Saving CEB
Saving CEB
How a Group of UC Employees, More Than a Decade Ago, Saved Their Department from Privatization and Kept Their Jobs
by Mariam Grodzins
On November 7, 1997, the University of California Office of the President (UCOP) announced that a review committee had recommended that the University sell Continuing Education of the Bar (CEB). I had been working at CEB for almost 19 years, and I knew (along with anyone else who had been around for a while) that at the University “committee recommendation” was code for “we’ve already made up our minds.” November 7 quickly became known to CEB employees as “Black Friday.”
A more detailed account of this story may be found here.
Background. CEB was established in 1947, under a joint agreement between the University of California and the State Bar, to meet the continuing education needs of California’s attorneys. Under the joint agreement, CEB was expected to be self-supporting. For many years, it was able to meet its financial obligation to the University. The 1980s, however, brought competition from for-profit legal publishers, and employees found themselves worrying about CEB’s financial status, while supervisors became a lot more serious about budgets and schedules. There was a long recession and, along with the rest of the country, CEB’s financial situation deteriorated. In the early 1990s, CEB suffered three consecutive years of losses over $1 million.
In March 1993, in response to this situation, UCOP decided to bring in new management, and hired Richard Lee, previously with a large San Francisco law firm, as director. Lee immediately established a number of task forces to study ways of making CEB more efficient and more competitive in the legal publishing market. Every task force had an expensive consultant or two. Some of them not only collected large fees but managed to do a considerable amount of damage as well. By the time Lee hired ten programmers from Minsk to write a financial software application in-house, we began to suspect that he didn’t understand very much about management. In the end, when CEB was forced to scrap the whole project and take a multi-million dollar writeoff, we were certain.
In February 1997, shortly before Lee’s scheduled retirement, the University announced the formation of a review committee, appointed to assess, among other things, CEB’s mission, the quality of its products and services, its position in the marketplace, and the joint agreement between the University and the State Bar. On Black Friday, it was announced that the review committee’s recommendation was to sell CEB. The University issued a press release and the recommendation was reported in the media.
Getting organized. After the initial panic subsided, a group of employees, who had long supported employee interests, went out to lunch to do some serious talking. We agreed to try to find a way to prevent the sale and keep our jobs. It was easy to see why the University wanted to divest itself of CEB. After all, CEB was roughly $10 million in its debt. On the other hand, it was also easy to see that the review committee’s report was anything but fair. For example, one member of the five-person review committee, William Coblentz, had visited CEB in May 1997 and openly told CEB employees in that he thought CEB should be sold, and that the Practising Law Institute (PLI), a New York based private nonprofit continuing legal education provider, was a potential purchaser. A little research revealed that Coblentz had previously been active in advocating privatization at UC through the merger between UCSF and Stanford hospitals (which collapsed in financial chaos a few years after its implementation).
Some members of our group had some political organizing experience in the 60s and 70s. We were knowledgeable enough to see that it was overwhelmingly likely that an attempt to save CEB from privatization would fail, and we were aware enough to know that most of the good things CEB did were things that management might stop doing (in the name of “acting like a business”). Mostly, we wanted to keep our jobs, and it looked like a tough sell. Nevertheless, we felt that, win or lose, we had to try.
We met almost every Wednesday for a year. We gave ourselves a name, the CEB Employees Advisory Board, consisting of whoever showed up at any given time (usually about 20 people at any particular meeting). A handful of us, who were willing to put in the time, ran the group. Everyone else at CEB was kept informed of what we were doing through weekly meeting notes, sent by e-mail.
At our initial meeting, on November 19, 1997, we decided, first, that then-UC Provost C. Judson King, to whom the director of CEB reported, needed to hear from us. We wrote three group letters, addressing various issues, and invited employees to sign any or all of them. We also encouraged employees to write individual letter to Provost King.
