The California Constitution provides that the University of California constitutes a public trust administered by the Regents of the University of California, a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including, among others, as may be necessary to ensure the security of its funds.

Existing law prohibits officers or employees of the University of California from engaging in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest if that employment, activity, or enterprise is sponsored or funded by a university department or contract, except as provided.

This bill would prohibit a business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the University of California if a University of California executive serves or has served the business entity within the previous year, as specified. The bill would also prohibit a business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the University of California for at least one year after providing or promising any University of California executive compensation. The bill would declare a contract entered into, renewed, automatically renewed, extended, expanded in scope, or maintained in violation of these prohibitions to be void, a risk to the security of the University of Californias funds, and contrary to public policy. require a University of California executive, within 60 days of accepting a board of director position with a business entity, to post on a University of California internet website a written recusal from involvement with any future university contract decisions where the business entity is a party, as provided. The bill would prohibit a University of California executive from making, participating in making, or in any way attempting to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract. The bill would authorize the Attorney General to bring a civil action to enforce these provisions and to recover attorneys fees if the civil action prevails. If a court finds in such a civil action that a business entity an executive has violated these provisions, the bill would require the court to enjoin the business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of a contract with the University of California for a period of one year from the date of the finding. void the affected contract. The bill would define business entity, compensation, contract, and University of California executive for its purposes.

The California Constitution provides that the University of California constitutes a public trust administered by the Regents of the University of California, a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including, among others, as may be necessary to ensure the security of its funds.

Existing law prohibits officers or employees of the University of California from engaging in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest if that employment, activity, or enterprise is sponsored or funded by a university department or contract, except as provided.

This bill would prohibit a business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the University of California if a University of California executive serves or has served the business entity within the previous year, as specified. The bill would also prohibit a business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the University of California for at least one year after providing or promising any University of California executive, or an immediate family member of the executive, executive compensation. The bill would declare a contract entered into, renewed, automatically renewed, extended, expanded in scope, or maintained in violation of these prohibitions to be void, a risk to the security of the University of Californias funds, and contrary to public policy. The bill would authorize a California taxpayer or the Attorney General to bring a civil action to enforce these provisions and to recover attorneys fees if the civil action prevails. If a court finds in such a civil action that a business entity has violated these provisions, the bill would require the court to enjoin the business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of a contract with the University of California for a period of 10 years one year from the date of the finding. The bill would define business entity, compensation, contract, and University of California executive for its purposes.

The California Constitution provides that the University of California constitutes a public trust administered by the Regents of the University of California, a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including, among others, as may be necessary to ensure the security of its funds.

Existing law prohibits officers or employees of the University of California from engaging in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest if that employment, activity, or enterprise is sponsored or funded by a university department or contract, except as provided.

This bill would prohibit a business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the University of California if a University of California executive serves or has served the business entity within the previous year, as specified. The bill would also prohibit a business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the University of California for at least one year after providing or promising any University of California executive, or an immediate family member of the executive, compensation. The bill would declare a contract entered into, renewed, automatically renewed, extended, expanded in scope, or maintained in violation of these prohibitions to be void, a risk to the security of the University of Californias funds, and contrary to public policy. The bill would authorize a California taxpayer or the Attorney General to bring a civil action to enforce these provisions and to recover attorneys fees if the civil action prevails. If a court finds in such a civil action that a business entity has violated these provisions, the bill would require the court to enjoin the business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of a contract with the University of California for a period of 10 years from the date of the finding. The bill would define business entity, compensation, contract, and University of California executive for its purposes.

SENATE COMMITTEE ON

Senator Sabrina Cervantes, Chair

2025 - 2026 Regular Session

SB 1141 (Wahab) - Public contracts: University of California executives: conflicts of interest: prohibition

Bill Summary:

This bill requires University of California (UC) executives, within 60 days of accepting a board of director position with a business entity, to post on a university internet website a written recusal from involvement with any future university contract decisions where the business entity is a party. The bill also authorizes a California the Attorney General to bring a civil action to enforce the bill’s provisions and recover attorney’s fees if the civil action prevails.

Fiscal Impact: The UC estimates General Fund costs of $160,000 each year for 1.0 position at the UC Office of the President to track recusals and manage compliance, including the coordination with all UC locations and developing and updating a website for published recusals.

