Monday, May 22, 2017

Empty Seats on the Regents: Reminder

Jerry Brown Could Overhaul UC Leadership If He Wanted To. Here's How

Capital Public Radio, Ben Adler, 5-22-17

Gov. Jerry Brown’s latest budget proposal calls for withholding $50 million from the University of California until the UC improves its financial accountability and admits more community college transfers. It’s his way of pushing for change despite the UC’s constitutional independence.

But the governor has a far more effective tool to overhaul the UC that he has yet to take full advantage of: He could reshape the Board of Regents by filling its four current vacancies.

“I think it would be a game-changer if the governor filled the remaining four vacancies with people who were ready to roll up their sleeves and try to approach their love of the university through improving it – not just through defending what it is at the moment,” says Regent and former Assembly Speaker John Pérez, whom Brown appointed in 2014.

And when asked after Thursday’s board meeting if he’d like to see the governor appoint four regents to the four vacancies that would hold the president’s office more accountable, Regent and current Assembly Speaker Anthony Rendon replied, “Absolutely.”

The anger and frustration from the state Capitol toward the University of California is bipartisan. A state audit last month blasted the president’s office for a lack of financial transparency, just weeks after UC regents voted to raise tuition. Lawmakers have also pushed the UC to admit more in-state students and cut costs in the president’s office.

“Absolutely, we want to ensure there’s greater accountability,” says Board Chair Monica Lozano. “But that can’t be the only criteria. (The UC) is a very complex institution.”

The governor appoints 18 of the 26 board members. The others are elected officials, the UC president, two alumni and a student.

Lozano says regents already exercise strong oversight of the president’s office, and are taking more action in light of the audit’s findings. But, she adds, there’s good reason for the UC’s constitutional independence – and the audit shouldn’t lead to an overreaction.

“It’s difficult to look at a snapshot of what is a very complex set of factors and think that because of this one moment, you have to move the spectrum to a particular end,” Lozano says.

Brown’s office says it’s taking the time it needs to find the best people to serve – especially because regents serve 12-year terms.


Listen to the Regents Meeting of May 18, 2017

As promised, we provide below a link to the full audio of the Regents meeting of May 18th. The main issue of focus of the four and a half hour session was the state audit.

The Daily Bruin provided a summary:

The governing board of the University of California met for the last day of its bimonthly board meeting at UC San Francisco on Thursday. The Board of Regents heard details about the state’s audit of the UC Office of the President, discussed UCOP’s budget and approved a cap on nonresident student enrollment. Ex officio regents Anthony Rendon, speaker of the assembly, and Tom Torlakson, state superintendent of public instruction, attended the meeting.
Board of Regents
  • State Auditor Elaine Howle presented the results of her office’s audit of UCOP. She emphasized the audit aimed to look at UCOP’s protocols and procedures, not critique UC President Janet Napolitano’s leadership.
  • Howle also expressed concerns about UCOP’s schedule for implementing the audit’s recommendations. The audit recommended a three-year plan, starting April 2018, to begin implementing changes to align with the state’s legislative and budget cycle. However, UCOP had asked to begin implementing them by July 2018, which Howle said she thought was unreasonable.
  • Howle said the audit had difficulty measuring the cost of systemwide UCOP and the number of services campuses are actually using. She added she was concerned by UCOP’s interference with her attempts to conduct confidential surveys with individual campuses. The regents approved hiring an independent third party to investigate UCOP’s alleged interference May 11.
  • She also said she hopes regents will hold public meetings to discuss people’s opinions on systemwide initiatives and will continue overseeing UCOP.
  • Rachael Nava, UC chief operating officer and head of the task force in charge of implementing the audit’s recommendations, laid out UCOP’s plans for implementation, including changing budget practices. She said UCOP will now separately display past funds and provide reserve balances.
  • Regent Monica Lozano, chair of the board, said the recommendations were not just about complying, but changing the institutional culture of UCOP.
  • The regents voted to authorize a budget for UCOP for the 2017-2018 fiscal year, but the Finance and Capital Strategies Committee will review it in depth before the regents vote to confirm increased funding for certain programs at the July meeting.
  • The board also approved actions the committees voted on during Wednesday’s meeting.

Audio link below:

On the audit: Somebody missed the boat

With all the fuss about the state audit, one might have thought that the auditor would have focused on where the big bucks that the Regents oversee are. Consider the headline number that triggered the brouhaha that there was a "hidden reserve" in UCOP of $175 million that the Regents didn't know about, or have the ability to make policy about. UCOP, of course, disputes that number and says the "true" reserve is under $40 million. But consider the capital expenditures the Regents routinely approve, based on campus requests that are blessed by UCOP. The UCLA Grand Hotel involved an expenditure of over $150 milllion, and that was just one project!