Second, we formed some committees of our own, and encouraged employees to volunteer. The legislative committee was to lobby various presumably sympathetic state legislators to put pressure on Provost King and then-UC President Richard C. Atkinson. The investigative committee was to look further into the financial relationship between CEB and UCOP, the possible conflicts of interest among members of the review committee, and anything else that might help us. The publicity committee was charged with coming up with some guidelines for press releases, and generally trying to get the legal press on our side.
The legislative committee first met with representatives of the University Professional and Technical Employees (UPTE) to discuss a legislative strategy. The committee then arranged a series of meetings, initially with aides to four state legislators—Don Perata, Bill Lockyer, Tom Hayden, and Ted Lempert. The meetings took place on December 9, and kicked off our lobbying effort with the state legislature, an effort that eventually proved to be crucial in saving CEB.
The investigative committee was able to obtain copies of UCOP’s financial reports, which we decided should be examined regarding the issue of CEB surpluses in the golden years when CEB had surpluses. According to the joint agreement, 75 percent of any surpluses were to be put aside to cover future deficits. We wanted to know if this actually happened.
The publicity committee sent out our first press release on December 10. And we did succeed in getting some publicity. On December 18, KPFA gave us about ten minutes on the evening news, which was rebroadcast the following morning. The LA Daily Journal published an article on December 22 headlined “CEB Employees Rip University Report,” and in the following months there were stories in the Bay Guardian, the Berkeley Voice, the SF Recorder, and California Lawyer.
We also examined the written procedures for reporting misuse of UC funds. “Misuse” was defined to include fraud, waste, and abuse, and we would have to decide at some point if we wanted to file a formal complaint re misuse of funds during Lee’s tenure.
We began discussions of what came to be called “the copyright issue.” The joint agreement stated that “title of all assets, . . . including copyrights, shall be in the name of the Regents of the University of California. . . . In the event of termination, accumulated assets will be retained by the University to be used for the continuing education of California attorneys.” We agreed that we should ask an expert in copyright law to give us an opinion on whether invoking this section of the joint agreement might make it possible for us to prevent the sale of CEB to a for-profit publisher. If copyrights were retained by the Regents, there was nothing of value to sell.
We were also interested in the legal challenge pending at that time to the UCSF/Stanford hospital merger. This case had raised various issues including the question of whether turning public property over to a private entity constituted an illegal gift of public funds. We had the name of the law firm representing the petitioner in the pending case and decided to ask if someone there would talk to us.
New ideas in the new year. At our first meeting in the new year, we discussed the coming turnover of leadership in the state legislature due to the failure of legal challenges to term limits. We were betting on a new Democratic governor, accompanied by a little less enthusiasm in Sacramento toward privatization of anything that could be sold to a for-profit company, free of burdensome rules designed to protect employee rights.
On January 5, we received a very supportive letter written by State Senator Quentin Kopp, in response to a letter from a CEB employee. We had been asked by CEB senior management to leave Senator Kopp off our list of legislators to contact. He was described as a “loose cannon” but as it turned out, he had fond memories of CEB from his early days as a lawyer, and turned out to be one of the legislators who protested the sale of CEB most effectively.
Investigative Committee. The investigative committee had begun turning up financial information regarding CEB surpluses and deficits over the years. UPTE had submitted an information request to UCOP that included a request for the missing records, but the only response thus far had been an acknowledgment that the request had been received. Because we had no idea when (or whether) UCOP would hand over the data, we decided that the committee should pursue its effort to fill in the missing years from internal sources or the UC microfiche archives. Assuming we would eventually have complete figures, we hoped to produce a report that would eventually prove useful as a bargaining chip. The committee was also tracking down the costs of the administrative overhead CEB paid to UCOP to see if we could confirm our hunch that the University was overcharging considerably for its services.
Advice from a good lawyer. On January 21, we met with Jane Lawhon, of Eggleston, Seigel & LeWitter. This firm represented UPTE and was experienced in litigating with the University. In addition, Lawhon was one of the attorneys involved in ongoing litigation concerning the UCSF/Stanford hospital merger. We had submitted to her a list of potential legal issues, including:
1. The copyright issue. Could we argue that no sale could go forward without a determination of whether intellectual property can be conveyed to a third party?