Background:

Existing law establishes the UC as a public trust to be administered by the Regents of the UC; and, grants the Regents full powers of organization and government, subject only to such legislative control as may be necessary to insure security of its funds, compliance with the terms of its endowments, statutory requirements around competitive bidding and contracts, sales of property and the purchase of materials, goods and services.

Existing law prohibits an officer or employee of the UC from engaging in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest if that employment, activity, or enterprise is sponsored or funded by a university department or contract, except as provided. It further prohibits an officer or employee from contracting on his or her own individual behalf as an independent contractor with any university department to provide services or goods.

Proposed Law:

This bill provides that a UC executive shall, within 60 days of accepting a board of director position with a business entity, post on a university internet website a written recusal from involvement with any future university contract decisions where the business entity is a party. The recusal notification shall contain several requirements, including a declaration that the executive recuses themself from and will avoid any participation of any kind in a university contract decision in which the business is a party, that the executive will avoid communicating with any university officers or employees about a contract decision, and will not review any privileged or confidential documents that may relate to the contract decision.

This bill provides that a UC executive shall not make, participate in making, or in any way attempt to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract.

This bill authorizes the Attorney General to bring a civil action to enforce its provisions and upon prevailing, shall recover attorney’s fees and costs. The bill also authorizes the court to void the affected contract if an executive has violated this section.

This bill defines the following terms for purposes of the bill:

1. “Business entity” to mean any private sector organization, regardless of its corporate form.
2. “Contract” to mean any legally enforceable agreement that establishes the rights and obligations of two or more parties, one of which is the Regents of the UC, any UC campus, medical center, health system, hospital, clinic, or laboratory and is for the sale or lease of real property, the sale or lease of materials, or the provision of personal or professional services.
3. “Executive” or “University of California executive” to mean a UC employee who serves as a Chancellor of a UC campus, a Chief Executive Officer of a UC hospital or hospital system, or a President of a UC health system.

Staff Comments:

This bill is intended to prevent potential conflict of interest in scenarios where a UC executive serves on the board of a company that contracts with the UC or UC health system. Specifically, the bill requires a UC executive, within 60 days of accepting a board of director position with a business entity, to post on a UC website a written recusal from involvement with any future contract decisions where the business entity is a party. It also prohibits the executive from making or in any way attempting to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract. The bill authorizes the AG to enforce these provisions and if a violation is found by the court, the contract can be voided.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2025-2026 Regular Session

Bill No: SB 1141 (Author:Wahab)

Version: April 7, 2026

Hearing Date: April 21, 2026

Fiscal: Yes

Urgency: No

Consultant: AM

SUBJECT

Public contracts: University of California executives: conflicts of interest: prohibition

DIGEST

This bill requires a University of California (U.C.) executive to, within 60 days of accepting a board of director position with a business entity, post on a U.C. website a written recusal from involvement with any future University contract decision where the business entity is a party, as provided. The bill prohibits a U.C. executive from making, participating in making, or in any way attempting to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract. The AG is authorized to enforce these provisions and if a violation is found by the court the contract is to be voided.

EXECUTIVE SUMMARY

The author has agreed to amend the bill to change its focus to transparency by U.C. executives serving on boards of other business entities. The U.C. Office of the President has told the Committee that it will move to a neutral position on the bill with the proposed amendments. This analysis will analyze the bill as proposed to be amended. A mockup of the amendments can be found at the end of the analysis. The bill in print was opposed by various business organizations; however, the amendments should address most of the concerns of the opposition.

The author and sponsor of the bill expressed concern with the potential conflict of interest that could arise in the scenario where a U.C. executive serves on the board of a company that contracts with the University system or University health system. The bill requires a written recusal from involvement with any future University contract decision where the business entity is a party when a U.C. executive accepts a board of directors position with that business entity. The bill prohibits a U.C. executive from making, participating in making, or in any way attempting to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract. The bill passed the Senate Education Committee on a vote of 4 to 2.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes the U.C. as a public trust to be administered by the Regents of the U.C.; and, grants the Regents full powers of organization and government, subject only to such legislative control as may be necessary to insure security of its funds, compliance with the terms of its endowments, statutory requirements around competitive bidding and contracts, sales of property and the purchase of materials, goods and services. (§ (9)(a), art. IX, Cal. Const.)
2. Prohibits an officer or employee of the U.C. from engaging in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest if that employment, activity, or enterprise is sponsored or funded by a university department or contract, except as provided.
   1. Further prohibits an officer or employee from contracting on their own individual behalf as an independent contractor with any university department to provide services or goods. (Pub. Cont. Code § 10516.)

