, the Wall Street Journal and other major media outlets as evidence of CSU’s prominence. And the highly marketed Superclusters are at the crux of the school’s newfound notoriety.

The Superclusters concept, intensely focused categories for research on key subjects like cancer and infectious disease, were adopted in 2006 with the help of a $900,000 gift from the CSU Board of Governors reserve fund and were established as a university priority the next year when the Board approved $2 million for the concepts from the school’s budget.

Superclusters are promoted as bringing valuable research to the market to challenge global issues like sustainability and clean energy while kicking back royalties for patents to the school, sometimes resulting in start-up companies like MicroRx, which works to commercialize results from the Infectious Disease Supercluster.

But a report of royalties received over the last 10 years from technology transfer initiatives like Superclusters shows the university has only seen about $9.4 million in returns — a figure dwarfed by the billions of dollars poured into research projects.

Tony Frank, provost and executive vice president, said the return on innovations from research is expected to increase over time but said royalties are only an ancillary benefit of the research.

“When we invest in technology transfer, if your only point is to make money, you’re doomed,” Frank said.

As to the effectiveness of programs like Superclusters, Jim Hearn, a higher education finance expert with the Institute of Higher Education in Georgia, said it’s a gamble, adding that universities typically sell off start-up companies instead of “enduring a long wait for profitability.”

“It is difficult to profit from these kinds of investments,” he said.

“… For every great success, there appear to be corresponding stories of disappointment. There are no guarantees in that business.”

John Straayer, a CSU political science professor, said that while research spending has its benefits, “It can’t do a whole lot for the instructional side … even if you bring in research dollars in the train loads.”

“Basically what you’re doing is using students’ money as venture capital,” Straayer said.

“For millions of years, the market has pushed good ideas to the market. Why are you spending millions of dollars of students’ money?”

Frank, who researched and introduced the Superclusters concept to the president, admits the research being conducted under the Superclusters model isn’t dissimilar from lofty research projects that were already being conducted at CSU.

But the branded models, he said, help bring in grants for those specific research areas.

“We tried to put our bets on areas that not only benefit (CSU), but also bring a return to the university — those with the greatest chance of being profitable,” he said, adding that a majority of the university’s general fund investment is a reflection of grant-matching contracts with research financiers.

But Straayer is critical of the Superclusters concept, saying the research already existed and that the concepts are just “very expensive public relations.”

Research dollars, whether they fall under Superclusters or not, are a benefit for students and faculty working on the project, Frank said.

And peripherally, the rising research expenditures increase the school’s visibility, he said.

Adding that the focus on research can “ultimately be a losing game for some institutions,” Hearn, the finance expert from the Institute of Higher Education, echoed a similar statement.

“Done right, research work on campuses does benefit students,” he said.

“Faculty learn more to inform their teaching, students become involved in the research process, revenues are used to provide superior learning experiences in labs, etc.”

News Managing Editor Aaron Hedge and Enterprise Editor J. David McSwane can be reached at

Tuition, state dollars diverted to research As CSU beefs up research efforts and marketing, burden falls on struggling students, colleges

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Sep 232008

By Aaron Hedge and J. David McSwane

As CSU President Larry Penley continues to aggressively market and fundraise for research projects — catapulted by the new “Green University” campaign — university expenditure reports show the criticized efforts are pulling money from financially starved academic colleges.

The increased focus on competing for research dollars in the last five years, namely for the branded “Supercluster” technology transfer concepts, is costing students and the state more money each year, a Collegian investigation found.

Each year since Penley’s arrival in 2003, the university has increasingly pulled millions of dollars from institutional funds for research, leaving less for academic colleges and the library, which are for the first time in the school’s history, drawing less financial support than administration, according to annual university budget reports.

University officials defend the investment of student and taxpayer dollars on research as fulfilling the mission of a 21st century land grant research institution to bring new research to the state, and they say the research improves the value of a CSU degree.

“There are plenty of non-research universities students can go to, but the value of a degree comes from the reputation of the institution, which comes from research,” said Tony Frank, the provost and senior executive vice president. ” … It’s why we exist,” he said.

In his fall address, Penley boasted a record-breaking $303 million in research expenditures for fiscal year 2008. But for every dollar of sponsored research, the university spent 15 cents — about $45 million total — in institutional funds from what’s commonly referred to as the “general fund,” an aggregate account of primarily tuition dollars, state dollars and other less significant revenue streams like private donations.

At the same time, resident undergraduate tuition has increased 52 percent — from $2,907.90 in 2003 to $4,424 today — since Penley’s arrival, and undergraduate student fees have climbed by more than 73 percent, from $836.40 in 2003 to $1449.56 today.

