For Immediate Release: Reports of UC Regents’ Widespread Conflicts of Interest

AFSCME Local 3299
For Immediate Release
September 30, 2010

SACRAMENTO, CA—Service and patient care workers at the University of California’s 10-campus system who are represented by AFSCME Local 3299 are calling on state legislators to examine closely the allegations of widespread conflicts of interest among members of UC’s powerful and well-connected Board of Regents. 

This follows the release this week of an 8-part investigative report about UC Regent conflicts of interest written by journalist Peter Byrne.  The investigative story titled “The Investors’ Club: How the University of California Regents Spin Public Money into Private Profit,” chronicles a troubling history of conflicts of interest involving numerous UC Regents. 

According to Byrne, this is a problem that has plagued UC for decades but has accelerated in recent years as the Regents have increasingly failed to hold themselves to sufficient ethical standards in their investments practices, particularly around questionable private equity investments that Byrne says have directly benefited individual Regents. 

Byrne’s report, published in a variety of California weeklies is available in its entirety here: http://www.spot.us/stories/544-the-investors-club-how-the-university-of-california-regents-spin-public-money-into-private-profit.

“The allegations made by Byrne are incredibly disturbing,” said AFSCME Local 3299 President Lakesha Harrison, “This is an alarm bell for the public and the state legislature that it’s time to wake up to the fact that UC’s Regents are taking our public university down the wrong track.”

Harrison says that the overwhelming amount of evidence Byrne presents about a wide range of alleged Regent conflicts of interest comes at a time when the Board and UC President Mark Yudof have failed to heed the call of California legislators, who passed a resolution urging them to give UC workers some oversight over how their pension money is invested.  Legislators encouraged the creation of a pension board of trustees with equal numbers of plan participants and Regent appointees, similar to what other California public workers have. Currently, the Board of Regents acts as the trustees of the pension.

In addition to any potential harm caused by conflicts of interest, UC’s pension fund has suffered from UC’s failure to contribute to it at an adequate level as it did in the 1980s.  Citing the need to cut costs, President Yudof is moving forward on a path toward reducing retirement benefits for UC’s lowest paid and middle income workers, while protecting or boosting benefits for highly compensated UC executives. 

“This is absolutely criminal,” said Harrison, “It’s been allowed to happen because of a host of issues ranging from UC’s misplaced spending priorities to UC workers and retirees lacking a voice on their own pension to a broken process for Regent appointments by the governor.  Something has to be done.”

Earlier this year UC employees and their unions were successful in moving the state legislature to require an audit of the UC’s finances. AFSCME Local 3299 members are now calling on lawmakers to investigate these serious allegations of Regent conflicts of interests. 

AFSCME Local 3299 members are also calling for a commitment from lawmakers to hold UC accountable to the public by way of a variety of legislative reforms including greater public oversight of the ill-managed pension system through a shared governance model, revamping the Regent appointment process to require Senate confirmation before Regents can serve on the job, and establishing strict conflict of interest rules that protect the public from excessive use of public funds for private profiteering.

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[ Read more details: Spot.us ]