This bill, as proposed to be amended:

1. Requires a University of California executive to, within 60 days of accepting a board of director position with a business entity, post on a University of California website a written recusal from involvement with any future University contract decisions where the business entity is a party.
   1. A recusal notification is to contain all of the following requirements:
      1. The executive’s name, address of employment, and date they accepted a board of director position.
      2. The name of the business entity for which the executive serves as a member of the board of directors.
      3. The type and amount of compensation, if any, provided or promised to the executive by the business entity.
      4. The name, address, and contact information of the office where a member of the public can request copies of any contracts with the business entity that are disclosable pursuant to the California Public Records Act or other existing law. A contract with the business entity is to be provided to the requester as soon as practicable, but no later than 30 days after the request is made.
2. Prohibits a University of California executive from making, participating in making, or in any way attempting to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract.
3. Provides that the Attorney General may bring a civil action to enforce this section and, upon prevailing, shall recover attorney’s fees and costs
   1. If a court finds an executive has violated these provisions, the court is required to void the contract.
4. Defines the following terms for these purposes:
   1. “business entity” means any private sector organization, regardless of its corporate form, other than a nonprofit organization organized pursuant to Section 501(c)(3) of the United States Internal Revenue Code;
   2. “contract” means any legally enforceable agreement that establishes the rights and obligations of two or more parties, one of which is the Regents of the University of California, any University of California campus, medical center, health system, hospital, clinic, or laboratory and is for the sale or lease of real property, the sale or lease of materials, or the provision of personal or professional services; and
   3. “executive” or “University of California executive” means a University of California employee who serves as a Chancellor of a University of California campus, a Chief Executive Officer of a University of California hospital or hospital system, or a President of a University of California health system.
5. Makes the following Legislative findings and declarations:
   1. The University of California, as a public institution, is charged with responsible stewardship of public funds and it is appropriate that its leaders are held to the same high standards of integrity and transparency, as state public officials. Avoiding conflicts of interest in public procurement and public service, and transparency of public decision making, are important to build and maintain the public trust.
   2. Article IX, Section 9 of the California Constitution provides that The Regents of the University of California are subject to such legislative control as may be necessary to ensure compliance with such competitive bidding procedures as may be made applicable to the university by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services.
   3. It is the intent of the Legislature that conflicts of interest from outside professional activities for senior executives are handled appropriately through recusals, disclosures, and transparency, avoiding even the perception of undue influence.

COMMENTS

1. Stated need for the bill

The author writes:

The University of California system educates more than 300,000 students, employs 265,000 faculty and staff, it is the second largest employer in the State of California, and the second largest healthcare delivery system in California, only behind Kaiser. Given both its economic footprint and its vast purchasing power, it is vital that the State safeguards the investments and funds that the University manages and ensures that the UC lives up to the public benefit it provides. SB 1141 does that by stopping the private business seeking to contract with the University from providing personal financial rewards to University executives.

1. This bill seeks to provide more transparency to U.C. contract decisions when an executive serves on the board of an entity contracting with the U.C.

The author and sponsor of the bill note that existing law does not prevent private businesses from providing valuable compensation to U.C. executives, appointing them to their boards or hiring them as advisors, while also securing valuable contracts from the University at the same time. Without transparency, the author and sponsor argue, that this practice can create an air of impropriety and potentially undermine public trust. In order to address this concern the bill requires a U.C. executive to, within 60 days of accepting a board of director position with a business entity, post a written recusal from involvement with any future University contract decision where the business entity is a party on a U.C. website, as provided. The bill also prohibits a U.C. executive from making, participating in making, or in any way attempting to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract.

The bill applies to any contract for the sale or lease of real property, the sale or lease of materials, or the provision of personal or professional services with the Regents of the U.C., any U.C. campus, medical center, health system, hospital, clinic, or laboratory. The persons included under the definition of U.C. executive, and thus subject to the bill’s provisions, are Chancellors of a U.C. campus, CEOs of a U.C. hospital or U.C. health system, and the President of a U.C. health system.

