Jenny LaCoste-Caputo

The UT System hired Kroll Associates, Inc., a risk mitigation response firm, in August to conduct an investigation into the University’s admissions process, according to System spokeswoman Jenny LaCoste-Caputo.

The System reported in May that it found no evidence of a structured system of favoritism or wrongdoing after Chancellor Francisco Cigarroa asked the System to administer its own investigation in July 2013. Cigarroa issued his request after Regent Wallace Hall brought up issues he discovered while examining University records.  

The System found there were still questions about whether letters of recommendation sent directly to President William Powers Jr. or a dean from influential individuals, such as state legislators, influenced admissions decisions. 

Cigarroa announced in June that the System would launch a full external investigation of University admissions because of remaining public concern about the process, LaCoste-Caputo said.

LaCoste-Caputo said Kroll, which is based out of New York City, is still in the initial stages of its investigation. The investigation is expected to be completed by Oct. 15.

The firm plans to determine whether UT-Austin admissions decisions are made for any reason other than an applicant’s individual merit as measured by academic achievement and “officially established personal holistic attributes,” according to the contract.

Photo Credit: Shelby Tauber | Daily Texan Staff

The UT System will launch an external investigation into the University’s admissions process, according to System spokeswoman Jenny LaCoste-Caputo.

After the System released its findings from a limited investigation in May, Chancellor Francisco Cigarroa and Dan Sharphorn, System vice chancellor and general counsel, determined a full investigation was needed because of questions raised about the admissions process by the public, LaCoste-Caputo said.

“There were some lingering questions and the chancellor felt a deeper investigation was needed,” LaCoste-Caputo said.

Cigarroa first announced the investigation in an interview with The Texas Tribune on Friday. An outside firm has not yet been selected.

The limited investigation, which looked at the influence of letters of recommendations from state legislators on the University’s admissions process, was conducted by Sharphorn and Wanda Mercer, associate vice chancellor for academic affairs. According its report, the investigation found there was no structured system of favoritism or wrongdoing at the University, but found instances in which letters from legislators sent directly to President William Powers Jr. or a dean likely influenced the admissions process.

“With the undergraduate data, there is at least the strong appearance that the letters of recommendation from legislators, regardless of the strength of the substance of the recommendations, count more in admissions decisions than other letters of recommendations,” the report stated.

At a Board of Regents meeting in May, Cigarroa suggested ending the practice of allowing letters not submitted through the prescribed process to be considered in admissions decisions and said he would review System-wide admissions processes by meeting with institution presidents and admissions officials to develop new recommendations for change.

According to the report, Cigarroa authorized the initial investigation in July 2013 after Regent Wallace Hall brought up issues with the admissions process from two emails he received from one of his records request to the University.

Because of his large records requests to the University, Hall became the subject of a House Select Committee on Transparency in State Agency Operations investigation after state legislators accused him of overstepping his authority and working to remove Powers from office. In May, the committee determined grounds for his impeachment exist, and it is in the process of drafting specific impeachment articles.

One of the committee’s co-chairs, state Rep. Dan Flynn, R-Canton, said he supports the System’s investigation.

“That’s part of what [the transparency committee] suggested all along is that there need to be some procedural changes at the University, and I applaud them for going forward to delve into those procedures,” Flynn said.

Flynn said the committee could act if the investigation finds wrongdoing.

“If there’s something that’s inappropriate, it needs to be sought out,” Flynn said. “If after their probe they find something that’s inappropriate, then certainly it should be brought to attention.”

UT spokesman Gary Susswein declined to comment on the new investigation.

The UT System has not moved any closer to finding a new chancellor since hiring an executive search firm on March 12, according to System spokeswoman Jenny LaCoste-Caputo. 

In February, Chancellor Francisco Cigarroa announced he would be stepping down after serving in the position since 2009. Cigarroa will serve as the director of pediatric transplant surgery at the UT Health Science Center-San Antonio following his resignation. 

Earlier this month, the System signed a contract with Wheless Partners, a national executive search firm, to assist in the search for a new chancellor. Cigarroa will remain in his position until the next chancellor is selected. 

