Category: fund raising

Regents Again Approve a UCLA Building Despite Cost Concerns

Blog readers will recall that at a prior Regents meeting, UCLA produced a very sketchy and high cost plan for a new medical building, a “teaching and learning center.”  The presentation was so sketchy and the costs were so worrisome for the Regents to ask for a revised plan.  At the Jan. 16 meeting of the Grounds and Building Committee, UCLA came back with a revised plan for a $104.7 million project – said to be significantly scaled back – with more details.

As with the earlier hotel project, UCLA apparently had offline meetings with Regents after the prior meeting (such discussions are referenced in the Jan. 16 proceedings) and persuaded them of the need for the building.  There was rather perfunctory questioning on Jan. 16 until Regent William De La Peña, an ophthalmologist, began raising issues again about cost.  He suggested that UCLA was excluding dollar costs from the total in calculating the dollar/square foot ratio and exaggerating the footage.  He argued that the comparable buildings cited for costs were built in good times and that nowadays construction firms would offer lower prices.  The idea that because donor dollars would be raised, the building was somehow freed from such cost worries was also viewed as a dubious proposition.

Yet at the end, the committee decided to approve the project with some vague understanding that despite the approval, UCLA would see if it could get lower bids or somehow lower the cost and tell the Regents about what it saved.  There was no suggestion that if cost savings were not found, the project would be unapproved.  

Once again, we have an example of costly projects being approved by Regents – despite reservations – because at the end of the day they have no independent oversight capability.  That lack is a general problem that goes beyond the UCLA hotel and medical projects.  As Regent De La Peña pointed out, if donor dollars were more efficiently used, more might be accomplished with them.

The UCLA medical project proposal is at: 
http://regents.universityofcalifornia.edu/regmeet/jan13/gb4.pdf

You can hear the meeting at which the project was approved at:
 

  

He said/she said official rebuttal misses the big issue on the Grand Hotel

An earlier post noted an op ed in the Daily Bruin by Laura Lake on the grand hotel project slated to occupy a location roughly across from Ackerman where a parking structure now sits.  A rebuttal op ed ran yesterday by Steve Olsen, UCLA’s chief financial officer (and a very capable individual).  Here is an excerpt:

The Meyer and Renee Luskin Conference and Guest Center will become a reality at UCLA in 2016 thanks to a generous gift from two alumni who share UCLA’s vision of creating a place where academics from all across the world can gather to share ideas, host world-class conferences and stay on our campus, experiencing the inspiration and vitality that are part of UCLA. Once built, it will be a boon both to the campus and the larger Westwood community.  It is unfortunate that Save Westwood Village and its co-president, Laura Lake, are trying to impede that progress with a lawsuit. In fact, they have a long history of opposing projects on campus and in the community that have ultimately gone on to successfully serve UCLA and Westwood Village. UCLA believes their lawsuit is utterly without merit and we fully expect to prevail…

The full rebuttal op ed is at:
http://dailybruin.com/2013/01/10/submission-claims-against-approval-process-for-luskin-conference-and-guest-center-lack-merit/

But the problem is that the rebuttal misses the larger key point.  There could have been alternatives, less grand to be sure, that would have met UCLA’s needs and would have been in total compliance with the wishes of the donors.  Instead, a grandiose  project was put before the donors and sold to them as the best use of their money.  There is no way that the donors would have approached UCLA and said what we really want is a grand hotel.  It simply didn’t happen that way.  The project was proposed to them by high level campus administrators.  No one has ever asserted a different history.

The original plan would have replaced the Faculty Center and was so grandiose that it led to a faculty outcry.  It was justified by a contrived and indefensible consulting report containing glaring errors.  As a result of the outcry, the project was then slightly scaled back and relocated.

The Regents were very skeptical of the revised project as the recording of the March meeting posted on this blog makes clear.  They were then subject to a campaign to convince them otherwise, the culmination of which was a letter – ostensibly spontaneously written by the donors – that essentially said it would be the grand hotel or nothing.  Not wanting to reject $50 million, the Regents approved the project and put the best face they could on their change of heart.  What choice did they have?  Again, all of this is in the public record: the letter, the Regents meetings (with the audio we posted), etc.

