UC reviews investment portfolio performance, controversial venture with Blackstone
The University of California Regents Committee on Investments discussed the performance of the UC’s portfolio of investments on Jan. 17, which currently sits at $157 billion in assets as of Jan. 15.
The UC’s investments — comprised of stocks and bonds, real estate and cash assets — fund the university’s endowment and retirement savings program. Working capital accounted for $19.7 billion of the total fund, with the majority of money allocated for retirement and pensions at $114.7 billion and the remaining $22.5 billion servicing the endowment.
Since 2014, the portfolio has grown at an average annual rate of 5%, whereas it grew at a rate of 2-3% from 2000 to 2013.
Jagdeep Singh Bachher, who signed on as the chief investment officer and vice president of investments for the UC in 2014, said the office’s strategic asset allocation drove higher rates of return.
In his presentation, Bachher touched on the UC’s decision, announced on Jan. 3, to invest $4 billion in Blackstone Real Income Trust (BREIT), the start of a long-term strategic venture with the private equity and real estate investment firm.
“Real estate is a good hedge in a recessionary environment, and the cash flows are certainly attractive to have in a portfolio of stocks and bonds,” Bachher said. “There’s going to be a fair bit of discussion on the investment we made with $4 billion in one investment in the BREIT with Blackstone, with the anticipation that over the next five years … when we liquidate we’ll earn a minimum of 11.25%.”
The venture became controversial for Blackstone’s alleged role in fueling rent increases in California, evicting tenants in its affordable housing units and spending to defeat a 2018 rent control measure.
The Council of UC Faculty Associations joined with UC unions to call for the UC’s divestment from Blackstone. Members of the Alliance of Californians for Community Empowerment (ACCE) spoke at the public comment session of the Jan. 17 Regents meeting in support of divestment.
“It’s ridiculous how money hungry you are to come into our communities and displace our people, our old people that have worked all their lives to be where they’re at,” ACCE organizer Patricia Mendoza said. “This is how we treat our fellow community members?”
UC Investments also adopted other revenue earning strategies; the office sold $3 billion worth of real estate and prioritized a passive investing approach over stock picking, a move that saved money on active stock analysts.
“We had the start of the pandemic and for the first six months, it looked like real estate was going to be the worst performing asset. And then something happened. The pandemic had an impact on real estate values, commercially and in our personal lives, that just surprised all of us,” Bachher said.
As real estate saw historic returns, with commercial and residential home values jumping up to 40% during the pandemic, UC decided to “take some of those chips off the table” and sell, according to Bachher.
The university’s cash assets yielded returns at a rate of 4.6%, a high that Bachher said “we haven’t seen since the global financial crisis.”
Additionally, the decision to shift holdings from long-term to short-term bonds at the start of the pandemic saved the UC approximately $1 billion in losses.
“In the onset of the pandemic, we felt that with rates practically at 0, it would be a better thing to look at our position and shorten our duration of bonds,” Bachher said. “That decision continues to pay. It’s saved us close to a billion dollars.”
Systemwide Title IX office presents current Title IX efforts and initiatives in UC
Systemwide Title IX Director Julie Lewis and Systemwide Deputy Director Isabel Alvarado Dees presented on the UC Office of the President’s (UCOP) current Title IX prevention, response and complaint resolution programs to the Board of Regents.
Title IX prohibits the discrimination against or harassment of anyone at the University on the basis of race, color, national origin, religion, sex, gender, pregnancy, ability, medical condition, ancestry, marital status, sexual orientation, citizenship or age. The UC Systemwide Title IX Office supports and leads the Title IX offices across the 10 UC campuses, the Lawrence Berkeley National Laboratory and the Office of the President.
“It is important to note at the onset that sexual harassment and gender-based discrimination is endemic in our society and ending and redressing impacts are a shared community responsibility,” Lewis said.
Title IX officers oversee the response and complaint resolution processes, as well as prevention efforts for the UC. The officers work under the UC policy on Sexual Violence and Sexual Harassment (SVSH) — a UCOP policy that defines conduct prohibited by Title IX and establishes the authority and responsibility of Title IX officers. Prevention efforts focus on expansive education and training for all campus communities in the UC.
Dees detailed that all incoming students must complete training through three points of contact: online education prior to arrival on campus, in-person education once they arrive on campus and electronic communication in the first few weeks of instruction.
“[This is] to ensure that all students know where to report and what to report and how to seek support during that period when we see the majority of incidents occurring on campuses nationwide,” Dees said.
All UC staff and faculty must also train to meet the Responsible Employee reporting requirement under the SVSH policy once every two years, and supervisors must undergo the same training annually.
“We’ve taken significant steps by providing guidance to our campuses for how to respond when employees fail to meet this obligation,” Dees said. “Making explicit our prohibitions on retaliation is a critical factor in ensuring staff and faculty who hear or observe possible misconduct feel safe coming forward.”
Dees highlighted the importance of campus culture in light of sexual violence prevention, coordinating community review team campaigns and climate surveys at the local level and conducting research initiatives under the National Academies of Sciences, Engineering, and Medicine (NASEM) across UC facilities.
According to Dees, the Systemwide Title IX efforts aim to foster a “culture of safety, respect and accountability.” She said the office is working to support the systemwide non-discrimination policy and presidential policy on abusive conduct, focusing on “meaningful engagement from senior leadership and training requirements in competence on trauma informed practices, implicit bias and cultural humility.”
“Leadership demonstrating with action the importance of this topic is noted by NASEM as a promising practice in preventing sexual harassment in higher education,” Dees said.
Regents discuss 2022 annual multi-year compact report
The Regents discussed the new multi-year compact between the UC and the state, outlining strategies to increase enrollment and the affordability of the UC.
Governor Gavin Newsom approved the multi-year compact in May 2022, providing a yearly base budget increase of 5% to the university. In turn, the UC will work on long-term, student-focused goals.
The compact outlines six broad goals the UC is committing to: increasing access to the UC, improving student success and advancing equity, increasing the affordability of a UC education, increasing intersegmental collaboration to benefit students, supporting workforce preparedness and high-demand career pipelines and providing access to online courses.
The UC is required to submit an annual report to the state by November of each year, with the 2022 report laying out the initial plans. Reports from 2023-26 will outline what actions have already been taken, as well as planned actions for the next year.
“Through annual reporting, the university has the opportunity to re-commit to these shared end goals and identify areas that need greater emphasis or support,” UC Executive Vice President and Chief Financial Officer Nathan Brostrom said.
Enrollment is the primary area of action, with the report stating the UC will add 8,000 full-time equivalent students over four years.
“We need to be able to reach the enrollment goal at the end of [each] time period, and look at adding 4,000 plus students each year to get us on track in that direction,” Institutional Research and Academic Planning Vice President Pamela Brown said.
A minimum of 15% of this growth will be aimed at UC Berkeley, UC Los Angeles and UC San Diego, which Regent Jose Hernandez said takes attention away from campuses with proportionally lower enrollment rates.
“It seems like the rich keep getting richer and the poor keep getting poorer, if we look at enrollment growth at our other universities,” Hernandez said.
To address affordability, the compact aims to reduce non-tuition expenses, primarily housing.“One of our biggest pushes is to make housing more available to students.
UCLA now has a four-year guarantee, UC San Diego has one, we have to make sure that we can do that on every campus,” Brostrom said.
A version of this article appeared on p. 3 of the Jan. 19, 2023 print edition of the Daily Nexus.