LOOKING INTO THE UC BUDGET -- Report #12 (e-mail version) by Charles Schwartz, Department of Physics, University of California Berkeley, CA 94720. 510-642-4427 August 7, 1994 SUMMARY This is a collection of short stories, all unfinished, about political doings around the UC Board of Regents. I. The "single-payer" health plan initiative, on this November's California ballot, attracts the Regents' attention. II. One regent may be launching a revolution in how the Board works. III. The UC President hires a big-time public relations consultant. IV. A proposed agenda for open debates on issues facing UC. I. The Regents and the "Single-Payer" Health Plan Initiative The University of California Board of Regents met on July 14, 1994, in San Francisco. On the agenda of their Committee on Hospital Governance was a general discussion of issues relating to UC's five teaching hospitals and medical schools. At one point during this discussion Regent Clair Burgener introduced the issue of the "single-payer" Health Plan Initiative, scheduled to be on the California ballot this November. [What follows is transcribed from my tape recording of the session.] -------------------------------------------------------------------- Regent Burgener: "Are we involved, are we going to be players or are we going to be observers ?" UC Vice President - Health Affairs Dr. Cornelius Hopper: "I have to choose my words carefully here. The ... which is the association that involves hospitals around the state ... is in the process of formulating, has actually formulated a position on this initiative. I think the University typically has tried to stay out of direct political activity on initiatives of this kind; and I am not sure that ... it is of sufficient danger to us to depart from that usual practice. This is a political initiative and we have sat on the sidelines to some extent. I would say, however, that individual schools, ... hospitals and certainly our faculty have their own views on this and they will be expressing those in the appropriate venues." ... UC President Jack Peltason: ... "This issue is a complicated one; and [it is] appropriate [to have] the initiative drawn to our attention for us to examine to see if it is appropriate for us to make a comment on or not. [It is] something I think we need to look at in terms of if it affects us in our ability to run academic health centers. It would be only in that capacity it would be appropriate for us to say anything. Individual faculty members and professors of course are free to participate in that debate. Whether we [The Regents] should would depend upon whether or not it directly affects our academic health [centers.]" ... Regent Roy Brophy: ... "I would be very interested in hearing Regent Burgener's opinion. He serves on the board of Blue Shield..." ... Regent Brophy: "I was interested in what Regent Burgener had to say about it." Regent Burgener: "I am vigorously opposed ..." Regent Brophy: "I am too. ... ... I walk down the street with my friends and I say, How do you feel? And they say, Lousy. And I say, Let me get you an appointment right away; and I call Frank." [Frank Loge, Director of the UC Davis Hospital and Clinics] ... Regent Alice Gonzales (Chair of this committee): .... "Particularly in light of the state initiative that was mentioned by Regent Burgener that's of great interest. I don't know what the statistics are or what the polls are saying about that but ..." Regent Burgener: "Research has reared its attractive head. And our neighbor to the north, Canada, with its single-payer system, relies upon America, the United States, for medical research. I suppose if we go single-payer, we could rely on somebody else." [general laughter] Regent Glenn Campbell: "An off-shore ship." Regent Gonzales: "As I visit our institutions I always think that if I should become ill, and I'm a pretty healthy person, if I should become ill, I'd want to go to one of ours based on their research and ability to deal with some of the major illnesses that come with old age." -------------------------------------------------------------------- In the above dialogue one finds the familiar elements of the national debate over the politics of health care: the authoritative voice of special interests; severe exaggeration by partisan debaters; the appeal to personal privilege enjoyed by those with higher socio-economic status. There is also the question of financial conflicts of interest for the regents who might vote to take a position on this initiative. I have checked the financial disclosure forms on file at the UC Office of the President and found that a majority of the regents have substantial investments in companies in the health care industry, or serve on the Boards of such businesses, or receive significant income from them. The UC President and some of the Chancellors have similar potential conflicts of interest. My advice to the Regents on this matter is: DO NOT ENTER THIS POLITICAL MINEFIELD. Attempting to do so will just further damage the integrity of the University. II. A Regent Leads a Revolution ? Also at the Regents' July 14 meeting, Regent Ward Connerly started out his term as Chair of the Board's Committee on Finance by laying out what he termed a "strategic plan" for that committee. [Transcribed from my tape recording of that meeting.] ------------------------------------------------------------------- "We have a number of possibilities on the Committee and I want to outline three of them that I think are important for this Committee. The first is that we are to be involved in all matters relating to the business of the University, the University as a corporation, all matters relating to the business and management of the University. The second is the budgetary responsibility: we are to consider the budget prepared by the President; we are to be involved in presenting that budget to the Legislature. It becomes the Regents budget and we have a responsibility, I think, to help the Office of the President to get that measure through. And the third one is an oversight responsibility on all appropriations. Now there are other things that we