If you look at the Regents’ procedures for capital projects – a general topic noted in this blog in earlier posts – they in fact have no capacity for real oversight.  Campuses send up grand plans with Excel sheets that pencil out and pretty architectural drawings.  There is no independent auditing capacity at the Regents.  There is no mechanism to go back and review whether the promises made were actually delivered once the structures are built.  We are talking really big bucks here in an age where dollars are scarce.  If you want real oversight, well meaning, part-time Regents cannot provide it.  They would need professional auditors, independent of UCOP.

We noted in our previous post on the governor’s budget that he is very interested in efficiency and cost saving.  And he expresses an explicit concern about UC’s capital projects process.  The building and bond bureaucracies on the campuses are artifacts of an earlier age of UC physical expansion – which the state no longer will support.  That age ended in the 1990s, but the incentives to build-and-bond remain.  The needs of UC and UCLA are more in the human capital area now, not physical capital.  We need scholarships, research grants, endowed chairs, etc., far more than we need brick and mortar.

In a sense, the grand hotel and the Regents’ initial resistance to it should be the canary in the coal mine for the old approach.  But it is not clear that the message has gotten through.  It will require leadership – in Oakland and in Murphy Hall and at the Regents – to change the system. What the governor’s budget message is saying is that if the system isn’t fixed internally, there will be changes imposed from outside.  It may be painful to do the fixing internally and so far there has been little sign of it.  It will be more painful if the fix comes from outside UC.

UPDATE: The Olsen rebuttal also appears at:
http://today.ucla.edu/portal/ut/claims-against-approval-process-242540.aspx

UCLA Undergrad Philanthropy Course

The LA Times today carries a story about a fall quarter undergraduate philanthropy course in which $100,000 was distributed to various local charitable groups by students who research such groups. The course was taught by Dean Judi Smith.  

Back in May, the Daily Bruin carried a story about the course which was then being announced. 

You can find the original story at:

http://www.dailybruin.com/index.php/article/2012/05/new_ucla_course_offers_third_and_fourthyears_chance_to_donate_100000_to_local_nonprofits
 
The LA Times’ story about the outcome of the course is at http://www.latimes.com/news/local/la-me-ucla-philanthropy-20121224,0,5878820.story
 
UCLA put out two media releases about the course outcome earlier this month but apparently the LA Times reserved it as a holiday story.  See http://newsroom.ucla.edu/portal/ucla/a-class-above-ucla-students-distribute-241700.aspxand http://newsroom.ucla.edu/portal/ucla/learning-to-give-students-in-unique-241059.aspx 

The Money That Danced Away

USC recently announced a gift from philanthropist Glorya Kaufman to establish a new school of dance.  In a radio interview on KCRW, Kaufman said she had given money for renovation of a dance building at UCLA but the building wasn’t being used as intended.  Excerpt:

…Glorya Kaufman, the philanthropist funding USC’s new dance school, won’t reveal exactly how much money she’s putting into it. “That’s not the important part. The important part is what it’s doing … that’s why I’m withholding that amount,” she says. But whatever the pricetag, it’s large enough to pay for a brand new building and at least part of the faculty hiring and curriculum.

So who is Glorya Kaufman?  She is the widow of Donald Bruce Kaufman, one of the founders of the home building company now known as KB Homes, who has given tens of millions of dollars to dance programs in and outside of L.A in recent years, including a $20 million gift to downtown’s Music Center to host dance companies from around the world. She’s also given $6 million to Alvin Ailey American Dance Theater and $3.5 million to the Juilliard School in New York.  In 1999, Kaufman gave UCLA $18 million to renovate its dance building. She says she’s since been disappointed in UCLA’s dance program — an interdisciplinary one that’s combined with the World Arts and Cultures Department –and in how the school has used the building…

You can read the full transcript of the broadcast and listen to the program at:
http://blogs.kcrw.com/whichwayla/2012/12/glorya-kaurman-brings-dance-to-usc

First with the Japanese Garden affair and now with dance, UCLA seems to be establishing a reputation with donors of not doing what is promised.  We have noted in prior posts that gifts of human capital such as scholarships, endowed chairs, and research grants are more likely to leave a long-term legacy for donors than grand buildings which can someday be demolished or re-purposed.  Yes, you can try and protect legacies with contracts.  But, as noted, the Japanese Garden affair seems to suggest that putting it in writing doesn’t provide guarantees when it comes to physical facilities.

Radio Interview About David Geffen

Susan Lacy and David Geffen

PBS recently ran an “American Masters” episode about David Geffen who just donated $100 million to the UCLA med school.  [See yesterday’s post.]  Yours truly did not see the PBS program but there was a radio interview with the program’s director, Susan Lacy, aired on KPCC on Nov. 20.  One amusing anecdote is that Geffen got his first (mailroom) job by stating (apparently falsely) that he was a UCLA grad.  I’m sure he could have an honorary UCLA degree at this point if he wanted one.  The interview can be heard at the link below.

The Gift of Human Capital is Good News for UCLA and for the Donor

The Good News

By the time you read this posting, you will likely have heard or read about David Geffen’s gift of human capital – in the form of scholarships – to the UCLA med school. From the official UCLA media release: 

Entertainment executive and philanthropist David Geffen has established an unprecedented $100 million scholarship fund that will cover the entire cost of education for the very best medical students attending the David Geffen School of Medicine at UCLA (DGSOM). The school was named in his honor after his $200 million unrestricted gift in 2002. With this recent gift, Geffen’s total philanthropic support to UCLA exceeds $300 million, making him the largest individual donor to UCLA and to any single UC campus. The David Geffen Medical Scholarship Fund, conceived by Geffen and announced Dec. 13 by Dr. A. Eugene Washington, vice chancellor for health sciences and dean of the medical school, ensures that DGSOM will have students who graduate from medical school debt-free, allowing them to pursue lifesaving research and patient care without the economic burdens that restrict the choices of many young physicians and scientists…

Gifts of this type can be thought of as contributions of human capital.  Other forms include endowed chairs, research grants, etc.  Such gifts have no termination unlike physical capital gifts, which can someday be demolished.  Human capital gifts, therefore, are true legacy gifts.  Structures are not.

Yours truly was an undergraduate in the early 1960s at Columbia.  A prominent structure that had just been built at the time was Ferris Booth Hall, named after an investment banker.  Below is a picture of Ferris Booth Hall. 
The now-demolished Ferris Booth Hall

If you went to the Columbia campus today, however, you wouldn’t see Ferris Booth Hall.  Why? How could such an imposing structure disappear? Because it was torn down and replaced by another building named after someone else in the 1990s.  That is, a little more than three decades after the donation, the fruits of the large gift had disappeared.  

Proposed UCLA hotel-conference center
By the way, you might have noticed that Ferris Booth Hall looks uncannily like a certain UCLA hotel-conference center project.  So there is a lesson to be drawn: Massive structures may seem like legacy donations.  But they can disappear.  In contrast, human capital donations, properly endowed, will last.  Physical capital donations are Good News for the build-and-bond bureaucracies that depend on them for employment.  Human capital donations are Good News for the university and the donors.


Neon Tommy Report on UC Fundraising

Neon Tommy is an online student news service of the USC Annenberg School.  The service features a news item dated Nov. 28 which reviews UC’s “Onward” fundraising campaign.  That’s right; USC is reviewing UC.  What is interesting about the piece is what isn’t in it.  Back in the day – say, the 1950s or 1960s – any such story would deal with the impact of a public university competing with privates in fundraising.  Private universities would complain about the competition and say UC should be getting its funding from the state.  But despite the traditional USC-UCLA rivalry, no such view is mentioned in the story. The idea that UC should rely on the state no longer even occurs to anyone.

You can read the item at:
http://www.neontommy.com/news/2012/11/education-cuts-pushes-uc-onward

The UCLA Hotel Did Not Happen That Way

In a TV interview dated 7/13/12, UC President Mark Yudof talked about donations to UC.  He agrees with the interviewer, Conan Nolan of KNBC, that it is hard to explain to the public why in budgetary hard times, buildings are going up on campuses.  But he offers various explanations, none of which justify the proposed UCLA hotel/conference center.

One explanation is that the projects have been in the pipeline 5-10 years and the bonds have already been floated.  That is not true for the proposed UCLA hotel/conference center.  Bonds have not been floated.  And although the planning timeline is fuzzy due to contradictory statements from UCLA authorities, no one has suggested the project has been in the works for 5-10 years.  
Another explanation offered is that the construction projects underway on UC campuses are dorms and parking garages that pay for themselves.  That is not true of the hotel/conference center which – even with the overoptimistic business plan – has to be subsidized by both a donation and various costs shifted to parking and other sources.  

Most significantly, Yudof says that when donors absolutely insist on having a particular building constructed, UC reluctantly will go along.  The hotel/conference center was not something the donors came to UCLA and insisted on.  UCLA has never even made that claim.  The fact is that the project was proposed by UCLA to the donors and not the reverse.  The fact is that the hotel does not fit any of the Yudof explanations.
You can listen to the audio at the link below.  The statement about reluctantly accommodating donors who insist on a part building occurs just after one minute into the audio.

Bay Area Council Business Group Announces Fundraising Campaign for UC

From the Bay Area Council’s website:

A “PERFECT” WAY TO LAUNCH AN EFFORT TO SAVE THE UC SYSTEM

Recent years have been unkind to the crown jewel of California’s education system, the University of California.  Budget cutting knives have hit the UC system so hard that new studies show the state will be 1 million college-educated workers short of need by 2025.  This will not be good for our members and not be good for our economy.  Bay Area Council Executive Committee member Larry Baer, who happens to also be President of the San Francisco Giants, hosted a launch event Wednesday of “Onward California” with several Bay Area Council members, Jim Wunderman and UC President Mark Yudof.  Onward California is a very exciting new cause-related marketing campaign, modeled after the “Red campaign” or the “Susan G. Komen” campaign, whereby companies can align themselves with supporting the UC system, make purchasing decisions based on companies that support the UCs and work on many other benefits associated with the UC audience.  Onward California aims to raise $350 million in a five-year effort.  In this Year-One, they seek 10-20 brands to partner with.  After Mark Yudof and team presented the idea, the excited assembled corporate executives turned their attention to the field.  They watched Matt Cain pitch a perfect game.  If ever the UCs needed a signal that fate might support their campaign, this seemed to be it!…
Source: http://hosted.verticalresponse.com/308700/dc0295ff54/1474586391/b44554f2f4/
(scroll down)

Note: The Bay Area Council represents many high-tech firms with a need for educated employees.

Listen to Remaining Audio of Regents Meeting of March 29, 2012

A previous post on this blog noted that a defective file had been received for the third day session of the Regents after the Public Comments period.  Only part of that session was posted as a result, although it did include the decision officially to withdraw implementation of an exemption from the IRS pension cap.  The complete recording has now been received.  It includes the portion previous posted plus discussion of private budgetary support and fund raising, political advocacy including a request by students to support the governor’s tax initiative scheduled for the November ballot. 
There was also discussion of the current budget proposal and then the idea of a multiyear deal with the governor.  This time around – unlike previous compacts with governors – UCOP is apparently planning to involve legislative leaders.  However, there is no deal with anyone yet.  It was reported that legislative leaders would want “performance metrics” to be included in any deal.  Such metrics would include time to degree and the proportion of transfer students from community colleges (which the legislators think is too low). There was skepticism expressed by regents including the lieutenant governor about such a deal.  Concern was expressed that such a deal would be unenforceable.  There was discussion about whether such a deal should include a schedule of annual tuition increases. 
It was noted that the legislative leaders want UC to endorse the governor’s tax initiative unconditionally, i.e., without any agreement about how much funding UC would get from the initiative.
Click on the link below for audio of the Regents session: