Time for explanation and examination at UC

UC Davis Chancellor Linda P.B. Katehi’s service on outside boards of directors has drawn scrutiny from the Legislature.
UC Davis Chancellor Linda P.B. Katehi’s service on outside boards of directors has drawn scrutiny from the Legislature. Sacramento Bee file

Big public universities are complex institutions. The people who run them must be part CEO, part academic, part rainmaker, part diplomat.

And part mover and shaker. A major aspect of the job, at the University of California and elsewhere, involves developing relationships with private sector players that rely on universities for workers and wisdom.

Though the UC has one president managing the system, the chancellors who run its 10 campuses operate like college presidents in their own right. They join nonprofits and community organizations, hobnob with potential donors, sit on boards of corporations and generally nurture strong community contacts.

Why UC Davis Chancellor Linda P.B. Katehi thought it was appropriate to nurture a for-profit college targeted by federal regulators has mystified many in the days since she was forced to step back from the board of the DeVry Education Group. Even she may be asking herself at this point what she was thinking.

But while she swiftly resigned from the $70,000-a-year board seat, after state lawmakers raised a ruckus, and apologized Friday, the damage lingers.

It hasn’t helped to learn that she took the DeVry position before it had been approved by UC President Janet Napolitano or vetted by the university’s general counsel. Or that she previously received about $420,000 in stock and cash as a board member for a corporation that sells university textbooks; this, even as cash-strapped students were begging for free, digital alternatives in UC classrooms.

Katehi said Friday she plans to donate her stock compensation from that gig to a scholarship fund for UC Davis students. That’s a terrific first step, but she owes the public a much more complete explanation. Just saying that she felt she could help DeVry isn’t sufficient. Until she explains herself, these questions won’t go away.

Meanwhile, the controversy raises concerns about whether the University of California is doing all it can to balance its community role with potential conflicts of interest. Katehi is far from the only UC chancellor who serves, with and without compensation, on boards of corporations and nonprofits.

University policy allows its senior managers to serve with pay on as many as three for-profit boards of directors – a restriction that the Board of Regents approved about a decade ago, after the then-chancellor at UC San Diego was criticized for nearly doubling her compensation by serving on 10 boards of directors.

Such service can be useful to an academic managing a campus. Local boards typically include seasoned executives who can offer business advice and community leaders who can help generate public support and private contributions.

But it can also pose conflicts. As a board member of John Wiley & Sons from 2012 to 2014, for instance, Katehi had a duty to help the textbook supplier turn a profit. As UC Davis chancellor, however, she had a competing responsibility to her students to keep costs down, and to the taxpayers of California.

Chancellors don’t buy textbooks; faculty members decide what books to use in their classes. But with Wiley’s books amply stocked at the UC Davis bookstore, the relationship creates at the very least an appearance of conflict.

University records for the past several years reflect the range of approaches chancellors have taken. Some scarcely take board compensation at all. Others take stock for advising startups. Still others have served on major companies such as Procter & Gamble and Facebook. UC Berkeley Chancellor Nicholas Dirks’ most recent disclosure statements showed that in 2014, the vast majority of his board earnings, about $54,000, went to the campus.

Denying chancellors the opportunity to serve on paid boards might eliminate confusion. But with pressure to limit tuition and state funding and to cap UC’s famously generous pensions, paid board seats are among the few remaining perks UC can offer potential campus leaders in recruiting.

Katehi’s $424,360 annual salary may sound to some like a king’s ransom, but highly talented executives can command twice that at Ivy League institutions and universities in some other states.

The UC Board of Regents and Napolitano should conduct a thorough – and transparent – review of outside activities and compensation. Under the current policy, invitations to join boards are vetted by the university’s human resources department and general counsel, then sent for approval to Napolitano. The buck stops with her in determining whether a seat poses a potential conflict.

Something clearly fell through the cracks with DeVry, and someone clearly missed the questionable optics of Katehi’s Wiley & Sons board seat. Had the policy worked, much pain might have been spared Katehi and the university.

On Friday, the chairman of the Assembly budget subcommittee overseeing education finance, Assemblyman Kevin McCarty, D-Sacramento, called for Katehi’s resignation as chancellor. Meanwhile, the chairman of the Assembly Higher Education Committee, Assemblyman Jose Medina, D-Riverside, called for oversight hearings as the Legislature considers UC funding.

We share their disappointment and support demands for answers. Although Katehi has been successful raising money and helping to enhance what already was a top-notch university, she has a blind spot when it comes to seeing how her actions will be viewed outside her campus.

Pitchforks are big in public discourse at the moment; these are the days of public figures who bark “you’re fired!” and compare hand sizes. We’re not those people. We’d like Katehi to be successful.

But a university, complex as it is, needs to ensure its executives will make the right choices – and remember that the job is also part common sense.