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California State University:
It Needs to Strengthen Its Oversight and Establish
Stricter Policies for Compensating Current and
Former Employees
November 2007 Report 2007-102.1
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CALIFORNIA STATE AUDITOR
Elaine M. Howle
State Auditor
Doug Cordiner B u r e a u o f S t a t e A u d i t s
Chief Deputy
555 Capitol Mall, Suite 300 Sacramento, CA 95814 916.445.0255 916.327.0019 fax www.bsa.ca.gov
November 6, 2007 2007-102.1
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As requested by the Joint Legislative Audit Committee, the Bureau of State Audits presents its
audit report concerning the California State University’s (university) compensation practices.
This report concludes that the university has not developed a central system enabling it to
adequately monitor adherence to its compensation policies or measure their impact on university
finances. From July 1, 2002, through June 30, 2007, the university payroll has increased by
$225.8 million, or 9.6 percent, but increases varied significantly by employment classification.
Average executive compensation increased by 25.1 percent over this time period, with salary
increases contributing the most to the growth. Average compensation for Management Personnel
Plan employees (management personnel), such as managers and professional technical staff,
increased by 10.4 percent. In contrast, average compensation for tenure-track faculty and other
faculty increased by 5.6 percent, and 6.2 percent, respectively.
The board of trustees has justified increasing executive salaries on the basis that its executives’
cash compensation, excluding benefits and perquisites, lags those of comparable institutions,
but concerns have been raised about the methodology used. Additionally, the university has
three executive transition programs that provide postemployment compensation packages
to departing executives, in addition to the standard retirement benefits available to eligible
executives. Further, some management personnel received questionable compensation after
they were no longer providing services to the university or while they were transitioning to
faculty positions. Finally, the discretionary nature of the university’s relocation policy can
result in questionable reimbursements of costs for moving household goods and closing costs
associated with selling and purchasing residences.
Respectfully submitted,
ELAINE M. HOWLE
State Auditor
California State Auditor Report 2007-102.1 vii
November 2007
Contents
Summary 1
Introduction 7
Chapter 1
The California State University Should Strengthen Its Monitoring
of Compensation Policies and Practices 17
Recommendations 38
Chapter 2
Proper Administration of Postemployment Compensation
Requires Continued Oversight and Improved Policies 41
Recommendations 56
Chapter 3
Current Policies on Moving and Relocation Expenses and
Dual Employment are Inadequate 57
Recommendations 64
Appendix A
Compensation and Employment Inducements for
76 Highly Paid Employees 67
Appendix B
Postemployment Compensation Packages for California
State University Executives 105
Response to the Audit
California State University 109
California State Auditor Report 2007-102.1 1
November 2007
Summary
Results in Brief Audit Highlights . . .
The California State University (university) aims to make quality Our review of the California State
higher education programs accessible to people striving to develop University’s (university) compensation
intellectually, personally, and professionally. With 23 campuses practices revealed the following:
serving nearly 417,000 students and employing 23,000 faculty
members, the university is the nation’s largest system of senior »The university has not developed a
higher education. Overseeing university operations is the central system enabling it to adequately
responsibility of a 25-member board of trustees (board), which monitor adherence to its compensation
adopts rules, regulations, and policies governing the university. policies or measure their impact on
university finances.
Although it has established compensation policies applicable to
all campuses, the university has not developed a central system »Average executive compensation
enabling it to adequately monitor adherence to those policies increased by 25.1 percent from
or measure their impact on university finances. Specifically, the July 1, 2002, through June 30, 2007, with
university does not maintain systemwide compensation data by salary increases contributing the most to
type and funding source, and this lack of data impairs the ability the growth.
of the chancellor’s office to provide effective oversight of its
compensation policies. Although the university delegates broad »The board of trustees (board) has justified
authority to the campuses to ensure that systemwide policies are increasing executive salaries on the basis
followed, it is important for the chancellor’s office to have sufficient that its executives’ cash compensation,
data to monitor the campuses’ implementation of the policies. excluding benefits and perquisites, lags
those of comparable institutions, but
In fiscal year 2006–07, university employees received a total of concerns have been raised about the
$2.6 billion in compensation, excluding amounts paid directly by methodology used.
external entities such as foundations. Funded primarily by state
resources, most university compensation is paid in the form of »The university has three executive
salaries. Over the last five fiscal years, the university payroll has transition programs that provide
increased by $225.8 million, or 9.6 percent. Increased compensation postemployment compensation packages
per employee represented about 97 percent of that increase, and to departing executives, in addition to the
3 percent stemmed from the hiring of more employees. However, standard retirement benefits available to
the compensation increases varied significantly by employment eligible executives.
classification. For example, average compensation for executives
increased by 25.1 percent, and average compensation for Management »Some Management Personnel Plan
Personnel Plan employees (management personnel), such as employees received questionable
managers and professional technical staff, increased by 10.4 percent. compensation after they were no longer
In contrast, average compensation for tenure-track faculty and providing services to the university
other faculty increased by 5.6 percent and 6.2 percent, respectively. or while they were transitioning to
Average compensation for all other university employees increased faculty positions.
by 12.4 percent. Changes in the number of employees also varied
significantly by employee classification over the five-year period. »The discretionary nature of the
university’s relocation policy can result
Because average executive compensation experienced the most in questionable reimbursements of
growth during the five-year period, we examined the growth in costs for moving household goods and
the various components that make up executive compensation— closing costs associated with selling and
salaries, housing allowances, and automobile allowances. Salary purchasing residences.
increases contributed the most to this growth, with the board
2 California State Auditor Report 2007-102.1
November 2007
approving increases for executives ranging from an average of
1.68 percent to 13.7 percent on three separate occasions. The board
has continually justified increasing executive salaries on the basis
that its executives’ cash, or salary, compensation lags behind that
of comparable institutions. However, as early as October 2004, the
California Postsecondary Education Commission (commission),
the entity that was involved with executive compensation studies
until that time, raised concerns that the methodology used in
making such comparisons did not present a complete picture
of the value of individual compensation packages because it did
not consider the benefits and perquisites provided to executives,
which can be substantial. Despite these concerns and the absence
of further commission involvement in surveys of executive
compensation, the university proceeded to use a consulting
firm to perform surveys of the comparison institutions using
the questioned methodology. Further, documents indicate that the
board approved executive salary increases in October 2005
and January 2007 based only on considering the lag in
cash compensation.
In 2007 the commission and the Legislative Analyst’s Office
(legislative analyst) expressed further concerns about the existing
methodology used in these types of comparisons. Nevertheless,
in September 2007, the board subsequently granted its executives
another raise averaging 11.8 percent. Further, the chancellor
recommended that the board adopt a new formal executive
compensation policy and that the board continue to have a salary
target focused on the average cash compensation of similar positions
at comparable institutions. In response to these recommendations,
the board adopted a new executive compensation policy and resolved
that it aims to attain parity for its executives and faculty by fiscal
year 2010–11.
We asked the chancellor’s office why the university continued to
justify increases in compensation for its executives based on a
methodology that has been questioned by the commission and
the legislative analyst. The vice chancellor of human resources
responded that the university did not believe it appropriate to
deviate from a methodology that was agreed upon years ago by
the various interested parties, including the commission and the
legislative analyst. However, as these are now the same parties
that are raising concerns, we believe it is time for the university
to work with the interested parties to develop a more appropriate
methodology that considers total compensation.
1 The former vice chancellor of human resources departed her position on August 1, 2007, but
for the purposes of this report, we refer to her as the vice chancellor of human resources.
California State Auditor Report 2007-102.1
November 2007
The university has three executive transition programs through
which current employees receive postemployment compensation
packages upon their departure from the university. These programs
are in addition to the standard retirement benefits the university
provides to eligible executives, including retirement income, medical
and dental coverage, and voluntary retirement savings plans. The
university has three programs because over time the board has made
revisions to the original transition program established in 1981. Each
departing executive is eligible for the program in effect at the time
of his or her appointment. The terms of the transition agreement
offered to a departing executive depend on the transition program
for which the person is eligible but can include one year of paid
leave, lifetime tenure as a trustee professor at a campus, or an
alternative agreement negotiated by the chancellor.
In November 2006, after media criticism of the existing transition
programs, the board passed a resolution requiring the chancellor
to provide each board member with a copy of all final transition
agreements and to submit an annual report summarizing all
existing transition agreements. However, the annual report
presented by the chancellor in March 2007 does not include
information on the status of accomplishments or deliverables that
former executives may have agreed to provide the university as part
of their transition agreements. Moreover, the chancellor does not
have to disclose details to the board until after entering into a final
agreement with a departing executive. Although the board prefers
not to participate in the negotiating process, it should continue to
monitor the chancellor’s administration of the executive transition
program to ensure that it is conducted in a prudent manner and
that intended cost savings are achieved.
Although only executives are eligible to participate in a transition
program, we noted instances in which management personnel
received questionable transitionlike compensation after they
were no longer providing services to the university or while
they were transitioning to faculty positions. For example, we found
that one individual, who received compensation totaling $102,000
during a seven-year leave on the premise that he was gaining
experience that would benefit the university on his return, never
returned to university employment.
The university exercises considerable discretion in paying
expenses related to moving and relocation (collectively referred
to here as relocation) for its employees. The university’s broad
policy on relocation expenses enables employees to receive
reimbursement for actual, necessary, and reasonable expenses, but
the policy sets few monetary limits on those expenses. Further,
California State Auditor Report 2007-102.1
November 2007
although the policy identifies the types of expenses that can be
reimbursed, it contains clauses that permit the chancellor or
campus presidents to grant exceptions to the policy.