According to Board Chairman Paul Foster, a new chancellor will be selected over the summer so he or she can officially begin working at the beginning of the fall 2014 semester. 

“The Board of Regents is fully committed to finding a new chancellor who is worthy of leading one of the finest and most prominent public universities in America and the world,” Foster said in a statement from the System. “We will not settle until we have the right person for this extraordinary responsibility.”

According to reports from The Texas Tribune, Gov. Rick Perry is encouraging the board to consider Kyle Janek, Health and Human Services Executive commissioner, for the position. Perry does not have appointment power in selecting the Chancellor — that decision is ultimately up to the Board of Regents. Perry’s office did not immediately respond to a request for comment. 

While announcing his resignation, Cigarroa said the existing tensions between President William Powers Jr. and members of the Board of Regents did not factor into his decision to step down. An email to Cigarroa from Foster, originally obtained by The Dallas Morning News, suggested Regent Wallace Hall accused Cigarroa of not doing his job weeks before Cigarroa announced his resignation. 

Hall is currently being investigated by the House Select Committee on Transparency in State Agency Operations for overstepping his role as a regent by filing open record requests for over 800,000 pages of information, according to Kevin Hegarty, UT executive vice president and chief financial officer. Individuals at the System have said his requests amounted to only 100,000 pages of information. 

William Cunningham, former chancellor and former UT president, said he thinks it’s important for the chancellor to be able to work closely with all of the regents and the presidents at the various institutions within the System. 

“The chancellor must be able to work with the presidents and the regents, and that’s not always easy,” Cunningham said. “The regents are your bosses, [and] your job is to keep them informed and to shape their decision making process. You play a special role as chancellor in helping the regents understand what the issues are and also helping them understand the position the System should take.”

Cunningham said it is vital for a chancellor to preserve UT’s academic prowess. 

“They need to understand UT-Austin’s historical role that it has played in the development of the System and also UT-Austin’s academic flagship status — that must never be questioned,” Cunningham said. “If you have a chancellor who said, ‘I’m not really sure if we should differentiate between the component institutions,’ or ‘I’m not sure UT-Austin should be the flagship academic institution,’ that person will not be successful and will not do a good job as chancellor.”

The UT System will lease out more than 50,000 square feet of its new consolidated building to retailers. 

Last week, the System announced administrative services and employees in downtown Austin will be integrated into one building on Seventh Street, between Lavaca and Colorado streets. The building will be completed in late 2016 or early 2017. 

The System currently operates out of five buildings downtown: O. Henry Hall, Claudia Taylor Johnson Hall, Ashbel Smith Hall and the Lavaca and Colorado buildings. According to System spokeswoman Jenny LaCoste-Caputo, the Lavaca and Colorado buildings will be demolished to make room for the construction of the new building.

According to Scott Kelley, executive vice chancellor for business affairs, the estimated cost of the project is $102 million. Kelley said projected savings for the System could be between $2 million and $8 million a year, with a total estimated net savings of more than $125 million over 30 years. 

“If you look at the age, it’ll start saving money right away,” Kelley said. “[Ashbel Smith Hall] needs roof repair right now, the little plaza area needs to be waterproofed. If we chose not to [build a new office] we would be spending millions of dollars over the next couple of years to do those. By deciding to move, we can halt that and defer those costs and not make [those changes] and save money from the beginning.”

Kelley said current office space occupied across all five System buildings totals approximately 226,000 square feet, while the new building will have about 258,000 square feet.

“Because we’ll be more efficiently using the space, we can take the employees here and move them over to occupy about 200,000 square feet, so we’ve got about 58,000 additional square feet,” Kelley said.

Kelley said leasing out some of the space for commercial development has always been a possibility. 

“We’d always envisioned potentially putting some retail on the first floor,” Kelley said. “We thought that would be good for our employees. We think, and we had discussions with the city, it also may create a catalyst for future development in this area, which we would also applaud as residents here during the day.”

