SECRETS of the REGENTS


by Charles Schwartz, Professor Emeritus, University of California, Berkeley      
schwartz@physics.berkeley.edu                         July 17, 2005
Available on the Internet at    http://socrates.berkeley.edu/~schwrtz


Several recent developments show how the Regents of the University of California have been sneaking away from their obligations to conduct business in the open, as required by state law. This starts with the Committee on Investments, then spreads to all regental meetings, with secretized discussions identified on the topics of pension futures and long range planning for the whole university.


Blowback from the Lawsuit

     In 2003 I, along with some other plaintiffs, filed a lawsuit against the UC Regents, charging that they had overstepped the bounds of state law in their conduct of managing the investment of many billions of dollars in pension and endowment funds.  We charged that they were wrong to conduct closed meetings to discuss and decide on major issues of investment policy and strategy, where the state open meetings law allowed closed meetings only for the limited purpose of considering the purchase or sale of specific investment items, the advance disclosure of which in public session might lead to disadvantageous changes in the market price.

     The trial court ruled in our favor and ordered UC to disclose the Minutes, tape recordings and other documents from several closed session meetings, in 2000 and 2002, when the regents dealt with some major investment policy issues. UC’s lawyers appealed those rulings all the way up to the California Supreme Court, on a variety of claims, all to no avail.

     One question following those victories was this:  How would the Regents conduct their future business after this proven past abuse of the open meetings law?  At first, it seemed that scheduled meetings of their Committee on Investments had significantly fewer agenda items listed for Closed Session; but then this usage seemed to grow.  So, in May of this year, I made a formal request for documents related to Closed Session agenda items (other than those identified as Personnel Matters) from several recent meetings of the regents’ Committee on Investments. I sent that letter to the attorney in the Office of the General Counsel of the Regents who had handled these types of matters; I made reference to the previous lawsuit; and I asked specifically for Minutes, tape recordings, and other materials related to those Closed Sessions.

     A formal letter of response from that office (dated May 16, 2005) acknowledged receipt of my Public Records Act request; told me that a search for appropriate records was underway; and said this:
Please note that the University no longer tape records closed session meetings, so there are no tapes or transcripts that are responsive to your request.

     That was a surprise.  It prompted me to submit further inquiries about this change in policy and practice. Here is the detailed response, dated June 23, from the Office of the General Counsel (with my Q’s and their A’s), along with some of my comments interspersed.

Dear Professor Schwartz,
 
This is in response to your inquiries regarding the change in University practice to no longer make audiotapes of closed session Regents meetings.  Here are the University's responses to your inquiries; please let me know if you have any questions.

1. Is it correct that this change in policy/practice relates to all closed session meetings of The Regents and committees thereof and not just to the Committee on Investments?  
 
Correct, the University's current practice is not to audiotape any closed sessions of meetings of the Regents or its Committees.  

2. When was this change in policy/practice decided?  
 
The University's practice of not making an audiotape of closed session Regents meetings began in November, 2003.

November 2003 is an interesting date. That was after the trial court had ruled that certain past meetings of the Regents’ Committee on Investments had been improperly closed and therefore the minutes and tape recordings of those meetings should be made public; but at that November date UC was still appealing that ruling to higher courts. In January 2004 their appeals were exhausted and the relevant documents were made public.  Of the several meetings involved, only one tape recording was “found” and transcribed; for the others we got only the minutes.

The Q&A continues:

3. Who are the University officials responsible for this change?   
 
The change of practice was implemented by the Secretary of the Regents, in consultation with the General Counsel.
 
What a laugh! Are we supposed to believe that this change – protecting the secret-but-official deliberations of regents from any future court scrutiny – was not ordered by some regents? I don’t know if it is illegal for the responsible regents to hide their identity; but it certainly is cowardly.

And finally:

4.  Please provide me with copies (under the California Public Records Act) of any and all documents and other records related to this change in policy/practice.  
 