The chancellor determines the amounts of relocation
reimbursements for executives, campus presidents, and
management personnel in the chancellor’s office, and the campus
presidents determine the amounts for management personnel
and faculty at their respective campuses. Board approval of these
arrangements is not required, and typically the payment amounts
are not disclosed to the board. The discretionary nature of the
university’s policy can result in questionable reimbursements
covering, for instance, the cost of moving household goods and
closing costs associated with selling and purchasing residences.
These costs can be considerable. For example, we noted that the
university reimbursed one individual for $65,000 in closing costs
and $19,000 in moving expenses.
Finally, the university has established a dual-employment policy
that allows its employees to have jobs outside the university
system as long as no conflicts of interest exist. However, the policy
does not require employees to obtain prior approval for outside
employment, nor does it require them to disclose that they have
such employment. Thus, the university is unable to adequately
determine whether employees have outside employment in conflict
with their university employment.
Recommendations
To provide effective oversight of its systemwide compensation
policies, the university needs accurate, detailed, and timely
compensation data. The university should create a centralized
information structure to catalog university compensation by
individual, payment type, and funding source.
The board should consider total compensation received by
comparable institutions, rather than just cash compensation, when
deciding on future salary increases for executives, faculty, and other
employees. The university should work with interested parties,
such as the commission and the legislative analyst, to develop
a methodology for comparing itself to other institutions that
considers total compensation. If the university believes it needs a
statutory change to facilitate its efforts, it should seek it.
The board should continue to monitor the executive transition
programs to ensure that the chancellor administers them prudently
and that intended cost savings are achieved for the university.
In addition, the board should require the chancellor to include
California State Auditor Report 2007-102.1
November 2007
in the transition agreements clear expectations of specific duties
to be performed, as well as procedures for the former executives to
report on their accomplishments and status of deliverables. Further,
the board should require the chancellor to include information in
his annual report on the status of accomplishments and deliverables
associated with transition agreements.
The university should work through the regulatory process to
develop stronger regulations governing paid leaves of absence for
management personnel. The improved regulations should include
specific eligibility criteria, time restrictions, and provisions designed
to protect the university from financial loss if an employee fails to
render service to the university following a leave. Further, the board
should establish a policy defining the extent to which it wants to be
informed of such leaves of absence for management personnel.
The university should strengthen its policy governing the
reimbursement of relocation expenses. For example, the policy
should include comprehensive monetary thresholds above which
board approval is required. In addition, the policy should prohibit
reimbursements for any tax liabilities resulting from relocation
payments. Finally, the board should require the chancellor to
disclose the amounts of relocation reimbursements to be offered
to incoming executives.
The university should work to strengthen its dual-employment
policy by imposing disclosure and approval requirements for faculty
and other employees, including management personnel. If the
university believes it needs a statutory change to facilitate its efforts,
it should seek it.
Agency Comments
The university agrees that the facts are correctly stated in our report
and indicates that our recommendations will be helpful in its efforts to
improve its compensation policies and practices. In fact, the university
reports that it will begin implementing some of our recommendations
immediately and will act on others as soon as feasible.
California State Auditor Report 2007-102.1
November 2007
Blank page inserted for reproduction purposes only.
California State Auditor Report 2007-102.1 7
November 2007
Introduction
Background
The mission of the California State University (university) includes
providing opportunities for individuals to develop intellectually,
personally, and professionally through high-quality, accessible,
higher education programs. Serving nearly 417,000 students and
employing 23,000 faculty members at 23 campuses, the university
is the nation’s largest system of senior higher education.
A 25-member board of trustees (board) is responsible for overseeing
university operations. The board adopts rules, regulations, and
policies governing the university. It has authority over curricular
development, use of property, development of facilities, and
management of fiscal and human resources. Under current law,
the governor, lieutenant governor, speaker of the Assembly, state
superintendent of public instruction, and chancellor of the university
are trustees by virtue of their positions. The university’s Alumni
Council appoints an alumni trustee, and the governor appoints the
remaining 19 trustees, including a faculty trustee and two student
trustees. The board meets seven times each year. Board meetings
generally must allow public comment. They also provide an
opportunity for communication among the trustees and the campus
presidents, executive committee members of the Academic Senate,
representatives of the California State Student Association, and
officers of the Alumni Council.
The chancellor is the chief executive officer of the university and
reports to the board. The chancellor’s responsibilities are leading the
Executive Council, which is composed of the vice chancellors and
campus presidents; assisting campuses and presidents in carrying
out the university’s mission; coordinating systemwide functions;
representing the university to state and national policy makers; and
leading university communications with various federal entities.
The chancellor, in partnership with the board, also selects, appoints,
and evaluates campus presidents. Further, the chancellor makes
recommendations on the selection of other university executives
whom the board ultimately appoints and evaluates.
Besides the chancellor, university executives include three vice
chancellors and the general counsel. The role of these university
executives is to develop and coordinate systemwide policy and
programs in areas ranging from budget and business affairs to
physical plant development and employee relations. Campus
presidents serve as the chief executive officers of their respective
campuses and are the primary liaison between the campuses
and their surrounding communities. Presidents report to the
chancellor and have responsibilities that include implementing
California State Auditor Report 2007-102.1
November 2007
executive orders, hiring faculty and staff, raising private funds,
ensuring academic quality, setting campus priorities, and managing
campus operations.
The university workforce also comprises Management Personnel
Plan employees (management personnel), such as managers and
professional technical staff; tenure-track faculty, which in this
report refers to instructional faculty who have attained tenure
as well as faculty on a path to attain tenure; other faculty; and
other employees. Management personnel serve under a campus
president or the chancellor. Among management personnel are
vice presidents, associate vice presidents, deans, some athletic
coaches, managers, officers, and supervisors. The chancellor or a
designee assigns management personnel positions to one of four
grade levels. Tenure-track faculty are members of a collective
bargaining unit and include assistant, associate, and full professors.
Other faculty, including lecturers, most instructors, librarians, and
certain coaches, are members of the same collective bargaining
unit. Other university employees consist of a wide range of
positions including payroll technicians, cooks, and parking officers.
Figure 1
Source of University Revenues for Fiscal Year 2005–06
(Dollars in Thousands)
Other—$155,653 (2.9%)
Investment income—$71,113 (1.3%)
Sales and services—$294,683 (5.6%)
Grants, contracts, and gifts—
$682,222 (12.9%)
Student tuition and fees— State appropriations—
$1,185,154 (22.3%) $2,917,338 (55%)
Source: California State University’s audited financial statements for fiscal year 2005–06.
California State Auditor Report 2007-102.1
November 2007
As shown in Figure 1, the university receives its funding from several
sources, including state appropriations, student tuition and fees, and
investment income. Of the university’s $5.3 billion in total revenues
for fiscal year 2005–06, state appropriations totaled $2.9 billion,
with revenue from student tuition and fees totaling $1.2 billion. State
appropriations and student tuition and fees are thus the core
components supporting the mission of the university, representing
about 77 percent of the university’s revenue.
Compensation Policies
The board governs executive compensation through an executive
compensation policy, human resource memoranda, and technical
letters. The Bagley-Keene Open Meeting Act (act) requires the
board to give public notice of its meetings and related agendas,
accept public testimony, and conduct its meetings in public unless
specifically authorized by the act to meet in closed session. The
executive compensation policy sets forth objectives and methods
for establishing equity and accountability. Some human resource
memoranda provide guidance on implementation of resolutions
passed by the board at public meetings that relate to compensation
matters such as increases in base salaries, housing allowances,
and automobile allowances. The board approves executive
compensation, including housing allowances and automobile
allowances, and approves increases to executive base salaries,
housing allowances, and automobile allowances. The chancellor
negotiates salaries with executive candidates in accordance with
the executive compensation policy.
Over time, the board has established three transition programs
to provide postemployment compensation packages as additional
incentives to incoming executives. The specific transition program
an executive is eligible for is determined by the executive’s
appointment date. However, after receiving notification of an
individual’s intent to resign an executive position, the chancellor has
the sole authority to approve the details of the transition agreement,
including the beginning and ending dates of transitional service to
the university, if any; specific duties and locations of the service; and
compensation. A policy change in November 2006 now requires
the chancellor to forward copies of all final transition agreements to
each board member and to report annually on all existing transition
agreements in an open meeting of the board.
Compensation of management personnel is regulated by Title 5 of
the California Code of Regulations, which states that the chancellor
determines and the board approves salary ranges for management
personnel based on comparative salary data available from
competitive public and private organizations. The chancellor and
10 California State Auditor Report 2007-102.1
November 2007
the board can review and adjust salary ranges when they consider it
appropriate. However, a campus president must obtain approval
from the vice chancellor of human resources to authorize salaries
above the maximum range for the administrator IV level, which is
the highest level in the management personnel classification.
Additional guidelines for other aspects of management personnel
compensation, including bonuses and
supplemental compensation, are presented in
letters from the human resources unit within the
TTyyppeess ooff CCoommppeennssaattiioonn OOffffeerreedd bbyy tthhee UUnniivveerrssiittyy
chancellor’s office.