In the course of a year, the Regents approve vast sums involved in capital projects without any built-in capacity to evaluate them. They approve projects basically on the say-so of the campuses and UCOP. If a member of the Board of Regents happens to have some professional experience in real estate, that's at best a lucky happenstance. Even when questions are raised, the campus typically comes back with the same project with some tinkering and eventually it is approved. The Regents have no independent capacity to evaluate capital expenditures.

Usually, there is some assurance by the campus and UCOP that a particular project will be built without state money so not to worry. The proposition seems to be that non-state funds have no opportunity cost which is dubious on its face. Moreover, it neglects the fact that if the project ends up costing more than expected, or its "business plan" fails, or outside fundraising proves to be inadequate, the costs will eventually have to be met by state funds and/or student fees of one kind or another.

Sunday, May 21, 2017

What the State Auditor Presented to the Regents

We continue our catching up with the Regents by skipping to the May 18 session. We have already posted audio of May 16 and the morning of May 17. We'll come back to the afternoon of May 17 and the full May 18 session in a later post. In the meantime, below is a video of what California State Auditor presented to the Regents as a summary of her earlier report. Her comments were followed by discussion of the report which UCOP has promised to implement. The report dealt with reserve funds, various initiatives by UCOP, and seeming interference by UCOP with the auditor's survey of the campuses of their evaluation of UCOP's services.

You can see her presentation below:

Listen to the Regents: Morning of May 17, 2017

Now available are the audio recordings of the meetings the Regents held on the morning of May 17, 2017.

The audios are preserved by this blog indefinitely because the Regents delete their recordings after one year. Under the revised format for Regents meetings, committees meet simultaneously in different rooms. On the morning of May 17, there was a full board meeting and then meetings of three committees. Academic and Student Affairs and then National Labs met in one room. In another room, Finance and Capital Strategies met. Here is a direct link to Academic and Student Affairs and National Labs:

All the sessions can be heard at this address:

Below is the Daily Bruin summary of the morning meetings:

The University of California Board of Regents, governing board of the UC, met at UC San Francisco for its bimonthly board meeting. The board discussed student housing, transfer student enrollment and the state budget.
Students and union workers disrupted the beginning of the meeting for about 15 minutes, chanting, “Whose university? Our university” in protest of the UC’s alleged nondisclosure of $175 million and generous salaries, which a state audit revealed in April.
Academic and Student Affairs Committee
  • The regents discussed reviewing student residency policy and planned to bring recommendations for classifying student residency by fall 2018 in preparation for newly admitted students.
  • Aimée Dorr, UC Office of the President provost and executive vice president for academic affairs, talked about implementing a one-year independent residency policy to replace the current two-year requirement. Regents also discussed how a student’s residency could impact their admission and encouraged implementing a UC policy that aligns with state laws.
  • Robin Holmes-Sullivan, vice president of student affairs, said that selected UC campuses will reach the goal of accepting one transfer student for every two freshmen by the end of next year.
  • Chancellor Gene Block said UCLA has been consistent with the two-to-one ratio since 2003. Block added UCLA achieved the admission ratio through approaching more transfer students by assigning staff members to work with community colleges in California.
  • UC Riverside Chancellor Kim Wilcox said how close a UC campus is to a community college is an important factor for transfer applicants, and thinks the UC should reach out to more transfer applicants so they have more incentives to apply. Wilcox added the UC could achieve the two-to-one ratio by reducing the number of freshman admissions.
Finance and Capital Strategies Committee
  • The committee approved budgets and designs for several new buildings at UC San Francisco and the renovation of the UCLA graduate art studio on Warner Drive.
  • The committee also approved funding to help UCLA explore the potential of five housing sites discussed at the March meeting. Regent Hadi Makarechian suggested condensing housing options because land is expensive in Westwood. Steve Olsen, UCLA vice chancellor and chief financial officer said the campus aims to house 60 percent of undergraduate students.
  • Nathan Brostrom, UCOP executive vice president and chief financial officer, updated the committee on UC President Janet Napolitano’s student housing initiative. He added the UC’s proportion of students housed on campus is lower than the proportions of private universities but higher than those of many public universities. He said campuses have added about 18,000 beds from 2006-2016.

The strawberry suit goes on, and on

Who gets it?
From time to time, we have noted this litigation which seems to go on without end. If any legal beagles want to provide an interpretation, we would welcome it.

