University of California officials spent nearly $1 million investigating former UC Davis Chancellor Linda P.B. Katehi, a probe that ended in her resignation last August and a deal that allowed her to take a year off at full pay before returning to a faculty job, according to figures released Friday.
The four-month investigation was ordered last April by UC President Janet Napolitano after disclosures in The Sacramento Bee about Katehi’s acceptance of lucrative corporate board seats and her use of university funds to clean up her image online. The final investigative report was released Aug. 9, the same day Katehi agreed to resign after fighting for months to save her job running one of the nation’s premiere universities.
The probe by the Orrick law firm was headed by two former U.S. attorneys from Northern California – Melinda Haag and McGregor Scott – and included interviews with 55 individuals, the compilation of 2.7 million emails and documents and a review of more than 67,000 emails and other electronic documents.
Haag and other investigators were to be paid $595 per hour, according to the contract between the university and the firm. Team members who conducted document review were due a much lower rate, university officials said in June.
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The Bee sought release in August of the probe’s cost through a California Public Records Act request, but UC officials did not provide a tally until Friday, saying the delay was caused by negotiations over the legal bills.
“After taking into account the discounted hourly billing rates and other fee accommodations that the firm agreed to, the final cost to UC will be $988,142.75 for Orrick’s fees and expenses,” Napolitano spokeswoman Dianne Klein wrote in an email to The Bee Friday. “The funds used to pay for the investigation come from the presidential endowment, which does not include any state or tuition dollars.”
UC officials still have not released individual billing records, logs of hours incurred during the probe or other financial information The Bee originally requested in August.
“The big losers in this are the students at the University of California, Davis specifically, and the University of California generally,” said Ed Howard of the Center for Public Interest Law. “If you think of the number of scholarships or the number of computers, or the excellent professors or programs that could have been paid for with that nearly million dollars, that is just tragic.”
Katehi, who served as chancellor for seven years, was caught up in a scandal that began with revelations last March that she accepted board seats with the for-profit DeVry Education Group and textbook publisher John Wiley & Sons. Those disclosures prompted a five-week sit-in in the lobby outside her office by students who demanded her resignation.
“I appreciate the thoroughness of the UCOP investigation, however it clearly would have been much more financially prudent to fire Chancellor Katehi early on when she crossed the line by moonlighting with the diploma-mill DeVry University,” said Assemblyman Kevin McCarty, D-Sacramento.
McCarty was among the legislators who called for Katehi to step down last March after learning she had accepted a seat on the DeVry board while it faced federal scrutiny.
As pressure grew for Katehi to step down, The Bee subsequently revealed that UC Davis spent hundreds of thousands of dollars paying public relations firms to improve Katehi’s and UC Davis’ online reputations, which had been marred by a November 2011 protest on the Quad during which campus police pepper-sprayed students who were sitting peacefully demonstrating against tuition hikes.
That incident cost the university nearly $2 million, including a $1 million settlement to the students who were sprayed. The balance paid lawyers, consultants and others who dealt with the aftermath.
The UC investigation determined that Katehi’s staff spent $407,000 hiring three companies to improve her image and the university’s after the pepper spray incident, and quoted one former aide as saying she wanted staffers to “get me off the Google.”
The investigation concluded that Katehi had not been forthright when asked about the hiring of the firms.
The effort to minimize negative postings online backfired. Prior to the disclosure of the efforts, Google searches for “UC Davis pepper spray” produced nearly 100,000 results, while searches for “Katehi pepper spray” generated about 10,800 results. This week, a “UC Davis pepper spray” search on Google provided 260,000 results, while “Katehi pepper spray” generated 12,400.
A more recent Public Records Act request from The Bee has revealed that Katehi spent more than $300,000 a year for staffing, maintenance and for entertainment at the chancellor’s house in 2013-14 and 2014-15.
The entertainment portion of the bill – about $90,000 each of those two years – generally went to entertain staff, to wine and dine donors or to host award luncheons, among other things.
James Finkelstein, a professor emeritus at George Mason University who has done extensive research on university executive compensation, said his research doesn’t show any campus leader spending this much for entertainment. “It’s nearly four times what we’ve seen in our research,” he said.
Napolitano demanded Katehi’s resignation last April, but the chancellor refused, leaving Napolitano to suspend her with pay and order the investigation. At the time, Napolitano said Katehi had provided “material misstatements” to her and the media about her involvement in the hiring of the firms.
“As you know – but it bears repeating – all of this could have been avoided had Katehi resigned as chancellor of UC Davis as President Napolitano had asked,” Klein wrote in her Friday email. “Instead, in direct contravention to the agreement she and the president had made to keep the matter confidential until the terms of the resignation could be finalized, the chancellor waged a public campaign to keep her position while at the same time denying any wrongdoing.
“Following the chancellor’s action, in the interest of transparency, the president initiated an independent investigation into several areas of concern. She did this after consulting with the Board of Regents and then drafted a letter to the chancellor placing her on leave during the course of the investigation. The investigation found that the chancellor had exercised poor judgment, had not been candid with university leadership, and violated multiple university policies.”
Katehi attorney Melinda Guzman said Friday that the money “might have been better spent on behalf of the students of California.”
“I think it’s unfortunate that President Napolitano chose to embark with this costly investigation,” Guzman said.
Katehi’s resignation came the same day UC officials released the investigative report. Katehi was allowed to keep her salary of $424,360 plus retirement and health benefits for a year while she remains on leave. She will return to the campus in the fall as a member of the faculty. Her faculty salary has yet to be determined.
The agreement was the same one Katehi had been offered in April, when Napolitano asked her to resign, a source has told The Bee.