Something to Think About While Waiting for the Governor and Regents

Snow at UCLA in 1932

The governor is due to give his State of the State address today. What, if anything, he will say that might have a connection to UC and higher ed is unknown. The Regents are also meeting today (and tomorrow).

Inside Higher Ed today is running a list of average annual snowfalls (in inches) at selected universities. So whatever happens at the State of the State or the Regents meeting (or if you have followed weather reports for other parts of the country today), remember that things could be worse:

1. Michigan Technological University: 200
2. Syracuse University and SUNY Oswego: 124
3. University of Rochester: 99
4. State University of New York at Buffalo: 94
5. University of Minnesota at Duluth: 86
6. University of Vermont: 81
7. Southern New Hampshire University: 69
8. Western Michigan University: 67
9. Cornell University: 65
10. University of Alaska at Fairbanks: 62

Full story at http://www.insidehighered.com/quicktakes/2014/01/22/10-snowiest-college-campuses-sort

[youtube http://www.youtube.com/watch?v=RWTQqpYBHQ8?feature=player_detailpage]

UPDATE: Yours truly was able to hear most of the governor’s speech. Why “most of”? Because the calchannel system evidently was overwhelmed by folks tuning in on the web. So, again, a cautionary note on the technology solutions to higher ed costs is warranted. The speech did mention UC in connection with research. Other than that reference, however, the governor focused on fiscal prudence, debt, drought, K-12 funding changes that divert resources to disadvantaged students, “subsidiarity” (mainly local assumption of prisoners), environment and greenhouse gas, and poverty.

At the same time the governor was speaking, the UC Regents web broadcast also had problems. Parts of the public comment session I heard involved fossil fuel divestment, complaints about anti-Israel lectures and course credit for such lectures, and sexual assaults at Berkeley. I heard part of UC president Napolitano’s report. Among the topics: cap on UCOP staff, consultants, travel. There was a reference to development of a new funding model for tuition to be unveiled in the spring and “efficiency” initiatives. Academic Senate chair William Jacobs spoke mainly on UC undergraduate programs.

The Committee on Finance heard a report on federal budget issues, particularly the squeeze on research funding. Federal funds also flow to UC through student aid, Medicare at the hospitals, etc. The latest budget deal in Washington was seen as a positive. As far as the state budget proposal of the governor is concerned, UCOP noted (as it has before) the CSU’s pension is taken car of by the state via CalPERS but not UC’s. It was noted that the governor now lists the UC pension as part of state debt and the Legislative Analyst is moving toward that position. Since the Leg Analyst is projecting more dollars than the governor, perhaps – at the time of the May revise – UC might get more funding and put some of it in the pension fund. The tuition freeze was noted as well as lack of an explicit enrollment growth factor in the governor’s budget.

The Committee on Health Services looked at a UCLA health take-over of a program previously run by USC. It’s not on the agenda documents, as far as I can tell – at least as of today. There is also a proposal for a joint lab in China that would conduct clinical trials. Significant skepticism was expressed by regents about the risks entailed and having UCLA’s name linked to an outside entity – a private firm. [Only one regent seemed to want to ask whether clinical trials in China are subject to the same kinds of controls, regulations, and human rights protections, that exist in the US. UCLA says it will apply US standards.]

A review of the nuclear labs followed. It was reported that past-due pension contributions for the labs had been partly paid and that the rest is expected due to the Washington budget deal.

Note: There is a notice on the governor’s website that he will attend the afternoon session of the Regents meeting. http://www.gov.ca.gov/news.php?id=18374

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Yours truly is teaching this quarter and his ability to record and post audio of Regents meetings is limited by other commitments. Nonetheless, it will (eventually) be done because the Regents continue their policy of archiving meetings only for 1 year. Presumably, calchannel will have a link to a recording of the governor’s speech so you should have access to that event soon.

New and Old at the UC Regents

The Regents in 1964

1-17-2014

SACRAMENTO – Governor Edmund G. Brown Jr. today announced the following appointments.