RReegguullaarr PPaayy
Faculty compensation is outlined in the collective
BBaassee ppaayy:: BBaassee ssaallaarryy,, ssttuuddeenntt aassssiissttaanntt oorr ssuummmmeerr aaiidd
bargaining agreement between the board and the
ppaayymmeennttss,, aanndd ppaayymmeenntt wwhheenn aann eemmppllooyyeeee iiss lleeaavviinngg
California Faculty Association. The compensation
aanndd iiss oowweedd ssaallaarryy..
policies and benefit programs available to other
LLeeaavvee ppaayy:: PPaayymmeenntt ffoorr ddiissaabbiilliittyy aanndd ssiicckk lleeaavvee,, hhoolliiddaayy,,
represented university employees are outlined
aanndd vvaaccaattiioonn..
in collective bargaining agreements between
OOvveerrttiimmee ppaayy:: PPaayymmeenntt ffoorr wwoorrkk ppeerrffoorrmmeedd oouuttssiiddee the board and 11 collective bargaining units. The
rreegguullaarr wwoorrkk hhoouurrss.. board’s committee on collective bargaining has
the authority to negotiate with the California
SShhiifftt ddiiffffeerreennttiiaall:: PPrreemmiiuumm ffoorr ppeerrffoorrmmiinngg nnoonnoovveerrttiimmee
Faculty Association to set faculty salary ranges.
wwoorrkk oonn aann eevveenniinngg,, nniigghhtt,, wweeeekkeenndd,, hhoolliiddaayy,, oorr
““oonn‑‑ccaallll”” sshhiifftt.. Compensation above the range maximum for
faculty members is governed by the terms of
AAddddiittiioonnaall PPaayy
the collective bargaining agreement. Finally, the
AAddddiittiioonnaall tteeaacchhiinngg aanndd ssppeecciiaall aassssiiggnnmmeennttss:: chancellor, in addition to campus presidents,
PPaayymmeenntt ffoorr tteeaacchhiinngg aanndd ootthheerr aassssiiggnnmmeennttss tthhaatt aarree iinn has the authority to negotiate reimbursement of
aaddddiittiioonn ttoo aann eemmppllooyyeeee’’ss pprriimmaarryy aassssiiggnnmmeenntt,, ssuucchh aass moving and relocation expenses as well as closing
tteeaacchhiinngg ccllaasssseess dduurriinngg tthhee ssuummmmeerr oorr iinntteerrsseessssiioonn..
costs associated with both the selling and buying
BBoonnuuss ppaayy:: AA bbrrooaadd ccaatteeggoorryy iinn wwhhiicchh tthhee of a residence, without board approval.
uunniivveerrssiittyy ggrroouuppss vvaarriioouuss ttyyppeess ooff bboonnuusseess aanndd
ssuupppplleemmeennttaall ccoommppeennssaattiioonn.. As shown in the text box, the university provides
various types of compensation and benefits to
SSttiippeennddss:: PPaayymmeennttss ffoorr uunnddeerrttaakkiinngg aassssiiggnneedd
its employees. In addition to regular base pay,
rreessppoonnssiibbiilliittiieess oouuttssiiddee tthhee ssccooppee ooff tthhee eemmppllooyyeeee’’ss
rreegguullaarr rreessppoonnssiibbiilliittiieess,, aass wweellll aass ccoommppeennssaattiioonn ffoorr certain university employees can earn overtime
ffeelllloowwsshhiipp aawwaarrddss.. and differential pay and be eligible for bonuses and
stipends. Faculty members are the primary
HHoouussiinngg aalllloowwaanncceess:: PPaayymmeenntt ttoo pprroovviiddee ssuuppppoorrtt ffoorr
recipients of additional pay for performing
hhoouussiinngg ccoossttss..
teaching and other assignments, such as teaching
BBeenneefifittss--rreellaatteedd ppaayymmeennttss:: PPaayymmeennttss ooff hheeaalltthh ccaarree summer classes or intersession classes, that are
ssttiippeennddss aanndd uunniiffoorrmm aalllloowwaanncceess..
in addition to their regular assignments. Housing
AAuuttoommoobbiillee aalllloowwaanncceess:: PPaayymmeenntt ooff aa mmoonntthhllyy and automobile allowances are given primarily
aauuttoommoobbiillee aalllloowwaannccee ttoo ssuuppppoorrtt uunniivveerrssiittyy‑‑rreellaatteedd to executives.
bbuussiinneessss ttrraavveell rreeqquuiirreemmeennttss..
The university can offer prospective employees
OOtthheerr ppaayy:: AA bbrrooaadd ccaatteeggoorryy ccoommpprriissiinngg ssuucchh iitteemmss
incentives like transitional housing allowances
aass iinnddiivviidduuaall sseettttlleemmeennttss,, aawwaarrddss,, iinncceennttiivvee pprrooggrraamm
aawwaarrddss,, ggrraattuuiittiieess,, mmiilliittaarryy lleeaavvee,, aanndd hhaazzaarrddoouuss and reimbursements for house-hunting trips,
ttrraaiinniinngg aalllloowwaanncceess.. moving expenses and travel, and other costs
associated with relocating to their new positions,
including those of selling and buying homes.
California State Auditor Report 2007-102.1 11
November 2007
Other inducements have included discretionary research funding;
spousal employment, with or without tenure; capital improvements
to university-provided housing, office furniture, and laboratories;
and reduced teaching assignments.
In addition, the university provides most employees with health
care benefits that include medical, vision, and dental care. Among
the flexible benefits the university offers are a premium plan
that covers medical costs and offers tax advantages, a health
care reimbursement account, and a parking plan that allows
participating employees to pay certain parking expenses with pretax
dollars. The university also offers income protection benefits, which
provide a source of income in the event that an eligible employee
becomes disabled and is unable to perform his or her normal work
duties. Some university employees receive income protection,
such as life insurance, with different amounts of coverage for
different employee groups, and survivor education benefits. Further,
the university provides eligible employees retirement benefits
that include retirement income, medical and dental coverage,
and voluntary retirement savings plans. Finally, most university
employees receive paid and unpaid time off, including paid holidays,
vacation, sick leave, and leaves of absence.
Scope and Methodology
The Joint Legislative Audit Committee (audit committee) requested
that the Bureau of State Audits review the compensation practices
of the university. Specifically, the audit committee asked us to
perform the following analysis to determine the extent to which the
university used various programs to compensate employees:
• To the extent data are centrally maintained and reasonably
consistent among campuses, identify systemwide compensation
by type and funding source.
• Subject to the same limitations, categorize by type and funding
source the compensation of highly paid individuals receiving
funds from state appropriations and student tuition and fees.
• For the most highly paid individuals, identify any additional
compensation or employment inducements not appearing in the
university’s centrally maintained records, such as those recorded
in any employment agreements with the university.
2 The audit committee also requested that we review the university’s hiring practices and
employment discrimination lawsuits. The results of our review of these areas will be included in a
separate report (2007-102.2), which we anticipate issuing in December 2007.
12 California State Auditor Report 2007-102.1
November 2007
The audit committee also asked us to review any postemployment
compensation packages and identify the terms and conditions
of transitional special assignments for highly paid individuals,
including top executives and campus presidents, who left the
university in the last five years. Finally, the audit committee asked
us to determine the extent to which the university’s compensation
programs and special assignments are disclosed to the board and to
the public, including the types of programs that exist, the size and
cost of each, and the benefits that participants receive. To the extent
that this information is available and is not publicly disclosed, the
audit committee asked us to include these items in our report.
To identify systemwide compensation by employee classification
and by type, we obtained payroll data from the State Controller’s
Office (state controller) for all employees of the university during
fiscal year 2006–07. The state controller is the university’s sole
payroll agent; therefore, all compensation directly paid by the
university is paid through the state controller. However, university
employees may also receive compensation from one or more of
the 89 recognized university auxiliaries, which include campus
foundations and businesses such as bookstores and student unions.
For example, foundations may administer contracts and grants
that have been awarded to university employees. A university
employee with a foundation-administered contract or grant can
receive compensation directly from the foundation through its
payroll system. That compensation is not included in the payroll
file maintained by the state controller (payroll file). Alternatively,
a university employee can receive compensation related to a
foundation-administered contract or grant directly from the
university, which is subsequently reimbursed by the foundation.
In this case, because the university pays the employee through the
state controller, the compensation is included in the payroll file.
Therefore, the systemwide compensation data that we present in
this report does not include amounts paid directly by foundations
to university employees but does include amounts initially paid by
the university and subsequently reimbursed by foundations.
The payroll file is sufficiently detailed to identify systemwide
compensation by type and employee classification. However,
campuses use more than 60 payment descriptions when reporting
payments to the state controller. To construct more meaningful
measures of what payment types constitute “regular pay” and
“additional pay,” we grouped the detailed payment types into
the categories shown previously in the text box. For example,
3 The state controller provided data from the second work day of fiscal year 2006–07 through the
first work day of fiscal year 2007–08, as most payments issued on the first work day of each
fiscal year reflect activity of the previous year.
California State Auditor Report 2007-102.1 1
November 2007
we grouped nine types of leave payments under the “leave pay”
category. We also grouped various types of bonuses and stipends
under the categories “bonus pay” and “stipends.” We did this by
reviewing documentation of the payroll codes that appeared in the
payroll file and, when necessary, obtaining clarifying information
from university staff.
We also chose to categorize the various types of compensation by
employee classification, such as executives, management personnel,
tenure-track faculty, other faculty, and other employees. To
differentiate the various types of university employees, we used the
employee classifications and collective bargaining unit designations
provided in the payroll file. To calculate full-time equivalents (FTEs)
for each of these employee categories, we used a methodology similar
to that included in the university’s Employee Salary Projection (ESP)
system: assigning an FTE value to each salary payment recorded in
the payroll file and factoring in the full-time, part-time, or temporary
status of each employee and the number of days and hours worked
each pay period. In addition, we defined highly paid employees as
those who made more than the top salary for 12-month tenure-track
faculty in fiscal year 2006–07. The chancellor’s office reviewed our
categorization of payment types and employee categorizations and
agreed that they were reasonable.
Because the payroll file does not contain funding information, we
used information from the university’s ESP system to determine the
amount of university compensation funded by state appropriations
and student tuition and fees. The payroll file is the initial source
of the data in the ESP system, to which each campus adds funding
source information. However, the university uses the ESP system
only for specific salary and benefits projection purposes, not
to monitor the university’s systemwide compensation policies.
Consequently, the ESP system does not contain the compensation
detail necessary for a systemwide analysis by payment type. In
addition, the ESP system contains some errors in its detailed
funding source information. However, we determined that the
funding source data were the best available data for us to provide
high-level funding source information in the report.
