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


     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 
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 

     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 

     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 

                         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.


     I have gotten no official response.