Big Enough for You?

Our periodic updates on the UCLA Grand Hotel's "progress."

Listen to the Regents meeting of Sept. 17 (afternoon)

We continue our practice of recording and uploading the audio of Regents meetings, this one for the afternoon of Sept. 17.  The Regents won't maintain their recordings for more than a year.  So we hope to shame them into permanent archiving.  (So far, despite our doing this archiving for years, they have no shame.)

In the afternoon meeting, the UCSA student president spoke against tuition increases.  That presentation was followed by a discussion of the investment portfolio that pretty much tracked the discussion of last week at the Committee on Investments.  One thing of note was the announcement that UC would continue to invest in hedge funds, even though CalPERS was getting out of that business.  There was also discussion of the new venture capital fund (UC Ventures) being set up by UC to capitalized on university-based innovations.  There were a number of probing questions.  Why don't we get a share of the returns from such innovations if they are UC-based without having our own venture capital fund?  Why would faculty want to use UC Ventures as opposed to outside venture capital funds?  And sitting in the background was the general issue of risk; would a UC fund be good at figuring out which innovations had commercial potential.

If there is one lesson that seems to come out of the discussion of UC investments, UC Ventures, and the decision not to follow CalPERS in dropping hedge funds, it is that UC seems to be moving toward "active" management of its portfolio ("stock picking") and away from passive management (just buying the benchmark indices).  The presentation noted that while most of the returns basically follow from general market trends, there can be "value added" of a few extra basis points from active management.  Whether this is inevitably the case is debated in financial circles, i.e., can you consistently "beat the market" through active management?

The discussion then turned to the green investing report which did not include fossil fuel divestment.  The estimates are that in its $90+ billion portfolio, UC has about $10 billion in fossil fuels, $3 billion in firms singled out by fossil fuel divestment advocates, and $0.5 billion in just coal.  These figures include direct and indirect investments (the latter through outside money managers).  There was a push by the student regent for some statement in the report that coal divestment could be considered and that there should be more student representation in whatever planning was to follow.  The lieutenant governor (ex-officio regent) added indirect investment in guns - not an issue that was previously mentioned - and seemed to want some language about coal.  (California has no coal industry but does have a significant oil industry.)  At that point, UC prez Napolitano said that the Regents should just approve the report as written now and maybe there could be changes in November at the next meeting.  At that point, the report was approved "as is."

There followed a brief presentation on export controls and how those rules might apply to UC.  It was noted that some foreign universities can be seen as instruments of foreign governments and therefore payments to them could possibly run afoul of the rules.

Finally, the meeting ended with some discussion of NCAA rule changes by the Berkeley and UCLA chancellors.  (As blog readers will know, there has been noteworthy litigation on the status of student-athletes, some stemming from a court case filed by a former UCLA athlete.)  The lieutenant governor made a statement about low graduation rates of athletes at Berkeley and how the push for performance might be linked to the half billion dollar costs of the new campus stadium there. 

We will try to post the Sept. 18th meeting soon.  In the meantime, below is a link to the Sept. 17 afternoon session described above.

Regents Give to Chancellors' Relief to End Hard Times

The University of California Board of Regents on Thursday approved average 16 percent raises for four chancellors and hired a fifth at a 24 percent increase, amid discussions about increasing compensation across the board for its 10 campus leaders.

“Our chancellors have not had raises for years,” and they are paid far less than leaders of large public universities in other states, UC President Janet Napolitano said during a board meeting in San Francisco...

Full story at http://www.sacbee.com/2014/09/18/6718794/uc-regents-approve-new-chancellor.html

Hard Times (for chancellors) are coming to an end!

Read more here: http://www.sacbee.com/2014/09/18/6718794/uc-regents-approve-new-chancellor.html#mi_rss=Capitol%20Alert#storylink=cpy

Training Lessons and Lessons from Training

We noted in previous posts that the sexual assault policy recently adopted by the Regents could easily result in a "training" program that is a bonanza for some outside consulting firm.  As this item from Clemson suggests, other issues may also arise.

Clemson University has suspended its online Title IX training course after some students protested that it asked questions that were too personal, the Associated Press reports.  University officials will review the mandatory training, which deals with preventing sexual violence in the context of the federal gender-equity law known as Title IX. The course contained a survey that asked questions like “How many times have you had sex (including oral) in the last 3 months?”...

Full story at http://chronicle.com/blogs/ticker/clemson-suspends-sexual-violence-training-after-privacy-complaints/86331

Hmm!

One of the things being set in motion at the UC Regents is a UC linked venture capital fund that is supposed to provide a vehicle for UC to profit from on-campus innovations.

Where is the UC money coming from that might finance such an entity?  Bloomberg BusinessWeek indirectly suggests the answer.  UC may be backing out of similar off-campus funds:

The Regents of the University of California is looking to sell about $500 million in older private-equity fund stakes after valuations of the holdings jumped, according to two people with knowledge of the matter. UC Regents, which oversees the $91 billion pension and endowment funds of the University of California, hired Cogent Partners to manage the potential sale of venture capital and buyout fund stakes, said the people, who asked not be named because the information is private. The university is evaluating options as private-equity funds sit on almost $1 trillion in uninvested capital and valuations of companies rise, Jagdeep Singh Bachher, chief investment officer of UC Regents, said in an interview, declining to comment on the deal. “Private equity markets are exciting and not exciting at different times for different reasons,” said Bachher...

