University of California regents voted Thursday to limit top administrators to two outside paid jobs and add another layer of approval to ensure moonlighting doesn’t pose a conflict of interest or a “reputational risk” to the university system.
The regents approved the changes without opposition during their full board meeting in San Francisco. The new restrictions come after UC Davis Chancellor Linda P.B. Katehi drew criticism this year for accepting past board positions with a textbook publisher and for-profit DeVry Education Group.
The new policy, initially proposed by UC President Janet Napolitano, would require administrators to explain the benefits an outside job or paid board seat would bring their campus and UC, as well as a statement that spells out how much time the job would require. The new policy adds a mid-year review of outside jobs, as well as a review panel for questionable applications.
“The changes we are recommending today would be among the most careful and restrictive in the nation,” said UC regent Bonnie Reiss, who chairs the board’s Compensation Committee.
Regents approved the new policy after The Sacramento Bee reported in March that Katehi accepted board seats with DeVry Education Group as it faced a federal investigation for allegedly misleading students. She did not receive final sign-off from Napolitano before accepting the seat that paid $170,000 annually in stock and salary. Katehi resigned that position within days under pressure from Napolitano, Assemblyman Kevin McCarty, D-Sacramento, and watchdog groups.
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The Bee also reported the chancellor had previously received $420,000 in income and stock over three years as a board member for John Wiley & Sons, a publisher of textbooks, college materials and scholarly journals. Critics said that represented a conflict because students and state leaders were seeking to reduce the cost of textbooks and use free alternatives.
She pledged $200,000 toward a UC Davis student scholarship in March but has not donated the money and could rescind her pledge depending on the outcome of the UC investigation, her private spokesman Larry Kamer said earlier this month.
In 2014, the most recent year data are available, 49 top UC had outside jobs as consultants, advisers, speakers and corporate board directors. The exact compensation is hard to determine because the report, which lists income from cash and stocks, doesn’t always include the value of stock options.
Eight senior managers with outside jobs, including Katehi, held three or more outside paid positions in 2014. That would exceed the proposed policy’s maximum of two, though UC will only apply the limit when current administrators seek new positions rather than ask them to step down from existing ones.
Big step for the Regents?
The biggest earner appears to be Mark Laret, chief executive officer of UC San Francisco Medical Center, who earned $589,820 serving on the boards of medical firms Nuance and Varian, according to UC records. In 2014 Laret earned $1.59 million in salary and other compensation from UC.
Katehi has been onpaid administrative leave since April 27as outside investigators look into allegations of misusing student funds, nepotism and misstating her role in hiring online image consultants. She has denied any wrongdoing.
Kamer would not comment Thursday on the UC changes.
Reiss said news stories led state legislators to hold a hearing on the outside compensation policies of California’s public university policies in April. The state budget this year also included language directing UC leadership to review and make changes to the policy.
“Our Board of Regents and our compensation committee took this very seriously, as we take our relationship with state leaders and we take our relationship with the public very seriously,” Reiss said.
Despite that, she said conflicts of interest among senior management are “neither prevalent or rampant” in the UC system. In her seven years on the board there have only been two stories that questioned a conflict of interest and those involved only two of UC’s senior staff, she said.
To come up with its recommendations, the committee reviewed the policies of other U.S. universities. It could not find any that banned moonlighting and very few that limited chancellors and other senior managers from serving on boards and receiving outside compensation, she said.
“We agree that an outright ban is an overreach and could hurt UC’s ability to attract talent and would deprive UC of the benefits that some of these affiliations bring,” Reiss said.
The proposed policy applies only to the university’s 165-member Senior Management Group, which includes Napolitano, campus chancellors, medical center chief executive officers and directors of national laboratories, as well as some directors that report directly to them. Similar policies for staff and faculty won’t be revised, according to UC officials. Senior managers who already hold more then two paid outside positions will be allowed to continue in those positions.
“I’m extremely comfortable with this,” said Regent Sherry Lansing. She said that she had to go through the same process as a corporate executive and that it helped her to avoid unintentional errors. “It’s not a difficult process. It’s a common process.”
The outside professional activities policy for senior management was last revised in 2010 after public outcry over the extensive activities of some campus chancellors. Faculty policies underwent a major revision in 2014, and there are no current plans for additional revisions, Klein said.