Critics of a study published last December by the Stanford Institute for Economic Policy Research (SIEPR) — which concluded that the state of California has underfunded pensions for government employees anywhere between $142.6 billion and $498 billion — have recently questioned the academic integrity of SIEPR, accusing the nonpartisan economic research organization of being partial to corporate sponsors.
In a joint email to The Daily, SIEPR Director John Shoven and Deputy Director Greg Rosston reaffirmed that SIEPR’s research is not influenced by its corporate support, which made up approximately 8 percent of the organization’s income during the 2009-10 academic year.
“When we talk with donors, we emphasize faculty independence — we always tell donors that we not only can’t tell faculty what conclusions to come to, we can’t even tell faculty what projects to work on,” Shoven and Rosston wrote. “We care very much about academic independence.”
Debate over public pensions research
A Dec. 13 SIEPR report, authored by public policy professor Joe Nation and titled “Pension Math: How California’s Retirement Spending is Squeezing the State Budget,” examined the state of three of California’s public employee pension systems: the California Public Employees’ Retirement System (CalPERS), California State Teachers’ Retirement System (CalSTRS) and the University of California Retirement Plan (UCRP).
The study concluded that debt on public pensions was larger than the state is currently reporting, underfunded by anywhere from $498 billion, using a 4.5 percent “risk free” rate, to $142.6 billion, using a 7.5 to 7.75 percent rate.
California Treasurer Bill Lockyer had previously agreed to serve on a SIEPR pension advisory panel, but resigned from his position on the panel in protest of last month’s report, which called for reducing the benefits of current state workers and reforming the public pension system in California.
While attempting to discredit the study in an op-ed than ran in the Sacramento Bee on Dec. 25, Lockyer called SIEPR a “Wall Street-supported think tank.” In particular, Lockyer wrote that he believed the study may have been influenced by corporate sponsors who “make a lot of money when workers invest in 401(k)s.”
Nation, the study’s author, addressed Lockyer’s original complaints against the research and decision to resign in a Dec. 16 op-ed in the Sacramento Bee.
“The advisory panel members who resigned seem fixated on just one issue, insisting that we present the numbers assuming only a long-term investment return of 7.75 percent,” Nation wrote. “Notably, even at that rate, all three pension systems remain substantially underfunded.”
David Crane, a Stanford public policy lecturer, would later come to the study’s defense. In a Jan. 8 op-ed in the Bee, Crane wrote that the California financial officials opposed to the report were making “ad hominem responses.”
According to Shoven and Rosston, Nation’s report is a “perfect example” of research not influenced by corporate sponsors.
“The report expresses his research and opinions, not SIEPR’s,” Shoven and Rosston wrote. “And it was funded directly as a research project through SIEPR by the James Irvine Foundation and California Forward.”
Dean of Research Ann Arvin and Stanford’s Sponsored Projects Office also approved the sponsored project, Shoven and Rosston added.
They noted that all faculty must abide by both codes of conduct written by the University and the dean and research.
How SIEPR is funded
According to its 2009-10 annual report, corporate support accounted for 8.6 percent of SIEPR’s approximately $13.5 million in income that academic year.
Of the money raised from corporate sponsorship that year, $806,954 was dedicated to “project support” while $356,000 went toward “general support.” Corporations that donated $20,000 or more included Exxon Mobil, Cisco Systems and Charles R. Schwab. Bank of the West, Goldman Sachs, Google, JPMorgan and Wells Fargo each contributed between $10,000 and $20,000.
The rest of SIEPR’s income comes from (in decreasing order) foundations, the U.S. government, endowment, individual donors and University support. Foundations such as the William and Flora Hewlett Foundation, the Alfred P. Sloan Foundation, the Ewing Marion Kauffman Foundation and the Koret Foundation make up around 25 percent of SIEPR’s income. Grants from government agencies like the National Science Foundation and National Institutes of Health are the second-largest component, making up 18 percent of SIEPR’s income.
17 percent then comes from endowment, 13 percent from individual donors and 13 from the University.
According to Shoven and Rosston, “no corporate support paid for our new building,” referring to the John A. and Cynthia Fry Gunn Building, which was dedicated in March of 2010.
A majority of SIEPR’s 2009-2010 expenditures was devoted to research, supporting faculty and graduate students and funding conferences. Ten-percent of the budget — over $1 million — was committed to running Stanford’s public policy program, and the rest was expended on development, communications and administration
The SIEPR advisory board
SIEPR’s advisory board — defined on its website as a “board of directors for the Institute” that “helps to guide and support SIEPR” — includes 49 members, some with links to business world, such as Eff Martin, advisory director of Goldman Sachs; Susan Bostrom, senior vice president and chief marketing officer at Cisco Systems; and John Gunn, who chairs the advisory board and is chairman at Dodge & Cox.
Members of the advisory board “make both an intellectual and financial commitment” and “are active in helping to facilitate and disseminate research,” according to SIEPR’s website.
“SIEPR’s Advisory Board is just that — an advisory board,” Shoven and Rosston wrote. “It is not a governing board. It does have very impressive members — successful business people, academics and policymakers — who provide guidance and fundraising assistance”
The mixture of academics, policymakers and business people, they said, creates a “positive influence on the policy process.”
The University stance
In an email to The Daily, University spokesperson Lisa Lapin wrote that corporate contributions, which are received by entities throughout the University, “represent a very small percentage of overall giving to Stanford (less than 10 percent).”
She added that Stanford has strong policies that serve to prevent instances of conflict of interest across all fields of the University, not just SIEPR.
“Stanford has some of the most thorough and complete conflict of interest policies and practices among U.S. universities,” Lapin wrote. She said these “thoroughly address inferences about corporate giving [being questions].”