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UC task force calls for 'sea change' in compensation policies, practices
Regents' panel lays out sweeping set of 21 recommendations to restore public trust. Saying he hears task force "loud and clear," Dynes announces first steps toward addressing problems

| 19 April 2006

A nine-member task force called last Thursday for a "sea change" in the UC system's executive-compensation practices and policies, recommending that the Board of Regents "immediately" begin to clean house in areas ranging from compliance with existing pay policies to punishment for violations, and from checks and balances to transparency and disclosure.

"Trust and confidence in the administrative leadership of the university have declined precipitously over the last six months," the report says, as "unsettling and troubling information" has been disclosed in the press. At a special regents meeting held at UCLA and remote locations via conference call, several members of the panel - appointed in December by Gerald Parsky, the regents' chair, and originally expected to submit its findings on March 1 - formally presented the report, which was posted online less than an hour before the meeting began.

Dynes responds to task force with list of "first steps"
On Monday, April 17, UC President Robert Dynes announced the first set of steps to be taken in response to the task-force report critical of his handling of compensation matters. Said Dynes: "I have heard the task force loud and clear: Major change is required, and we need to begin implementing that change immediately."

The initial steps being taken are those "that build upon new policies and practices already announced or that can be immediately implemented," Dynes said, noting that other recommendations clearly fall under the purview of the regents. According to a news release from the Office of the President, these steps include:

. the first phase of an integrated human-resources-information system that enables compensation data to be quickly examined and analyzed. The initial focus will be on capturing senior- management compensation starting in October 2006 - the beginning of the next compensation cycle.

. continued refinement of the protocols set forth beginning last November for disclosing to the media, the Legislature, and the public approved compensation for senior-level appointments.

. development of a clear schedule and process for providing regular reports to the regents, the Legislature, and the public. This will entail design of an internal tracking system to facilitate compensation reporting and development of a schedule and protocols for releasing annual online reports of base salaries for all UC employees.

. appointment of an interim systemwide public-information-practices coordinator who will be charged with coordinating all Public Records Act requests and developing clear protocols and timelines for processing such requests.

. naming Senior Vice President Bruce Darling, in his interim role overseeing human resources, as the administration's official liaison to the regents on compensation matters.

. funding and implementation of mandatory ethics training for all UC employees, to include communications about existing whistleblower programs and anti-retaliation policies. In addition, Dynes is recommending that training be expanded for senior managers to include a focus on compliance requirements with university policies.

. naming a new high-level Implementation Committee, to be compoised of regents, chancellors, faculty, and campus and systemwide staff, to address a number of policy and philosophical issues raised by the task-force report.

Dynes also noted that actions must be accompanied by accountability, including consequences for problems that have occurred - many of which, it is assumed, will be identified over the next several weeks as the results of three pending audits (by PricewaterhouseCoopers, the Bureau of State Audits, and the University Auditor) are released.

Resources
• The complete report of the Task Force on UC Compensation, Accountability, and Transparency

•The UCOP press release outlining President Dynes' first steps toward addressing the task-force recommendations

Echoing the report's often tough language, former Assembly Speaker Robert Hertzberg termed the current situation "wholly unacceptable," pointing to insufficient clarity, organization, openness, and accountability, among other systemwide problems. Hertzberg, who co-chaired the task force with regent Joanne Kozberg, added that the failures are "all the more troubling" because many were identified more than 15 years ago.

The nine members of the Task Force on UC Compensation, Accountability, and Transparency include representatives from state government, business, and the media, both inside and outside the UC system. The panel is one in a series of steps taken by the regents and the Office of the President in response to a barrage of press reports since November on the size and nature of compensation packages for top managers, as well as the repeated failure to fully disclose - either to the public or to the regents - so-called deferred-compensation benefits, leave privileges, and other high-priced perks.

While the report called for a top-to-bottom overhaul of the system's policies and practices - which it said had helped create "an impression that rules and regulations are being deliberately manipulated" - UC officials could find some solace in its recognition of the rigors of today's academic marketplace, a central theme in the effort to reframe the recent press disclosures in a more charitable context.

"For UC to best serve the people of California, the task force believes that the university must remain in the top tier of the world's research universities," the report says. "To maintain this level of distinction, it must be able to provide its faculty, administrators, and staff a level of compensation that is competitive with that offered by universities in its peer group."

The panel was "deeply sensitive to the need to remain competitive" with other universities, Hertzberg assured the regents. Nevertheless, neither the executive leadership nor the regents themselves "have done all they could or should to fulfill their respective or shared responsibilities."

A brief public-comment period included remarks by Charles Schwartz, a Berkeley professor emeritus, who said there was "no good reason for extreme pay" to top UC administrators, and quoted from a 1992 Academic Senate resolution stating "it should be the policy of any institution of higher learning that the total compensation paid to any executive officer should not exceed twice the average amount paid to its full professors."

Hertzberg, however, asserting that UC faculty and executives are "not overpaid," said it was "the workarounds and nondisclosures that have gotten UC into the present mess."

The report includes 21 recommendations for reversing the slide in the public's trust, addressing concerns that range from the lack of clear policies on setting and disclosing compensation packages for faculty and senior management to the lack of consequences for violating existing policies - including routine, widespread "exceptions" it calls tantamount to violations. Implementing the recommendations "will require several years to complete if done well," it says, suggesting that the regents create a similar, independent panel in three years "to review and report back on the university's progress in these areas."

Among the report's most daunting findings, perhaps, is its assessment of UC's outdated and decentralized information systems, which it calls "inadequate and unable to provide full and timely compensation information." Because so much data is not captured in a systematic way, the report says, "It can take weeks or months to respond to even the most basic public-information requests."

The university should invest in "a modern, comprehensive integrated human-resources information system" as an essential step toward meeting "its obligation of public accountability," the report says. Without such a system - which will require "a major investment of time, money, and staffing" - even "the best disclosure policies and practices" are not likely to succeed.

The panel's findings, Hertzberg said, were "expressed with a tone of urgency." Added Kozberg, "We need to move quickly to restore public confidence."

Parsky, insisting the regents "need to be careful and deliberate" and noting that additional reports are still to come, said the board would take up the task force's findings at its next regular meeting in May, following another special meeting later this month to hear the results of an audit of compensation packages for a relatively small group of UC executives by an accounting firm hired by the university.

Asked if the panel's declaration that "consequences must be consequential" would apply to past violations - many of which have been acknowledged by UC's top leadership - Parsky was noncommittal. "We certainly get the message going forward," he replied, "that we need to make clear to people that violations of policy will not be tolerated."

Parsky had praise for the panel's work, as did UC President Robert Dynes, who has acknowledged responsibility for many of the problems the task force was asked to address. In a statement released after Thursday's meeting, Dynes said he could "immediately embrace a number of its recommendations, beginning with the suggestions that all relevant information about compensation packages be provided to the regents in advance of approval and that all compensation information be disclosed to the public in a timely manner," and added, "I believe we have already begun to move in that direction."