Frank says the investment of student’s dollars in research, which institutional reports show has a negligible monetary return, is controversial among some faculty circles. While he says it’s a wise investment, he said the money could instead be funneled into instruction.

“You’ve got limited resources at CSU,” he said. “There’s research out there that argues you could invest that money somewhere else. And that’s a very legitimate question.”

And as the push continues, CSU’s research expenditures surpass that of peer institutions by 27 percent, up from three years ago when the university was at the bottom of the list of peer institutions. But conversely, CSU falls about 6 percent behind in instructional spending, according to university officials.

And critics of the research campaign say student’s money should go to fund the academic colleges to bring that number up.

“The money that funds this stuff comes out of the general fund,” said John Straayer, a CSU political science professor. “As the burden has been shifting more and more on the students, large chunks of that money aren’t going to the instructional side. I think that’s questionable.”

Despite drastically increased student fees, tuition costs climbing at three times the rate of inflation and state funding falling $832 million behind other states, the president promises to spend more time on the road vying for research grants, which aren’t alleviating the university’s dire financial woes.

Money granted to the university for research can’t legally be used for other university needs — tenure faculty promotion, construction, financial aid, anything that doesn’t apply to the specific research project or associated overhead costs — and is focused almost exclusively on the sciences.

And as the university consistently breaks records each year in overall research expenditures, the amount taken from the general fund also increases, annual CSU expenditure reports show.

Expenditures from sponsored research, mostly from the federal government, have risen 53 percent since 2002, and research spending from the general fund has climbed at 50 percent, according to the expenditure reports.

In total, CSU has spent $246 million from institutional funds for research since 2002, according to university records.

Jim Hearn, a higher education finance expert with the Institute of Higher Education in Georgia, said Penley’s focus on research is common among public university presidents who struggle to offset dwindling state funds, but he said the efforts have mixed returns.

“Sometimes, leaders have to trade off certain goals to pursue others,” he said in an e-mail interview. “A president becoming heavily involved in pursuing research funding might be exactly the wrong choice in one institution, but quite appropriate in another.”

As Penley charges the institution with becoming carbon-neutral by 2020 as part of the internationally recognized “green university” campaign, the funneling of tuition and state dollars into research and away from other areas is likely to increase, according to the trend seen in expenditure reports over the last five years.

Frank defended the increased focus on research, saying it provides more opportunities for faculty to conduct research and for students to be involved. But the expenditures have no short-term positive impact on most undergraduate and graduate students, especially those in non-research majors like the liberal arts.

Straayer charges Penley with not prioritizing the academic mission of the school and paints the increased focus on research spending as “very expensive public relations” that can’t benefit the instructional side “even if we bring it in by the train loads.”

“I don’t think that, in the long-run, you serve the students, and ultimately the state, to raise money that can’t be used on instruction,” said Straayer, currently in his 41st year of teaching at CSU.

Straayer, an expert in state and local governments, said Penley and his administration should spend less time marketing and fundraising for research grants and more time at the Capitol, working to fix the way the state funds CSU.

“Is he going to go out and raise money for tuition relief?” he said. “I would say that the number one priority of any president in this state is to work cooperatively with each other, the governor and the legislature.”

Frank said the university has not backed off efforts at the Capitol and alluded to an official university campaign for financing reform in the future. He didn’t provide details about the campaign because it’s “in the silent stage,” he said.

While state lawmakers laude Penley’s efforts to aggressively pursue research funding, they cite questions of transparency as the president spends large amounts of time on the road talking to investors and neglecting what they said are Penley’s duties to candidly disclose the direction of fundraising efforts to them.

“I think the university should be talking to the legislators more and the media more,” said Sen. Steve Johnson (R – Larimer County), who sits on the Joint Budget Committee, a six-person board charged with setting the state’s budget and allocating state funds to CSU. “We’d like to be included more, so we can tell people how their tax dollars are being spent.”

Considering what he called a “flawed system” for funding higher education at the state level, Rep. John Kefalas (D – Fort Collins) applauded Penley’s efforts to focus on research, which he said can be a wise investment.

But he said he plans to meet face-to-face with Penley and other administrators to ensure tuition dollars are focused on instruction.

“Academic instruction is the highest priority,” he said. “… For me, the bottom line is that we don’t put all of this on the backs of students. … We need to make sure we’re good stewards of those dollars.”

In addition to meeting with administration, Kefalas said he plans to talk with student government and Faculty Council to discuss the school’s budget.

“I think that research is part of academics, but the question is: Where is all this money coming from, and how is it used?” he said. “I’d want to make sure CSU is demonstrating the highest level of transparency on how these decisions are being made.”

News Managing Editor Aaron Hedge and Enterprise Editor J. David McSwane can be reached at