The standards of the U.S. Government Accountability Office
require that we assess the reliability of computer-processed data.
We assessed the reliability of the data by performing electronic
testing of required elements, reviewing existing information about
the data and the system that produced them, interviewing officials
knowledgeable about the data, and testing the completeness and
accuracy of the data. As part of our annual audit of the State’s
financial statements, we perform completeness testing on the payroll
file. Based on past results of that testing, we determined that we
could rely on the completeness of the payroll file. We verified the
1 California State Auditor Report 2007-102.1
November 2007
completeness of the ESP system by ensuring that the total gross
pay appearing in the payroll file materially agreed with that in the
ESP system.
For the data fields that we used in the payroll files for the purposes
of this audit, we performed testing of a sample of transactions
to determine whether those fields were accurate. Specifically, we
traced the sample transactions from the payroll file to the university
data systems, but we generally did not vouch this information to
original source documents, except in certain instances such as
when the university made special payments. However, during our
review of source documents for a sample of highly paid employees
discussed in the following paragraph, we noted some errors
resulting from campuses classifying transactions inconsistently.
We discuss these errors further in Chapter 1. We also tested the
accuracy of the limited funding information that we present in our
report by reviewing an additional sample of payroll transactions
from the ESP system. Similarly, although we traced the funding
information for the sample transactions to the input source from
the university’s data systems, we did not obtain documentation to
determine the appropriateness of the funding information in the
ESP system because this was beyond the scope of our audit. Further,
some campuses did not provide documentation supporting certain
fields for some transactions from the payroll file or ESP system.
Consequently, we assess the reliability of the payroll file and ESP
system as undetermined for the purposes of our analysis.
To determine whether highly compensated university employees
received any additional compensation or employment inducements
beyond what is recorded in the payroll file, we selected a sample
of 76 highly paid university employees from the chancellor’s office
and the university campuses at Fullerton, Long Beach, Sacramento,
San Diego, and San Francisco. We reviewed the university’s
personnel files and obtained information from relevant auxiliaries
to identify any additional compensation or other employment
inducements received by these employees in fiscal year 2006–07.
However, the completeness of the additional information we
present is dependent on the completeness of the personnel files
and the information we obtained from the auxiliaries. The detailed
methodology for selecting this sample, which includes faculty,
management personnel, and executives, is presented in Appendix A.
To understand the university’s transition programs and
postemployment compensation packages, we reviewed the
university’s policies, minutes of board meetings, and copies of
transition agreements for departed executives. In doing so, we
identified the transition programs that have existed since 1981.
We also determined which postemployment compensation
package applied to each university executive as of August 31, 2007.
California State Auditor Report 2007-102.1 1
November 2007
In addition, we identified the terms and conditions of executive
transition agreements for executives who departed the university
from July 1, 2002, through August 31, 2007. To determine the
extent to which the university’s compensation programs and
special assignments are disclosed to the board and the public,
we reviewed the agendas and minutes of board meetings. We
also reviewed the board’s disclosure policies. Finally, we reviewed
a report that the chancellor submitted to the board in March 2007
disclosing the former executives participating in transition programs
and the benefits the participants received in fiscal year 2006–07.
We also selected a sample of management personnel who were
classified as administrators in the level IV category and who left their
positions within the last five years. We reviewed the personnel files of
these nonexecutive employees to determine whether the university
was providing them with postemployment compensation packages.
We focused on administrators in the level IV category—which
includes campus vice presidents and systemwide directors—because
they represent the highest rank of the university’s management
personnel. To identify these individuals, we used the payroll file
to find management personnel at the chancellor’s office and the
five campuses discussed previously who received at least one payment
at that level from fiscal years 2002–03 through 2005–06 but did not
receive a payment at that level in fiscal year 2006–07.
Finally, we reviewed the university’s policy for reimbursing
incoming employees for moving and relocation costs and its policy
regarding employment outside the university system. As part of
our review of the appointment letters and other documentation
contained in the personnel files of our sample of 76 highly paid
university employees, we determined whether reimbursements for
moving and relocation costs received by these employees were in
compliance with university policy.
1 California State Auditor Report 2007-102.1
November 2007
Blank page inserted for reproduction purposes only.
California State Auditor Report 2007-102.1 17
November 2007
Chapter 1
The CAlIfoRNIA STATe UNIveRSITy ShoUld
STReNgTheN ITS MoNIToRINg of CoMpeNSATIoN
polICIeS ANd pRACTICeS
Chapter Summary
The California State University (university) establishes systemwide
compensation policies but does not have a system that allows it
to adequately monitor adherence to those policies or to measure
their impact on university finances. Specifically, the university does
not maintain systemwide compensation data by type and funding
source, and this lack of data impairs the ability of the chancellor’s
office to provide effective oversight of its compensation policies.
Although the university delegates broad authority to campuses to
ensure that systemwide policies are followed, it is important for the
chancellor’s office to have sufficient data to monitor the campuses’
implementation of the policies.
In fiscal year 2006–07, compensation for university employees
totaled $2.6 billion, excluding amounts paid directly by external
entities such as foundations. Funded largely by state resources,
university compensation most often is disbursed through salary
payments. Over the last five fiscal years, the university payroll has
increased by $225.8 million, or 9.6 percent. Roughly 97 percent of
this increase resulted from increased compensation per employee,
with the remaining 3 percent due to an increased number
of employees.
The compensation increases varied significantly among various
employment classifications. For example, average compensation for
executives increased by 25.1 percent, and average compensation
for Management Personnel Plan employees (management
personnel), such as managers and professional technical staff,
increased by 10.4 percent. In contrast, average compensation for
tenure-track faculty and other faculty increased by 5.6 percent,
and 6.2 percent, respectively. Average compensation for the
remaining university employees increased by 12.4 percent. Changes
in the number of employees also varied significantly by employee
classification over the five-year period.
We examined the growth in the various components that make
up executive compensation—salaries, housing allowances, and
automobile allowances—because average executive compensation
experienced the most growth during the five-year period. Salary
increases contributed the most to this growth, with the board
of trustees (board) approving salary increases on three separate
occasions. The salary increases for executives ranged from an
1 California State Auditor Report 2007-102.1
November 2007
average of 1.68 percent to 13.7 percent. The board has continually
justified increasing executive salaries on the basis that its executives’
cash, or salary, compensation lags behind that of comparable
institutions. However, as early as October 2004, the California
Postsecondary Education Commission (commission), the entity
that was involved with executive compensation studies until that
time, raised concerns that the methodology used in making such
comparisons did not present a complete picture of the value of
individual compensation packages because it did not consider
benefits and perquisites provided to executives, which can be
substantial. Despite these concerns and the absence of further
commission involvement in surveys of executive compensation, the
university proceeded to use a consulting firm to perform surveys
of the comparison institutions using the questioned methodology.
Further, documents indicate that the board approved executive
salary increases in October 2005 and January 2007 based only on
the lag in cash compensation.
The commission and the Legislative Analyst’s Office expressed
further concerns in 2007 about the existing methodology used in
these types of comparisons. Nevertheless, in September 2007, the
board granted its executives another raise averaging 11.8 percent.
Further, the chancellor recommended that the board adopt a new
formal executive compensation policy and that the board continue
to have a salary target focused on the average cash compensation
for similar positions at comparable institutions. In response to
these recommendations, the board adopted a new executive
compensation policy and resolved that it aims to attain parity for
its executives and faculty by fiscal year 2010–11.
The University Has Not Developed a Central System Sufficient for
Monitoring Compliance With Its Compensation Policies
The chancellor’s office establishes systemwide compensation
policies but does not have a system in place that allows it to
adequately monitor adherence to those policies and to measure
their impact on university finances. Specifically, the chancellor’s
office does not maintain systemwide compensation data by type
and funding source, either by individual or in total. The lack of this
data impairs the ability of the chancellor’s office to provide effective
oversight of the university’s compensation programs. The executive
IItt wwaass nneevveerr tthhee cchhaanncceelllloorr’’ss vice chancellor and chief financial officer (executive vice chancellor)
ooffifficcee’’ss iinntteenntt ttoo hhaavvee ddeettaaiilleedd indicated that it was never the chancellor’s office’s intent to have
ssyysstteemmss iinn ppllaaccee ttoo mmoonniittoorr detailed systems in place to monitor employee payments and to
eemmppllooyyeeee ppaayymmeennttss aanndd ttoo eennssuurree ensure that payments are consistent with policy, as it believes that
tthhaatt ppaayymmeennttss aarree ccoonnssiisstteenntt is a campus responsibility. The university delegates broad authority
wwiitthh ppoolliiccyy,, aass iitt bbeelliieevveess tthhaatt iiss aa to campuses to ensure that systemwide policies are followed. The
ccaammppuuss rreessppoonnssiibbiilliittyy.. executive vice chancellor cited the standing orders of the board and
California State Auditor Report 2007-102.1 1
November 2007
the board’s statement of general principles as the general policy
basis for this delegation. Although we recognize that campuses have
primary responsibility for implementing compensation policies, it is
important for the chancellor’s office to have sufficient data to ensure
that the campuses appropriately carry out their responsibilities.
While granting the campuses some discretion in hiring and
compensating employees, the university has employment
and compensation policies designed to align campus procedures
with broad systemwide goals. For example, the university prohibits
employees from performing additional assignments that would
cause them to work more than 125 percent of a full-time position.
Systemwide, more than 11,000 employees, primarily faculty, earned at
least $74.8 million in fiscal year 2006–07 by performing assignments,
such as teaching summer classes or conducting other special
assignments, that were in addition to any primary university duties.