Richard C. Blum, 78, of San Francisco, has been appointed to the University of California Board of Regents effective March 2, 2014, where he has served since 2002 and was chair from 2007 to 2009. Blum founded Blum Capital Partners L.P. in 1975 and serves as chairman and president. He has been chairman of the CB Richard Ellis Group Inc. Board of Directors since 2001. Blum has been a member of the University of California, Berkeley Haas School of Business Advisory Board since 1984 and was chair from 2012 to 2013. He is a member of the Federal Reserve Bank Economic Advisory Council and the National Democratic Institute’s Board of Directors and an appointee to the President’s Global Development Council. Blum is a founding member of National Geographic’s International Council of Advisors and founder of the American Himalayan Foundation and the Blum Center for Developing Economies at the University of California, Berkeley. He is the Honorary Consul of Nepal and a member of the board of trustees at the Brookings Institution, the California Academy of Sciences, the Carter Center, the Glide Foundation, the Wilderness Society and Central European University. Blum earned a Master of Business Administration degree from the University of California, Berkeley. This position requires Senate confirmation and there is no compensation. Blum is a Democrat.

Monica Lozano, 57, of Los Angeles, has been appointed to the University of California Board of Regents effective March 2, 2014, where she served from 2001 to 2013. Lozano has held multiple positions at ImpreMedia LLC since 2004, including chief executive officer, chair of the board and senior vice president of newspapers. She has held multiple positions at La Opinion L.P. since 1985, including owner, chief executive officer and publisher. She was a member of the California State Board of Education from 1998 to 2001. Lozano is a director at the Bank of America Corporation, the Walt Disney Company, the Rockefeller Foundation and the Weingart Foundation. This position requires Senate confirmation and there is no compensation. Lozano is a Democrat.

Norman Pattiz, 70, of Beverly Hills, has been appointed to the University of California Board of Regents effective March 2, 2014, where he has served since 2001. Pattiz has been chief executive officer of Courtside Entertainment Group since 2011. He held multiple positions at Westwood One from 1976 to 2010, including founder and chairman. Pattiz was an appointee to the Broadcasting Board of Governors of the United States of America from 2000 to 2006. He is a member of the Council of Foreign Relations and the Pacific Council on International Relations. This position requires Senate confirmation and there is no compensation. Pattiz is a Democrat.

Richard Sherman, 61, of Pacific Palisades, has been appointed to the University of California Board of Regents. Sherman has been chief executive officer at the David Geffen Company since 1992. He was a partner at Breslauer Jacobson Rutman and Sherman from 1977 to 1992 and a senior accountant at Peat Marwick and Mitchell from 1973 to 1977. Sherman is a member of the Aviva Family and Children’s Services Board of Directors, the Geffen Playhouse Board of Directors and the David Geffen Foundation Board of Directors. He was a member of the Dreamworks Animation SKG Inc. Board of Directors from 2008 to 2013. Sherman earned a Master of Business Taxation degree from the University of Southern California. This position requires Senate confirmation and there is no compensation. Sherman is a Democrat.

From http://www.gov.ca.gov/news.php?id=18369

New appointment is in italics. Lozano was on the Regents before but her appointment expired in 2013. So she is being returned after a hiatus. Blum is husband of U.S. Senator Feinstein.

The LA Times has the story at http://www.latimes.com/local/la-me-uc-regents-20140118,0,3872109.story

Is the ball still in their court or has the train left the station?

Hey! Let’s rebuild the old stadium!

Sorry to mix metaphors. But Inside Higher Ed today has a long story on Berkeley athletics which have recently been in the news for low graduation rates and problems in funding a stadium upgrade. A white paper from the Berkeley Center for the Study of Higher Education suggests that the program is running as an autonomous and relatively uncontrolled business operation. It is written by a former vice chancellor – who can now tell all -and a Berkeley grad student.

