University of California Regents Use Public Funds for Private Profit

by Project Censored
Published: Updated:

Experts identify multiple conflicts of interest among an elite group that oversees investments for the University of California. A few members of the Investment committee from the University of California (Richard Blum, Paul Wachter, and Gerald Parsky) have been making private and unregulated real estate and equity deals since 2003.

In 2009 the University of California Regents cut costs by laying teachers off, increased student tuition by 32 percent, eliminated classes, and made it clear that out of state students would have to pay higher tuition fees. The Regents spent more money on construction projects and giving bonuses to top workers, while they paid janitorial employees less. They assured Wall Street bond underwriters that periodic tuition increases would help pay off hundreds of millions of dollars in new construction loans. Many people at the UC protested against the Regents saying they are privatizing the University to benefit Corporations.

The UC Regents are straying from the traditional investments and are taking chances by making risky business investments and are taking over the UC’s investment strategy. The Investment committee hired private managers to handle the unregulated deals. Many of the deals are loosing the UC’s endowment and retirement funds. The Regents funded $2 billion in private deals in which Arnold Schwarzenegger, Richard Blum, Sherry Lansing, and Paul Wachter made money. UC invested $748 million into seven equity deals in which Blum also had investments. As a member of the regent’s investment committee, Blum oversaw these investments.

Title: The Investors’ Club: How the University of California Regents Spin Public Money into Private Profit.
Publication: Spot. us, August, 18th, 2010
Author: Peter Byrne

Student Researcher: Jacquelyn Waring, Sonoma State University
Faculty Evaluator: Heather Flynn, Sonoma State University