However, the university has not established a central system that
captures the data necessary for it to efficiently ensure that employees
working additional assignments do not exceed 125 percent of a
full-time position. The university also lacks a central system that
would enable it to readily monitor, by individual and by funding
source, the recipients of various stipends and bonuses, including
summer fellowship stipends, temporary project stipends, and
performance and merit bonuses.
In addition, despite the criteria it has established for awarding
supplemental compensation, the chancellor’s office does not have
centralized data that would enable it to monitor adherence to those
criteria. Automobile allowances, certain bonuses, and other types of
supplemental compensation must be approved by the chancellor’s
office before management personnel can receive these payments. In
addition, supplemental compensation must be funded from sources
other than the State’s General Fund. Although the chancellor’s office
requests reports from campuses listing recipients of supplemental
compensation and can retroactively audit this information, it has
no ability to request timely reports from a central data depository
to ensure that employees are receiving approved supplemental
compensation from appropriate funding sources.
Further, without a central system for capturing systemwide WWiitthhoouutt aa cceennttrraall ssyysstteemm
compensation data by type and funding source, the chancellor’s office ffoorr ccaappttuurriinngg ssyysstteemmwwiiddee
cannot effectively monitor the financial impact of compensation ccoommppeennssaattiioonn ddaattaa bbyy ttyyppee aanndd
trends among campuses. For example, without compensation data ffuunnddiinngg ssoouurrccee,, tthhee cchhaanncceelllloorr’’ss
by type and funding source, the chancellor’s office would not know ooffifficcee ccaannnnoott eeffffeeccttiivveellyy mmoonniittoorr tthhee
in a timely manner if a particular campus has significantly increased fifinnaanncciiaall iimmppaacctt ooff ccoommppeennssaattiioonn
the number of employees receiving automobile allowances over ttrreennddss aammoonngg ccaammppuusseess..
prior years or if those allowances are being inappropriately funded
from the General Fund.
20 California State Auditor Report 2007-102.1
November 2007
According to the executive vice chancellor, the financial tools
available to the chancellor’s office for payroll purposes reflect its
view that campuses are delegated the authority and responsibility
to monitor compliance with university policy. For example,
the university has overseen the systemwide implementation of the
Common Management System (CMS), a software suite designed to
support the administration of campus payroll and human resource
systems. The university did not implement the CMS in a way
that would allow the chancellor’s office to produce reports from
it that reflect the entire university system. Rather, each campus
modifies its CMS software to support its specific needs. The
chancellor’s office does not require that campuses standardize all key
data fields, but provides the ability for campuses to define certain
fields according to their business processes and needs. Accordingly,
if the chancellor’s office desires systemwide information, it must
specifically request the particular data from each of the 23 campuses.
Further, the CMS does not record certain fringe benefits, including
housing and automobile allowances, which are important elements
of systemwide compensation.
Data collected by the State Controller’s Office (state controller),
which records all university payments made to employees at the
transaction level, do not contain funding source information. In
addition, data in the payroll file maintained by the state controller
(payroll file) may be inaccurate because of errors campuses make in
reporting the nature of payroll transactions. Specifically, we noted
that campuses code automobile allowances paid to management
personnel as bonuses in the payroll file and sometimes code
additional pay for research as base pay. Further, we found that
campuses are inconsistent in reporting certain payroll transactions
to the state controller, with some campuses coding stipends as base
pay. Inconsistencies like these reduce the ability of the chancellor’s
office to use the payroll file as a tool for monitoring the university’s
compensation policies.
TThhee uunniivveerrssiittyy ddooeess cceennttrraallllyy The university does centrally maintain the Employee Salary
mmaaiinnttaaiinn tthhee EEmmppllooyyeeee SSaallaarryy Projection (ESP) system, which summarizes into a single file all
PPrroojjeeccttiioonn ssyysstteemm,, bbuutt tthhiiss payroll data submitted to the state controller over one fiscal year.
ssyysstteemm ddooeess nnoott pprroovviiddee ddeettaaiilleedd This system, which the university uses for the limited purposes of
iinnffoorrmmaattiioonn oonn uunniivveerrssiittyy performing specific salary and benefit projections in negotiations
ccoommppeennssaattiioonn bbyy ffuunnddiinngg ssoouurrccee.. with collective bargaining units, contains some funding source
and high-level information on payment type. However, it does not
retain much of the significant detail present in the source files it
receives from campuses and does not contain the stringent quality
control measures needed to ensure the reliability of the data it
contains. According to the executive vice chancellor, the campuses’
monthly ESP system reports do go through a verification process,
California State Auditor Report 2007-102.1 21
November 2007
in which campus submittals are compared with the state controller’s
records. Nonetheless, the ESP system is unable to provide detailed
information on university compensation by funding source.
Without a central system that compiles universitywide
compensation information, the university’s ability to oversee
its compensation programs is limited. This does not mean that
oversight of university compensation is entirely lacking. Campuses
can set payroll controls and perform their own audits, and the
chancellor’s office does periodically audit campuses. The office of
the university auditor performs various types of campus audits,
including compliance audits in which it reviews campuses’
adherence to laws, regulations, board policies, and directives issued
by the chancellor’s office. For example, in 2004, the office of the
university auditor performed a systemwide audit of the university’s
human resources function. One of the objectives of that audit was
to determine whether employee compensation and benefit requests
were properly authorized, were processed promptly, and complied
with applicable collective bargaining agreements and university and
campus policies. However, the chancellor’s office does not have a
comprehensive, universitywide, real-time system that allows it to
ensure compliance with the university’s compensation policies and
to monitor the monetary impact of its compensation programs.
Most University Compensation Paid Through the State Controller Is
Funded by State Appropriations and Student Tuition and Is in the
Form of Regular Pay
The university compensates its employees from
various funds, including the General Fund, which PPeerrcceennttaaggee ooff EEmmppllooyyeeee CCoommppeennssaattiioonn FFrroomm
SSttaattee AApppprroopprriiaattiioonnss aanndd SSttuuddeenntt TTuuiittiioonn ffoorr
incorporates state appropriations; enterprise
FFiissccaall YYeeaarr 22000066––0077
funds, such as dormitory and parking revenue funds;
continuing education and state lottery funds; and
EExxeeccuuttiivveess 110000..00%%
a university trust fund, which comprises student
MMaannaaggeemmeenntt ppeerrssoonnnneell 8877..77
tuition and fees (student tuition) and other
subsidiary funds. As shown in the text box, state TToottaall ffaaccuullttyy 9977..44
appropriations and student tuition make up more
OOtthheerr eemmppllooyyeeeess 8822..33
than 90 percent of the total university compensation
recorded in the ESP system. Data in the payroll file, AAllll eemmppllooyyeeeess 9900..33%%
combined with funding source information added
SSoouurrccee:: BBuurreeaauu ooff SSttaattee AAuuddiittss’’ aannaallyyssiiss ooff ddaattaa ccoonnttaaiinneedd iinn tthhee
by each campus, are the source of the data in the uunniivveerrssiittyy’’ss EEmmppllooyyeeee SSaallaarryy PPrroojjeeccttiioonn ssyysstteemm..
ESP system.
Prior to fiscal year 2006–07, student tuition was paid through the General Fund.
22 California State Auditor Report 2007-102.1
November 2007
Because of the limitations of the university’s central compensation
data discussed previously, we used the payroll file to identify and
categorize systemwide compensation. Although the payroll file does
not contain funding source data, it does provide sufficiently detailed
information on the payment type for each payroll transaction. Any
payments made through the university’s payroll system are also
recorded in the payroll file, including compensation from externally
funded contracts and grants paid through the university. The file
does not, however, contain information on compensation paid
directly to university employees from university auxiliaries, such
as foundations, because these entities generally maintain their own
payroll systems. Given the Joint Legislative Audit Committee’s
request that our audit include an analysis of compensation paid
from state appropriations and student tuition, the absence of direct
payments by auxiliaries in the payroll files did not limit our analysis.
Table 1 summarizes systemwide compensation by employee
classification for fiscal year 2006–07. The first portion of the table
RReegguullaarr ccoommppeennssaattiioonn ttoottaalleedd contains payments that are considered regular compensation, which
nneeaarrllyy $$22..55 bbiilllliioonn,, oorr 9966..66 ppeerrcceenntt totaled nearly $2.5 billion, or 96.6 percent of the $2.6 billion paid
ooff tthhee $$22..66 bbiilllliioonn ppaaiidd ttoo uunniivveerrssiittyy to university employees. These payments include base pay in the
eemmppllooyyeeeess iinn fifissccaall yyeeaarr 22000066––0077.. form of hourly or salary compensation, leave pay, overtime pay, and
shift differential payments. The second portion of the table contains
additional pay—payments considered to be above an employee’s
regular compensation—which totaled about $89 million. Forms
of compensation in this category include additional teaching and
special assignments, bonus pay, stipends, housing and automobile
allowances, and benefits-related payments. Pay for additional
teaching and special assignments, such as summer classes or other
assignments that are in addition to an employee’s primary duties,
totaled $74.8 million and made up 83.9 percent of all additional
pay. Our review indicated, however, that campuses do not always
consistently classify this pay, and thus we believe the $74.8 million
to be conservative. Executives, including campus presidents,
received housing and automobile allowances, but they received no
other forms of additional pay through the payroll file.
The last two rows of Table 1 provide the total full-time equivalents
(FTEs) and the average compensation per FTE for each employee
classification. This analysis shows that although executives received
just 0.3 percent of systemwide compensation, on average they
earned more than three times as much as management personnel
and nearly four times as much as tenure-track faculty.
