The University and state Legislature are looking to amend
disclosure laws in an effort to reduce company concerns regarding
the privacy of their relationship with the University.
A bill recently passed by the state House of Representatives and
Senate will provide increased confidentiality for corporations
receiving University investments, claiming it will create a more
competitive economy in the state by allowing companies to keep
secret their business relationships. Senate Bill 1032 is currently
before Gov. Jennifer Granholm, who is expected to decide whether to
sign it by April 20.
Sen. Valde Garcia (R-Howell), the bill’s chief sponsor,
collaborated with University officials earlier this year in an
attempt to create an amendment to the Confidential Research and
Investment Act, which specifies that investments held by public
entities must be made publicly available. The amendment would
change the disclosure policy the University has with its corporate
investments, allowing the University to withhold its investment
portfolios from public inquiry. The new law makes the act
consistent with existing laws regarding pension, which are also not
University spokeswoman Julie Peterson said the economic benefits
of the bill and adjustments to disclosure exemptions have helped
generate the legislation’s bipartisan support.
“And (it would) ensure that the same protections afforded
to public employee pension funds in Michigan would also apply to
the public university investment funds,” Peterson said.
Previously, corporations had the ability to use the Freedom of
Information Act to access other corporations’ investment
portfolios and strategies, considered by law to be trade secrets.
Access to these secrets placed venture corporations at a
significant competitive disadvantage, Garcia said. The University
typically invests in private equity or venture capital firms that
normally invest in small start-up companies that develop new
“When you have a brand-new company that is dealing with
new technology, they want to protect their trade secrets and any
investment strategies,” Garcia said. “Because they
partner with a public university, a competitor can come in and FOIA
these secrets, and that puts them at a disadvantage.”
Peterson added, “The University’s inability to
protect such sensitive, proprietary information from public
disclosure has hurt our ability to invest in these promising
Each year, the University invests close to $3.5 billion in
corporations to keep a diverse investment portfolio, University
One of the newest outlets for University investment is the Life
Sciences Corridor, which attracts many new venture firms in the
biological science field. The Life Sciences Corridor is a statewide
project backed by a 20-year commitment of support from
Michigan’s tobacco settlement fund.
The LSC is a collaboration between the University of Michigan
and Michigan State and Wayne State universities, and is designed to
provide research opportunities for scientists in the state.
“The reason I agreed (to sponsor the bill) was I was
familiar with the Life Sciences Corridor,” Garcia said.
“I believe we need to diversify the economy in Michigan so
we’re not so dependent on the auto industry.”
Votes in the Legislature showed the widespread support for the
bill — the House voted 105 to 1 in favor of the bill on March
31, and the Senate voted 33 to 4 with one abstention in favor of
the bill on March 24.
But one of the only problems associated with the new amendment
was that the bill contained no provision for public involvement in
how University endowment funds are invested.
Initially, the bill would have allowed the University to keep
the names of corporations confidential, and many student groups
work to maintain investment transparency at the University. The
problem was addressed early in the bill’s drafting by the
Michigan Press Association and resulted in a number of
According to Peterson, the writers of the bill consulted with
the Michigan Press Association and followed its recommendations to
keep certain investment data open.
For example, names of all companies in which the University
invests and the aggregate amount of money invested in them will
stay public. Other information in each company portfolio will
Garcia also expressed his support for the MPA’s amendment.
“When (the MPA) came with their concern, they asked for a
simple amendment,” Garcia said. “We have no problems
with that. The intent was not to deny information in terms of who
the University was investing in, the importance was to protect
these small companies who they’re investing in.”