More on UC Regents conflict of interest

The Berkeley Planet reports that since 2003 Gerald Parsky, Richard C. Blum, and Paul Wachter, all financiers themselves have steered UC investments and pensions towards risky private equity and real estate instruments. In order to maintain the appearance of propriety, they got UC to hire private money managers with high fees. Not only were private managers paid handsomely, their investment choices have suffered much more than blue chip stocks and bonds. $2 billion were steered toward risky financial instruments and the losses that UC suffered are negatively impacting its retirement and endowment funds. Blum, once again, reveals himself to be a beneficiary of his regental position: after being appointed to the board in 2002, $745 million of UC money was invested in seven private equity deals involving either Blum or his firm, Blum Capital Partners. People, offense is the best defense. Kudos to Berkeley Planet for excellent investigative reporting. In July, the LA Times ran Mike Hiltzik's column covering UC Regents' conflict of interest news.

Fall Comes to the U of Washington

by Gerald Barnett, Director, Research Technology Enterprise Initiative, UW-Seattle

In the State of Washington, funding for higher education is in a free-fall. An August 29 story in the Chronicle of Higher Education reports that the State has cut the budget of the University of Washington by 33% or $134m in the past 15 months. But that’s not all, as Governor Gregoire has just signed an executive order for another round of across the board budget cuts --with an open tab—maybe 7% but could be 10%--with the prospect of another $3b state deficit in the next biennium budget (update—looks like 6%).


Here’s how the Chronicle story paints the picture:

“In a frustrating paradox, Washington and other top public universities are victims of their own success. Every research-support milestone or big donation takes a whack at the urgency of their budget appeals. But that money can't be used for faculty raises or for the day-to-day costs of educating students, which can be difficult to explain to the general public.”

This theme has been explored by a number of contributors to this blog over the past year. The more the university claims “success,” the worse off it gets.

UCRP: Real Questions, False Answers

 Introduction by Michael Meranze

With  the Regents set to take up the UCRP task force report -- and to consider the Senate's Dissenting Statement  as well as a new UCOP Response to the Dissenting Statement --it is more important than ever that the entire university community have the information necessary to debate, and the influence to effect, the future of employee retirement.  To that end, Onuttom Narayan, Professor of Physics at UCSC, has examined the logic and calculations of the different proposed solutions to the UCRP funding problems.  His analysis appears below, and it concludes that neither of the options that the Task Force proposes (what they term A & B) will, in fact, solve the funding problem.  Instead, they will only put off a solution for a decade. By that point, unless UC is able to make dramatically larger contributions from an as yet unknown source, either employee contributions will increase substantially or benefits will be further reduced. What the options will accomplish, however, is to diminish employee retirement in the meantime, and to erode the defined benefit system at the heart of the UC retirement system.  Moreover, they will do so in a way that is inequitable—favoring those at the top end of the pay scale.  Unfortunately, while the Senate representatives' preferred proposal (Option C) will preserve the present system with small changes, it will not solve the larger funding issues either, and will require employee contributions that are unlikely to be acceptable to all employee groups.  Narayan suggests that some immediate changes may help, along with a more searching examination of the way that UCRP is managed, not to mention more equitable solutions to sharing the burdens of change.   Please do read his analysis and as always comments are more than welcome.

Bain's Blow to Berkeley

Nothing kills performance like distress.  The same goes for fear, anger, powerlessness, injustice, and a sense of having been screwed over by ignoramuses. The remarkable conversation going on via the recent comments on this blog suggest that the Bain-Berkeley analysis for UCB’s Operation Excellence has dug Berkeley into a deeper operational hole than it was already in.   

Why is this report so disturbing? Is there anything in it that might make Berkeley administration better?  The answer to the second question is yes, but the report rests on several foundational errors. These are serious enough to suggest that implementation of the report as it is will impose an outdated, centralized organizational model that will in turn undermine Berkeley’s key strengths as a university.

This post describes the report’s analysis, and shows that its solutions do not fit with this analysis. I argue that the report will, if implemented, make UCB administration less efficient than it already is. I also offer one simple reason that the recommendations will also make faculty’s relations to staff worse rather than better, meaning that faculty should help staff find alternatives to the Bain-OE blueprint rather than vainly hoping that it will solve some of their local staffing issues.

Staffing the Downsize

As the many comments by staff members to the post Did I miss Something? make clear, the task force on pensions and UCOF are only one strand of the ongoing restructuring of UC.  In multiple departments and offices, especially at Berkeley, staff jobs are being eliminated and downsized while faculty are away, and the attempt to cut costs on the basic organization and staffing of the campuses are taking their toll on members of staff and their ability to perform their jobs.  While Bain, to take only one example, is taking home its profit for swooping in and deciding which human workers are necessary and which are disposable, the people who actually support faculty offering instruction and performing research are facing both overwork and a loss of job security.

Unfortunately, this information tends to be localized.  Do people have data on job losses, or information on staff restructuring and consolidation etc?  The more that people know the better.

Did I Miss Something?

In the latest issue of the Senate Source Henry Powell makes explicit what many of us already suspected--that while the UCOF process is ongoing, President Yudof has told the working groups that their participation will no longer be needed.  Admittedly, this announcement is no great surprise.  But it does raise at least one question.  At the first round of recommendations in March (back when we still pretended that the process was being driven by the labor of the working groups) the Working Group on Education and Curriculum noted that they had put off any firm recommendations about educational quality but indicated that these recommendations would be forthcoming. (49)  Now that promised discussion has been short-circuited. (Although as Anonymous points out below in comments that short-circuit is not the fault of the working-group which did deliver a fuller discussion.)