Under the bill, the AG is authorized to enforce its provisions. If a court finds a violation the contract is to be voided. This remedy is similar to the remedy under Government Code 1090, which prohibits members of the Legislature, state, county, district, judicial district, and city officers or employees from being financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.

1. Stakeholder statements

The sponsor of the bill, AFSCME Local 3299, writes in support stating:

The frontline service workers at the University of California sponsor and support SB 1141, a long-overdue step toward dismantling a dangerous practice of some companies that do business with UC and high-level UC executives.

For years, we have witnessed troubling side-dealing relationships between companies who receive UC contracts and UC’s senior management. We know of senior UC executives with 7-figure public salaries who have concurrent lucrative private roles with companies doing business with UC.

SB 1141 does not prevent a company from doing business at UC.

SB 1141 does not prevent UC from selecting business executives to serve as a UC executive.

SB 1141 does establish clear prohibitions against conflicts of interests.

By prohibiting conflicts of interest, SB 1141 protects integrity in the UC’s contracting processes, maintains public trust, and shields state government from the damaging, scandal-baiting charges emanating from Washington DC.

The U.C. Office of the President has moved to a neutral position on the bill as it is proposed to be amended. The bill in print was opposed by various business organizations; however, the proposed amendments should address the concerns of the opposition.

SUPPORT

AFSCME Local 3299 (sponsor)
American Federation of State, County and Municipal Employees, AFL-CIO

OPPOSITION

American Staffing Association

Avid Technical Resources, Inc.

Bay Area Council

Biocom California

California Chamber of Commerce

California Hospital Association

California Life Sciences Association

California Staffing Professionals (CSP)

Central City Association of Los Angeles

Los Angeles Area Chamber of Commerce

San Diego Regional Chamber of Commerce

Santa Barbara South Coast Chamber of Commerce

Silicon Valley Leadership Group

TechNet

Valley Industry and Commerce Association

Vizient, Inc.

West Los Angeles Chamber of Commerce

Yolo Food Bank
2 individuals

RELATED LEGISLATION

Pending Legislation: None known.

Prior Legislation: None known.

PRIOR VOTES

Senate Education Committee (Ayes 4, Noes 2)

**************

mock-up of sb 1141 (wahab) AS PROPOSED TO BE AMENDED^[1]

SECTION 1. The Legislature finds and declares all of the following:

(a) Due to the University of California’s constitutional autonomy, the courts have found conflict of interest statutes of general application do not apply to the University of the California.

(b) The California Court of Appeals decision of People v. Lofchie (2014) 229 Cal.App.4th 240 found Section 1090 of the Government Code to be inapplicable to the University of California.

(c) The United States District Court of the Southern District of California held in Regents of the University of California v Aisen (2016 WL 4097072) that Sections 87100 and 87407 of the Government Code, conflict-of-interest provisions of the Political Reform Act of 1974 (Title 9 (commencing with Section 81000) of the Government Code), do not apply to University of California faculty employees for the same reasons.

(a) The University of California, as a public institution, is charged with responsible stewardship of public funds and it is appropriate that its leaders are held to the same high standards of integrity and transparency, as state public officials. Avoiding conflicts of interest in public procurement and public service, and transparency of public decision making, are important to build and maintain the public trust.

(b) Article IX, Section 9 of the California Constitution provides that The Regents of the University of California are subject to such legislative control as may be necessary to ensure compliance with such competitive bidding procedures as may be made applicable to the university by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services.

(c) It is the intent of the Legislature that conflicts of interest from outside professional activities for senior executives are handled appropriately through recusals, disclosures, and transparency, avoiding even the perception of undue influence.

SEC. 2. Section 10516.1 is added to the Public Contract Code, to read:

10516.1. (a) For purposes of this section, the following definitions apply:

(1) “Business entity” means any private sector organization, regardless of its corporate form, other than a nonprofit organization organized pursuant to Section 501(c)(3) of the United States Internal Revenue Code.

