Posted on 05/02/2006 7:01:56 PM PDT by NormsRevenge
An independent state audit into University of California compensation practices portrays a pay structure run amok, where officials regularly bent the rules to secure better deals for top administrators and a shoddy centralized bookkeeping system provided inadequate checks and balances on pay matters.
As a result, the university overpaid at least one employee nearly $130,000, padded the retirement-covered compensation of others, and provided housing allowances and other perks far in excess of amounts allowed under policy. The audit said many of the deals were not reported to the public and UC's own governing board.
All told, UC handed out $334 million last fiscal year in ``additional compensation'' out of $9.3 billion it paid for salaries, according to the audit released Tuesday by the California State Auditor. The additional pay encompasses a broad range of categories, including housing and car allowances, stipends, sabbatical leave and more.
The additional compensation was handed out even as the university raised student fees and cut services in the face of what it portrayed as draconian state budget cuts.
The audit - the third in the past weeks to find serious problems with UC's handling of compensation matters - sparked immediate response from legislators who have been calling for more accountability.
``This audit should be the final nail in the coffin of the University of California's outrageous compensation practices,'' said Assembly Speaker Fabian Nunez in a statement. ``Over $300 million in compensation flows unchecked through their system.''
Nunez, who requested the audit along with state Sens. Jackie Speier and Jack Scott, called on administrators to immediately reform policies.
Among its recommendations, the auditor said the president's office should limit the number of pay exceptions granted each year; should exercise greater oversight of pay decisions at individual campuses; and should determine whether employees should repay compensation that violated policies.
UC officials did not dispute the audit's findings and said they will consider the recommendations as they embark efforts to improve accountability and openness.
``The key findings reaffirm my own resolve and the changes I have already begun to implement,'' said UC President Robert Dynes in a statement. ``I believe it is critical to move swiftly, but accurately, to identify root causes and permanent solutions. Where there has been misconduct, misjudgments or mistakes, I will take appropriate action.''
UC regents will discuss the state's audit, as well as additional reviews into compensation, at their meeting May 17-18 at UC San Francisco.
The state audit showed the highly paid employees - those making $168,000 or more - benefited greatly from the exceptions and additional pay.
Exceptions to university policies for those employees were so commonplace, the audit said, that they ``may weaken the credibility of the compensation policies'' and ``create a culture of noncompliance.''
In a sample of 100 highly paid employees, 17 benefited from an exception to policy, the audit said. And while the 4,071 employees whose pay tops the $168,000 mark received 10 percent of the base salary last fiscal year, those employees received 26 percent of the additional compensation.
The audit highlights a number of questionable deals, including a $128,649 overpayment to UC San Diego's dean of medicine that resulted from a complex agreement crafted specifically to avoid running afoul of university rules regarding external earnings. When notified of the overpayment, campus officials said it would be inappropriate to discontinue the payments because then the dean's salary would fall below that of his peers. The UC president's office is reviewing the deal, the audit said.
UC regents were generally not informed of non-salary compensation, such as housing and auto allowances, the audit said. In one instance, regents' ignorance of the pay led them to approve a big raise for then-newly hired Provost M.R.C. Greenwood.
The audit said regents were not informed that Greenwood, who has since resigned, was promised a $125,000 housing allowance, as well as an additional, temporary housing allowance, when they set her annual salary at $380,000 - a 41 percent increase over her previous salary as chancellor of UC Santa Cruz.
UC officials also granted a series of policy exceptions that gave employees benefits for which they would not otherwise be eligible, including boosted retirement benefits, participation in a severance-pay program and more, the audit said.
UC Berkeley Chancellor Robert Birgeneau, for instance, was granted an exception that reduced the number of years he needed to qualify for increased health care benefits. Regents also approved a deal that allowed his retirement income to be based on his full salary, then $390,000 a year, rather than the $205,000 earnings limit dictated by the Internal Revenue Service, the audit said.
The audit comes as the Legislative Counsel of California, the Legislature's legal adviser, has issued a separate opinion saying UC should approve executive compensation in open session. UC officials countered that the full board does vote on compensation matters in open session, but that board committees are allowed to discuss compensation in private to protect employees' privacy.
Still, the audit said UC's disclosure practices are generally consistent with those at other universities that responded to a survey, including the California Institute of Technology, Stanford and Duke universities, and the University of Illinois.
``Although the seven responding universities did not fully complete our survey,'' the audit said, ``their responses show that they generally do not disclose more about the details of employee compensation to the public than the University of California.''
Visit www.bsa.ca.gov for a copy of the audit.
Highlights from state audit of UC pay practices
The Bakersfield Californian
http://www.bakersfield.com/119/story/49431.html
OVERALL FINDINGS:
- In fiscal year 2004-05, bonuses, stipends, relocation allowances and other perks amounted to $334 million of $9.3 billion total compensation.
- In a sample of 100 highly paid employees, 17 benefited by getting exceptions to pay rules.
- Administrators didn't consistently disclose the extra compensation to their governing Board of Regents.
- UC's pay tracking system has inconsistent and vague categories.
EXAMPLES OF EXTRA COMPENSATION:
- A dean at UC Riverside got a housing allowance of $187,500; the limit in place was $53,300.
- A dean at UCLA got a $270,000 housing allowance.
- A UC San Diego dean was overpaid by $5,000 a month over a five-year period in a complex plan designed to get around a requirement that the university get a percentage of outside earnings. UC San Diego officials told state auditors it would be inappropriate to drop the extra pay because it would take his salary below market level. The UC president's office is reviewing.
- A UC San Diego vice chancellor who was on sabbatical for much of 2004-05 got a $68,100 administrative stipend and an $8,900 auto allowance. UC San Diego officials said the employee assisted with administrative matters during her sabbatical and also said she had been approved for a raise earlier, but it was deferred due to budget constraints.
-A senior manager at UC San Francisco received a $1.2 million low-interest loan from the supplemental home loan program to pay off previous university loans, a personal loan and to make $573,000 in renovations to a home in Sonoma.
UC REFORMS SO FAR:
- All separation agreements of $100,000 or more must be approved by UC regents.
- Policy exceptions must be approved by the UC president in consultation with regents.
- Renovation to chancellor's houses or offices must be approved by UC president.
- Web site developed to disclose compensation information.
Wasn't it UC that managed Los Alamos and let the Chinese have our nuke secrets? So why did anyone think they could handle this?
Boy they are worse than corporate boards. I wonder how much these same people complaing about CEOs salaries. Maybe we should call them the ENRON of universities.
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