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Lawmakers, Observers React to Tense UT System Meeting

Bob Daemmrich, Texas Tribune

Longtime employees of the University of Texas System said they could not recall a split vote on the board of regents, which has traditionally settled differences behind closed doors and presented a unified front. That changed on Wednesday, catching higher education observers and even some lawmakers off guard.

The board voted 4-3 — Chairman Gene Powell and another member were absent — in favor of commissioning an external review of the relationship between the University of Texas at Austin and the University of Texas Law School Foundation, an independently run fundraising organization. 

Their arrangement has been scrutinized since the departure of law school dean Larry Sager in 2011 and the revelation that he had received a $500,000 forgivable loan from the foundation.

The relationship between UT and the foundation has already been examined by Barry Burgdorf, the system's now-outgoing vice chancellor and general counsel, and is the subject of an ongoing internal system audit. Burgdorf's report was reviewed by the attorney general's office, which concurred with the findings that the set-up was "not appropriate."

The foundation's forgivable loan program was halted, and the law school's compensation practices were reconfigured. For some, the likely returns of further investigation appear paltry.

"I’m all for transparency," state Rep. Dan Branch, R-Dallas, the chair of the House Higher Education Committee and co-chair of the Joint Select Oversight Committee on Higher Education Governance, Excellence and Transparency, said after Wednesday's meeting. "I’m also for not wasting taxpayer dollars and unnecessary friction. I am a little concerned that we’re auditing audits of audits. When we start auditing audits of audits, maybe there’s a more efficient way to get things done."

But Alex Cranberg, a regent who voted in favor of further review, said that there are "numerous questions and concerns that are legitimate" regarding Burgdorf's findings. "As far as I’m concerned, even if I had confidence in the report, which I don’t," he said, "if another regent didn’t have confidence, I would vote to have another report done."

He added, "It may very well be the [external] report doesn’t change the conclusions, but there are very serious matters that cannot simply be dismissed as a witch hunt."

A "witch hunt" is exactly what state Rep. Jim Pitts, R-Waxahachie, at the inaugural hearing of the joint select oversight committee on Tuesday, said the regents have been engaged in. Their alleged target: UT-Austin President Bill Powers, whose relationship with the board has been tense for the last two years.

Following Wednesday's hearing, Pitts said he stood by his characterization and said he was "shocked" that the board opted to proceed with another review. "Given the concerns expressed by the legislature regarding the UT Board of Regent’s conduct," Pitts , who also chairs the House Appropriations Committee, said in a statement, "I don’t believe that it would be appropriate for the Board to use any public money to pursue this ill-conceived, unnecessary, and duplicative investigation."

He recommended the system save money by utilizing the attorney general's office, which already signed off on the Burgdorf report.

Before he was president, Powers was dean of the law school, and it was on his watch that the forgivable loan program began. Burgdorf's report noted stark differences between how the program was operated while Sager was dean as opposed to how it ran during Powers' tenure. However, multiple sources close to the System said some regents did not appreciate Powers being let off the hook.

The Texas Coalition for Excellence in Higher Education, which formed in 2011 out of concern for the way the regents of the state's leading university systems were behaving, saw ulterior motives in Wednesday's board action. "Unfortunately," the group said in a statement, "today's vote by the UT System Board of Regents has the appearance of a continued vendetta against UT-Austin and its leaders."

"Rather than focus on improving quality and excellence at our institutions, these Regents insist on undermining our institutions' leaders and creating a culture of distrust and micromanagement," the statement said.

They coalition also questioned how — "contrary to all recommended good governance practices" — Regent Brenda Pejovich, who leads the special committee that recommended the external review, can serve as on the System's board while also sitting on the board of the Texas Public Policy Foundation, a conservative think tank that has actively pushed controversial higher education reforms.

Pejovich, who does not speak often the press, said very little in Wednesday's meeting. In a UT System press release, she simply noted the Burgdorf report "did not fully address the issues of concern" to the committee.

Many of these concerns arose, the release said, as a result of information gleaned from massive information requests — including 40 boxes worth of open records requests and responsive materials from the last two years — made of UT-Austin by Regent Wallace Hall. Hall defended the large request, saying, "We have found that through the Texas Public Information Act, boards may learn about significant issues of concern to the public, the press or faculty from open records requests."

"The documents we reviewed are so informative and so surprising that we are convinced the Board must direct a further look into these issues," he said. It is likely that more requests are forthcoming —  Powers was recently directed not to delete any emails and to make sure his staff, Sager, and other key individuals in the law school issues don't delete theirs either.

The motion the regents approved to set aside Burgdorf's report and pay for a new review cited "fact discrepancies regarding transparency and disclosure of or consent to material compensation matters that have affected the confidence of the Law School faculty, the Board, and the public at various times," as well as "fact matters which may affect legal opinions regarding the independent status of the law school foundation, including that of the Attorney General."

As far what those discrepancies are, the regents who favor an external review were vague. Hall said that between 2007 and 2010, concerns about a lack of transparency in reporting compensation led to requests that the provost investigate but that such a project was "never seriously undertaken." He also cited an example from 2009, when he said the university's budget director notified the Powers that Sager’s deferred compensation had been reported to to the UT System, which, Hall noted, "contradicts statements from UT-Austin Administration."

In previous interviews, Powers has denied being aware of Sager's compensation arrangement.

After Wednesday's meeting, Powers told reporters, "Any implication in what occurred today that I have not been transparent or forthcoming with information to the system or when asked of regents is simply false."