(2) “Compensation” means a thing of value or source of income aggregating one hundred thousand dollars ($100,000) or more in any twelve month period, or aggregating two hundred and fifty thousand dollars ($250,000) or more while the recipient is employed by the University of California, and includes any cash, remuneration, loan, any type of ownership interest, debt, lease, discount, retainer, fee, stipend, honoraria, equity, stock, stock option, subsidy, incentive pay, share of current or future profits, gift, donation, rebate, or kickback. “Compensation” does not include interest, dividends, distributions, or a return on the investment of personal savings or retirement funds, including those held in a mutual fund or index fund, or a loan provided by a financial or commercial lending institution provided that such types of income are generated in the regular course of business on terms available to the public without regard to the executive’s official status.

(3) (2) “Contract” means any legally enforceable agreement that establishes the rights and obligations of two or more parties, one of which is the Regents of the University of California, any University of California campus, medical center, health system, hospital, clinic, laboratory, or facility or organization affiliated with the University, or any person acting on the University’s behalf. “Contract” includes, but is not limited to, any agreement or laboratory and is for the sale or lease of real property, the sale or lease of materials, and or the provision of personal or professional services. “Contract” includes an evergreen contract, or an agreement that automatically renews from time to time.

(4) (3) “Executive” or “University of California executive” means a University of California employee who serves as a Chancellor of a University of California campus, a Chief Executive Officer of a University of California hospital or hospital system, or a President of a University of California health system.

(5) “Twelve months” means any 12-month period starting on or after January 1, 2028.

(b) A business entity may not bid on, enter into, renew, automatically renew, extend, or expand the scope of any contract with the Regents of the University of California if a University of California executive serves the business entity, or has served the business entity at any time within the previous twelve months, as a compensated consultant, partner, director, governor, trustee, employee, or manager. This subdivision does not prevent a business entity from receiving uncompensated volunteer services from a University of California executive.

(c) A business entity may not bid on, enter into, renew, automatically renew, extend, or expand the scope of any contract with the University of California for at least twelve months after providing or promising any University of California executive compensation of any kind.

(d) A contract entered into, renewed, automatically renewed, extended, expanded in scope, or maintained in violation of this section shall be declared void, a risk to the security of the University of California’s funds, and contrary to public policy.

(b)(1) A University of California executive shall, within 60 days of accepting a board of director position with a business entity, post on a University of California internet website a written recusal from involvement with any future University contract decisions where the business entity is a party.

(2) A recusal notification pursuant to this subdivision shall contain all of the following requirements:

(A) The executive’s name, address of employment, and date they accepted a board of director position.

(B) The name of the business entity for which the executive serves as a member of the board of directors.

(C) A declaration that the executive recuses themself from and will avoid any participation of any kind in a University contract decision in which the business identified under subparagraph (B) is a party, that the executive will avoid communicating with any University officers or employees about a contract decision, and will not review any privileged or confidential documents that may relate to the contract decision.

(D) The type and amount of compensation, if any, provided or promised to the executive by the business entity.

(E) The name, address, and contact information of the office where a member of the public can request copies of any contracts with the business entity under subparagraph (B) that are disclosable pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) or other existing law. A contract with the business entity shall be provided to the requester as soon as practicable, but no later than 30 days after the request is made.

(c) A University of California executive shall not make, participate in making, or in any way attempt to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract.

(e) (d) If a court finds, in a civil action brought pursuant to subdivision (f), (e), that a business entity an executive has violated this section, the court shall enjoin the business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the University of California for a period of twelve months from the date of the finding. void the effected contract.

(f) (e) The Attorney General may bring a civil action to enforce this section and, upon prevailing, shall recover attorney’s fees and costs.

1. The amendments may include nonsubstantive changes as identified by Legislative Counsel. ↑

SENATE COMMITTEE ON EDUCATION

Senator Sasha Renée Pérez, Chair

2025 - 2026 Regular

Bill No: Hearing Date: March 25, 2026

Subject: .

NOTE: This bill has been referred to the Committees on Education and Judiciary. A “do pass” motion should include referral to the Committee on Judiciary.

SUMMARY

This bill prohibits a business from entering into a contract with the University of California (UC) if a UC employee in a senior management position serves or has served the business as specified within the previous year, or if the employee or their immediate family member has received compensation from the business within the previous year. The bill further authorizes a California taxpayer or Attorney General (AG) to bring a civil action to enforce the bill’s provisions and recover attorney’s fees if the civil action prevails.

