The Run on the Bank at Blackstone Continues

As blog readers will know, UC invested $4.5 billion in Blackstone's real estate investment trust in exchange for a "guaranteed" 11.25% return. The idea seemed to be that if UC showed confidence in the trust, other investors would be calmed and the run on the bank would halt. But that seems not to have happened. From Bloomberg:

Blackstone Inc.’s $69 billion real estate trust hit a monthly redemption limit in January, as the firm’s crown jewel continues to wrestle with a line of investors seeking to get money out. Blackstone Real Estate Income Trust told investors Wednesday that it fulfilled repurchase requests for 2% of its net asset value. That accounted for about 25% of what investors wanted to pull out, according to a letter. January repurchase requests were north of $5 billion, according to Bloomberg calculations.

Blackstone President Jon Gray had previously cautioned that a chunk of redemptions in January involved unfulfilled requests from November and December. January requests were “in line with the aggregate unfulfilled amount for November and December,” Blackstone said in a statement Wednesday. “We expect it will take some time to work through this backlog and that flows will normalize over time as BREIT continues to deliver for investors.” ...

Full story at https://www.bloomberg.com/news/articles/2023-02-01/blackstone-s-breit-hit-monthly-redemption-limit-in-january.

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There are also reports of a management reshuffle at Blackstone in response to the financial turmoil:

https://finance.yahoo.com/news/blackstone-shakes-leadership-key-real-124500444.html.

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At the most recent meeting of the Regents' Investments Committee - as blog readers will know - all the questions focused on the trust's landlord-tenant relations. Nobody asked about the risks involved - risks that are actually demonstrated by the large 11.25% return. Of course, it is quite possible that all will go well and UC will benefit. But that is not the test that fiduciaries - which the Regents are - should be using. They should be asking about risk-return trade-offs and not waiting to see if all turns out to go well. If the trust overall earns less than 11.25%, in one way or another, the payout to UC has to come at the expense of the other investors. Is there a legal risk entailed? No one asked about that. Was anyone even there from the general counsel's office who might have been asked?

From the Internal Revenue Service: [excerpt]

Fiduciaries are in a position of trust with respect to the participants and beneficiaries in the plan. A fiduciary’s responsibilities include:

• acting solely in the interest of the participants and their beneficiaries;
• acting for the exclusive purpose of providing benefits to workers participating in the plan and their beneficiaries, and defraying reasonable expenses of the plan;
• carrying out duties with the care, skill, prudence and diligence of a prudent person familiar with the matters;
• following the plan documents; and
• diversifying plan investments.

The responsibility to be prudent covers a wide range of functions needed to operate a plan. Since you must carry out these functions in the same manner as a prudent person, it may be in your best interest to consult experts in such fields as investments and accounting.

Source: https://www.irs.gov/retirement-plans/retirement-plan-fiduciary-responsibilities.

Deleted Comments

Attentive blog readers may have noted from time to time that comments on postings are listed as deleted. We delete any comments that appear to be commercial messages.

A series of commercial comments have been attached to various blog postings. When yours truly notices such a comment, he deletes it. Possibly, this message will discourage such comments from being posted in the first place. However, I suspect that they are being produced by a machine.

Swimming in Scandal - Part 6

UC-Berkeley's swimming scandal - which we last covered in September* - seems to have concluded, although there could be litigation ahead. From the Mercury News:

It was a day Cal swimmer Leann Toomey thought she would never see. “Not in a million years,” Toomey said. Toomey, a former All-America swimmer at Cal, is one of more than 40 women who alleged they were bullied by Teri McKeever, Cal’s groundbreaking women’s swimming head coach. McKeever, the most successful female coach in swimming history and who led the Golden Bears to four NCAA team titles, was fired Tuesday after an eight-month university-commissioned investigation concluded that she discriminated against swimmers on the basis of race, national origin and disability, including using the n-word, and abused athletes in violation of university policy, the Southern California News Group has learned. “They finally heard us,” Toomey said.

The investigation’s heavily redacted nearly 500-page report based substantiated reports of bullying and discrimination over a period of decades first disclosed by the SCNG last May. After interviewing 147 people and reviewing 1,700 documents, attorneys hired by the university found “by a preponderance of the evidence that Coach McKeever discriminated against certain student-athletes, in certain instances, on the basis of race, national origin and disability.”. The attorneys also found McKeever’s behavior “toward some, but not all, student-athletes in some instances was abuse and violated University policy.” Cal athletic director Jim Knowlton, who has been heavily criticized by current and former Golden Bears swimmers for ignoring or dismissing credible complaints about McKeever’s behavior, apologized in a letter Cal swimmers Tuesday afternoon.

