CUE Gains Disclosure of Funds

The ongoing dispute between the combined efforts of the Coalition of University Employees and San Jose Mercury News against the University of California Regents came to final closure when the California State Supreme Court refused to hear UC’s appeal.
The dispute between CUE and the San Jose Mercury News and the UC Regents revolves around investment funds. The UC invests money in a number of venture capital funds. The concern among university employees, represented by CUE, is that their investments are not yielding any profit or have even lost money. CUE has been fighting for disclosure of investment information on behalf of UC, and UC has finally been forced to reveal their venture capital portfolio.
Trey Davis, a representative of UC, claimed that the UC Regents have over $55 billion in assets.
According to Jason Barnett, a CUE spokesman, and Mary Higgins, CUE executive board member from UC San Francisco, approximately $40 billion of the $55 billion assets are cash. Higgins stressed that the UC is mishandling the funds which is ‘a concern because we were losing money.’
Barnett explained UC funds are supported by California’s taxpayers and ‘within the last year, UC retirement funds had the second-worst performance.’ He argued that over the last three years there have been 20 percent losses in the budget, which is more than the 10 percent benchmark that the state set as a regulation.
‘University of California has to invest for the employees for their retirement and endowment funds,’ Davis said. ‘[These funds are then invested in] stocks and private equity venture capital.’
According to Barnett, UC refused to publicly disclose the Investment Returns Reports to anyone. This has been an ongoing struggle and the issue was finally taken to court.
Barnett explained that the case began earlier this year at the Alameda Superior Court, where the ruling was in favor of CUE and San Jose Mercury News. The UC Regents asked for the ruling to be reconsidered, but their request was rejected. UC challenged this ruling with the California State Appellate Court, and the ruling was again in favor of CUE and San Jose Mercury News.
Davis explained that since the UC is forced to disclose the ‘confidential data,’ certain venture capital firms, such as Sequoia Capital, are stopping business with UC. Davis said that such actions will lead to less profit in the UC funds.
Davis also noted that in the end, disclosing this information results in the loss of valuable venture capitals.
‘[The loss of venture capitals] ultimately hurts students and faculty who benefit from our investments,’ Davis said.
Higgins said that ‘confidentiality agreements’ are illegal. In court, UC referred to the agreements as capital trade secrets.
Barnett stated that UC is making ‘risky investments and losing a lot of pension money, but they are losing taxpayers’ money in this difficult budget time.’
Barnett accuses UC of mismanaging funds, which affects the 18,000 employees, represented by CUE, whose funds are in the University of California.
According to Jean Miller, president of CUE Irvine Local Line, UC hired private lawyers that charged between $500 to $600 per hour. CUE lawyers estimated that the final lawyer fees were between $200,000 to $250,000. Both sides confirmed that UC will use the funds it has to pay for private lawyers.
Miller said some venture capitals have revealed the Investment Returns Reports. She also claimed that companies dealing with state tax money should not have a confidentiality agreement because they are dealing with public funds. These public funds, not private funds, are crucial for UC.
‘The lawsuit has been about public information and our members’ right to know how their money is being invested,’ Barnett said.
Higgins added that the information that will be disclosed was possible under the Freedom of Information Act and fears that UC will not continue to provide the Investment Returns Report. She states that ‘this is not a budget crisis, it’s a management crisis.’

The ongoing dispute between the Coalition of University Employees and combined efforts of the San Jose Mercury News against the University of California Regents came to final closure when the California State Supreme Court refused to hear UC’s appeal.
Trey Davis, a representative of the UC, claimed that the UC Regents have over $55 billion in assets.
According to CUE spokesman Jason Barnett and Mary Higgins, CUE executive board member from UC San Francisco, approximately $40 billion of the $55 billion assets are cash. Higgins stressed that the UC is mishandling the funds which ‘became a concern because we were losing more money.’
Barnett explained UC funds are supported by California’s tax payers and ‘within the last year, UC retirement funds had the second-worst performance.’ He argued that over the last three years there have been 20 percent losses in the budget, which is more than the 10 percent bench mark that the state set as a regulation.
‘University of California has to invest for the employees for their retirement and endowment funds,’ Davis said. These funds are invested in two types of bonds, ‘public stocks and private equity venture capital; to invest in venture capital there has to be an invite.’
According to Barnett, UC was very hesitant and refused to publicly disclose the IRR to CUE and SJ Mercury News. This has been an ongoing struggle for a few years and the issue was finally taken to court.
Barnett explained that his case began earlier this year at the Alameda Superior Court, where the ruling was in favor of CUE and SJ Mercury News. The UC Regents asked for the ruling to be reconsidered, but their request was rejected and the UC to challenged this ruling to the California State Appellate Court, and again the ruling again was in favor of CUE and SJ Mercury News.
Davis explained that since the UC is forced to disclose the ‘confidential data’ certain venture capitals are withdrawing their invite, such as the firm Sequoia. Davis said that actions such as these will lead to less profit in the UC funds.
Higgins said that ‘confidentiality agreements’ are illegal and in court, UC referred to the agreements with the capital ventures as trade.
Davis also noted that in the end, disclosing this requested information results in the loss of these very valued venture capitals, which ‘ultimately hurts students and faculty who benefit from our investments.’
Barnett states that the UC is making ‘risky investments and loosing a lot of pension money, but they are losing tax payers’ money in this difficult budget time.’
Barnett accuses UC of mismanaging funds, which dramatically affects the 18,000 employees CUE represents. Barnett added, the UC ‘Has the money, just a question on how they want to prioritize it.’ According to Barnett, within this past year Joseph Mullinix, senior vice president of finance of the UC Regents, received a $80,000 ‘performance bonus’ and David Russ, treasurer of UC Regents, received a $171,000 bonus
Although Barnett said that as student tuition increases so does the pay for these ‘top-dogs,’ Davis affirmed that there is no correlation.
According to the President of CUE Irvine Local Line Jean Miller, the UC hired outside private lawyers that charged between $500 to $600 per hour. CUE lawyers estimated that the final lawyer fees were anywhere between $200,000 to $250,000. Both sides confirmed that the UC will use the funds it has to make payment arrangements for private lawyers.
Miller challenges Davis’s business ethics by stating that some venture capitals have revealed the IRR and the disclosed data. She also claimed that companies dealing with state tax money should not have any confidentiality agreement because it is public funds for the UC campuses needs and not for private funds.
‘The lawsuit from the beginning has been about public information and our members’ right to know how their money is being invested,’ Bartnett said.
Higgins added that the information that will be disclosed was possible under the Freedom of Information Act and fears that the UC will not continue to provide the IRR. She states that ‘this is not a budget crisis, it’s a management crisis. ‘