5/24 Dewhurst (R), Craddick (R) and Perry (R) revive deregulation (in HB 3015) in a "marathon" 8 hour meeting (The Austin-American Statesman 5/24/03).
"I was talking to a Senator this morning about this; he said it took the three most powerful people in the state, in a closed door meeting, and eight hours of negotiations to overturn the progress that we made against this issue" (Brian Haley email 5/25/03).
"University of Texas officials have been lobbying for that freedom [deregulation] since before the legislative session started. But it has been bitterly opposed by smaller college systems, many UT students and by several senators who had appeared to kill the idea earlier this month" (The Austin-American Statesman 5/25/03).
5/26 The Austin-American Statesman reports that tuition deregulation has become a "political trade-off between the House and Senate leadership", not a tradeoff for budget cuts. In exchange for deregulation universities would be given $500 million more in state money (The Austin-American Statesman 5/26/03).
"'This has nothing to do with balancing the budget,' Dewhurst said Monday. 'We have agreed to pass whatever the House passes on deregulation.'" ...
6/1 HR 1694 scraps all limits placed on deregulation in HB 3015. This 11th hour maneuver surprises and angers many legislators, students, and educators.
"Tensions flared between party lines during the debate on the House floor. Coleman and Rep. Joe Crabb, R-Kingwood, continued to argue after the debate and had to be separated by a House sergeant.
Sen. Steve Ogden, R-College Station, said he plans to vote in support of the measure but sees only one state college system -- the University of Texas -- as using it to their advantage. Ogden said Texas A&M regents have assured him they will not increase tuition dramatically as a result of the legislation" (Houston Chronicle 6/1/03).
"Basically Craddick forced both chambers of the Legislature to scrap both versions of HB 3015, which had at least some limits on deregulation, to give the regents complete deregulation. He held the entire state budget in limbo to do this" (Nick Schwellenbach email 6/1/03).
In the spring of 1997, UT hired Texas-based firm John Doner and Associates, a political campaign and lobbying agency, to change the laws regarding investments of the Permanent University Fund (PUF). Legislation was written, known as Proposition 17, to loosen the investment restrictions of the fund. Many voters were unaware of this proposition, so John Doner had a grassroots campaign to 'inform' the voters. It worked: Proposition 17 was placed on the November 2, 1999 ballot and won by a convincing 61% to 39%.
The movement behind Proposition 17 was well financed through the Friends of University PAC, Texans for Proposition 17, and Proposition 17 for a Better Texas. The Friends of the University PAC is a political action committee consisting of what the name suggests- "friends" of UT. These include familiar names such as regents Rita Clements and Dub Riter, Frank Denius (the $4 million football practice facility is named after him), and former UT System Chancellor Hans Mark, along with plenty of others who've used the University as a source of personal income. Texans for Proposition 17 was the PAC for UT, and Proposition 17 for a Better Texas was the PAC for Texas A&M. Each were composed of the same women and men from the Friends of the University PAC, willing to put some money back into the system to make more. $302,742 was spent between the two Proposition 17-specific PAC's with another $74,500 coming from the Friends of the University.
Sometime in the fall of 1999 before the vote, University officials contacted the well-financed John Doner and Associates about creating a comprehensive database of voters likely to vote yes. With this database, John Doner called voters, persuaded them to vote yes, and encouraged them to get out and rock the vote.1 They claim to have called 75,000 voters in "just a few days" prior to election day in a grassroots campaign. They told these voters that by giving more authority to managing the PUF, they would be positively changing students' situations without imposing new fees. Ideally it sounds nice, but in actuality it cost the largest UTIMCO fund some money since the legislation merely eliminated governmental regulations of managing the fund. Governmental regulations were in place for more sustainable growth, but these increases were too small for UTIMCO managers who wanted to take control and invest in risky hedge funds. These hedge funds, such as Maverick Capital, were characterized as big moneymakers, but they underperformed while their managers such as Sam Wyly cashed in (see below).
There's a chart at this link that shows that there was a direct decrease in the PUF's value after this.
Earlier in 1999, UTIMCO had a chairman named Tom Hicks. With Tom Loeffler at his side, Hicks invested around $550 million in companies run by his friends, making them rich while the funds suffered.2 Out of these crony firms and companies, the Maverick Capital Fund was declared one of the best performing UTIMCO investments- ever. However, it has earned little less than 12 percent since its inception in 1998 through the period ending June 31, 2003. This fund has not met expectations, and as shown many UTIMCO investments made under Hicks usually stay in the red or show only minimal gains.3 In 1999, the Houston Chronicle ran an expose detailing these relationships, resulting Hicks' resignation and a statement that he wouldn't run for another appointment to the Board of Regents. Months later, John Doner were on the ball, calling thousands of people that the PUF didn't need more oversight and accountability but more power and flexibility.
Tom Hicks. Why does he sound familiar? Oh, right, he's the guy that bought the Texas Rangers, with George Bush threw people out of their homes by using eminent domain (for roads???? No, for his private property boondoggle).
The Observer has not yet covered the University of Texas Investment Management Company (UTIMCO) scandal, in which huge sums of money flow back and forth between Bush and his top donors. Tom Hicks (of the Dallas corporate takeover firm Hicks Muse Tate & Furst) made Bush a millionaire fifteen times over by buying the Texas Rangers. Hicks and his brother Steven contributed $146,000 to Bush's gubernatorial campaigns; Steven is a Bush fundraising "Pioneer," who has raised at least $100,000 for Bush's presidential race. Tom Hicks long urged U.T. to move part of its $13 billion endowment into riskier investments. In 1990, for example, he tried to get it to invest in his takeover of Healthco, a dental supply company that went bankrupt three years later. In 1995, the Texas Senate confirmed Tom Hicks as a U.T. regent, just as Bush was moving into the Governor's Mansion. Hicks hired lobbyists to push a bill -- signed into law by Bush -- that created UTIMCO. With Hicks as its first chair, UTIMCO began to dole out lucrative contracts to private investment firms to manage portions of the endowment. Many of these firms had ties to Hicks and Bush:
"The Carlyle Group. The elder George Bush reportedly has an equity stake in this firm, which is run by leading members of his presidential administration. Maverick Capital Fund. Its investors include Bush Pioneer Charles Wyly and his brother Sam, who gave $210,273 to Bush's gubernatorial campaigns. Bass Brothers Enterprises. Bass family interests funneled $215,000 to Bush and financed a Bahraini drilling contract won by a small oil exploration company where Bush served as a director. Kohlberg Kravis Roberts. This corporate buyout firm would soon join Hicks, Muse in a $1.5 billion takeover of Regal Cinemas. Evercore Partners. Evercore joined Hicks, Muse in a $900 million buyout of television stations soon after its UTIMCO deal. American Securities Partners. The company won a UTIMCO contract soon after selling eleven radio stations to Hicks, Muse."
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