LaCoste-Caputo said approximately 200 employees will be displaced once construction begins and will be temporarily moved to other office spaces around Austin. In a press release from the System, Kelley said the remaining System buildings — O.Henry Hall, Claudia Taylor Johnson Hall and Ashbel Smith Hall — will be available for leasing.

“O. Henry Hall will remain owned by the UT System and leased to new tenants,” Kelley said in the press release. “The property housing the Claudia Taylor Johnson Building and Ashbel Smith Hall will be available for improvement or redevelopment.”

System Chancellor Francisco Cigarroa, who announced last month that he is stepping down as chancellor, updated his higher education improvement plan, “A Framework for Advancing Excellence,” in 2012. In the plan, Cigarroa said he wanted the System to develop stronger “space utilization efficiencies.”

The UT System Board of Regents approved salary increases for UT System Chancellor Francisco Cigarroa and five other executives from the System
Administration.

The decision, which was made at the board’s special meeting last week, increases Cigarroa’s salary by 15 percent to $862,500. Randa Safady, vice chancellor for external relations, received the largest increase in percentage, with a 20 percent increase to $550,000. Francie Frederick, general counsel to the board, received a 15 percent increase, bringing her salary to $484,085. 

System executives Dan Sharphorn, Patricia Hurn and J. Michael Peppers received smaller salary increases as well.

According to System spokeswoman Jenny LaCoste-Caputo, the decision was made largely to keep the executives’
salaries competitive.

“In the cases of some executives, it was a retention issue and a matter of making sure they [were] paid market value for their position,”
LaCoste-Caputo said.

Although President William Powers Jr.’s salary will not increase for the 2014 fiscal year, he received $195,058.50 in deferred compensation at the end of the 2013 fiscal year in August. According to LaCoste-Caputo, the regents use deferred compensation — which can only be collected at the end of a multi-year term — to encourage institution presidents to stay at their respective institutions instead of accepting positions elsewhere.

Project South Texas, a plan to merge the University of Texas-Pan American and the University of Texas at Brownsville and establish a medical school in the Rio Grande Valley, commenced Thursday, with former Missouri Southern University president Julio Leon hired to lead all project operations.

Recent studies have shown there is anywhere from 1,050 to 2,146 students currently enrolled at UT-Austin who originate from various counties within the Rio Grande Valley. It is these students who have experienced first-hand the necessity for change in higher education and health care.

Elisa Benavides, biology junior and native of Edinburg, Texas, situated in Rio Grande Valley, said she was offered a full ride to the UT-Pan American campus but elected to attend UT-Austin in hopes of creating a more competitive and challenging environment for herself. 

“After taking summer classes at UTPA my sophomore year of high school, I felt as if I could experience bigger things at UT,” Benavides said. 

Katie Rodriguez, business sophomore from Mission, Texas, said she sees the potential for Project South Texas to inspire confidence and tenacity within residents of the Rio Grande Valley, known locally as the RGV or simply the Valley. 

Rodriguez’s mother, who works as a principal at an elementary school within the Valley recently struggled with her school district to allow her to bring her fourth and fifth graders to UT-Austin and display the possibilities that lay outside the county borders.  

“There are many students in the Valley who want to go into the medical field, but do not have the knowledge or resources to leave the Valley,” Rodriguez said. 

Project South Texas not only aims to inspire a sense of purpose for RGV students, but it also helps mend the growing health and economic problems within the Valley as well. 

“Texas in general, compared to the rest of the country, has a large need for doctors but South Texas in particular has a serious dearth of physicians,” UT System spokeswoman Jenny LaCoste-Caputo said. 

Aside from lengthy waits for the chance to schedule appointments, quality assurance is also a source of trepidation. Rodriguez said her younger brother recently dealt with a severe case of “Cat scratch fever” and needed to be taken to facilities in San Antonio to receive proper care. 

“The doctors in the Valley, who could not diagnose this, wanted to perform exploratory surgery along his neck and the base of his skull,” Rodriguez said. “We took him up to San Antonio, where they immediately diagnosed and treated him.”

LaCoste-Caputo said that statistically, people who go through medical school and practice their residency within the region are 80 percent more likely to stay and practice in that region.

“Giving the opportunity for people to train in South Texas will mean we can build a workforce of physicians there to provide care,” LaCoste-Caputo said.

At the time of its opening, which is scheduled for 2015, the South Texas medical school will be the first medical school within the UT System to be directly integrated with a university. Shortly to be followed by the Dell Medical School at the flagship campus in 2016, the two historically different colleges are now united by a common goal: to provide community health care. 

“We need more opportunity for quality higher education in Texas,” LaCoste-Caputo said. 

UT System Board of Regents fund campus security enhancements

The UT System Board of Regents voted Thursday afternoon to use up to $1 million of available university funds for campus security enhancements.

In April, a Massachusetts Institution Technology police officer was fatally shot and killed, following the Boston Marathon explosion that happened earlier in the week. In an email, UT system spokeswoman Jenny LaCoste-Caputo said these campus security enhancements are not a response to the events in Boston, as the board has been working on this proposal prior to the events in Boston.

"Of course, shootings and other security threats in recent years on university campuses, schools and other public places are a major concern and the Board of Regents wants to ensure UT police forces are prepared and equipped for any eventuality," LaCoste-Caputo said. 

LaCoste-Caputo said the money will be used to purchase equipment.

After several months of dispute, the University agreed this week to release confidential records from October 2012 to February 2013 to UT System Board of Regents member Wallace Hall Jr.

According to System spokeswoman Jenny LaCoste-Caputo, the documents arrived at the System’s downtown office on Wednesday morning. 

LaCoste-Caputo said the documents would likely be returned later that day, after the documents were copied by System employees. Hall was also on site to begin his review of the documents. 

Kevin Hegarty, the University’s vice president and chief financial officer, is in charge of open records requests. According to the Austin-American Statesman, Hegarty initially was hesitant to give access to confidential records to Hall – but system lawyers advised with the exception of Social Security numbers, personal health information and information about students, Hall is entitled to see the information he requested. 

Hall, who had already been granted access to roughly 40 boxes of materials, requested the files earlier this year as part of a larger conflict between the University and the board. Hall was also one of the four regents who voted for an external review of the relationship between the UT School of Law and the Law School Foundation because he alleged there were documents that were not made available for the original investigation conducted by System council Barry Burgdorf.

In April, The Texas Tribune obtained documents revealing Hall had failed to disclose his involvement in at least six state and federal lawsuits on his original application for the regent position. In the same week, board chairman Gene Powell asked the Texas Attorney General if the System is allowed to withhold information from legislators. 

Powell’s request was prompted by state Sen. Judith Zaffirini, D-Laredo, who made a wide-ranging request as a private citizen under the Texas Public Information Act. Powell’s letter sparked sharp criticism from lawmakers and the board voted unanimously to release all documents requested at their most recent meeting. 

The flow of investments between five companies links an oil and gas production company that drills on university land to the UT System’s investment company and to UT System Regent Alex Cranberg.

In 2011, the University of Texas Investment Management Company committed $200 million to a private investment firm that has a financial stake in an oil and gas production company that operates on University land — B C Operating Inc. Cranberg, an energy investor, is chairman of a holding company that is partially owned by another investor with a financial stake in B C Operating. 

UT System spokeswoman Jenny LaCoste-Caputo said UTIMCO CEO Bruce Zimmerman confirmed UTIMCO is aware of the connection to B C Operating, but it presents no investment conflict.

UTIMCO’s $200 million commitment was to Post Oak Energy Capital, a private investment firm. Post Oak then committed $60 million to oil and gas company Crown Oil Partners IV, LP. The owner of Crown Oil owns half of B C Operating. B C Operating drills on part of the 2.1 million acres of land that make up the Permanent University Fund and has transferred ownership of some of its leases to Crown Oil.

Mark Warner, UTIMCO’s managing director of natural resources investments, said UTIMCO is involved in its partners’ investment decisions, but he would not elaborate on Post
Oak’s investments. 

“I will say in any of these partnerships there is a very thorough discussion on strategy and approach,” Warner said. “We certainly had that discussion with Post Oak. This is an
ongoing conversation.”

UTIMCO, a nonprofit corporation established by the System, invests profits from leasing the land for projects ranging from oil and gas production to cattle herding. Through the Available University Fund, the UT System receives two-thirds of profits from those investments and the Texas A&M University System receives one-third. UT-Austin received $200 million from the fund, which made up about 9 percent of the University’s 2012-2013 operating budget.

B C Operating is a long-time University land lease owner, with records of oil production dating back to the 1950s, according to University Lands Office records. Through the lease sales, B C Operating has contributed more than $921,000 to the Permanent University Fund, not including production royalties. 

Post Oak was two years old when it entered a limited partnership with UTIMCO. Limited partnerships are one of multiple investment arrangements UTIMCO makes.

Warner said Post Oak presented an opportunity to create a private equity partnership with a smaller, middle-market company that invests specifically in the energy sectors.

“They were well known to many people known by us,” Warner said. “It was easy to do diligence on them.”

Warner said UTIMCO’s portfolio had a gap that Post Oak’s market could fill.

Cranberg, appointed by Gov. Rick Perry to the UT System Board of Regents in 2011, is connected to Crump Energy Partners, whose owner also owns the other half of B C Operating. Like Crown Oil, Crump Energy has partial ownership of some land leases originally obtained by B C Operating from University Lands. Crump Energy received a $100 million commitment from energy equity company Quantum Energy Partners.

In a statement to The Daily Texan, Cranberg said Quantum Energy Partners owns 11 percent of his company, Aspect Holdings. Aspect Holdings, a private exploration and energy investment company, is also an investment portfolio company for Quantum Energy Partners, according to Quantum Energy.

However, Cranberg said he does not receive any compensation from Quantum Energy Partners. Quantum Energy continues to have a financial stake in Aspect Holdings. Cranberg also has other connections to the founders of Quantum Energy through the creation of a hybrid investment fund and an oil and gas operating company called Quantum Resources Management, but it does not have investments in B C Operating or its affiliated companies. 

The UT System recently laid out a new disclosure system to avoid conflicts of interest by requiring faculty, administrators and staff who serve on boards of other organizations or participate in businesses beyond their university to disclose their involvement.

LaCoste-Caputo said this policy does not apply to the regents because they are governed by state conflict of interest laws.

As a regent, Cranberg is required to file a personal financial statement with the Texas Ethics Commission, which was obtained by The Daily Texan. But the financial statements do not require public officials to report who has financial ties to their businesses.

Published on March 8, 2013 as "Web of investments". 

The UT System released records Monday indicating that a total of $2 billion has been saved over the past six years through coordinated efforts between the nine UT campuses. 

Due to efficient strategies and newly implemented practices, the UT System has cut costs while at the same time allocating more resources for students.

The $2 billion in savings has a direct effect on UT. According to UT President William Powers Jr., current efforts could produce as much as $490 million over the next ten years. Overall these initiatives will save the System nearly $4 billion by 2016, according to executive vice chancellor for business affairs, Scott Kelley.

In a press release, the System attributed the savings to energy-use reduction and the sharing of resources, journal subscriptions and software between campuses. Costs were also diminished through methods like centralized investments and outsourcing.

System spokeswoman Jenny LaCoste-Caputo said the System is making careful decisions to avoid hurting productivity or students. 

“We want to look for areas where we can cut excess and do the same job or better with less resources and using that [excess] money for investments which will allow for a bigger return for students,” LaCoste-Caputo said.

Kelley will release updates on savings at a Board of Regents meeting Wednesday. According to Kelley, a total of $383 million has been saved in the past year. 

“We’re well positioned because our 15 institutions allow us to come together and look at things collectively and holistically,” Kelley said in the press release.

According to LaCoste-Caputo, institutions have combined to invest in resources to help reduce cost.

“So, for example, we all need notebooks. The idea is let’s purchase them together and get a better deal. That’s a small example but you can save a lot of money that way,” LaCoste-Caputo said.

The UT System is comprised of nine academic universities and six health institutions with more than 87,000 employees.