|(Steve McConnell photo)|
Regents approve 2006-07 budget as spotlight glares on executive pay
Fallout from the S.F. Chronicle's compensation series continues in wake of board's votes to raise student fees, reward top managers
| 02 December 2005
Meeting in Berkeley on Nov. 16 and 17, the UC Board of Regents approved a steep hike in student fees for next year, then awarded merit raises averaging 2.5 percent to hundreds of top UC administrators. The controversial actions - thrown into sharp relief by the publication days earlier of a San Francisco Chronicle examination of salaries and perks paid to high-ranking administrators and faculty - have focused an unusual degree of public and internal attention on UC's Office of the President.
The student-fee hike - the fifth in as many years - was but one element of the 2006-07 budget proposal approved by the regents on a 17-2 vote. The proposal also includes funding for systemwide enrollment growth of 2.5 percent next year, an increase of 5,000 full-time-equivalent students; funding for an average 4-percent salary increase for employees in 2006-07 (subject to collective-bargaining requirements); restoration of permanent funding for student academic-preparation programs (currently funded on a one-time basis); a set-aside of 33 percent of new fee increases (45 percent for non-professional-school graduate students) as "return to aid" funding to cover the fee increase for needy students and ease the burden on students from middle-income families; and a request for $340 million in state funding for capital improvements.
Those actions received relatively little attention, though, compared to the heat generated by the proposed student-fee hikes, which were built into the budget as a key element in UC's compact with Gov. Arnold Schwarzenegger, negotiated by UC President Robert Dynes in 2004. The academic-year increases - 8 percent ($492) for resident undergrads, 10 percent ($690) for resident grad students, and 5 percent (varying dollar amounts) for most professional-school students - are the fifth set in as many years, representing a nearly 80-percent increase in fees overall since 2001-02.
Pay, perks, and perception:
A sampling of published reactions to UC's compensation controversy, the regents' decision to raise student fees (and to increase the level of "return to aid" financial assistance accordingly), and other matters.
"For an institution devoted to openness and truth, the University of California is falling short. It refuses to speak plainly about the eye-popping compensation packages for its top leaders. . . .UC must explain its compensation policies more fully. It isn't showing the openness that taxpayers expect and deserve from a public university."
"When you work for the taxpayers, perception is everything, and the last thing you need to do is mislead the people who are paying the bills."
"This is outrageous. While students face rate increases every year and UC rank-and-file workers face salary freezes, the top UC administrators will be getting secret salary hikes."
"We're absolutely thrilled that [the regents] reinstated the
33-percent return-to-financial-aid rate, and we applaud [them] for preserving affordability for the low- and middle-income
students in this way."
"It's pretty simple. A public university has no choice but to do its business in public. That is a truism that the University of California has yet to fully embrace. It should not take a lashing from the public and the press . . . to force it to do so."
"It is so unconscionable. They are just brazen in what they do."
"The perks are not the issue here. We expect UC to be competitive in hiring top-notch professors and executives. But UC
does need to get its house in order, and to make that house completely transparent."
"It's time for the University of California to come clean about their various compensation packages. We understand that in the short term, critics will complain about the salaries.
"However, given complete information and the context of how the university stands compared to other institutions, the public may realize that there's nothing wrong with these high-end pay packages.
"It's just that by keeping this information hidden, the university has tarnished its credibility."
"No" votes on the budget proposal were cast by student regent Adam Rosenthal and state Assembly Speaker Fabian Nuņez, who had urged the finance committee to postpone raising student fees, suggesting that the California Legislature might, during its own budget deliberations, allocate adequate funding for UC to make the hikes unnecessary. Approving the increase, he said, would "tie [sympathetic legislators'] hands behind our backs."
Though Nuņez's advice was not heeded, the board did add a caveat to its approval of the proposal, stating that the increases could be reduced or rescinded "if the governor and Legislature provide the funding to reduce or eliminate [them] and the remaining portions of the compact remain in place."
It was inevitable that the anticipated revenue from the fee increases (nearly $148 million) would be viewed in contrast with the $871 million paid in bonuses and other forms of compensation over and above base salaries to some 8,500 UC employees last year. This key finding in the Chronicle series was still the talk of the campus, and the entire UC system, when the regents convened on Wednesday. (UC salaries are public records; the newspaper requested and received from the university salary records for all UC employees, in keeping with the provisions of California's public-records act.)
Though Dynes and UC officials defended the expenditures as warranted by the demands of a competitive academic marketplace, the huge sums involved left a sour taste in the mouths of many. Among them were students; lower-paid staff, many of whom not only lag their peers at other institutions significantly but have either just received their first raise in several years or received no raises because of stalled labor negotiations; legislators, who reacted with indignation, genuine or otherwise; faculty, who questioned the propriety of compensating administrators so generously while their own salaries have been allowed to lag the market; and editorialists and bloggers around the state, who saw the confluence of circumstances as too tempting to ignore. (See sidebar at right for a sampling of reactions.)