2. Misuse of funds. Could we claim that UC wanted to get rid of CEB to avoid embarrassment and exposure re misuse of funds and faulty oversight? Could a sale be delayed pending an investigation of these issues?
3. Conflict/bias. Could we claim that the review process was so tainted by bias that no decision should be made on the basis of its recommendations?
4. Illegal transfer of public assets. Could we use some of the same grounds used by the unions opposed to the UCSF/Stanford hospital merger? See Lisa Davis, Giving Away the Hospital, S.F. Weekly (September 10, 1997). Was CEB a public asset? Would a sale in fact be an illegal transfer of a public asset?
Concerning the copyright issue, although Lawhon emphasized that copyright was not her area of expertise, she suggested that we argue that transferring the copyrights would constitute a gift of public funds (as the labor is donated by our contributors in the public interest). The gift of public funds was the same issue raised in the hospital merger case—that such a transfer is a violation of article XVI, §6, of the California Constitution. Lawhon suggested that CEB’s contributors might be concerned about the use of their donated contributions. This suggested to us that we needed to launch an informational campaign to make certain that they would become concerned if they weren’t already.
Lawhon said the misuse of funds issue is useful primarily in its potential for generating adverse publicity that the University would rather avoid. She said seeking to expose mismanagement is protected under the whistleblower statutes, and we should probably focus specifically on what happened under Dick Lee rather than focusing too much on long-term faulty oversight from UCOP. In other words, we didn’t want it to look like Lee represented just one facet of an endless bleeding of UC funds by CEB.
Concerning the bias issue, Lawhon did not believe that we would get too far attacking members of the review committee directly, as they had stature and would stand by their report. This was a disappointment, but we accepted her judgment.
Developing a strategy. The meeting with Lawhon brought forward an issue that we realized we had neglected. We had been very busy with day-to-day details, but hadn’t spent much time on developing an overarching strategy. We had no idea what they were thinking at UCOP and we had no way to find out (in other words, no internal source). What did they want? What did they care about? We knew some things that top UC managers pretended to care about, for example, education, public service, and the welfare of UC employees. But behind that façade? We figured it essentially amounted to preserving their high salaries, bonuses, perks, and corresponding lifestyles. They also wanted to avoid negative publicity, which could cause a lot of problems for them, including being bothered by the Regents.
We needed to create an environment in which the folks who ran the University would feel less comfortable selling CEB than keeping it. I decided, personally, that if it took me a whole day to cause Provost King five minutes of anxiety, it was worth it.
Following Lawhon’s advice, we decided to back off from the bias issue and focus on the copyright issue, framing it as a question of whether the transfer of CEB copyrights was essentially an illegal transfer of public assets. We needed to alert contributors to the situation, and by mid-February we found a contributor willing to sign a cover letter to colleagues, emphasizing the public service role of CEB and the fact that CEB’s volunteer contributors assign their copyrights to the University with the understanding that the material would be used in the public interest. Along with the cover letter, we would send to contributors a sample letter to Provost King, which we would ask them to sign and mail to King, or write a letter of their own. We would include a stamped envelope addressed to King. In the sample letter, we would attempt to combine a tone of polite concern with just the smallest suggestion that messing with copyrights belonging to a bunch of lawyers could eventually prove to be a mistake the University would regret.
We mailed the letters to over 900 contributors to CEB’s publications and programs, and it wasn’t long before we found out that our efforts had an impact. I was told by Director Conly that “they had gotten a lot of mail over there at UCOP,” and that they were indeed concerned about the trouble that could result if a group of CEB contributors (who also happened to be angry lawyers) decided to pursue the copyright issue.
