UC regents approve new limits on moonlighting by administrators

UC Davis Provost Ralph Hexter will serve as acting chancellor during Katehi investigation

Control of the campus has been turned over to Provost Ralph Hexter, who is now acting chancellor pending the outcome of the investigation.
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Control of the campus has been turned over to Provost Ralph Hexter, who is now acting chancellor pending the outcome of the investigation.

University of California regents voted Thursday to limit top administrators to two outside paid jobs and add another layer of approval to ensure that moonlighting doesn’t pose a conflict of interest or a “reputational risk” to the university system.

The regents approved the changes without opposition during their full board meeting in San Francisco. The new restrictions come after UC Davis Chancellor Linda P.B. Katehi drew criticism this year for accepting past board positions with a textbook publisher and for-profit DeVry Education Group.

The new policy, initially proposed by UC President Janet Napolitano, would require administrators to explain the benefits an outside position would bring their campus and UC, as well as a statement that spells out how much time the job would require. The new policy adds a midyear review of outside jobs, as well as a review panel for questionable applications.

“The changes we are recommending today would be among the most careful and restrictive in the nation,” said UC regent Bonnie Reiss, who chairs the board’s Compensation Committee.

Regents approved the new policy after The Sacramento Bee reported in March that Katehi had accepted a board seat with DeVry as it faced a federal investigation for allegedly misleading students. She did not receive final sign-off from Napolitano before accepting the seat that paid $170,000 annually in stock and salary. Katehi resigned that position within days under pressure from Napolitano, Assemblyman Kevin McCarty, D-Sacramento, and watchdog groups.

The Bee also reported the chancellor had previously received $420,000 in income and stock over three years as a board member for John Wiley & Sons, a publisher of textbooks, college materials and scholarly journals. Critics said that represented a conflict because students and state leaders were seeking to reduce the cost of textbooks and use free alternatives. Katehi had permission from UC to join that board.

Katehi pledged $200,000 toward a UC Davis student scholarship in March but has not donated the money and could rescind her pledge depending on the outcome of the UC investigation, her private spokesman Larry Kamer said earlier this month.

In 2014, the most recent year data are available, 49 top UC administrators received at least $2.2 million in outside jobs as consultants, speakers and corporate board members. The exact compensation is hard to determine because the report, which lists income from cash and stocks, often doesn’t include the value of stock options.

Eight senior managers with outside jobs, including Katehi, held three or more outside paid positions in 2014. That would exceed the new policy’s maximum of two, though UC will apply the limit only to new positions rather than ask administrators to resign from existing ones.

The biggest earner in 2014 appeared to be Mark Laret, chief executive officer of UC San Francisco Medical Center, who earned $589,820 serving on the boards of medical firms Nuance and Varian, according to UC records. In 2014, Laret earned $1.59 million in salary and other compensation from UC.

Katehi has been on paid administrative leave since April 27 as outside investigators look into allegations of misusing student funds, nepotism and misstating her role in hiring online image consultants. She has denied any wrongdoing.

Kamer would not comment Thursday on the UC changes, saying in an email that “because of its extreme bias and unwillingness to correct erroneous reporting, we are no longer interacting with the Sacramento Bee.”

Katehi’s suspension followed a series of reports in The Bee about the chancellor, and Kamer and Katehi’s attorney, Melinda Guzman, have been critical of its coverage. Guzman on Thursday also criticized the Los Angeles Times.

For instance, Kamer has claimed publicly that a Bee story Sunday incorrectly stated that Katehi held three outside positions in 2014 for which she was paid: the textbook publisher Wiley & Sons; EMAG Technologies, a company in which she has ownership; and the National Science Foundation Division of Electrical Communications and Cyber Systems.

Kamer maintained that the NSF “position is NOT compensated.” Katehi’s own financial disclosure forms show she received $1,520. The reporting form is available online.

Kamer also has claimed that Katehi “never served on the DeVry board.”

According to a UC Davis spokeswoman, Katehi accepted the appointment to the DeVry board at a meeting in Weston, Fla., from Feb. 15-18, where she attended a DeVry board orientation and meeting. DeVry paid for her travel to the meeting, for which she took vacation days, and Katehi resigned days after the appointment became public in March. She did not receive compensation.

The uproar over the DeVry seat led state legislators to hold hearings on the outside compensation policies of California’s public university systems in April. The state budget this year also included language directing UC leadership to review and make changes to the policy.

“Our board of regents and our compensation committee took this very seriously, as we take our relationship with the state leaders and we take our relationship with the public very seriously,” Reiss said.

Despite that, she said conflicts of interest among senior management are “neither prevalent nor rampant” in the UC system.

To come up with its recommendations, the committee reviewed the policies of other U.S. universities. It could not find any that banned moonlighting and very few that limited chancellors and other senior managers from serving on boards and receiving outside compensation, she said.

“We agree that an outright ban is an overreach,” Reiss said. “It could hurt UC’s ability to attract talent and would deprive UC of the benefits some of these affiliations bring.”

The proposed policy applies only to the university’s 165-member Senior Management Group, which includes Napolitano, campus chancellors, medical center chief executive officers and directors of national laboratories, as well as some high-ranking administrators that report directly to them. Similar policies for staff and faculty won’t be revised, according to UC officials.

“I’m extremely comfortable with this,” said UC regent Sherry Lansing. She said that she had to go through the same process as a corporate executive and that it helped her to avoid unintentional errors. “It was not a difficult process. It was a common process and I respected it.”

The outside professional activities policy for senior management was last revised in 2010 after public outcry over the extensive activities of some campus chancellors. Faculty policies underwent a major revision in 2014, and there are no current plans for additional revisions, UC spokesperson Dianne Klein said.

McCarty called the vote “a solid first step toward curtailing unethical UC moonlighting,” but said it does not go far enough. He wanted the regents to add language that would have required the board to vote annually on outside board memberships.

“I thought that would bring about more transparency and sunlight on the process, and some accountability,” McCarty said.

Diana Lambert: 916-321-1090, @dianalambert

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