The 3 Dealbreakers still in the Bylaw Proposal

The final version still 1. Transforms unit-level elections into mere nominations, 2. Gives away stakes to moneyed outside interests 3. Irreversibly erodes any checks and balances on the process. If Board really must pass something tonight, Board should give the extra seats back to the members.

The 3 Dealbreakers still in the Bylaw Proposal

There is a bylaw amendment, changing how Board members are selected, on the agenda for the last Board meeting of the semester, 5/9/2019. Here is the full proposal. The final version still

  1. Transforms unit-level elections into mere nominations,
  2. Gives away stakes to moneyed outside interests
  3. Irreversibly erodes any checks and balances on the process.

To summarize the original and changes:

This post is an overview of the concerns that still have not been addressed, and the minimum changes that would be necessary to render this proposal a conscionable change.  In brief, we want:

  1. No removal of elected Directors without the Unit's consent
  2. Alumni rep should be vetted by the BSCAA
  3. No new external directors until proportional representation is restored.

1. It dramatically limits the rights of members to select our own Board Directors

Right now, there are three ways for a member-elected Board Director to be removed:

  1. By simple majority vote, if they miss two consecutive meetings (V.A.8.)
  2. By house-level recall
  3. By court order or equivalent

The proposed change introduces a new, unaccountable vehicle for tyranny of the majority to reign on Board: It allows Cabinet to initiate the removal of any Board Director, subject only to a one-time, 2/3 vote by Board.

  1. The BSC Board of Directors may vote to remove any individual Board Director that has not fulfilled their fiduciary duties (which may include but is not limited to undisclosed conflicts of interest, substantial negligence or lack of attendance), or has not fulfilled the roles and responsibilities written in this section, V.A. and V.B., of the BSC Bylaws. Director removal may only be considered if: cabinet places it on the board agenda and the agenda is approved by a simple majority, OR if the Board of Directors places it on the agenda by a two-thirds vote.
    a. The Board of Directors must be given two weeks notice before the vote to remove ensues. If the Director being considered for removal is a Student Director, their unit must also be given two weeks notice of the vote.
    b. The individual Board Director under consideration for removal must be given voice in person or in writing, prior to the vote, to offer their circumstance and plea on their behalf.
    c. The motion to remove a board director may only be passed by a simple two-thirds majority.

For comparison, the impeachment process for removing a Cabinet member is much more arduous - involving a non-Cabinet Impeachment Committee that is required to "gather evidence and testimony, and investigate the validity of the accusations and allow the accused to respond to the substance of the charges made", all before the 2/3 vote can even take place.

This provision would effectively give the incumbent Board the ability  to veto members' choices of who we want to represent us at Board,  unless a reform caucus is able to win an outright majority of Board  seats in one fell swoop. And if that does happen, the new majority can  easily purge  the incumbent minority.

We all  want to believe that  nobody would do this, but bylaws exist for resolving disputes. When we  are writing legally binding bylaws and policies, we have to consider  scenarios where power is contested. Cooperative bylaws should be able to  check and balance uncooperative behavior.

What's "not fulfilled their fiduciary duty"?

"Fiduciary duty" is a legal term of art with a specific meaning. But for purposes of the proposed amendment, it matters much more what Board Directors think it means. Board Directors are expected at all times to act - and vote - in a way that fulfils their fiduciary duties. Every single vote is a potential test of Directors' fiduciary duties, in which the majority believes the minority is not fulfilling them.  This all but necessitates that the  minority left over after every vote, is at risk of being accused of not  fulfilling their fiduciary duties by the majority that voted the other  way.

The minutes from the IACom meeeting on 4/29 have not yet been uploaded, but in that meeting, it came out that if they ever wanted a lawyer's opinion on something like what it means to have "not fulfilled fiduciary duties," the usual protocol would be to relay legal questions and answers via executive staff. There was vague acknowledgement that Board Directors would be entitled to the lawyers' contact information if they really wanted it, but none of the Internal Affairs Committee members has ever actually consulted one of the BSC's lawyers. IACom is the committee tasked with legal matters like bylaw changes, so if IACom has never consulted the lawyers, it is unlikely that any other committee does so on a regular basis either.

Major decisions will be made without real legal advice, and only Directors with access to their own lawyers will conceivably be able to challenge any abuses of this provision.

The political removals have already begun

This has been framed as only being for "egregious" acts, but there are good reasons to believe this will be abused - or at least make Board Directors more cautious about expressing a minority viewpoint. Most notably, the rationale given in the Board Pack obfuscates the fact that the political impetus for this bylaw change is to (1) remove former BSCAA-appointed Director John Ehrlich, and (2) retroactively justify the undemocratic removal of Elissa Roy, a sitting Board Director.

Elissa Roy was appointed as an external Board Director under provision V.A.3. of the current bylaw, for a term ending May 31, 2019. At the Board meeting on 4/18/2019, she was told she was no longer a Board Director due to having missed two meetings, and subsequently deprived of access to her official BSC email account. But the clause she was supposedly removed under, is not in the current bylaws - it's part of the proposal she was being told she couldn't vote on.

