Graham B. Spanier's Remarks
Friday, March 23, 2007

This morning I am going to provide just a brief report and then open the floor to questions, because I want to leave enough time for a very special announcement that we are going to make after the conclusion of the Board Report.

Two weeks ago we were able to announce a groundbreaking new partnership with Highmark that we believe will have a great impact on improving the quality of health care and increasing access and affordability of services for our employees, their families, and the people of central Pennsylvania and the Commonwealth.

The 10-year agreement encompasses a number of components including investment in clinical research for diseases such as cancer and a contribution toward a new children's hospital, as well as the collaborative development of community health initiatives including the study and enhancement of wellness and prevention programs. Highmark will administer the health-care benefits for all employees and family members of Penn State University, including Penn State Hershey Medical Center, beginning January 1, 2008. The agreement also ensures that the Medical Center will remain part of the Highmark network of hospitals and providers for the next decade.

The partnership, which is unique, provides increased access to health care services for our Penn State employees and their families across the Commonwealth, while advancing vital research and investing in new facilities that will ultimately benefit the health of everyone we serve.

Under the agreement:

-- Highmark is committing $5 million to support clinical research for diseases such as cancer, including investment in research infrastructure that will increase the ability of other area hospitals to participate in clinical research.

-- Highmark is committing $20 million to the construction of the Penn State Children's Hospital. When completed some years from now, the Children's Hospital will enhance the availability and quality of specialized medical care for children throughout Pennsylvania.

-- Highmark, Penn State and the Medical Center will jointly develop evidence-based health, wellness and prevention programs to help employers improve the overall health of their workers and families.

-- All three partners will work together to develop community health initiatives designed to benefit the overall health of the region.

-- Beginning January 1, 2008, Highmark will be the exclusive administrator of all health plans offered to employees, dependents and retirees of Penn State, Penn State Hershey Medical Center, and throughout the state at all campuses. About 60,000 people will be covered under the agreement.

Hal Paz, and his senior staff, and Gary Schultz and Billie Willits deserve great praise for helping to negotiate this important new arrangement. And we are very grateful to the leadership at Highmark for their commitment to Penn State. We look forward to partnering with them over the next decade in an effort that we believe will make life better for people across the entire Commonwealth.

Another extraordinary accomplishment that benefits the Hershey Medical Center and the children it serves happened last month when Penn State students raised a record-breaking $5,240,385 at this year's THON. This year's total exceeded the funds raised in 2006 by approximately $1 million. It was an unbelievable achievement.

More than 700 dancers packed the floor of the Bryce Jordan Center for the event. More than 15,000 Penn State students participated, serving on committees to plan the event or raising money through their student organizations.

All proceeds from THON benefit pediatric cancer care and research through The Four Diamonds Fund at Penn State Children's Hospital. THON has raised more than $40 million for Four Diamonds since 1977. Congratulations go to all of the Penn State students who made this year's event such a huge success.

The research being done here at Hershey continues to make news around the world in a number of areas of medicine. One recent and important Penn State College of Medicine pilot study suggests a low dose of naltrexone, a drug used to ease symptoms of alcohol and drug addiction, also may bring relief to people with Crohn's disease, a chronic inflammatory disorder of the intestine that affects an estimated 500,000 Americans.

A team of researchers led by gastroenterologist Jill P. Smith and Ian S. Zagon, distinguished professor of neural and behavioral sciences, received NIH funding last summer to initiate a phase 2 trial of low-dose naltrexone and Crohn's.

Congratulations goes to Trustee Joel Myers, who has been named the first inductee into the National Meteorologist Hall of Fame in Punxsutawney. The Hall of Fame opened on February 2nd, and is part of the Punxsutawney Weather Discovery Center. Joel's accomplishments in revolutionizing the field of meteorology made him a natural choice, and we offer our congratulations.

I also want to point out, if you have not already seen it, that there is a wonderful video currently available on "Penn State Live" that features trustees George Henning's extraordinary Penn State Room, and his one-of-a-kind collection of Penn State memorabilia. It is a nice tribute to his long-standing hobby of collecting unique pieces of Penn State's history.

Penn State has made history on another front – that being television ratings. ESPN recently released the list of the most highly rated Big Ten football broadcasts in the history of their network. Penn State played in 4 of the top 5 highest rated games on ESPN, and we played in 8 of the top 20 rated games. The highest rated game was Michigan State playing at Beaver Stadium in 1994. The highest number of viewers (and there is a slight difference in how they calculate rating and viewership) was when we hosted Ohio State at Beaver Stadium in 2005.

Later today you will be asked to approve two new dean appointments. I want to take just a moment this morning to reiterate how fortunate we are to have been able to select two such outstanding candidates. In Arts and Architecture, Barbara Korner will be coming to us from the University of Florida to replace Dick Durst, who left to become the president of Baldwin-Wallace College. Barbara has done a terrific job at Florida and will bring outstanding leadership skills to our arts and architecture programs.

In Health and Human Development, we were able to persuade a familiar face to many at Penn State, as Nan Crouter, professor of human development, director of the Social Science Research Institute and director of the Consortium for Children, Youth and Families has agreed to accept the appointment to fill the position that was vacated when Ray Coward left to become Provost and Executive Vice President at Utah State.

Nan has a long history at Penn State, joining the faculty in the College of Health and Human Development in 1981.

On the administrative side, you also will be asked to approve two additional appointments: vice president for Finance and Business and vice president for University Relations.

Albert Horvath is the candidate for the Finance and Business post. He comes to us from Columbia University, where he served as executive vice president for finance and chief financial officer responsible for an operating budget of $2.7 billion and a capital budget of $300 million. He has vast experience in higher education.

For University Relations, I will recommend Bill Mahon be named vice president. Bill, as most of you know, has been with Penn State for more than two decades, most of that time as director of Public Information. He has been University spokesman on various issues and is a leader in our quest to curb underage and high-risk drinking on campus.

We will hear more about these recommended appointments shortly.

But as we have new people joining us, we also have some people leaving, and I wanted to take just a moment to acknowledge the service of two hardworking, outstanding members of the Penn State family who are attending their last Penn State Board of Trustees meeting as members of the current administration.

Ken Babe, who has served as the University's corporate controller for the past 21 years, is retiring next week. Throughout his more than four decades at Penn State, Ken has served as accountant, assistant controller, and assistant vice president for audits and internal controls, as well as corporate controller.

As a member of the Penn State Investment Council and Central Investment Group, Ken helped manage our endowment of more than $1 billion and ensured that the University is in compliance with myriad laws and accounting rules and regulations. In addition, Ken has skillfully served on a number of boards both within the University and the community, and is a gifted numbers man.

The other individual who I would like to recognize is Steve MacCarthy, vice president of university relations. Steve will move on next month in his career as vice president for external relations at The University of Arizona, where he will assume a highly visible and expanded leadership role within that institution. They are lucky to have snagged him.

Over the last 11 years, Steve has served as Penn State's chief spokesperson and has done an outstanding job of leading our internal and external communications efforts through Public Information, Publications, Marketing and Advertising, Advancement Communications and Special Projects. Steve also took on additional duties a few years ago, managing my office and working with the Board of Trustees, and assisting me in every imaginable way.

His work handling issues of critical importance for Penn State and in effectively overseeing day-to-day administrative operations has been superb.

We will miss both Ken and Steve for their experience and expertise, and also because they were such valued and dedicated colleagues and exceptional members of the Penn State community.

I would now be happy to answer any questions that you might have.