California State Auditor Report 2007-102.1 2
November 2007
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refer
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evah
ew
,troper
eht tuohguorhT
*
.yrogetac
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rehtO
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eht
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od
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fo shtnom
01
no
detaciderp
si
yap
esab
esohw
dna
raey
cimedaca
na krow
ohw
ytlucaf
sedulcnI
†
snoitces
rehto
ni
dedulcni
era
yrogetac
stnemngissA
laicepS
dna
gnihcaeT
lanoitiddA
eht
ni
gnoleb
taht
stnemyap
emos
,stnemyap
niatrec
dedoc
sah
ytisrevinu
eht
taht
yaw
eht
ni seicnetsisnocni
fo
esuaceB
‡
.detatssim
neeb
evah
taht
stnuoma
eht
yfitnauq
ot elbanu
erew
eW
.yap
esab
sa
stnemngissa
gnihcaet
lanoitidda
ro
seitud
hcraeser
rof
deviecer
yap
dedoc
evah
sesupmac
emos
,elpmaxe
roF .elbat
siht
fo
.elfi
lloryap
eht
eht
ni
sesunob
sa
dedoc
era
eseht
tub
,secnawolla
elibomotua
eviecer
osla
seeyolpme
nalP
lennosreP
tnemeganaM
niatreC
§
2 California State Auditor Report 2007-102.1
November 2007
Executives, Management Personnel, and Faculty are Among the
University’s Highest-Paid Employees
Our review of compensation received by the most highly paid
university employees revealed that executives, management
personnel, and tenure-track faculty earned 94.5 percent of such
compensation systemwide. Table 2 summarizes compensation for
the 1,462 employees who earned more than $115,920 during fiscal
year 2006–07. These individuals received a total of $204.8 million,
or 7.9 percent of the $2.6 billion systemwide compensation shown
in Table 1. We chose $115,920 as our threshold for highly paid
employees because it was the top of the salary range for 12-month
tenure-track faculty in fiscal year 2006–07. Despite the use of this
criterion, 41.2 percent of the FTEs summarized in Table 2 represent
tenure-track faculty, who collectively received 32.8 percent of all
compensation shown in the table. This is because, as we discuss
later in the chapter, faculty have opportunities to increase their
compensation considerably beyond their regular salary through
additional teaching and special assignments. Most of the remaining
highly paid employees, or 51.2 percent as measured in FTEs,
are management personnel, who received 57.6 percent of the
compensation shown in Table 2. This percentage is significantly
higher than the 12.9 percent share of systemwide compensation
received by all management personnel, as shown in Table 1.
Using a sample of the highly paid individuals represented in Table 2,
we analyzed whether any additional compensation or employment
inducements not appearing in the payroll file were recorded
in employment agreements with the university. We found that
employment agreements were rare among the employees whose
files we reviewed. Rather, most employees received letters outlining
the initial compensation packages offered to them. In addition,
we sometimes found that to identify employment inducements, we
could not rely solely on the personnel files centrally maintained
on each campus but also had to review documentation from
the departments in which the employees worked. We obtained
various payroll reports from campus foundations that provided
additional compensation to university employees and, in some
cases, reviewed foundation files. Nonetheless, we cannot be certain
that we identified all the additional compensation, employment
inducements, and other benefits for the employees in our sample.
AAppppeennddiixx AA pprreesseennttss tthhee Appendix A presents the compensation and additional employment
ccoommppeennssaattiioonn aanndd aaddddiittiioonnaall inducements that we were able to identify for the 76 highly
eemmppllooyymmeenntt iinndduucceemmeennttss tthhaatt paid university employees we selected for review. Included
wwee wweerree aabbllee ttoo iiddeennttiiffyy ffoorr tthhee are reimbursements for moving and relocation expenses, such
7766 hhiigghhllyy ppaaiidd uunniivveerrssiittyy eemmppllooyyeeeess as real estate closing costs and transitional living expenses;
wwee sseelleecctteedd ffoorr rreevviieeww.. housing, including housing allowances; low-interest home loans;
automobiles and automobile allowances; tenure; entertainment
California State Auditor Report 2007-102.1 2
November 2007
2 elbaT
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2 California State Auditor Report 2007-102.1
November 2007
allowances; executive transition benefits; spousal appointments;
performance incentives for coaches; and reductions in normal
teaching loads. We also found that faculty sometimes received
compensation through externally funded grants for research.
Growth in Average Compensation and the Number of Employees Has
Varied by Employee Classification
Over the past five years, the university’s payroll has increased
by $225.8 million, or 9.6 percent. As indicated by Figure 2, total
compensation decreased by $95 million, a 4 percent reduction,
from fiscal years 2002–03 through 2004–05. However, total
compensation rebounded over the following years, increasing by
$321 million, or 14.2 percent, by fiscal year 2006–07.
Figure 2
Growth in Compensation From Fiscal Years 2002–03 Through 2006–07
)snoilliM
ni(
noitasnepmoC
$3,000
2,589
Totals
2,413
2,500 2,363
2,326
2,268
2,000
1,500
997
1,000 899 882 865 919 Other employees
Tenure-track faculty
799 802 773 798 832
500 376 354 344 385 420 Other faculty
Management Personnel
282 281 279 303 332 Plan employees
7 7 7 8 8
Executives
0
2002–03 2003–04 2004–05 2005–06 2006–07
Fiscal Years
Source: Bureau of State Audits’ analysis of payroll files maintained by the State Controller’s Office.
Approximately 97 percent of the increase over the five-year period
was the result of increased compensation per employee, and
3 percent was due to an increased number of employees. However,
as shown in Table 3, the compensation increases varied significantly
California State Auditor Report 2007-102.1 27
November 2007
by employee classification. For example, average compensation for
executives and management personnel increased by 25.1 percent
and 10.4 percent, respectively. In contrast, average compensation
for tenure-track faculty and other faculty increased by 5.6 percent
and 6.2 percent, respectively. Average compensation for all
other university employees increased by 12.4 percent over the
five-year period. We discuss the largest of the increases, that for
executives, in the next subsection.
Table 3
Changes in Compensation and Number of University Employees From Fiscal Years 2002–03 Through 2006–07
managemenT
personnel
plan Tenure-TraCk oTher oTher
exeCuTives employees faCulTy* faCulTy* ToTal faCulTy* employees all employees
2002–03
Total compensation $6,935,999† $282,137,892 $799,26,256 $375,51,185 $1,17,967,1 $898,795,795 $2,362,837,127
Total FTEs 28.8 3,151.5 10,737.1 7,582.9 18,320.0 2,69.6 6,19.9
Average compensation 20,833 89,525 7,55 9,525 6,136 36,63 51,199
2006–07
Total compensation 8,08,838 332,226,929 831,523,710 19,696,999 1,251,220,709 996,801,125 2,588,657,601
Total FTEs 27.9 3,361.7 10,572.0 7,978. 18,550. 2,319.9 6,259.9
Average compensation 301,392 98,827 78,653 52,60 67,50 0,987 55,959
Percent Change
Total compensation 21.2% 17.8% .0% 11.8% 6.5% 10.9% 9.6%
Total FTEs (3.1) 6.7 (1.5) 5.2 1.3 (1.3) 0.2
Average compensation 25.1 10. 5.6 6.2 5.2 12. 9.3
Source: Bureau of State Audits’ analysis of the payroll file maintained by the State Controller’s Office.
* Includes faculty who work an academic year and whose base pay is predicated on 10 months of work. Faculty do have the option of working more.
† Campuses did not report housing allowances through the State Controller’s Office in fiscal year 2002–03. For purposes of comparison, we adjusted
executive compensation to reflect all housing allowance payments that campuses reported were processed through their accounts payable systems.
Changes in the number of employees also varied significantly by
employee classification over the five-year period. As shown in
Table 3, the total number of university employees, as measured
in FTEs, increased by 0.2 percent. However, while executives
experienced a negligible decrease of less than one FTE, a 3.1 percent
decline, the number of management personnel FTEs and other
faculty FTEs increased by 6.7 percent and 5.2 percent, respectively.
The number of tenure-track faculty FTEs decreased by 1.5 percent.
Finally, we found that the number of FTEs for other employees
decreased by an average of 1.3 percent. As a frame of reference, the
university reported that the number of full-time equivalent students
increased by 5.1 percent over the same period.
2 California State Auditor Report 2007-102.1
November 2007
The higher growth rates that we noted for non-tenure-track faculty
and management personnel are also evident in an analysis of
university staffing trends from 1995 through 2000 that the university
prepared in response to legislative questions in 2002. The university’s
analysis indicated a 0.8 percent decrease in tenure-track faculty
FTEs coupled with a 54 percent increase in the number of lecturer
and other faculty FTEs. At the time, the university cited two reasons
for the higher rate of growth in the number of non-tenure-track
faculty: a student population that increased by 13 percent from
fiscal years 1995–96 through 2000–01 and an increasing number
of tenure-track faculty retirements, which required a temporary
GGrroowwtthh iinn tthhee nnuummbbeerr ooff ootthheerr expansion in the number of lecturers to provide instruction. The
ffaaccuullttyy hhaass oouuttssttrriippppeedd tthhaatt ooff university expected that as enrollment growth leveled off and faculty
tteennuurree--ttrraacckk ffaaccuullttyy,, aanndd tthhee retirements slowed, the relative number of tenure-track faculty would
ggrroowwtthh rraattee ooff mmaannaaggeemmeenntt increase. However, despite enrollment growth slowing to 5 percent
ppeerrssoonnnneell wwaass hhiigghheerr tthhaann tthhaatt ooff from fiscal years 2002–03 through 2006–07, the five-year period
ootthheerr eemmppllooyyeeee ggrroouuppss,, ffoorr fifissccaall upon which our audit focused, the growth in the number of other
yyeeaarrss 22000022––0033 tthhrroouugghh 22000066––0077.. faculty has continued to outstrip that of tenure-track faculty.
In its 2002 analysis, the university also indicated that both
management personnel FTEs and the FTEs of all employees other than
management personnel rose by 15 percent from 1995 through 2000.
