UTIMCO was back before the Senate Finance Committee today, and what a different one regent can make. Texas A&M regent (and TXU chairman emeritus) Earl Nye, replacing former UT regent Robert Rowling as chairman of UTIMCO, gave a calm and convincing analysis of UTIMCO’s performance and urged lawmakers not to “emasculate” the current structure for investing and overseeing the state’s $9 billion Permanent University Fund and the University of Texas’ General Endowment Fund.
Far from the acrimonious atmosphere which greeted UTIMCO executives at their last trip before the Finance Committee, today’s hearing was marked by mutual respect and civility. (Not a bad strategy to send an Aggie regent to deal with a chairman who represents College Station.) But though the temperature was significantly lower, Nye managed to – in extremely polite fashion – poke holes in Chairman Steve Ogden’s plan to put UTIMCO under the auspices of the state’s pension review board.
“We have a saying in Fort Worth: If it’s not broke, don’t fix it. We would emasculate what we do if we take the chairman’s bill,” Nye told the Finance Committee. “I think UTIMCO operates pretty well.”
After his formal testimony, Nye , asked by reporters about Ogden’s bill, said, “The (chairman) is a wonderful man, a great senator and a friend, and I don’t fault his motivation, …but it would be a tragedy” to hamstring UTIMCO’S operations with pension board oversight.
He also suggested that such a change would require a constitutional amendment, since the state constitution currently gives the UT Board of Regents responsibility for overseeing the PUF.
Nye stressed, however, that he “didn’t mind improving” UTIMCO, and pledged to do a better job communicating with lawmakers, who were incensed earlier this session to learn about a $1 million bonus paid to UTIMCO executive Bruce Zimmerman, shortly before the economic downtown hammered state investments.
He told the committee that regents on UTIMCO”s board were negotiating Zimmerman’s current compensation plan in response to concerns raised by lawmakers, particularly that bonuses encourage UTIMCO managers to take too much risk with public funds. Nye elaborated with reporters, saying the regents – with Zimmerman’s cooperation – were considering a different payout for any bonus, and possibly requiring it to be re-invested for a period of time in the same investments as the PUF. That way, Nye said, the public would be assured Zimmerman “had skin in the game.”