have to do as well, but those are the three major responsibilities that we have and I think that we all take those things seriously, I certainly do. "I think that to fully discharge our fiduciary responsibility we need better, more timely information. We need that information analysed, I think, much more carefully than it has been in the past. I have met with President Peltason, with Provost Massey and with Vice President Kennedy; we have developed an excellent relationship over the past few weeks, and they are our agents in helping us to carry out our due diligence responsibilities. I think that we need, I have shared this with them, we need someone as a point person for this Commitee, who can follow through on the questions that we may have as the Finance Committee. And Vice President Kennedy has assigned to our Committee an excellent member of his staff, Rebecca DeKalb. She is a graduate of Boalt Hall, she has an extensive legal background, having worked with a private firm, and is available to assist us on following through on questions that we might have regarding issues that come to out attention. I would only ask that members of the Committee route to me, if you will, your requests so that we don't overburden her; and if it gets overloaded, at least we know what the load is. But that is the responsibility that we have. "We have a very distinguished Committee. We have two ex- Legislators on this Committee, we have Ralph Carmona, who was involved, on this board, in legislative activities. We want to bring that experience to bear. We want those ex-Legislators, people who have contacts in the Legislature, lobbying to convince the Legislature and the Governor to give this great institution more resources. And so we need to have them involved in that budgetary process. To do that we want the Committee involved with the President in formulating the budget so that we know what's there, that one-point-eight billion dollars that we act upon is something that we should know, where the dollars are. "And finally, cost containment. I think it is crucial that we begin the task of trying to contain our cost. We've already begun that; but we haven't scratched the surface, the kind of containment that we're going to have to make. And once we do that, once we convince people that we're spending the money wisely that we have, then I think it's incumbent on us members of the Committee to go and preach the gospel of increasing the revenue to this institution, because we desperately need it. "Now, having said that, we can then move on with the agenda. Any comments on that, anybody disagree with the general outline? It isn't something that requires a vote, but I hope you all agree with the direction that we are taking. ..." -------------------------------------------------------------------- There were no responses to Connerly. However, I doubt very much that he has the full support of all the other regents and administrators who sat there while he spoke. Taken at face value, the plan that Connerly outlined represents a near-revolutionary redistribution of power at the top of the University of California. Traditionally, the University's annual budget is something developed, in secret, by the President and the Chancellors and their staff and then presented to the Board of Regents for their approval. To an outside observer, the Board appears to act as hardly more than a rubber stamp on almost any issue presented to them for approval by the administration. When, as occasionally happens, some individual member of the Board asks too many critical questions about the details of some issue, there is likely to be a mild lecture from another regent about the sin of "micro-management." Connerly's plan appears to turn this old arrangement on its head. Having his committee deeply involved in the formation of the budget, with their own staff to gather data and carry out analysis independent of the Office of the President - this is a big power grab. Furthermore, Connerly's emphasis on "cost containment", if taken literally, implies an unprecedented challenge to many a sacred cow in the University's fiscal stable. His logic in all this is eminently sound: to get more money from the State, UC must rebuild its credibility, especially with the Legislature. But will logic prevail? Some background, as observed from the outside. Connerly was appointed to the Board of Regents by Governor Pete Wilson in 1993. His credentials for gaining this post appear to have met the usual standard: according to public records I have examined, Connerly contributed a total of $60,000 to Governor Wilson's campaign funds in 1990 and 1991. Also named a Regent by the Governor at that same time was Lester Lee. Throughout their freshman year on the Board (regents can serve for one year while waiting confirmation by the State Senate), Lee conformed to the traditional behavior: sitting silently at the table and voting Yes to whatever the President proposes. Connerly, however, started right out with frequent questions and comments; and he led the minority fight against student fee increases. In December of 1993, Connerly sent a letter to his fellow regents urging them to take a more active role in questioning and debating UC policies rather than just rubber-stamping the recommendations of the president. [San Francisco Chronicle, January 6, 1994.] That suggestion was not well received by UC President Jack Peltason, who responded with a letter that lectured Connerly on how things are supposed to work at the University: "A meeting of the Board of Regents should not be conducted like a legislative hearing, a meeting of a city council, or a presentation before an impartial court in which various persons come before it to argue their cases. ... [T]he Board is not there to balance among competing claims and pick and choose which it will support. ... The administration ... is the Board of Regents' chosen and publicly designated agent in whom it has vested confidence and to whom it has delegated responsibility to manage the University. ... By the time a recommendation is presented to the Board it has been through an elaborate consultative