<\/p>\n
State Sen.\u00a0Aisha Wahab, D-Hayward, right, stands with\u00a0Gov. Gavin Newsom\u00a0and, from left, Assemblymember Mia Bonta, D-Alameda,\u00a0and\u00a0Assemblymember Liz Ortega, D-San Leandro, in March.\u00a0 Wahab is asking lawmakers to approve SB1141, which would to stop companies from doing business with the University of California if UC executives are also on the company’s payroll.\u00a0<\/p>\n
Jessica Christian\/S.F. Chronicle<\/p>\n
Suresh Gunasekaran earns more than $2 million a year as chief executive of\u00a0UCSF Health. He also sits on the board of a company that sells software to five\u00a0UC hospitals and pays him hundreds of thousands of dollars a year in stock and retainers.\u00a0A Bay Area senator wants to stop companies from contracting with the public university if they have UC executives on their payroll.\u00a0<\/p>\n
Colin Peck\/Special to the Chronicle<\/p>\n
Johnese Spisso, who earns more than $2 million a year as chief executive of the UCLA Hospital System, also sits on two boards that do business with UC and pay her hundreds of thousands of dollars a year in retainers and stock, or in substantial university donations. A Bay Area senator wants to stop companies from contracting with the public university if UC executives are on their payroll.<\/p>\n
Provided by UCLA Health<\/p>\n
Kathryn Lybarger is executive vice president of AFSCME 3299, UC’s largest union, which is sponsoring a bill to stop companies from doing business with the University of California if UC executives are also on the company’s payroll.<\/p>\n
Provided by AFSCME Local 3299A proposed state bill would bar companies from contracting with the University of California if any executive or their family is paid by the business, including through board service, with violations triggering a 10-year ban.University of California executives have received lucrative compensation for board roles with companies that do business with the system, with some earning hundreds of thousands of dollars a year in stock and retainers.The bill passed its first committee vote and, if enacted, would make California the first state to impose such a restriction on university-industry board relationships.<\/p>\n
University of California executives routinely sit on the boards of companies that do business with the system \u2014 a common arrangement around the country that helps connect schools with industry.<\/p>\n
But they are also lucrative moonlighting deals<\/a> that raise questions about influence and access, and a Bay Area state senator wants those relationships to end at UC.<\/p>\n Article continues below this ad<\/p>\n Sen. Aisha Wahab, D-Hayward, is asking fellow lawmakers to prohibit companies from contracting with UC if any university executive or family member is paid by the business \u2014 including sitting on their board of directors \u2014 and to extend the ban for at least one year after payment ends.\u00a0<\/p>\n Violations would trigger a 10-year ban on business ties between that company and UC.\u00a0<\/p>\n If Senate Bill 1141<\/a> becomes law, California would be the first state to prevent companies from engaging in such alliances.\u00a0<\/p>\n San Francisco Chronicle Logo<\/p>\n Make us a Preferred Source to get more of our news when you search.<\/p>\n <\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n \u201cThis is a simple bill that literally prevents corruption,\u201d Wahab told the Senate Education Committee last week at a hearing on the legislation. \u201cAs a publicly funded institution, UC has a legal obligation to ensure that contracting decisions are made solely in the best interests of the university and the public it serves.\u201d<\/p>\n Article continues below this ad<\/p>\n UC\u2019s lobbyist argued at the hearing that such a law would trigger an \u201cimmediate operational and instructional crisis\u201d across the university, and that no conflicts of interest occur because rules require executives to recuse themselves when faced with decisions that would personally benefit them.\u00a0<\/p>\n The committee approved the bill<\/a> by a vote of 4-2 and sent it to the Senate Judiciary Committee.<\/p>\n Neither Wahab nor the bill\u2019s sponsor, UC\u2019s largest employee union, Local 3299 of the American Federation of State, County and Municipal Employees, flagged any actual conflicts of interest resulting from the executives\u2019 secondary jobs. They said it was impossible to know if such conflicts exist.\u00a0<\/p>\n But even the appearance of a conflict of interest is a problem, they said, adding that executives working for vendors also raises questions about whether other companies that don\u2019t have university leaders on their boards can get a fair shot at working with UC.<\/p>\n Also tainting the arrangement is that so much money changes hands, they said.<\/p>\n Article continues below this ad<\/p>\n Lucrative board roles draw scrutiny<\/p>\n UCSF Health\u2019s chief executive, Suresh Gunasekaran, for example, sits on the board of CareDX, a Bay Area company that sells software to five UC hospitals. The company gave Gunasekaran<\/a> $400,000 in company stock, and each year pays him additional stock worth $225,000 and a $50,000 retainer.<\/p>\n Johnese Spisso, chief executive of the UCLA Hospital System, sits on two boards that do business with UCLA Health: Welltower, which leases space to UC, and Vizient, which sources supplies. In return for Spisso\u2019s service, Vizient has donated to the UCLA Foundation, including $240,000 in 2022, records for that year show. Welltower pays<\/a> its non-employee board members an annual retainer of $110,000 and $200,000 a year in deferred stock.<\/p>\n From 2019 to 2021, Spisso also sat on the board of Douglas Emmett, a commercial real estate company that leases buildings to UCLA and whose chairman is a large donor to UCLA Law. That company pays non-employee board member directors $220,000 in equity each year. Dorene Dominguez, appointed to the UC Regents last month, serves on that board. But as a regent, rather than an employee, her service would not trigger a prohibition under the bill.<\/p>\n Board service is often lucrative for university executives, who are typically well paid already. As of 2024, UC was compensating Gunasekaran and Spisso each about $2.4 million a year, records show.\u00a0\u00a0<\/p>\n Article continues below this ad<\/p>\n Another advantage to being on a company board is that university leaders can connect with industry trends and \u201cinnovation pipelines,\u201d said Lynn Pasquerella, president of the Association of American Colleges and Universities.<\/p>\n Such relationships are seen as mutually beneficial, with companies gaining expertise from university leaders, \u201cespecially in areas like healthcare, artificial intelligence, and life sciences,\u201d\u00a0 she said.\u00a0<\/p>\n No companies showed up in Sacramento on March 25 to oppose SB1141. But UC did.<\/p>\n UC warns of operational fallout<\/p>\n If the bill becomes law, it \u201cwould trigger an immediate operational and instructional crisis across the UC\u2019s 10 campuses and five medical centers,\u201d Tyler Aguilar, a UC lobbyist, told the education committee.<\/p>\n Article continues below this ad<\/p>\n The bill defines compensation as anything worth $500 or more. So if a UC executive earned even a $500 dividend from a company doing business with UC, the violation would mean that company could not contract with UC for 10 years, he said.\u00a0<\/p>\n \u201cIf we can\u2019t renew our contract with Microsoft, our students and faculty can\u2019t do their work,\u201d he said, offering that vendor as an example. He said board service also helps ensure that products are consistent with UC\u2019s needs.<\/p>\n Aguilar said UC is already governed by a \u201crobust suite\u201d of conflict-of-interest protections. These include state laws that bar employees from having a financial interest<\/a> in certain activities; UC\u2019s Conflict of Interest Code<\/a>,which requires officials to disclose private economic interests and recuse themselves from making decisions in which they have a stake; and other UC policies<\/a> aimed at reining in conflicts<\/a>.<\/p>\n