“I’m writing to inform you that today we have parted ways with long-time women’s swimming coach, Teri McKeever’” Knowlton wrote. “After carefully reviewing an extensive investigative report that was recently completed by an independent law firm, I strongly believe this is in the best interests of our student athletes, our swimming program, and Cal Athletics as a whole." ...

Full story at https://www.mercurynews.com/2023/01/31/breaking-news-cal-fires-teri-mckeever/.

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*http://uclafacultyassociation.blogspot.com/2022/09/swimming-in-scandal-part-5.html.

Cylinders at UC-Santa Barbara

We'll take a little break from the events of the day with a bit of information:

As you likely know, Thomas Edison made the first sound recordings when he invented the phonograph. Those recordings were made on cylinders rather than disks. But you may not know that the UC-Santa Barbara library has a collection of early cylinders - which continued to be manufactured for some time even when disks became the technology of choice. From KCLU:

They are the sounds of history. It’s music from the late 1800’s. Long before we had digital downloads, CD’s, cassettes, or even records, wax cylinder recordings were the first commonly used way of recording music, and the spoken word. UC Santa Barbara’s Library has one of the largest cylinder collections in the United States, with some 20,000 cylinders dating back to the late 1800’s.

"They're about the size of a soda can, they're made out of a brown colored wax, they're very fragile, and susceptible to mold," said David Seubert, who is the UCSB Library’s Performing Arts Curator. "But they were the first home recording technology where you could make a recording at home." He says for the last 20 years, they have been digitizing the recordings, and making them available for the world to listen to on the internet.

"That was the turning point for the collection," said Seubert. "That visibility that came from having so many accessible to the public, recordings that hadn't been heard for a century in many cases, more records came, and we just put more online." ... 

Full story at https://www.kclu.org/local-news/2022-04-11/long-before-records-wax-cylinders-played-music-ucsb-has-one-of-the-worlds-largest-collections.

Here is a link to a current sampling of the collection:

https://cylinders.library.ucsb.edu/playlists.php

And if you have doubts about the afterlife, here is William Jennings Bryan to reassure you on one of the recordings:

Or direct to https://www.youtube.com/watch?v=e2YbBxCQR4M.

How did Edison do it?

Or direct to https://www.youtube.com/watch?v=qGJR2DZBfF0.

Student-Worker Strike Repercussions - Part 5

The Sacramento Bee carries an article today about how departments are adapting to the cost implications of the recently-concluded student-worker strike settlement. 

...According to a survey by UAW Local 2865, academic workers from 89 departments across the UC system said they had learned of plans to cut graduate student enrollment next year. The union reported that many respondents said they’d heard undergraduate class sizes could increase, and research groups might shrink...

Full story at https://www.sacbee.com/news/equity-lab/article271899252.html.

The article contains a link to a PowerPoint slide show prepared by the physics department at UC-San Diego at:

https://drive.google.com/file/d/18GvaI5GEPyL_lBKocLJCDZzb5r3zMAW9/view

One slide in particular suggests the scope of potential reductions:

GSR = graduate student researcher; TA = teaching assistant; AR = academic researcher; PI = principal investigator.

UC-Berkeley's Emeriti Academy

UC-Berkeley created an "Emeriti Academy" at the beginning of the pandemic (although planning had begun before that period). The Academy is supported through the campus retiree center but has its own support staff person. Through the Academy on an interdisciplinary basis retired faculty are able to put on special courses, engage in various forms of mentoring, and undertake other activities.

As blog readers will know, UC is under pressure by the legislature and the governor to increase its enrollment of undergraduates. Thus, engaging emeriti faculty in that process adds resources that otherwise would not be present - and potentially keeps emeriti engaged with their campus in various ways. The Academy "model" is under preliminary consideration by UCLA.

A promotional video on the Berkeley Academy can be seen at:

Or direct to https://www.youtube.com/watch?v=PPMTQ5IsMAI.

An interview on the creation and operation of the Academy can be seen at the link below:

https://archive.org/details/gmt-20230127-185959-recording-1428x-840.

The LAO on Higher Ed

The Legislative Analyst's Office (LAO) is out with a publication on higher education (UC, CSU, community colleges) in the governor's January budget proposal. Some points:

1) It tends to treat UC and CSU together, despite the unique constitutional position of UC and the Regents.

2) It follows LAO practice of suggesting a kind of micromanagement of UC by the legislature. (Keep in mind that the L in LAO stands for Legislative and the LAO is a creature of the legislature.) The various goals for UC in the governor's plan are apparently not detailed enough for the LAO.

3) It focuses on the "core" funding in the governor's proposal (which rises under the "compact") and not so much on total funding (which declines in nominal - and especially, real - terms. 

With these three points in mind, you can read the entire document at:

https://lao.ca.gov/reports/2023/4664/Higher-Education-Overview-013123.pdf.