Layoffs. Since the middle of March, it had been clear that layoffs were inevitable and, in fact, 19 CEB employees received layoff notices on May 6. On May 11, management called an all-staff meeting. We had prepared some questions, centered around our inability to figure out what sort of planning resulted in the form the layoffs had taken. The legal staff, which generated CEB’s products, had been cut by 40 percent, with only minimal cuts in operations staff. Could anyone tell us why that made sense?
Apparently not. The plan presented by the managers seemed, to put it mildly, lacking in logic. Essentially they changed the names of all the jobs. Most of the work formerly done by the highly paid research attorneys (who became “project managers”) was shifted to the lower-paid legal research analysts (who became “senior writers”). CEB management had long maintained that the legal research analysts did not have the necessary experience or training to do the work of the research attorneys. Now, suddenly, given a new job title but no training, they were told to “figure it out.” Further, the addition of the new project managers created a structure in which at least three tiers of managers stood between every decision and its execution. It is true that CEB saved money, but it took a long long time for the legal staff to figure out how to get the work done with so few people, all of them untrained in their new jobs.
What’s Next? “Pass the Prozac, please.” Most of us were pretty depressed in the wake of the layoffs. We had lost several members of our group, and struggled to re-orient ourselves and continue with our various projects. We had received some information indicating that a state legislative subcommittee might hold informational hearings on CEB, so it made sense to focus on the legislature.
Meanwhile, UPTE representatives were asking for a meeting with Provost King, in order to pursue the union’s earlier request for information. If the meeting failed to produce the requested financial documents, we had been told that an aide to John Burton, speaker pro tem of the senate, had expressed a willingness to make the request through Senator Burton’s office.
Senator Kopp. In mid-June, we received a copy of a letter sent by State Senator Quentin Kopp to President Atkinson expressing concern about a potential sale of CEB:
I am in receipt of constituent letters expressing concern regarding the rumored sale of the Continuing Education [of the] Bar by the University of California. As the only non-profit provider of continuing legal education in California, this naturally causes alarm in many users of the CEB service. Please advise me regarding the status of any proposal to divest the University of the CEB program and any related educational service for attorneys the University is considering.
On June 24, Provost King sent a lengthy response to Senator Kopp, who was kind enough to send us a copy. King assured Kopp that “we have not made a final decision about the future of CEB,” that he and President Atkinson were aware of widespread support for CEB, and that layoffs had occurred as a result of cutting publications and programs “that were not meeting expectations” and in order to avoid increasing CEB’s debt. Although King’s letter contained no new information, it certainly made clear UCOP’s sensitivity to legislative pressure.
In mid-July, we received a copy of a letter written by Senator Kopp, as follows:
Honorable Ward Connerly, Member
The Regents of the University of California
2215 21st Street
Sacramento, CA 95818
Dear Ward:
I am increasingly disturbed by the evident financial problems of the Continuing Education of the Bar program, several of which have apparently been caused by the administration of the University of California.
I enclose herewith a letter sent me by facsimile on July 10, 1998 from the CEB Employees Advisory Board. Granted that the writers possess a financial interest in the future of their employer, CEB, the letter raises points which disturb me very much. I’m particularly struck by the analogy to the David Pierpont Gardner* situation of five years ago in the information concerning a former CEB director, Mr. Richard Lee, who was allegedly allowed to retire in March 1997 with a generous pension benefit plan after presiding during a period in which the CEB debt to the University of California assertedly increased by twice the amount of pre-existing debt. I am also curious about the allegation concerning payment of $229,000 per year to the office of the President of the University of California for “administrative overhead,” for which CEB assertedly receives no tangible benefit.
I write to request that the matter be investigated by your colleagues and you, independently of the president’s office. In the alternative, I shall seek an oversight hearing by the Senate Select Committee on Higher Education.
Thank you for your time and attention and please advise me accordingly.
Sincerely yours,
Quentin L. Kopp
cc: Senator Tom Hayden
Interested Parties
*Gardner, a former University president, received a seven-figure retirement package that was greeted with outrage by much of the University community.