process, appropriate for the particular recommendation at issue. Such a recommendation, appropriately, should come to the Board with a very strong presumption that it will be supported. ... However, if there is a pattern in which a Board member consistently votes against key recommendations which the President and the Chancellors believe to be in the best interest of the University, almost by definition this becomes a vote of no confidence by that particular Regent." [See my Report #11 for more extensive excerpts from Peltason's letter.] In March of this year the Legislature did something unheard of: they refused to confirm Lee as a Regent. Connerly was not just confirmed, he was lauded by Legislators for his independence in challenging the UC administration. This upset the UC brass even more, as we learned from the leaked transcript of Peltason's meeting with the Chancellors on March 2 [San Francisco Examiner, March 20, 1994]: The officials were unhappy with Connerly. "He's the hero," Peltason said, with apparent sarcasm. "He's the one who came in and is prepared to stand up and reform the place." ... "That whole thing, the way Connerly was portrayed as the big agent of change, the self-appointed agent of change, God that was just disgusting," [UCSC Chancellor Karl] Pister said. From the perspective of this writer - considering the studies, critiques and recommendations I have been turning out over the past two years in this series of Reports - Connerly's initiative is an astonishing development. Of course, I (and you) should remain skeptical. Perhaps I over-interpret Connerly's intentions; perhaps he will achieve only token improvements, be coopted or just get worn down by the bureaucracy; perhaps he will succeed in getting himself deeply involved in administrative affairs but leave the public outside as before; perhaps he will succeed in openning up the administration but not succeed in changing the priorities that have been dominant. This merits further scrutiny. III. The UC President Hires a Public Relations Expert Two years ago UC President Jack Peltason led the formation of the California Business-Higher Education Forum, trying to build new support for the University's financial needs. One task sponsored by this group was a survey of public opinion on fiscal reform in California. Key findings regarding higher education were these: "A strong 61 percent approve [and 21 percent disapprove] of the job the University of California and State University institutions are doing in educating their students." "Higher education systems are rated most strongly for the quality of teaching and for their contribution to the state's economy through research. They are perceived more negatively on cost and having enough places for qualified students. This data indicates that the issues of quality education and bolstering the economy via research are believable and should be reinforced among the public." [CBHEF Task Force Member Reports, June 1994, page 89.] Last month Peltason hired Ronald E. Rhody, a former PR executive with Bank of America and Kaiser Aluminum, for a 6-month $60,000 job as a media consultant to help UC improve its communication with the public. Newspaper accounts expressed skepticism about the motives of this action, which several UC officials tried to counter: Regent Ward Connerly said he would oppose the arrangement with Rhody ..."if I thought we were hiring an image consultant to put the right spin on bad news." Rhody's role will be to "develop some ideas as to how we can be more effective in communicating to the public," Connerly said. [San Francisco Examiner, July 20, 1994] The news story gave a figure of $587,656 as the annual budget of UC's systemwide public information office. However, when I checked the official UC accounting reports ("Campus Financial Schedules") I found these expenditures for fiscal year 1992-93: $10,251,000 for the nine campuses plus $1,612,000 for the Office of the President. These numbers are only for "Public Information" activities and do not include other "Community Relations" expenditures classified as "Development", "Publications" and "Relations with Schools." I find it hard to know what is going on here in the minds of UC's leaders, but will offer some of my own views. Most of UC's public information work takes place on the campuses, putting out stories to the media about the University's research achievements and also, occasionally, about its educational programs. Perhaps this could be done better; but the survey result cited above suggests that UC has been doing a good job of getting this "good news" out to the public. The other problem is the "bad news" that has been hitting the public eye for the past couple of years: escalating student fees, cuts in University staff and services, and scandal after scandal after scandal at the top of UC's administration. Improved PR techniques will not solve this problem; real reform is needed in the manner in which the University is run. IV. Seeking Some Stimulating Open Debate At the May meeting of the Board of Regents I submitted the following: PROPOSED AGENDA for a series of public debates on issues of Governance and Management in the University. Proposition #1: Meetings of the Council of Chancellors, and of other high level bodies in the University, should regularly be open to public view. Proposition #2: The University suffers from an overgrown administrative bureaucracy that should be severely cut back. Proposition #3: The University's Executive Program should be abolished and administrative salaries should be reconstructed on an academic basis. Proposition #4: The University should establish an independent Office of the Whistleblower, with full investigative powers. Proposition #5: The University should divest itself of its Medical Centers and of the DOE Laboratories in order to attend better to the primary needs of the campuses. Proposition #6: The Board of Regents and the individual campus administrations should be democratized. WILL THE BOARD OF REGENTS AGREE TO SPONSOR THESE DEBATES AND WILL THE PRESIDENT AND THE CHANCELLORS AGREE TO PARTICIPATE ? I have gotten no official response.