BACKGROUND

Existing law:

1. Establishes the UC as a public trust to be administered by the Regents of the UC; and, grants the Regents full powers of organization and government, subject only to such legislative control as may be necessary to insure security of its funds, compliance with the terms of its endowments, statutory requirements around competitive bidding and contracts, sales of property and the purchase of materials, goods and services. (Article IX, Section (9)(a) of the California Constitution)
2. Prohibits an officer or employee of the UC from engaging in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest if that employment, activity, or enterprise is sponsored or funded by a university department or contract, except as provided. It further prohibits an officer or employee from contracting on his or her own individual behalf as an independent contractor with any university department to provide services or goods. (Public Contract Code § 10516)

ANALYSIS

This bill:

1. Prohibits a business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the UC Regents if a UC executive employee serves the business entity, or has served the business entity at any time within the previous 12 months, as a consultant, partner, director, governor, trustee, employee, manager, advisory board or member of any committee.
2. Prohibits a business entity from bidding on, entering into, renewing, automatically renewing, extending, or expanding the scope of any contract with the UC Regents for at least 12 months after providing or promising any UC executive employee, or the employee’s immediate family member, compensation of any kind.
3. States that a contract entered into, renewed, automatically renewed, extended, expanded in scope, or maintained in violation of the bill’s provisions be declared void, a risk to the security of the UC’s funds, and contrary to public policy.
4. Authorizes civil action to enforce the bill’s provisions to be brought by any California taxpayer or the AG, and upon prevailing, recover attorney’s fees and costs. It further requires, if a court finds in such a civil action that a business entity has violated the bill’s provisions, that the court enjoin the business entity from bidding on, entering, renewing, automatically renewing, extending, or expanding the scope of any contract with UC for 10 years from the date of the finding.
5. Defines all of the following terms for purposes of the bill:
   1. “Business entity” to mean any private sector organization, regardless of

its corporate form.

• 1. “Compensation” to mean a thing of value or source of income aggregating

$500 or more in value, and includes any cash, remuneration, loan, any type of ownership interest, return on investment, debt, lease, discount, retainer, fee, stipend, honoraria, equity, stock, stock option, dividend, distribution, subsidy, share of current or future profits, gift, donation, rebate, or kickback. “Compensation” does not include interest earned on personal savings or retirement funds or a loan provided by a financial or commercial lending institution in the regular course of business on terms available to the public without regard to the executive’s official status.

• 1. “Contract” to mean any legally enforceable agreement that establishes the

rights and obligations of two or more parties, one of which is the Regents of the UC, any UC campus, medical center, health system, hospital, clinic, laboratory, or facility or organization affiliated with the University, or any person acting on the University’s behalf. “Contract” includes, but is not limited to, any agreement for the sale or lease of real property, the sale or lease of materials, and the provision of personal or professional services. “Contract” includes an evergreen contract, or an agreement that automatically renews from time to time.

• 1. “Executive” or “University of California executive” to mean a UC employee

who serves as or reports to a Chancellor, Vice Chancellor, Chief Executive Officer, Chief Operating Officer, Chief Transformation Officer, Chief Human Resources Officer, or General Counsel of the University, or who holds any other position in the University’s Senior Management Group.

• 1. “Twelve months” to mean any 12-month period starting on or after

January 1, 2027.

STAFF COMMENTS

1. Need for the bill. According to the author, “State laws such as the Political Reform Act of 1974 and Government Code Section 1090 require most public officials to recuse themselves from contracting decisions in which they have a financial interest. These statutes do not address how many UC contracting decisions are made, however. Because UC’s contracting decisions take place behind closed doors and without a public vote, so recusal would not safeguard the public’s interest.

“In practice, UC’s decisions to enter into, renew or expand the scope of multi-million-dollar contracts are made by staff who report to UC Executives who may have a financial interest in the outcome of those decisions. Neither existing law nor UC policy prevents or addresses such conflicts of interest.”

The author further states, “the University of California system educates more than 300,000 students, employs 265,000 faculty and staff. It is the second largest employer in the State of California, and the second largest healthcare delivery system in California, only behind Kaiser. Given both its economic footprint and its vast purchasing power, it is vital that the State safeguards the investments and funds that the University manages and ensures that the UC lives up to the public benefit it provides. SB 1141 does that by stopping the private business seeking to contract with the University from providing financial rewards to University executives who oversee the University’s contracting decisions.”