The letter arrived in my CEB mailbox in the middle of a quiet afternoon. My first reaction was panic, something along the lines of “Oh my God, now we’re in bed with Ward Connerly, and what the hell are we going to do about that?” Why couldn’t Senator Kopp have written to some other Regent? Why did he have to pick the Regent determined to kill affirmative action in California, if not the whole country?
Eventually I found Mary Gerber, a long-tern CEB employee and lawyer, and we concluded that, on the whole, it wasn’t a bad thing. Senator Kopp was, after all, bringing our case before the Regents, and demanding an investigation either by the Regents themselves or by the Senate Committee on Higher Education (chaired by Tom Hayden). Surely, the prospect of such an investigation would not be welcomed by President Atkinson and Provost King, and the best way to avoid an investigation would be to keep CEB within the University. Therefore, good news for us.
We wrote a thank you note to Senator Kopp, including a copy of an article about CEB that appeared in the Los Angeles Daily Journal on July 20. The article quoted Barbara Gerber, special assistant to Provost King (and not related to Mary Gerber), as acknowledging that the charges paid by CEB to the Berkeley campus “don’t bear any relationship to the actual amount of the work.”
Waiting for the long hot summer to end. The state budget impasse had been resolved, and we were hoping to find it a little easier to get attention from the legislators (although we were aware that the ones who were going out on term limits might not care and the ones who were running for re-election might have other things to think about).
On August 4, Assemblyman Don Perata (who was running for the State Senate), wrote another strong letter in support of CEB to Atkinson and King, noting (1) the excessive amount CEB paid the Berkeley campus for running the payroll, (2) the excessive amount CEB paid UCOP for “administrative overhead,” (3) the fact that, although UCOP claimed to be “subsidizing” CEB, the University was collecting roughly $700,000 per year from CEB for debt service, and (4) the fact that “a former director of CEB, Richard Lee, was virtually given a blank check by your office, . . . resulting in a doubling of CEB’s debt.”
Election results. October passed in anticipation of the coming election, but with no news of particular interest to CEB. We talked politics a lot, spent time on internal personnel issues, and wondered about CEB’s financial status. We had a lot of questions, but management appeared to have once again shut down the lines of communication. We didn’t know where CEB stood re its debt to the University. Mostly, we waited.
The election gave California a Democratic governor (the rather disappointing Gray Davis) and saw Don Perata advance to the state Senate. On November 11, I got an e-mail from Lindy Graham, an aide to Perata with whom I had been in touch for several months. She said “Get your stuff together so you will be ready to rock ’n’ roll” (i.e., “be ready when I call you, these people don’t have a lot of time.” She said that there would be some changes in the make-up of the Committee on Higher Education, and recommended that, once we were certain of the new membership, we meet with their support staff “to explain what is going on.” Even though she was working on health issues and transportation, she promised to “squeeze in CEB.”
This promising news was followed by another lull. Thanksgiving came and went. We were increasingly (like everyone else) transfixed by the spectacle in Washington of a procession of apparently crazed Republican congressman expressing their horror over oral sex with the most exaggerated eloquence (“the flames of self-centered morality are licking at the very foundation of our society”).
In the middle of the annual CEB Christmas party, Director Conly said he wanted to read something to us. It was a letter from Provost King, stating in the second sentence that “we have concluded that CEB should continue as an activity of the University . . . .” It went on at some length about “measures of success,” “financial oversight,” and “continued progress on the challenges ahead.” We figured that the subtext was “you cause a lot of trouble, but it’s nothing compared to the trouble an investigation by the Senate Committee on Higher Education might cause.” In other words, we won.
But how could that have happened, when everyone thought we would lose? The CEB Employees Advisory Board had very limited resources. But we were motivated, and we knew that just a few people, making full use of e-mail and fax machines, can appear to be a larger and more influential group than they are in fact. On Black Friday, the prevailing opinion was that, if UC decided to sell CEB, we were powerless and had no choice but to accept the decision. But we got organized, and surprised even ourselves by showing that the people who hold the most power don’t always win.
A more detailed account of this story may be found here.