University of California senior managers will face tougher scrutiny on whether moonlighting activities pose real or perceived conflicts of interest under new rules approved Thursday by the Board of Regents.
The rules add another level of approval for paid outside activities and create a new independent review committee to assess conflicts of interest and potential damage to the university's reputation. The rules also decrease the number of for-profit boards senior managers can join from three to two and require a statement describing the benefits to UC from the outside activities.
"The changes...would be among the most careful and restrictive in the nation today," said Regent Bonnie Reiss, who presented the item during a board meeting in San Francisco. "I am confident that our president, our board and our chancellors are fully committed to UC, to ensuring our reputation and maintaining our public trust."
The stricter rules were passed after disclosures that UC Davis Chancellor Linda Katehi had taken paid board positions with the DeVry Education Group, which is under federal investigation for allegedly defrauding students, and John Wiley & Sons, a college textbook publisher. Katehi had received permission from the former and current UC presidents for the textbook company position but not the DeVry board seat.
Reiss said the disclosures, first reported by the Sacramento Bee, "reflected poorly on UC." The revelations prompted both a state legislative hearing on UC moonlighting and a directive in the state budget bill passed this year to review and adjust policies on outside activities.
She said a national review conducted by UC found that no university entirely banned senior managers from paid outside activities and very few limited the number of board positions they could accept.
"We agree that an outright ban is an overreach; it could hurt UC's ability to attract talent and it would deprive UC of the benefits some of these affiliations bring," Reiss said.
Moonlighting was not a rampant problem at UC, Reiss said, adding that only three of 10 chancellors serve in paid board seats.
UC policy encourages its senior managers to serve on scientific boards, foundations and corporations as a way to share their expertise and learn about other administrative and educational practices.
In 2014, 49 of UC's 180 senior managers reported income from outside activities, receiving a total $1.77 million. That represented a decrease from the $2.2 million reported by 52 managers the previous year. Senior managers include the president, chancellors, medical center chief executives officers, laboratory directors, some deans and other top administrators.
The highest-paid senior manager was Mark Laret, chief executive officer of the UCSF Medical Center, who reported $589,820 in total compensation for serving on the boards of two for-profit firms, Varian Medical Systems of Palo Alto and Nuance Communications, a Massachusetts software company. Laret is one of the UC system's highest-paid employees, earning $1.6 million in 2014.
Other top earners in 2014 were David Feinberg, who stepped down last year as head of UCLA's health and hospital systems and reported $201,500 from OSI Systems Inc., Steward & Lynda Resnick Revocable Trust and Douglas Emmett Inc.
Paul Alivisatos, who resigned this year as director of the Lawrence Berkeley National Laboratory, reported $140,000 for work as a consultant for Nanosys, an advisor to Samsung Electronics Co. Ltd., a speaker for Exxon Mobil and editorial positions for two nonprofits. Alivisatos was recently awarded the National Medal of Science by President Obama for his work on nanoscience.
In a discussion, Regent John Perez cautioned against creating "overbureaucratic impediments" for people wishing to participate in unpaid outside activities on their own time. Reiss said the new rules would apply to paid time, although unpaid positions are also reviewed to make sure they don't overly impinge on a manager's UC duties.
Regent Sherry Lansing said the rules would help prevent managers from making "unintentional errors" of judgment. She cited her own experience relying on conflict-of-interest rules to help guide her as chairwoman of major film studios.
Only Regent Richard Blum voted against the proposal, without comment.
The regents also approved a 3% raise for 19 senior managers, including all chancellors except Katehi. Katehi is under investigation for alleged nepotism, misuse of student fees and lying about her role in social media contracts. She denied any wrongdoing and has filed a grievance against the university.
With the pay hike, chancellor salaries will range from $394,655 at UC Riverside, UC Merced and UC Santa Cruz to $795,675 at UC San Francisco.
Regents also approved the final design and financing for UC Merced's $1.3-billion campus expansion. The expansion will nearly double the campus' physical capacity by 2020, enabling it to accommodate 10,000 students from the current enrollment of 6,700.
Several students spoke at the meeting, urging regents to continue supporting those in need of food and shelter. Regents discussed a major new study showing that 4 of 10 UC students do not have a consistent source of high-quality, nutritious food.