Nov 192008
Authors: Aaron Hedge, J. David McSwane

A secret group of “about a dozen” faculty and staff members sent an unsigned letter to the CSU System Board of Governors and other state officials this week questioning controversial funding trends and other grievances during former CSU President Larry Penley’s tenure.

In the letter, the group said that although Interim President Tony Frank promises to increase transparency and substantially cut administrative budgets bolstered under Penley, the former president’s financial management and reports that he allegedly bullied those who challenged his administration should be investigated.

The group, which calls itself Mark Felt — a play on the true identity of “Deepthroat,” an integral source in The Washington Post’s uncovering of the Watergate scandal — says it organized in secret and sent the letter anonymously to avoid repercussion from the university and, specifically, Penley, whose “administration did not tolerate dissent.”

Mark Felt has been an ongoing background source to the Collegian during an eight-month-long investigation into Penley’s administration prior to his abrupt resignation earlier this month. Reporters have met in person with the group’s intermediary, who spoke on the condition of anonymity to the public, to confirm the group’s legitimacy.

The secret group also claims to have sent copies to State Sen. Steve Johnson, R- Larimer County; State Rep. John Kefalas, D-Fort Collins; the State Treasurer; the State Department of Revenue; the Executive Director of the Colorado Commission on Higher Education; and Gov. Bill Ritter.

Mark Felt claims to have, over the course of several months, gathered information from interviews with current and past administrators, including three “in senior, Penley administration positions.”

The letter is in the BOG office, but the board has not seen it yet, said Michelle McKinney, the board’s top spokesperson.

She said the board will most likely review the letter and respond at its Dec. 2 meeting.

During Penley’s time at the helm of CSU, millions of dollars of tuition and state tax dollars that could have gone to academia were funneled into top-level administrative budgets, new administrative lines and steep salary hikes, while tuition and student fees increased 52 percent and 73 percent, respectively, an eight-month-long Collegian investigation found.

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

Edwin Ruotsinoja, a former controller of the CSU system who left around the same time and did not sign a confidentiality agreement, and a former staff member close to the issue, who spoke on the condition of anonymity, said the auditors were forced out after disagreements with Penley’s financial philosophy.

Then, in Penley’s final summer semester, the university took out nearly $140 million in Wall Street loans for new building projects, which come with at least a $5-million-a-year price tag. And in the light of a mounting economic crisis, the group questions how CSU will pay for increasing interest rates.

The embattled president’s tenure was underscored by highly publicized controversy in 2007 as he clashed with students, faculty and state lawmakers over a last-minute clause he introduced into Colorado’s Long Bill, which dictates university budgets, that would have effectively increased tuition by about $1,200 per student in one year.

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.

And while Frank spent the first two weeks of his tenure as interim president cutting administrative spending, promising transparency in university finance, and meeting exhaustively with students, faculty and state legislators, the group calls for BOG review of myriad funding issues that include:

Paying for Wall Street loans amid an economic crisis

Recovering from a $5.5 million shortfall in tuition revenue

Alleged allocation of university reserve funds to pay for holes in funding for CSU’s new online campus, CSU Global, which came with a $12 million price tag, and

Large amounts of money being spent on technology transfer programs like the branded “Superclusters,” while it brings negligible monetary returns.

The Collegian received an advance copy of the letter from Mark Felt’s intermediary.

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

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