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Monday, January 29, 2018

CSU Announces New President, Search Firm Likely Violated Contract Terms

Posted By on Mon, Jan 29, 2018 at 4:11 PM

click to enlarge Harlan Sands - CLEVELAND STATE UNIVERSITY
  • Cleveland State University
  • Harlan Sands
Update: Harlan Sands, the 54-year-old Vice Dean and CFO of the University of Pennsylvania's Wharton School of Business, will be CSU’s next president.

Sands was selected from a pool of 17 candidates furnished by the executive search firm Wheless Partners. Eight candidates were interviewed by a presidential search committee. Three finalists were then interviewed by the university’s board of trustees. All interviews for the publicly funded position were conducted at the Jones Day law firm, which volunteered space.

Sands, who has only been at Wharton since March, 2017, will replace current president Ron Berkman in June.

In comments Monday, Sands said that CSU was “uniquely positioned to transform lives” and that he was humbled to accept the position.



Original Story:
Cleveland State University has invited local media to a press conference Monday afternoon, where officials will make a "major announcement" regarding the future of the University. CSU would not say so explicitly, but a spokesman more or less confirmed our hunch that the announcement will name the University's next president. CSU's current president, Ron Berkman, will retire in June. 

The announcement comes during ongoing reporting by Scene about Wheless Partners, the Alabama-based executive search firm with whom Cleveland State University contracted to find Berkman's replacement. Though Scene cannot say so conclusively — we have outstanding records requests with the University — Wheless Partners appears to have violated the terms of its contract.

Documents already obtained via public records requests show that Wheless billed CSU for nearly $27,000 in reimbursable expenses, though the contract allowed for a maximum of only $15,000. Wheless also failed to include important details in its itemized invoices, including hours worked, which were required in the contract's language. Furthermore, Wheless sought and received reimbursement for travel expenses incurred before the contract term began and for those that may have not been expressly pre-approved by the university, as required by the contract. 

The agreement in question, effective July 31, 2017, was signed by both Mike JR Wheless, the Division President and Managing Director of Wheless Partners, and Stephanie McHenry, CSU's VP for Business Affairs and Finance.

The contract's term is officially up on July 31, 2018, but CSU Chief Marketing Officer Robert Spademan confirmed to Scene that the Wheless work was complete as of mid-January, and that the University would likely make an announcement about its next president "in February, March at the latest."

That announcement appears to have been pushed up.

Ronald Berkman has been President of CSU since 2009. He announced last year that he would retire this June. Like other University Presidents nationwide, Berkman is the recipient of lavish pay and perquisites.

In addition to his $450,000 annual base salary, he has received an annual $60,000 "retention bonus," and a merit-based bonus worth 25 percent of his base salary each year (now good for $112,500).

Berkman also received, at taxpayer expense — CSU being a publicly-funded university — residence at an $800,000 Cleveland Heights 13-bedroom colonial, where he relocated after an initial residence in Shaker Heights and an aborted foray into urban living at The 9. The widely circulated explanation for Berkman's relocation from downtown to Cleveland Heights, in 2016, was that the apartment was too small for entertaining.

CSU's Rob Spademan said that the next president will occupy the Cleveland Heights home as well. 

According to the terms of the presidential search contract, CSU was to pay Wheless a total amount not to exceed $114,000, $99,000 of which would be a flat fee paid in three installments. Up to $15,000 would cover reimbursable expenses, which would include travel, communication and candidate development expenses.

Three of the four invoices that Wheless submitted to CSU were for $33,000 each, in accordance with the outlined flat fee structure. The fourth sought a remittance of $26,754.17 in reimbursable expenses, the bulk of which was an $18,206.59 charge for "Candidate Sourcing / Resource Services."

The contract stipulated that each invoice "shall contain an itemization of the work performed, including dates the work was performed and total hours worked."

Though it is the costliest item on the reimbursement invoice, the  "Candidate Sourcing / Resource Services" charge includes neither. 

The invoice additionally includes seven dated travel expenses, one by Michael J.R. Wheless and six by senior partner Lisa Marks. Two of Marks' trips, one on July 13, 2017 and one on July 17, 2017, occurred before the contract term began. The contract stipulated that "only travel expenses that are pre-approved in writing by [the] University will be reimbursed."

CSU has not yet filled records requests that we filed seeking correspondence related to the Wheless travel, so we cannot report conclusively how many, if any, of the trips were pre-approved. Lisa Marks' two July trips, however (one for $479.90, and one for $901.34), could only have been retroactively approved by the University.) 

It's also unclear if CSU failed to enforce the contract in another way. The contract states specifically that if reimbursable expenses near the $15,000 threshold, "the parties shall have a conversation regarding such expenses and amend the agreement, if necessary, in writing."

CSU has not yet provided documentation of a contractual amendment.

The presidential search committee was chaired by Bernie Moreno, the local auto sales magnate who also chairs CSU's board of trustees and who made news, last week, for a $1 million donation that will establish the "Bernie Moreno Center for Sales Excellence" at the University.

Despite what may have been engagement by the Moreno-led search committee, the hunt for Berkman's replacement was conducted in secret. This is troubling, because public funds were used to pay the search firm, and public funds will be used to pay the salary and benefits of the university's top executive. It's unknown if there was even a shortlist, for example, and what methods were used to check the backgrounds and otherwise vet possible finalists.

Last month, in Georgia,  Kennesaw State University's president Sam Olens departed after only 14 months on the job. He was the only candidate considered for the position, despite having no higher education experience. He was hired by an executive search firm.

In an op-ed for the Atlanta Journal-Constitution responding to the situation, attorney Frank LaMonte argued that public universities were joining a "shortsighted race to the bottom" in competing to see who could be the most secretive in filling their top positions.

"The reason for this secrecy stampede is the dominance of executive search firms," he wrote, "which reap six-figure windfalls for placing candidates from their stockpile of resumes. The less public scrutiny, the better these headhunting firms like it. When only the name of the winner is announced, no one knows which candidates were turned down — which leaves the headhunters free to to peddle the rejects to other universities ... You'd put more diligence into hiring a dog-sitter than colleges put into hiring presidents."

This story will probably be updated.

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