(In light of that strong statement, it may be worth noting that the last time Powers wasreportedto be in imminent danger of losing his job was in 2012, when he offended regents by merely bloggingthat he was "disappointed" that the regents froze tuition at his university, which Powers contended "inevitably will affect our ability to teach our students and make new discoveries.")

The specific 2009 memo Hall mentioned was not provided to reporters. But there are publicly available details about a communication that is at least similar to the one he was referencing. For example, here is an excerpt from the Burdgorf report:

U. T. Austin is required to annually report to U. T. System the Top 10 compensated employees on its campus. In 2009, Dean Sager appeared on the list. The list was compiled by Mary Knight, Associate Vice President, U. T. Austin Budget Office. The process by which it is compiled is less than systematic. Ms. Knight simply calls around to the schools and colleges and inquires as to that department’s top earners. When Dean Sager appeared on the list, his regular Law School salary was listed in one column and $100,000 was listed in a separate column as deferred compensation. No mention is made of a forgivable personal loan. The $100,000 listed as deferred compensation was that year’s loan forgiveness. Thus, while President Powers may have had constructive notice of that amount of deferred compensation, the Top 10 report did not itself give him or his office any notice of the $500,000 forgivable personal loan Dean Sager had obtained.

"I think there’s been plenty of time, money and attention paid to this matter already," Regent Bobby Stillwell said at the meeting before casting a vote in opposition to further review. His — admittedly very rough — estimate was "a couple million dollars."

Regent Steve Hicks, another vote against external review, quizzed UT System Chancellor Francisco Cigarroa on how much a previous external review of the spending habits of Dr. Kern Wildenthal, the former president of UT Southwestern Medical Center in Dallas, had cost the system. That process included two external reviews and an internal review. Cigarroa said it cost the system about $530,000 and ultimately concluded that Wildenthal owed about $21,000, of which — after money he had given to the university as gifts were discounted — he was asked to pay slightly more than $6,000.

Cigarroa shied away from a direct answer to Hicks' questions about whether he supported another external review in the law school case, but he said he believed the "procedural weakness" in compensation practices at UT-Austin had been corrected.

Hicks, meanwhile, wasn't shy about his view. "I just can’t imagine that we should spend $500,000 of taxpayers money to beat this dead horse," he said, adding that other organizations on whose public boards he had served had been "management-driven and board-supported" but that the UT System had become "board-driven." He said it had caused moments in the last two years when he was "ashamed" to be a member of the board.

Regent Paul Foster, who presided as chairman at Wednesday's hearing and cast the deciding vote, thought the comparison to other boards was apt but saw it differently. "If I were on a public company board and came upon circumstances such as these, I would demand an independent investigation," he said.

Hicks said there was no doubt in his mind that the goal of continuing the review process was to hang blame on Powers. "I just don’t trust the intention of where this process is going," Hicks said. "It would be simpler to me, instead of spending money, if that’s the real goal, let’s just put that on the table and deal with it."

Nobody took Hicks up on that idea, though they did respond to his complaint that come regents were devoting up to 95 percent of their time digging into the flagship university rather than focusing on the whole system, which includes 15 institutions.

Hall countered that his only goal is "to make these institutions better." He said, "To suggest otherwise or to insinuate that there is something else going on is misplaced."

"It would be wonderful if cheering for our institutions was the sum total of what I think our responsibility is, but it's not," Hall said. "Some things we have to do are unpleasant, but it doesn’t mean we don’t do them."

But others outside the system have also observed that the board may be disproportionately Austin-focused.

In February, when the regents selected a new president for the University of Texas at Arlington, they were not all aware that their pick — Vistasp Karbhari, formerly the provost and executive vice president for academic affairs at the University of Alabama in Huntsville — was the defendent in a lawsuit stemming from a tragic 2010 shooting on the Huntsville campus.

It wasn't an obscure incident: The shooting was the subject of a major story in The New Yorker the same week Karbhari was selected.

In February, state Rep. Chris Turner, D-Arlington, told the Tribune that he did not know the full details of the regents' presidential search, but he observed, "I think very legitimate questions have been raised about the appropriateness of their focus on UT-Austin. People are right to raise questions asking if the regents are too involved in the details and day-to-day administration of our flagship university."

Turner also said he was looking forward to meeting and working with Karbhari, whose first day is June 1 and who by many accounts, despite the lawsuit, comes highly recommended.

Before voting against the latest review, Regent James Dannenbaum, whose days on the board are winding down, cautioned his colleagues to be wary of weakening the "competitive position of all of our UT component institutions." He said that determining the foundation's independent status should be "square one."

Discussions on the matter are and will undoubtedly continue to be a major point of discussion in the Legislature. There was already a hearing devoted to the law school foundation in the House Select Committee on Transparency in State Operations. The joint oversight committee on higher education governance, excellence and transparency will also likely look into the matter and its co-chairs have filed a major open records request — as have other individual lawmakers — to gather more information about the UT regents' activities.

One of the co-chairs, Sen. Kel Seliger, R-Amarillo, who also chairs the Senate Higher Education Committee, said he sees "nothing inappropriate" about seeking further review. "Clearly, what went on at the law school foundation was a source of concern," he said.

Though he added, "First and foremost, we expect the system will be mindful of their cost of operations."

Reeve Hamilton has interned at The Nation and The Texas Observer, for which he covered the 2009 legislative session. Most recently, he was a desk assistant at The NewsHour with Jim Lehrer. A Houston native, he has a bachelor's degree in English from Vanderbilt University.
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