UC keeps employee loan aid
Sacramento Bee 3/16/07
The program has loaned out $1.3 billion at interest rates as low as 3 percent, enabling professors to refinance -- and remodel -- their homes with swimming pools, backyard barbecue islands and granite kitchen counters, or buy out an ex-spouse, a Bee investigation found last year.
Others were allowed to use the subsidized interest rate to refinance and save money on lower monthly payments. Several bought new cars within a year of refinancing.
Since 1984, more than 4,500 employees, including athletic coaches, the UC president's secretary, administrators and longtime employees have gotten loans through the program, The Bee found.
At a UC regents meeting this week, the board briefly discussed the home loan program and agreed to allow system administrators and campus leaders to continue carving out exceptions to the home loan policy.
A staff report, prompted by last year's executive compensation flap about undisclosed pay and perks, recommended the flexibility to "address the varied needs that arise in recruitment and retention."
"We are continuing to seek ways to strike the appropriate balance between the need to maintain appropriate oversight and to offer timely recruitment and retention packages that address the very high costs of housing near many UC campuses," said UC Associate Vice President Michael Reese.
State Sen. Jack Scott, D-Altadena, who heads the state's Education Committee, has questioned why the university is refinancing loans and whether the university has gone too far to hold onto its employees "with breaks of this magnitude."
He said the loan program fits into a pattern of deals being cut for a select few in the UC system.
UC faculty and administrators have sharply defended the program as a critical tool to help professors live near UC campuses, which are located in some of the most expensive areas of the country: Los Angeles, San Diego, Santa Barbara and San Francisco.
It also has been used as an incentive to keep professors from leaving for other jobs.
UC officials say the program pays for itself through mortgage payments.
In fact, they're considering expanding the program to offer interest-only and 100 percent financing options.
About 20 percent of the loans have been used to retain, rather than recruit employees -- a diversion from the program's original goal to help new, out-of-town professors with a first-home purchase near campus.
Fewer than 50 percent of the total loans have been steered toward assistant professors -- the lowest rank who are competing for tenure, according to a 2006 report on the program.
Meanwhile, 99 UC employees were allowed to refinance their existing homes, 111 were allowed to use the loan program a second time, and 121 took out loans despite having previously owned a home near campus.
"My recollection is that when this program was put into effect, it was primarily designed to help assistant professors find homes within a reasonable commuting distance of campus," said Ken Verosub, a UC Davis geology professor for 32 years.
"But very quickly it seemed it got expanded into a benefit that was used across the board, particularly for high-level recruitment."
Indeed, the first home loan in 1984 went to a UC San Francisco professor. But the second went to the new executive vice chancellor and provost at UC Davis.
That person was Larry Vanderhoef, now the school's chancellor.