This seems to have been a mistake, and we are being told that Elissa will be able to vote tonight. It remains unclear whether her account will be reinstated. However, it has taken significant organizing and frantic efforts on the part of multiple people to even reach that conclusion. Regardless of the motivation, wrongful attempts to remove Board Directors can and do happen. Good bylaws should make this harder, not easier.

2. It opens Board votes up to moneyed interests with no connection to the BSC

The bylaw change is being framed as simply extending the alumni position to all alumni rather than just BSCAA members, on the grounds that it will extend Board to "tens of thousands of alumni who cannot afford to be part of the BSCAA". This is one of the many "half-truths" that has emerged from Cabinet surrounding this proposal.

True: There are tens of thousands of alumni who are not members of the BSCAA

False: There are tens of thousands of alumni who are not members of the BSCAA because they cannot afford the $250 lifetime membership fee.

This bylaw change does not specifically reach marginalized or impoverished alumni, nor is it intended to.

In picture form:

The blue region - non-BSCAA alumni who are otherwise engaged with cooperative principles, who can't afford BSCAA dues - are the alumni we're being told this change allows for. But having the BSCAA nominate and Board confirm, would fully accomplish that. The current proposal goes much farther, hand in hand with the recent push to fundraise extensively and see alumni primarily as donors.

And that's just for the alumni spot. This proposal also creates two other spots for "strategic stakeholders" and outside professionals, with no connection to the BSC at all. I have been accused of fearmongering, but these are actual suggestions I have heard put forth by Board Reps - I did not make this up:

  • The CFO of the Haas School of Business
  • A Berkeley City Council member
  • Professionals in the real estate industry

These suggestions were made in good faith, by Board Directors who genuinely think they are proposing what's best for the organization.

If the process for arriving at such a decision were truly democratic, then it would be possible for this to be cooperative. But as it stands, the vast majority of members don't even know this vote is taking place - and Board Directors have repeatedly refused requests to publicize it to membership.

Members deserve to have a chance to vote on these major changes. Without a membership referendum, this bylaw proposal is illegitimate.

3. Non-member non-alumni shouldn't get to vote until we do

Cabinet claims that we don't need a membership referendum because they're not changing the total number of Board directors, merely the composition. This is a disturbing interpretation of a clause that was clearly written to protect membership from Board restructuring itself.

Once we make external Board Directors with no connection to the BSC equal to student members, there is no going back. There are already mutterings about having an external VP of Capital and Finance. External people who, rather than being nominated by the Alumni Association, are actively recruited for their strategic and professional expertise, will take over Cabinet.

In contrast, a non-voting advisory Board would still provide all the professional expertise. The only difference, is the financial incentive structure - and I posit that anyone who agrees to advise a cooperative that they are not a member of, only if they get a voting stake, is not committed to cooperative values.

What kind of person would we exclude by restricting external people to non-voting roles? We would exclude corporate shills and people with non-transparent conflicts of interest, nominated by the UC, real estate companies, and all manner of self-interested actors. Restricting external directors protects us from economic coercion - moneyed interests can't force us to give them something we are legally barred from providing.

I don't expect this to play out in the first year or two - the  current Board will make a good-faith effort to select non-corrupt  external Directors (Spring 2019), and they will probably do a fine job. But with several VP positions currently vacant for 2019-2020, we could very well end up with an external VP of Capital and Finance.

Then next spring (Spring 2020),  these "real adult" professionals with a modicum of institutional memory  (but no firsthand experience living in a housing cooperative), will be  the obvious candidates for Cabinet in 2020-2021. Starting in Fall 2020,  the three external directors on Cabinet will then only have to win over  one of the four other cabinet members, to control the agenda and  framing of everything Board hears for the rest of the year.

An externally-addled Cabinet will also get to recommend the next round of external Directors in Spring 2021. They will again make a good faith effort, but since their own experiences are from the non-profit industrial complex and not cooperatives, they will likely choose people even less connected to cooperative principles.

At that point, Why bother with  proportionality at all? An amendment that reduced member representation  to one Director per house, and allocated an additional 6 spots to  external Directors, would be possible using the same loophole the  current proposal uses to avoid the membership referendum that would normally be required for amendments like this. With Board's new power (granted by the current proposal) to remove student Directors by simple majority vote, there would be an even stronger disincentive for individual Directors to dissent.

By Fall 2021,  Board would have only 20 BSC members and 10 non-members. The people who  actually live in the coops, would have to vote unanimously every time  in order to do anything requiring 2/3 that the non-members opposed. Have  you ever seen Board vote unanimously against a strong recommendation from Kim or Victor?

If this seems overly pessimistic, we invite you to review what happened with the last bylaw change.

What's the alternative?

Board should table the proposal indefinitely and direct Summer Board not to vote on the matter.

Or, if Board really must pass something tonight, Board must amend the proposal to restore member voting rights. Additionally, they should amend the proposal to either place restrictions on the external positions, or have only one alumni rep, and give the other two seats back to the members.