If, in fact, this change in policy/practice was discussed in any closed session meeting(s) of The Regents or any committee thereof (or, in any open session for that matter), my request for documents should include Minutes and other documents related to those meeting sessions.  
 
The only written record related to the decision not to create audiotapes of closed session meetings on a going-forward basis, is a single sentence contained in the minutes of a closed session Regents meeting in November, 2003.  The minutes themselves are exempt from disclosure pursuant to the California Public Records Act and the Bagley Keene Act, as pertaining to litigation matters.  However, I have reviewed the minutes and can assure you that there is only one sentence on this topic, which states:  "Mr. Holst noted that closed session meetings were no longer being tape recorded."

Mr. Holst is the General Counsel of the Regents.  You see how this works: They hold an illegally closed meeting to decide how to circumvent the law on open meetings; then they deny public access to records of that meeting on the grounds that the meeting was closed and therefore its records are not publicly available. I can imagine that further attempts to inquire into how that decision was made would be met with the objection of attorney-client privilege.

Revelations of Another Illegal Closed Door Meeting

     The Academic Council is the top body of the University faculty’s Academic Senate.  The chair and vice-chair of this body sit with the regents at almost all of their meetings, although they are not voting members of the Board.  Here is a portion from the Minutes of the Academic Council’s meeting of March 30-31, 2005, covering a report by the Chairman, Professor George Blumenthal, on items of interest from the Regents’ meeting earlier that month.

2) Pension issues: There was an extensive discussion on several pension plan issues in closed session, including the question of when contributions to UCRP might be expected to resume and plans for how those might be implemented. Options for how UC might convert some or all of its employees from a Defined Benefit Plan to a Defined Contribution Plan or Hybrid Plan were also discussed. The regents’ position at this time is that they are not prepared to move in the direction of changing UC’s Retirement Plan, independent of what may be required by state pension reforms.

     That such topics were discussed (extensively), and perhaps even a regental consensus arrived at, in closed session meeting, is a clear violation of the state’s open meetings law. I have examined the formal agenda for that March meeting of The Regents and there is no indication of any such topic scheduled for a Closed Session, so it may have been something that was just brought up during a Closed Session scheduled for other business; but such conduct is still in violation of the letter and the spirit of the law.

     Let me remind readers of the powerful language of Legislative Intent introducing the Bagley-Keene Act, to which the UC Regents are subject.  This is California Government Code Section 11120.

   It is the public policy of this state that public agencies exist to aid in the conduct of the people's business and the proceedings of public agencies be conducted openly so that the public may remain informed.
   In enacting this article the Legislature finds and declares that it is the intent of the law that actions of state agencies be taken openly and that their deliberation be conducted openly.
   The people of this state do not yield their sovereignty to the agencies which serve them.  The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know.  The people insist on remaining informed so that they may retain control over the instruments they have created.
   This article shall be known and may be cited as the Bagley-Keene Open Meeting Act.

     Of further interest is the ballot statement in support of a Constitutional Amendment, approved by California voters in 1970, which placed the Regents of the University of California under Legislative mandate for open meeting rules.

  The second, and most important argument for this Constitutional Amendment is that the University of California is supported by the people of California.  We, the people, have a right to know how the decisions affecting our tax money, and our sons and daughters, are made; who is making them and why.  By requiring open meetings we help guarantee that all decisions will be made in an open, logical, and democratic manner with all facts present and all viewpoints noted.  We also eliminate the chance for "backroom politics" to play a role in the decisions. …

  Moreover, the Board of Regents is a branch of the state government.  As with all other state agencies, there is no good reason why the decisions made by the Board should not be debated and voted upon in the public view.  In fact, there is every reason to guarantee that the public trust assigned to the regents will be administered openly, not privately or secretly.  If the people are to understand and support their University, if they are to have faith not only in the University but in all operations of government, they must have legal guarantees that no action will be taken "behind their back."  Proposition 5 will help provide that guarantee, will protect the public interest. And will provide the University with an added measure of public confidence.