The furor was exacerbated by the regents' approval, late on the second day of their meeting, of merit increases - labeled "modest" by a UCOP press release - averaging 2.5 percent for senior UC managers, including Dynes and all 10 UC chancellors, a number of UCOP staffers, and top deans, vice chancellors, and other administrators at each campus. With the spotlight focused so intensely on administrative salaries and perks, arguments that UC needs to remain "competitive" at these top levels, however well-founded, began to ring hollow to many.
Soon a new buzzword emerged, as the call for "transparency" in UC compensation practices gained volume. The UCOP website responding to the controversy noted, "UC takes seriously its accountability to the public and we believe we must work continually to ensure transparency and openness about how we conduct our business." On Wednesday the regents approved a proposal that includes adoption of what UCOP termed "more disciplined procedures for determining and setting senior management compensation"; at the same time Dynes also proposed the formation of a task force to study UC policies on public disclosure of senior-management compensation, saying that this and related steps would bring "transparency" to UC's decision-making. Regents Chair Gerald Parsky was quoted in the press as stating that the issue of transparency "needs to be addressed fully and carefully," while state Sen. Jackie Speier (D-Hillsborough), acting chair of that chamber's higher-education subcommittee (and a frequent critic of UC management on such issues as student fees and labor relations), was quoted as saying that she believes Dynes "recognizes the importance of transparency."
The word "non-transparent" also appears in a petition circulated among faculty members at Berkeley and UCLA and delivered to Parsky, Dynes, and others at UCOP headquarters in Oakland on Monday of this week. So do other, stronger words and phrases, such as "squandering," "disturbing issues," "distasteful and unbefitting," and "political disaster." Among a series of rhetorical questions, the petition asks: "Having learned how administrators waste public and private dollars, what are state legislators going to say when UC comes hat in hand to Sacramento with its annual plea of poverty?" The 50-plus signatories urge Parsky to appoint "a truly independent investigator to uncover which of [the Chronicle's] allegations are true, defensible, or simply amoral."
Bruce Fuller, a Berkeley professor of education and public policy, helped write and circulate the petition following publication of the Chronicle series. "There was a lot of spirited discussion in the hallways and over e-mail," he says. "So three or four of us at Berkeley decided we should try to unite and send a clear message to the regents. Our primary motivation is to communicate the point that it's very important for students, UC parents, and voters to know that there are many faculty who do not support President Dynes' compensation practices . that there is opposition to some of these lucrative deals that he has made in such a non-transparent fashion."
Parsky has yet to speak to the likelihood of naming an independent investigator, but even as the regents were in session at Berkeley, Dynes was quick to announce the formation of a high-level task force to be headed by Regent Joanne Kozberg and former Regent (and former Assembly Speaker) Robert Hertzberg. Its charge, Dynes later told the Oakland Tribune, will be to "look independently at what our practices are in terms of compensation and transparency."
Fuller characterized Hertzberg, who has already telephoned him about the faculty petition, as a person of "stellar values and strong social commitments," while noting that he was "presumably on the board when some of these [compensation] packages were approved..No informed citizen is going to see Mr. Hertzberg as a truly independent observer." He said appointing an independent investigator, in lieu of or in addition to the Dynes task force, is "a simple, straightforward idea..We need to air this dirty laundry through a truly independent auditor or small panel with no real or apparent conflict of interest."
The calls for investigations and improved oversight show no immediate sign of abating. As this issue of the Berkeleyan went to press, the San Francisco Chronicle was reporting that state Sen. Abel Maldonado (R-Santa Maria), a member of that chamber's education committee, had requested a joint informational hearing (with a Senate budget subcommittee) to look into UC's compensation policies and practices. Saying he was troubled by "the appearance of a lack of transparency and disclosure that surround these compensation decisions," Maldonado continued, "As a public entity, the UC system should make all efforts to dispel any perception that it is misleading California's taxpayers on how their hard-earned dollars are spent."
Amidst the hubbub, the regents' budget proposal will now enter the political process in Sacramento, with Gov. Schwarzenegger throwing out the metaphorical first pitch with his own statewide proposal in January. Final resolution of next year's budget will emerge from negotiations among UC, the governor, and the Legislature - with an added spin, this year at least, provided by a San Francisco newspaper report and the perceptions it leaves in Sacramento and around the state of California.
A complete record of approved actions taken by the regents at their November meeting is online at www.universityofcalifornia.edu/regents/aar/aar.html; it includes details of all salary increases approved at the Nov. 17 meeting. URLs for the San Francisco Chronicle series and UCOP's responding website appeared in our Nov. 17 issue and are online at www.berkeley.edu/news/berkeleyan/2005/11/17_briefs.shtml. Faculty interested in learning more about the petition discussed in this article can email email@example.com for information.