SAN FRANCISCO (CN) – Attorneys for the University of California, Davis, torpedoed its former researchers’ main arguments during day 4 of a contentious trial over who gets the right to breed multimillion-dollar California strawberries, raising questions as to how a federal jury will decide the case.
Former UC Davis researchers Doug Shaw and Kirk Larson ran the university’s world-renowned strawberry-breeding program until they retired in 2014. They say the school rejected their proposal to form a private breeding company once they retired that would license the strawberry plants they invented, develop new varieties from them, and pay the school royalties.
Shaw and Larson, who along with their company California Berry Cultivars (CBC) are cross-complainants in the case, claim that “powerful farming conglomerates” had the California Strawberry Commission pressure UC Davis to deny Shaw a license, by suing the school to keep the breeding program open once Shaw and Larson retired. Then, they say, the school froze CBC’s ability to work with the plants by filing a single patent application on 168 of the most valuable varieties they invented at the school – a move the U.S. Patent and Trademark Office called “inappropriate.”
The school, however, claims Shaw and Larson used its plants to develop new ones despite its denial of the license, and sued them and CBC in 2016 for violating nine patents on its most successful strawberries.
California strawberries generate $2.5 billion a year and are the state’s fifth most valuable crop. UC Davis’s agriculture school has developed 56 varieties since 1945, creating strains that are bigger, taste better, stay fresh longer and yield up to six times more per acre.
Shaw and Larson developed more than a dozen strawberry varieties at UC Davis that are grown throughout the world, and most of the strawberries currently eaten in California were invented by them. In 2004, they released the Albion variety, known for its sweetness and high yield.  It can be grown as many as nine months out of the year and is the most widely planted strawberry in California.
Although Shaw and Larson’s attorneys have argued throughout the week-long trial that the California Strawberry Commission nixed the license, it was only on Friday that they presented testimony to support their contention.
“We felt we were making a lot of progress,” farmer Jane Fujishige testified on Friday about a meeting between CBC and the California Strawberry Commission over the commission’s lawsuit against UC Davis. Fujishige Farms, which is owned by Fujishige’s family, is a member of CBC. “Then they said we would not settle, that the whole purpose of the suit was to prevent Shaw from breeding again.”
Fujishige didn’t explain her explosive statement, nor did defendants’ counsel ask her to elaborate. On cross-examination, Fujishige acknowledged the university had continued to negotiate with Shaw for a license even after the strawberry commission filed its lawsuit against UC Davis. She also confirmed that some of CBC’s own members are members of the strawberry commission.
Even more damning for the defendants on Friday, Yale plant genetics expert Stephen Dellaporta testified on UC Davis’s behalf that DNA analysis shows 85 percent of the plants CBC grew from seeds it imported from Spain contain genetic material from UC Davis’s patented varieties.
According to Dellaporta, a professor in Yale’s molecular, cellular and developmental biology department, CBC’s seedlings contained genetic material from five university-patented varieties that hadn’t been released at the time they were bred, and 19 that had never been released.
UC Davis claims that in 2010, Shaw and Larson began sending certain varieties from its strawberry program to EuroSemillas, a company in Spain that was a founder of CBC and a contractor for the university’s program, for breeding.
The school says Shaw and Larsen bred the seeds outside the United States because they knew they couldn’t do so here without violating U.S. patent laws.
Under agreements between UC Davis and EuroSemillas, the plants can be tested in Spain before going to market, but they cannot be used for breeding. However, the university says EuroSemillas harvested the seeds of the mother plants in Spain, and that CBC sent the seeds to the United States for use.
Attempting to cast doubt over Dellaporta’s results, Shaw and Larson’s attorneys suggested Shaw didn’t know that university-patented varieties had been used in the crosses – a suggestion U.S. District Judge Vince Chhabria told them to “move on” from – and that Dellaporta hadn’t actually observed CBC’s plants to see whether they shared physical traits with the university’s plants.
“The DNA is the most accurate method to determine,” Dellaporta countered. “There’s no question about that.”
UC Davis is represented by Rachel Krevans with Morrison & Foerster in San Francisco, and Shaw and Larson by Greg Lanier of Jones Day, also in San Francisco.

LAO Says There's More

The Legislative Analyst's Office (LAO) continues to project more resources in the state budget than the governor projects:

...Our office assumes 2017-18 would end with $12.1 billion in budget reserves — about $2 billion higher than the administration’s estimate... The difference is the product of two factors. Compared to the administration: (1) our office estimates the state will end 2016-17 with about $1 billion more in revenue and (2) our office’s estimate of state General Fund spending on schools and community colleges is nearly $800 million lower in 2017-18...

Full report at

The LAO report sets the stage for bargaining between the Democratic leaders of the legislature and the governor on the budget, which must be passed by the legislature in mid-June.