The university excluded from its analysis the four newest campuses
because it believed the ratio of administrative staff to faculty at the
start-up campuses was an anomaly. The university’s report also
excluded all growth in management personnel FTEs associated
with university fund-raising for similar reasons. We would expect
that as the four newest campuses reached full staffing levels after
fiscal year 2000–01 and the ratio of administrative staff to faculty
achieved a balance, the growth in the number of employees other than
management personnel would outpace that of management personnel.
However, we see no evidence of such a trend in our analysis. The
growth rate of management personnel from fiscal years 2002–03
through 2006–07 remained higher than that of employees other than
management personnel.
The Board Determines Executive Compensation
The board determines the appointments and salaries for
executives—the chancellor, vice chancellors, general counsel,
and campus presidents. The board’s committee on university and
faculty personnel (committee) is responsible for developing
recommendations to the board for establishing executive
compensation and personnel policies and procedures. Every year,
budget permitting, the committee and the chancellor recommend
to the board an average percentage salary increase for executives.
In years when the average percentage increase is relatively small,
across-the-board increases are recommended because deviations
California State Auditor Report 2007-102.1 2
November 2007
become too small to cause meaningful changes in salary. In contrast,
in years when the average percentage is large, increases are
determined individually based on each executive’s job performance,
complexity of assignment, length of service, assistance to the
chancellor’s office and board, and national leadership. The board
considers evaluations of individual presidents throughout the year in
closed sessions. However, the board considers salary increases for all
executives in a single open session.
As noted in the previous section, average executive compensation TToottaall aavveerraaggee eexxeeccuuttiivvee
increased by 25.1 percent from July 1, 2002, through June 30, 2007. ccoommppeennssaattiioonn iinnccrreeaasseedd bbyy
We examined the components contributing to that increase— 2255..11 ppeerrcceenntt ffrroomm JJuullyy 11,, 22000022,,
salaries, housing allowances, and automobile allowances—over the tthhrroouugghh JJuunnee 3300,, 22000077,, wwiitthh ssaallaarryy
five-year period to determine the cause of the increase. We found iinnccrreeaasseess ccoonnttrriibbuuttiinngg tthhee mmoosstt ttoo
that salary increases contributed the most to the overall growth in tthhee ggrroowwtthh..
total executive compensation. Specifically, from fiscal years 2002–03
through 2006–07, total annual base salaries for executives increased
by $992,274, or 15.5 percent. This increase represents 67.4 percent
of the $1.5 million total increase in executive compensation over
the five-year period and, in part, reflects salary growth caused by
presidential turnover. For example, when the chancellor appoints a
new campus president, the appointee’s initial salary may be greater
than that of the former president. In one instance, the former
president of the Bakersfield campus earned an annual salary of
$204,156, and the succeeding president was appointed effective
July 2004 with a starting annual salary of $220,008.
Increased housing allowances also contributed significantly to the
overall growth of executive compensation. Effective July 2005
the board approved increases to the annual housing allowances of
campus presidents. Specifically, the board implemented a two-tiered
housing allowance to address the increasing costs of housing,
house maintenance, and related service costs in California. The
adjustment resulted in an annual housing allowance of $50,000 each
for five campus presidents and $60,000 each for eight other
presidents. Total annual housing allowances increased by $386,226,
or 106.2 percent, from fiscal years 2002–03 through 2006–07. This
increase represents 26.2 percent of the $1.5 million total increase
in executive compensation. In addition, 10 presidents and the
chancellor are currently provided with houses for their use. We
considered whether a decrease in the number of houses contributed
to the increase in housing allowances over the five-year period
and found that the same number of houses was provided in fiscal
year 2002–03.
Finally, effective November 2005, the board approved an increase
in the automobile allowance from $750 to $1,000 per month for
campus presidents who choose to accept the allowance instead of
a university vehicle to support university-related business travel
0 California State Auditor Report 2007-102.1
November 2007
requirements. That same monthly allowance of $1,000 is provided
to the executives working in the chancellor’s office, except for the
chancellor, who is provided with a vehicle for his use. The increase
in the monthly allowance as well as an increase in the number of
campus presidents receiving automobile allowances contributed to
the growth in total executive compensation. Specifically, automobile
allowances increased by $151,500, or 124.7 percent, from fiscal
years 2002–03 through 2006–07.
As we discussed previously, salary increases contributed the most
to the overall growth in total executive compensation. During
the five-year period beginning July 2002, presidents and system
executives received three salary increases. Effective July 2002 the
board approved an across-the-board increase of 1.68 percent to
all executive salaries. In October 2005 the board approved an
average 13.7 percent increase for executives, effective July 2005,
with individual salary increases granted in varying percentages
based on performance. In January 2007 the board also approved an
across-the-board salary increase of 4 percent, effective July 2006.
TThhee bbooaarrdd hhaass ccoonnttiinnuuaallllyy jjuussttiififieedd The board has continually justified increasing executive salaries
iinnccrreeaassiinngg eexxeeccuuttiivvee ssaallaarriieess oonn on the basis that its executives’ cash compensation lags that of
tthhee bbaassiiss tthhaatt iittss eexxeeccuuttiivveess’’ ccaasshh comparable institutions. In the executive compensation meetings
ccoommppeennssaattiioonn,, eexxcclluuddiinngg bbeenneefifittss that led to the board’s approval of each of the three salary increases
aanndd ppeerrqquuiissiitteess,, llaaggss tthhaatt ooff discussed previously, the committee cited presidential compensation
ccoommppaarraabbllee iinnssttiittuuttiioonnss.. surveys performed by a consulting firm that showed that average
cash compensation for the university’s campus presidents lags
significantly behind the average salary among the comparison group.
For example, committee documents indicate that the board approved
the 13.7 percent increase in 2005 after it considered information
from the consulting firm’s presidential compensation survey indicating
a 49.5 percent salary lag. The committee noted that “while it is
recognized that it would be extraordinarily difficult to take remedial
action to narrow the 49.5 percent salary lag in a single action, it
is nonetheless critical that steps be taken to begin to address this
serious salary lag.” Further, the committee asserted that the ratio of
the average percentage increase in executive salary in relation to the
average cash compensation lag was the same as the ratio of the faculty
salary increase in relation to the reported faculty salary lag.
5 The committee cited a 3.5 percent salary increase for faculty and a 13.1 percent faculty salary lag.
We note that the faculty salary increase amounted to 26.7 percent of the faculty salary lag, while
the 13.7 percent executive salary increase was 27.7 percent of the executive salary lag.
California State Auditor Report 2007-102.1 1
November 2007
However, the board approved some of these increases after TThhee bbooaarrdd aapppprroovveedd ssoommee
significant concerns had been raised about the methodology used iinnccrreeaasseess ttoo eexxeeccuuttiivvee ssaallaarriieess
as a basis for the salary increases. The California Postsecondary aafftteerr tthhee CCaalliiffoorrnniiaa PPoossttsseeccoonnddaarryy
Education Commission (commission) has historically published EEdduuccaattiioonn CCoommmmiissssiioonn rraaiisseedd
executive salary comparisons for the university, using a comparison ssiiggnniifificcaanntt ccoonncceerrnnss aabboouutt tthhee
group of 20 public and private universities that, for purposes of the mmeetthhooddoollooggyy uusseedd aass aa bbaassiiss ffoorr
survey, were considered comparable to the university. The same tthhee ssaallaarryy iinnccrreeaasseess..
comparison group was used for separate faculty salary comparisons.
In preparing its executive compensation report in October 2004,
the commission relied on information provided by the university,
including information that the consulting firm referred to
previously had obtained on the comparison institutions. When it
issued its October 2004 report, which also addressed executive
compensation for the University of California and the California
community colleges, the commission concluded that the method
used in the comparison did not present a complete picture of the
value of individual compensation packages because it did not assess
the value of benefits and perquisites provided to executives, which
can be substantial. The commission recommended that if such
a report were to be issued in the future, it convene an advisory
committee made up of representatives from various interested
parties, including the university, the commission, the Department
of Finance, and the Legislative Analyst’s Office (legislative analyst),
to begin discussion with the goal of identifying a new methodology
with a broader scope that encompasses all forms of compensation.
However, the commission has not issued a report on executive
salaries since the October 2004 report.
Despite the concerns raised by the commission, the university
continued to use the consulting firm to perform surveys of the
comparison institutions that focused on cash compensation.
Further, we saw no indication, in the documents that were
presented to the board in open meetings for its approval for the
October 2005 and January 2007 salary increases, that there was any
discussion of the concerns that had been raised by the commission.
Also, we saw no disclosure in the documents that the salary lags
being considered were produced solely by the consulting firm used
by the university and were not based on published reports of the
commission. In fact, these documents described the lag as being
in reference to the “[commission] comparison group” and the
“[commission] 20 peer institutions.”
The legislative analyst has subsequently raised further concerns. In
February 2007 the legislative analyst reported on the commission’s
faculty comparison studies, which are prepared in a manner
similar to the one the commission used for its previous executive
compensation studies. The legislative analyst noted that the
commission’s current approach to faculty compensation was
flawed and that other forms of compensation besides salary should
2 California State Auditor Report 2007-102.1
November 2007
be included. Additionally, the legislative analyst noted that the
comparison institutions used for the university were last updated
in 1993 and that there are many campuses within the university
that differ greatly from the comparison institutions in terms of
selectivity, national ranking of programs, and other factors. Rather
than recommending that a new group of comparison institutions
be established, the legislative analyst recommended that the
commission calculate compensation for broad ranges of institutions
(both public and private) that reflect the spectrum of campuses
within the university. This would allow interested parties, including
the Legislature, the governor, and other stakeholders, to draw their
own conclusions about the adequacy of faculty compensation using
this as contextual information.
