Report: Next PSU president nixed after background search

Penn State University scrapped plans to name its new president last week after questions arose about whether the candidate was padding his state pay with money from companies, a New York newspaper is reporting.

The Times Union of Albany, N.Y., reported Tuesday evening that David R. Smith, president of the State University of New York’s Upstate Medical University, had been expected to be announced as Penn State’s 18th president until questions about his outside pay came to light.

The newspaper said its information came from two New York officials familiar with the situation.

Smith was placed on paid leave Tuesday while the matter is under review, the Times Union reported.

“If the story is true, then the Penn State Board of Trustees made a wise decision to postpone the election of the candidate,” Trustee Anthony Lubrano stated in an email to the Mirror late Tuesday night. “However, as I was not briefed on the details of the candidate, I cannot confirm the veracity of the story.”

The Times Union reported it obtained a letter stating that SUNY is reviewing all sources of Smith’s compensation after being contacted by Isaacson Miller, the search firm that has Penn State and SUNY as clients.

According to reports, Smith arranged for two companies – Medbest Medical Management Inc. and Pediatrics Service Group LLP, both linked to the medical school – to provide him with additional income.

SUNY is paying Smith $315,000 in salary, a $60,000 housing stipend and $250,000 from the SUNY Research Foundation, the Times Union reported.

The newspaper cited a letter from SUNY Chancellor Nancy Zimpher to Smith stating he accepted $349,295 from outside sources without SUNY’s approval and suggesting that Smith likely will have to make “substantial repayments.”

Sources told the Times Union that several members of Smith’s executive team at Upstate Medical also might have been receiving unapproved outside compensation as well.

Lubrano has been critical of the lack of transparency during the interview process as not all the board members were included.

He said Tuesday night, “This is another example of why the full board should be engaged in discussions with the finalists for the next president of Penn State.”

Last week, Penn State scheduled a board meeting to vote on a new president but abruptly canceled the public session a few hours later. The board said after a private meeting on Friday that it needed more time to consider candidates.

Penn State Board Chairman Keith Masser said the trustees will not publish a list of the presidential candidates under consideration in order to protect their confidentiality.

Twelve trustees have been working with an executive search firm to find a successor to President Rodney Erickson, who said he will retire by June 30.

In the wake of the canceled meetings last week, even Trustee Peter Khoury, who is on the trustees’ presidential selection committee, said he did not know the reason for the delay.

“I don’t know why it was canceled, but maybe it was an opportunity [for other board members] to ask questions,” he told the Mirror at the time. “It is frustrating, I think, for everyone.”