See http://cshe.berkeley.edu/sites/default/files/shared/publications/docs/ROPS.CSHE_.12.13.Cummins%26Hextrum.CalAthletics.1.6.2014.pdf and http://www.insidehighered.com/news/2014/01/08/highlighting-berkeley-paper-explores-academic-damage-expanding-independent-athletics

The issue is whether control can be retaken or whether – another metaphor!! – the ship has sailed. Would the Regents like to discuss this matter at their upcoming January 21-23 meeting? The stadium at least does involve a grand capital project they approved (and which seems not to have worked out as planned; who would have thought?). Anyway, it’s just a suggestion the Regents might want to consider. But maybe they figure that the ball is no longer in their court and the train has left the station.

Or maybe the ship has sailed:
[youtube http://www.youtube.com/watch?v=OqVrLdN7d68?feature=player_detailpage]

Follow Me, Says Crane

We have previously reported on a proposed ballot initiative on public pensions in California that, as written, would cover UC. There appears to be money behind the campaign for this initiative. Another indication of such money comes in the form of a letter by former UC Regent David Crane on CalSTRS. Crane was appointed by Gov. Schwarzenegger but the appointment was not endorsed by the state senate and thus ended.

In any event, the letter from Crane addressed to Gov. Brown – which his website says in today’s Sacramento Bee – seems to be part of the larger campaign for the initiative. It was circulated on the website of (and by emails from) a group associated with Crane – Govern for California: [excerpt]

…Governor, it’s long past time to act. By not addressing CalSTRS, California has already become the largest “deadbeat” state government, a term coined by The New Yorker to characterize governments not even paying minimally required pension contributions. Every day of additional delay adds millions of dollars to the next generation’s burden. If you don’t act, you are effectively defunding their classrooms, cutting their public services, and raising their taxes…

You can find the full letter at:
http://hosted.verticalresponse.com/990407/ff4a77211d/1660549029/358ab184e1/
or
http://www.governforcalifornia.org/an-open-letter-to-governor-jerry-brown/

Oddly, a search in today’s Bee (under Crane, CalSTRS, opinion, viewpoint, letters to the editor, etc.) did not find the letter. It did find other earlier Crane-related items. Among them was a recent article indicating Crane was involving himself in state legislative contests related to his pension interests. See:

http://www.sacbee.com/2014/01/03/6045328/pension-activists-back-democrat.html

As we have noted in past postings, the chief UC interest in this matter is to be excluded from the proposed initiative and to leave funding of the UC pension to the university and (current) Regents.

UPDATE: Crane in a later post on Fox and Hounds no longer claims the letter appeared in the Bee. See http://www.foxandhoundsdaily.com/2014/01/political-leaders-must-focus-calstrs-funding-crisis/

Upcoming Events in January

Under the state constitution, Governor Brown will release his budget proposal for 2014-15 at the end of next week. In the past, bits and pieces were often leaked to the news media ahead of the formal announcement. So far, that hasn’t happened – which might just mean that with the current budgetary calm, there is nothing shocking to leak, including about the UC budget. There will also be a “state of the state” address to the legislature by the governor which will touch on whatever the governor has in mind – who knows? – in this election year.

The UC Regents will be meeting Jan. 21-23. However, the agenda items are not yet posted and probably won’t be posted until a week or so before the meeting.

As we have noted in earlier posts, Chancellor Block will be under pressure to say something about the Israel boycott undertaken by a group called the American Studies Assn. Other UC chancellors and the UC prez have come out against the boycott as have heads of other universities. See http://uclafacultyassociation.blogspot.com/2013/12/clock-is-ticking-towards-uclas.html. The latest news on all of that – as of today – is at http://www.insidehighered.com/news/2014/01/02/presidents-denounce-academic-boycott-israel-some-campuses-faculty-and-presidents. One can imagine the issue coming up at the Regents since the student-regent-elect has pushed for Israel divestment (not the same thing as an academic boycott).

That’s the outlook but you never know what can happen:
[youtube http://www.youtube.com/watch?v=nsSbhdo0kQI?feature=player_detailpage]

Events May Divert the Governor from MOOCs, etc., at the Regents in 2014

Jerry Brown will almost certainly be running for re-election in 2014. It doesn’t look like there will be much of a contest but there will be at least some effort devoted to the campaign.