UC Long Range Guidance Team

     In January, UC President Robert C. Dynes announced that he had appointed a UC Long Range Guidance Team – composed four Vice Presidents, three Chancellors, two Faculty leaders, and seven Regents – with the following charge:

• Examining and clarifying the mission, focus, and strategic intent of the University of California for the next 20 years,
• Identifying a concise set of goals, objectives, strategies, and measures to guide the University toward its chosen direction, and
• Focusing and aligning University resources, initiatives, and the talent and energy of the leadership team to achieve those strategic goals and objectives.

     Given the budgetary problems of recent years, many people have been worrying about the future of this great public university; and intensive study of long-range planning is certainly a good thing.  But why should this be done in secret?

     I made several inquiries of top UC officials and was informed that meetings of this Guidance Team would not be open to public observers.  I submitted my objections to such secret proceedings and made a formal request for related public records.  On June 30, I was informed that the Guidance Team held its first meeting in May, with future meetings planned at two month intervals.

     It is explicit that this Team is intended to shape and guide future decisions by The Regents about what directions the University shall take.  The particular regents chosen to be part of this Team are dominant members of the Board – they chair the most important committees and are forceful speakers at open meetings.  Thus one is led to conclude that the primary purpose of this Team – as distinct from any one of many administrative task forces that the President might create to prepare studies on particular issues – is to form an advanced consensus among the regents about fundamentally important issues, and to do this by means of closed meetings.  That sort of tactic – evading the public deliberations requirement of the open meeting law – is something that the courts have in past cases found to be illegal.

Portfolio Discrepancies

     It has been customary for the Office of the Treasurer of the Regents (OTR) to provide a variety of data on the website www.ucop.edu/treasurer and one of the regular features there was a quarterly listing – a portfolio – of the investment holdings of the university’s pension and endowment funds.  I have frequently looked at that information; and I did so sometime in February of this year, downloading the equity and bond portfolios compiled as of December 31, 2004. Sometime during March I looked again and found that all of the portfolio information, current and previous listings, had disappeared from the Treasurer’s website. I sent an email inquiry to that office and received a reply as follows,
We are posting documents consistent with materials provided to The Regents Committee on Investments in open session.

     I then looked more closely at the report prepared for the Regents’ Committee on Investments at their February 15, 2005, meeting and found that the data given there, listing components of the UCRP investments as of December 31, 2004, was indeed different from the data I had downloaded in their portfolio for that same date.  It seemed that almost $1 billion in funds previously designated as placed with external Small Cap Domestic Equity managers had disappeared.

     This could easily be imagined as a minor clerical error.  But there has been no public acknowledgment or any other explanation given out, nor has any of the portfolio data been restored on the public website. The Regents and their Treasurer have a fiduciary responsibility to keep the beneficiaries of these investment plans well informed about what is going on; and that implies admitting and clearing up any mistakes or other discrepancies in their reported data.

     The reference to “open session” in the above-quoted email suggests that perhaps this problem, the billion dollar discrepancy, was discussed in the Closed Session part of that February 15 meeting of the regents.  But that would be an improper use of the law, which provides for closed meetings only on narrowly specified topics – and covering up an embarrassing situation is not one of those.

     I wrote to the University Auditor about this and requested an investigation. His report, released July 15, says the discrepancy was the result of a “programming error” in OTR and there was no misconduct. The report, however, says nothing at all about whether there was discussion of this matter at a closed regents meeting.

Remedies

     California Government Code Section 11130 allows any interested person to bring legal action against public officials who violate the terms of the Bagley-Keene Open Meeting Act; and among various sanctions, the judge may order the future tape recording of all closed sessions. Section 11130.7 also provides criminal penalties for any member of a state body who attends a meeting in violation of the Act with the intent of depriving the public of information to which the public is entitled.

     It would be nice to think that there are members of the Board of Regents who care enough about their public responsibilities to insist that the current mess of secret proceedings be cleaned up; but perhaps that is expecting too much.