1. Existing conflict-of-interest policies. Existing law primarily regulates conflicts of interest involving UC employees. This bill instead restricts the ability of private businesses to contract with UC when certain financial or service relationships including service on boards, advisory bodies, or in other formal roles exist with UC senior management employees. The UC indicates, in their letter submitted to this committee, that it is already subject to a comprehensive framework of state law and institutional policies governing conflicts of interest, including the Political Reform Act, Public Contract Code Section 10516, and a range of Regents policies and internal procedures. These policies require disclosure of financial interest, limit outside activities, and establish recusal requirements when conflicts arise. For example, UC policy requires employees, including senior management, to disclose financial interests and avoid participation in decisions where a conflict exists with recusal serving as the primary solution. The committee may wish to consider how the restrictions proposed in this bill interact with existing conflict of interest laws and UC policies, and whether those laws and policies already sufficiently address the concerns the bill seeks to remedy.
2. Covered employees. The bill could apply broadly to many employees and by extension their immediate family members. UC indicates that there are approximately:
   1. 505 employees who serve in, or report directly to, senior leadership positions.
   2. 184 senior management group employees, many of whom are included in the broader group.

It’s unclear to committee staff whether the scope of impacted employees aligns with the level of decision-making authority over contracting.

1. Potential impact on UC. This bill conditions vendor eligibility on financial relationships and relationships in the form of service involving UC senior management employees which may have potential implications for UC’s operations. With respect to service relationships, UC employees frequently serve on advisory boards or in other outside roles due to their subject-matter expertise. It is unclear how the bill’s provisions may have an impact on these types of routine activities, including unpaid advisory roles, and how such activities would be distinguished from relationships that present a direct conflict of interest. Implementation of the bill may require UC to develop additional disclosure and verification process related to the financial and service relationships of UC senior management employees and their family members to determine whether prospective vendors are eligible to contract with the UC. Also, to the extent vendors may face uncertainty regarding compliance with the bill’s requirements, may impact vendor participation and the availability of certain goods and services including those supporting instruction, and operations.
2. Definition of compensation. The bill defines compensation to include money or anything of value of $500 or more, including payments for services, fees, honoraria, or other financial benefits, and may include income generated from any type of ownership interests, such as dividends. The bill excludes interest earned on personal savings or retirement funds. However, it appears that the bill could apply to other forms of investment income or ownership interest. It’s unclear whether the bill is intended to capture passive investments. The committee may wish to consider whether the inclusion of passive investment income is necessary to achieve the bill’s intent.
3. Arguments in support. The sponsors of the bill, AFSCME 3299, in their letter of support state in part, “SB 1141, a long overdue step toward dismantling a dangerous practice of some companies that do business with UC and High-level UC executives. For years, we have witnessed troubling side-dealing relationships between companies who receive UC contracts and UC’s senior management. We know of senior UC executives with 7-figure public salaries who have concurrent lucrative private roles with companies doing business with UC.” They further contend that SB 1141 doesn’t prevent a company from doing business at UC nor does it prevent UC from selecting business executives to serve as a UC executive and that by prohibiting conflicts of interest, SB 1141 protects integrity in the UC’s contracting process, maintains public trust, and shields state government from the damaging, scandal-baiting charges emanating from Washinton, DC.
4. Arguments in opposition. The UC argues in their letter of opposition, in part, “…SB 1141 bans contracting with any entity where a UC executive (or their direct report) serves on a board, advisory board, or committee. Unlike other conflict laws, this applies even to unpaid voluntary service – and provides for a 10-year contracting ban for any business entity found in violation of the new and expansive prohibitions. UC faculty and administrators are frequently sought for their expertise to serve on technical advisory boards. These roles ensure that UC’s business partners develop tools that meet the needs of the UC community. Under SB 1141, a vendor would be barred from all UC business solely because a university expert provided expert guidance...” The University further argues, that “Maintaining the University’s operations will become unfeasible if existing contracts are cancelled or vendors choose to avoid University contracts to avoid the risk of a 10 year, systemwide band from UC contracting. Existing laws already prevent UC employees from benefiting from university contracts. SB 1141 is an unnecessary measure that would cause the University’s medical and instructional operations to grind to a halt.”

SUPPORT

AFSCME Local 3299 (sponsor)

American Federation of State, County and Municipal Employees, AFL-CIO

OPPOSITION

University of California

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