But apart from re-election, Brown is facing some “legacy” problems. During his first iteration as governor, he wasn’t big – to say the least – on grand infrastructure, unlike his father Pat. However, this time around, there is the high-speed rail project and the water tunnel project, both grand and expensive. These projects are analogs to his dad’s freeways and state water project.

The high speed rail is running into problems of financing and negative court rulings. The water project also has financing and environmental obstacles. Currently, dry weather is causing water rationing in the Sacramento area. But it is unclear that the proposed water tunnels would address that issue. Indeed, the drought could raise the issue – very sensitive in the Bay Area – of diverting water to southern California.

Of course, the third legacy of Father Pat was higher ed expansion in the form of the Master Plan. But we are not going to be building more campuses of UC or CSU in the immediate future. And tuition isn’t going up in an election year.

So UC may get a break from gubernatorial attention in 2014. Brown wouldn’t want his rail and other plans to end like this:

Core Competencies for Regents?

Yours truly noted with interest this item from the State Worker blog of the Sacramento Bee:

CalPERS’ governing board aims to up its collective understanding of everything from financial statements to financial markets with a new set of “core competencies” that will help shape education and training. The policy, which the board is imposing on itself, also requires board members to have familiarity with topics ranging from health care and pension plans to board governance and communication…

Full story at http://www.sacbee.com/2013/12/05/5974549/calpers-sets-knowledge-standards.html

Now if the Regents were to adopt such a policy, what would their core competencies be? Pension funding? Capital projects evaluation skills? Business plans? Just a thought!

But maybe they know all that:

Read more here: http://www.sacbee.com/2013/12/05/5974549/calpers-sets-knowledge-standards.html#storylink=cpy

We’re Not Alone in Pointing to the Risks of Open-Ended Capital Projects

Vannevar Bush

From: The Endless Frontier: Reaping what Bush Sowed?

by Paula Stephan (pp. 33-34)*

NBER working paper 19687 (Nov. 2013) Excerpt:

Overexpansion of research facilities

In recent years, universities have gone on a building binge, constructing a substantial amount of new research space which led to a 30 percent increase in net assignable square feet for research between 2001 and 2011. Most of this increase is for facilities in the biological, biomedical and health sciences—a response of universities to the doubling of the NIH. Some of this space has been paid for by private philanthropy. At MIT, for example, David Koch contributed $50 million to the construction of an institute for cancer research that bears his. But in a number of instances, campuses did not have the funds to construct the new buildings but instead did so by floating bonds, assuming that the debt would be recovered through increased grant activity engendered by better facilities housing more research-active faculty. A 2003 survey of medical schools by the AAMC found that the average annual debt service for buildings in 2003 was $3.5 million; it grew to $6.9 million in 2008. The brakes were applied to the NIH budget beginning in 2004 and in constant dollars the NIH budget shrank by about 4.4 percent between 2004 and 2009. It has continued to decline since, with the exception of ARRA. Success rates for NIH grants, as we have seen, declined, and universities found that revenues from grants did not live up to their expectations. The situation is not likely to improve in the near future given sequestration. This means that the only way a university can hope to cover the costs of these buildings is to outcompete over other academic institutions in bringing in grants. But, as Princeton’s President Shirley Tilghman notes, “this just can’t be true for every academic medical center. It does not compute.” Moreover, given that very top institutions have continued to maintain their share of NIH funding, the pain is most likely to be felt by institutions that historically have not received top funding. Somebody, especially at lower-tiered institutions, is going to have to pay for this substantial expansion and it is unlikely to be the federal government. It is more likely to come through a reallocation of resources within the university…

Full article at www.nber.org/papers/w19687.pdf

Note that while for a time, UC may be one of the more protected upper-tier institutions, continued squeeze on the federal budget will ultimately not insulate us. And someone will have to pay off bonds floated on the hopes of continued revenue. Anyone in UCOP or at the Regents paying attention?

*The Bush referred to in the title is not George H.W. and not George W. It is Vannevar Bush, FDR’s science advisor, who wrote a report entitled “The Endless Frontier” in 1945. His photo is above.

Lessons from Berkeley’s White Elephant Stadium for UCLA, the Regents, and UC?