Full story at http://mobile.businessweek.com/news/2014-09-17/university-of-california-said-to-plan-pe-stak-sale

If you can't wait...

Waiting room

As noted in our previous post, it takes yours truly a bit of time to get the Regents properly recorded.  But if you can't wait to learn about the afternoon session of the Regents, there are some sources below:

No real surprises on the green investment report:

http://www.latimes.com/local/education/la-me-ln-uc-divest-20140917-story.html

No real surprises on the sexual assault report:
http://www.latimes.com/local/education/la-me-uc-regents-20140918-story.html
Quick background:
http://chronicle.com/blogs/ticker/task-force-gives-u-of-california-7-ways-to-improve-sex-assault-policies/86221

The main issue for faculty is whether the program will degenerate into yet another online "training" exercise - a bonanza for some outside consultant providing the program - and as we noted some time back in an earlier post, never checked for evidence of effectiveness:
http://uclafacultyassociation.blogspot.com/2014/07/evidence-based.html

Listen to the Regents' Sept. 17 morning meeting

As is our habit - and will be as long as the Regents maintain their habit of archiving recordings of their meetings for only one year - we present an indefinitely archived audio of the AM meeting of Sept. 17.  Link below.  We will be posting the afternoon meeting and the Sept. 18 meeting in due course.  Just a reminder that since the Regents don't make available a downloadable recording - even for one year - it is necessary for yours truly to record the sessions in real time.  So one hour of meeting requires one hour of recording (hence, the delay in posting).

As expected, the public comments section of the meeting featured complaints that the report (discussed in the afternoon) on green investing did not explicitly call for divestment in fossil fuels.  Collective bargaining issues that were raised included safety practices at UC, bargaining at Childrens' Hospital of Oakland (merging with UC-San Francisco), and the Richmond campus of UC-Berkeley.  The Gil Tract farm issue at Berkeley also came up.  There were complaints about anti-Israel programs at the Center for Near East Studies at UCLA by two speakers and a call for anti-Israel divestment by another.  The sexual assault report (discussed in the afternoon) also came up.

The UC prez talked about various items but noted that at the November meeting of the Regents, there would be some kind of policy set about out-of-state students (who pay full tuition and thus support the UC budget).  Our faculty rep emphasized shared governance and other academic values.

The UC-Davis chancellor discussed a food nutrition program sponsored by Mars Candy.  Yes, the Regents did note the oddity of a candy company sponsoring such a program.  Hey! Stop your Snickers!

There was discussion of UC's efforts at "climate neutrality"including use of solar power.  Then the meeting turned to the proposed UC budget for next year.  There were some spirited complaints about Governor Brown (who wasn't there) and the legislature (also absent).  And there were complaints about CSU getting its pension costs covered but not UC.

Side note: UCOP's presentation noted various costs which it put under "mandatory" including what was said to be $30 million for faculty "merits."  There is good news, mixed news, and bad news here.  The good news is that the powers-that-be are now saying that faculty merit increases must continue, Good Times or Hard Times.  (Isn't that what "mandatory" means?  But see below.)  The mixed and bad news comes from the characterization of merits as a "cost."  In a steady state, merits should cost zero.  Take a simple example.  Suppose the faculty pay system consisted of two steps, 1 and 2.  Let's say there are 100 faculty in step 1 who earn, say, $100 and each year ten of the step 1 faculty go to step 2, ten retire from step 2 and ten new faculty are hired at step 1.  Let's say those in step 2 earn $120, i.e., a merit increase raises a faculty member's salary by 20%.  You could say that the (gross) cost of the merits is $20 x 10 faculty = $200.  But because of the new hires and retirements, the average salary remains $110, before and after the merits are granted.  (So the net cost of merits is zero.)  That is, so long as the proportion of faculty at the two steps is constant, there is no change in the overall payroll costs of faculty in both steps.  Of course, the university is never in a precise steady state.  Sometimes there will be a surge of new hires, pulling the average salary down.  Sometimes, the faculty will age due to slow retirements and the average salary will rise.  The issue is whether or not, by claiming the cost of merit is $200, we somehow extract an extra $200 from the state.  However, it is unlikely that the state Dept. of Finance is totally unaware of the arithmetic.  But maybe the legislature isn't so aware so I can't completely discount the possibility that some extra money results.  That's the mixed news.  The bad news is that if the powers-that-be insist that merits are inherently costly, in some future budget crisis, they will forget the "mandatory" label and deny them to faculty.

The capital budget was also discussed, including a list of projects.  No questions were raised on any individual project.  Not one.

Finally, the student regent-elect sent a written message (read by the student regent) which essentially opposed tuition increases.  However, he also said the Regents should consider limiting enrollment and said that if the climate actions actually cost something, no cost should be shifted to students.

You can hear the meeting at the link below: