Transcripts from closed-door meetings about the University of California system's investments for retired workers reveal that the university could have earned billions of dollars more on those investments had its officials hired outside advisers.

The system's retirement and endowment funds total $58.5-billion today.

According to the San Jose Mercury News, to which the transcripts were released under court order last week, the university's treasurer told members of the system's Board of Regents in 2002 that the system could have made up to $4.8-billion more on those funds over the previous decade if it had hired outside advisers.

That disclosure and others were the result of a lawsuit filed in April 2003 by the Mercury News, along with a union that represents about 18,000 University of California employees, and a retired UC-Berkeley physics professor who has criticized the university's investment activities (The Chronicle, April 18, 2003). The lawsuit contended that the public university system should disclose the results of its investments in venture-capital funds and that it should turn over the records of two regents' investment-committee meetings held in the fall of 2002.

The California Supreme Court ruled in September that the information should be made public, and the university gave out the venture-capital information shortly afterward. However, it refused to release transcripts from the closed-door meetings, in which the university had fired its internal investment staff and voted to hire several outside advisers. The system's treasurer, David H. Russ, had also given his calculations about potentially missed investment earnings to committee members at one of those meetings.

A State Supreme Court ruling last week denied the university's request to keep the transcripts private. According to excerpts of the transcripts published in the Mercury News, Mr. Russ said that the university could have increased its $25-billion U.S. stock portfolio by an additional $2.5-billion between 1992 and 2002 if those investments had been based on market indexes such as the Standard & Poor's 500. The portfolio could have earned an additional $2.3-billion if it had been managed by an outside professional, Mr. Russ said.

In one transcript, the regents talked about how the university had been fortunate that some of its investments, bonds in particular, had contributed to the fund's overall performance in the 1990s. "It was performance based upon a lucky bet," said Bruce N. Lehmann, a UC-San Diego professor of economics and finance and a consultant to the committee. "Interest rates did come down, and if they hadn't, you guys would have gotten creamed."