People keep noticing Berkeley’s White Elephant money-draining stadium – one of the grand capital projects that the Regents routinely approve based on pretty slides and business plans offered by the campuses. Peter Schrag in the San Francisco Chronicle today ties the low graduation rates of Berkeley athletes with the stadium:

…Fueling the… issue is the chronic matter of cost – what the university kicks in to the sports program – and what someone called “its gold plated” spending. Brian Barsky, a Berkeley computer science professor and vocal critic of the athletics program, says between 2003 and 2011, athletics “drained campus coffers of more than $88 million that could have been used instead to support the university’s core mission.” Cummins and Hextrum talk about “accumulating deficits over nearly 20 years totaling some $170 million at a time when the campus faced substantial staff layoffs and furloughs.” [Sandy Barbour, Berkeley’s director of athletics,] claims those numbers are flat wrong. With the exception of one year, she said, there have been no deficits. But there’s no question that its football and basketball coaches, like other big time coaches, earn 10 times as much as the average full professor, or that Barbour gets paid more than the chancellor, or that the sports program isn’t self-supporting. More important still is the huge debt UC Berkeley faces for the cost of the recent rebuilding of Memorial Stadium and the construction of the adjacent “Student-Athlete High Performance Center” – all together totaling more than $450 million, some of it to be paid by 100-year “century” bonds. All told, including interest, those facilities will eventually cost $1.25 billion. Paying it off depends on football. And given the dismal records of the past two seasons and the disappointing sales of expensive long-term rights to seats in the stadium – originally priced at $225,000 apiece – that were supposed to help retire the bonds, a strategy since supplemented by a “more diversified approach,” that’s hardly a sure thing. What is a sure thing is that Berkeley has mortgaged itself in perpetuity to the success of its football team.

Full column at www.sacbee.com/2013/12/01/5953595/peter-schrag-has-uc-berkeley-mortgaged.html

There are lessons to be learned here by UCLA [the Grand Hotel], the Regents, and all the campuses. But will there be lessons taken? So far, however, there is little sign of such learning. If Gov. Brown is as concerned as he says he is about dealing with UC budget affairs, he might consider attending meetings of the Regents’ Committee on Grounds and Buildings and maybe putting some state auditors to work on analyzing what has been approved over the past few years.

Read more here: http://www.sacbee.com/2013/12/01/5953595/peter-schrag-has-uc-berkeley-mortgaged.html#mi_rss=Opinion#storylink=cpy

Listen to Regents Meeting of Nov. 14, 2013

The November 14 meeting of the Regents opened with public comments. These included concerns over staffing and safety at UC hospitals, a Berkeley city councilman who called for pension caps on high-paid UC executives, students advocating fossil fuel divestment, concerns about student costs and debt, and spending on “amenities” for students at UC.

The Committee on Finance approved budgets for operations and capital after extensive discussion and back-and-forth with Governor Brown who said that UC was asking for $120 million more than it was going to get. There was a bit more push back from Regents and administrators with regard to Brown’s remarks than had characterized prior meetings. In particular, the fact that the state paid for CSU and community college retirement (to CalPERS) but resisted payments to the UC pension was referenced. There was concern about rising debts of UC as a result of state budgetary pressures. The Committee also endorsed changes in the UC mortgage program to comply with new federal rules.

UC’s pension was reported to have a market funding ratio of 79%. The issue of the sequester-related nonpayment by the federal government (Dept. of Energy) of $80 million for UC retirement expenses related to the labs was raised (as it had been at earlier meetings last week). There was discussion of what was said to be a $700 million liability reduction over 30 years for the 4,000 out-of-state retirees who are being moved off UC health plans, given a flat dollar contribution, and referred to an external contractor for counseling about what they could buy from local exchanges. [Yesterday, we posted the audio just for that segment.]

The Committee on Compensation approved pay levels for some administrators prompting an observation by Gov. Brown that the rest of the state paid less for similar employees. President Napolitano reported on faculty honors.

You can hear the entire session at the link below:

You can hear just the governor’s remarks at:

[youtube http://www.youtube.com/watch?v=VdiqL2ntJzU?feature=player_detailpage]