In March and June 2007, when the commission issued reports on
faculty salaries, the commission again reiterated its concerns about
the existing methodology’s focus on salary information, stating that
it does not present a complete picture of either faculty or executive
compensation and reiterating that a new, more comprehensive
approach that considers total compensation needs to be taken.
Despite the significant concerns that have been raised, the board
has continued to make further executive salary decisions and salary
policy based on this methodology.
During the September 19, 2007, board meeting, the chancellor
recommended that the board adopt a new formal executive
compensation policy that would give new board members, the
university community, and state lawmakers and policy makers a
context for the board’s decisions regarding executive compensation.
The chancellor also recommended that the board continue to
use the average cash compensation for presidents when making
comparisons with the commission’s 20 comparable institutions.
At the conclusion of the meeting, the board adopted the new
executive compensation policy and resolved that it aims, by fiscal
IInn iittss SSeepptteemmbbeerr 22000077 mmeeeettiinngg,, year 2010–11, to attain parity for its executives and faculty with
tthhee bbooaarrdd rreessoollvveedd ttoo aattttaaiinn ppaarriittyy the average of the 20 comparison institutions previously identified
ffoorr iittss eexxeeccuuttiivveess aanndd ffaaccuullttyy wwiitthh by the commission. To implement this policy, the board directed
tthhee aavveerraaggee ooff tthhee 2200 ccoommppaarriissoonn the chancellor to recommend appropriate salary adjustments for
iinnssttiittuuttiioonnss bbyy fifissccaall yyeeaarr 22001100––1111.. university executives over the next four years, beginning in fiscal
year 2007–08. The board resolution also noted that faculty salary
adjustments are made in accordance with collective bargaining
agreements and that the chancellor is directed to conduct periodic
market comparison surveys for employees not addressed in the
annual commission analyses.
At the same meeting, the chair of the committee and the
chancellor recommended, and the board approved, the first of
the pledged increases by raising executive salaries an average
of 11.8 percent effective July 1, 2007. The chair of the committee
California State Auditor Report 2007-102.1
November 2007
and the chancellor justified the increase by citing the consulting
firm’s July 2007 presidential compensation survey, which reported
that the average university president’s salary was 46 percent less
than the comparison group’s average. Although the consulting
firm’s previous survey from September 2006 indicated that the
lag was reduced significantly, to 12 percent, when total benefits
and perquisites were considered, the July 2007 presidential
compensation survey did not convey any calculation of the
university’s lag in total compensation. The consulting firm did
indicate in its 2007 report that none of the other surveyed
universities reporting information on benefits and perquisites
provide both a tax-qualified defined-benefit pension plan and a
transition program to their presidents, as discussed in Chapter 2.
Both of these programs are available, and provide significant
benefits, to the university’s executives. This again calls into question
the board’s decision to grant university executives an average raise
of 11.8 percent based only on a comparison of cash compensation
rather than total compensation.
We asked the chancellor’s office why the university continued to
justify increases in compensation for its executives based on a
methodology that had been questioned by the commission and
the legislative analyst. The vice chancellor of human resources
responded that the university did not believe it appropriate to
deviate from a methodology that had been agreed upon years ago
by the various interested parties, including the commission and
the legislative analyst. However, as these are now the same parties
that are raising concerns, we believe it is time for the university
to work with the interested parties to develop a more appropriate
methodology that considers total compensation.
The University Has Established Various Mechanisms for
Increasing the Compensation of Management Personnel
As described in the Introduction, the chancellor determines, and
the board approves, broad salary ranges for management personnel.
Additionally, the chancellor and campus presidents have the
authority to establish initial management personnel salaries at any
amount within that range. Campus presidents are required to obtain
the approval of the vice chancellor of human resources before paying
any management personnel employee a salary above the range
maximum for the administrator IV level, which is the highest level in
the management personnel classification. The chancellor’s office is
to receive an annual report of all management personnel
6 The 12 percent lag would not have reflected the 4 percent increase the board approved effective
July 2006 because this survey included information collected in 2005.
California State Auditor Report 2007-102.1
November 2007
compensation actions taken at the campuses.
However, preapproval of these actions, and
MMeetthhooddss ffoorr IInnccrreeaassiinngg MMaannaaggeemmeenntt
subsequent disclosure to the board, are
PPeerrssoonnnneell SSaallaarriieess
not required.
•• MMeerriitt ssaallaarryy iinnccrreeaassee pprrooggrraamm:: PPeerrffoorrmmaannccee‑‑bbaasseedd
ssaallaarryy iinnccrreeaasseess ffuunnddeedd ffrroomm aa mmeerriitt ccoommppeennssaattiioonn ppooooll Once the salary of a management personnel
eessttaabblliisshheedd aannnnuuaallllyy bbyy tthhee cchhaanncceelllloorr’’ss ooffifficcee.. employee is established, it may be increased in
•• EEqquuiittyy ((mmaarrkkeett)) iinnccrreeaassee pprrooggrraamm:: AAddjjuussttmmeennttss three ways, as shown in the text box. First, the
ddeessiiggnneedd ttoo aaddddrreessss ddiissccrreeppaanncciieess iinn ppaayy,, bbootthh wwiitthhiinn base salary can be increased annually through
aanndd oouuttssiiddee tthhee uunniivveerrssiittyy ssyysstteemm,, ffoorr ccoommppaarraabbllee jjoobbss.. the merit salary increase program. Each year, the
chancellor decides whether to fund this program.
•• RReeccllaassssiifificcaattiioonn:: SSaallaarryy iinnccrreeaasseess rreessuullttiinngg
If he chooses to fund the program, the chancellor
ffrroomm cchhaannggeess iinn aaddmmiinniissttrraattiivvee ccllaassssiifificcaattiioonn tthhaatt
establishes a systemwide merit compensation pool,
rreeflfleecctt cchhaannggeedd aassssiiggnnmmeennttss..
which may or may not be augmented with campus
funds, depending on the program for that fiscal
year. For example, for fiscal year 2006–07, the
chancellor approved a 3 percent merit compensation pool and an
additional 0.7 percent to address pay equity issues. Therefore, total
increases awarded to management personnel at each campus could
not exceed an average of 3.7 percent. However, individual increases
can vary because they are based on meritorious performance as
documented in annual performance evaluations. Campus presidents
are responsible for approving the individual merit increases awarded
to management personnel at their respective campuses. Similarly,
the chancellor is responsible for approving merit increases for
management personnel working in the chancellor’s office.
The salary of a management personnel employee can also be
increased through the equity increase program, which was designed
to address discrepancies in pay for comparable jobs, both within
and outside the university system. At the campuses, only presidents
have the authority to approve equity salary increases, and that
authorization cannot be delegated. According to a July 2002 memo
to the presidents from the vice chancellor of human resources,
equity salary increases can be approved only in rare circumstances
based on appropriate documentation. This memo also stated
that presidents are to report equity salary increases to the vice
chancellor of human resources by January 31 of each year for the
prior calendar year. Finally, the salary of a management personnel
employee can be increased through an administrative reassignment
or promotion that reflects increased responsibilities.
The merit salary and equity increase programs can significantly
raise the salaries of management personnel. Although the July 2002
memo defined the equity salary increase as a rarity, we found
that five of the six management personnel in our sample from the
Fullerton campus received equity increases in fiscal year 2005–06.
All five of these employees received merit increases during the same
period or shortly thereafter. For example, in March 2005, a dean at
California State Auditor Report 2007-102.1
November 2007
Fullerton received an equity increase that raised his monthly salary
from $11,579 to $12,512. Effective June 2006 he received another
equity adjustment that increased his monthly salary to $14,667.
Finally, in November 2006, the dean also received a merit salary
increase, retroactive to July 2006, that raised his monthly salary to
$15,210. In other words, from March 2005 through November 2006,
the dean’s base monthly salary increased by $3,631, or 31 percent.
Similarly, in October 2005, a vice president at Fullerton received
a merit salary increase retroactive to July 2005 that increased his
monthly salary from $13,570 to $14,045. Effective January 2006
the vice president received an equity adjustment, increasing his
monthly salary to $15,917. Subsequently, in November 2006,
the vice president received another merit increase that further
raised his monthly salary to $16,506 effective July 2006. Over a
one-year period, the vice president’s monthly salary increased by
$2,936, or 22 percent. The sixth individual, a head coach at Fullerton,
did not receive an equity increase. However, he received a new
contract in April 2005 that included a reclassification from the
administrator III to administrator IV level. As a result of the new
contract, the coach’s monthly salary increased from $10,200 to
$14,584. In addition, in November 2006, the coach received a merit
adjustment that further increased his monthly salary to $15,124
effective July 2006. Therefore, the coach’s monthly salary increased
by $4,924, or 48 percent, during this period.
Management personnel can receive compensation increases
through means other than salary increases. Campus presidents
can request supplemental compensation, including automobiles
and automobile allowances, for management personnel. According
to the vice chancellor of human resources’ July 2002 memo to the
campus presidents, supplemental compensation may be appropriate
if a benefit to the university can be clearly demonstrated and if
funding is available from resources other than the General Fund.
However, the memo states that for nonathletic supplemental
compensation, funding source exceptions can be requested in
the rare instances when it is appropriate to provide supplemental
compensation from the General Fund. Presidents must obtain
written approval from the chancellor or the vice chancellor of
human resources before providing supplemental compensation to
nonathletic management personnel. Approval for supplemental
compensation for athletic coaches is the responsibility of the campus
president, in consultation with the vice chancellor and the general
counsel, as appropriate.
For the five campuses that we visited, the most common supplemental
compensation for nonathletic management personnel was a monthly
automobile allowance. For example, five of the six management
personnel whose files we reviewed at the Long Beach campus were
California State Auditor Report 2007-102.1
November 2007
provided with either an automobile or a $600 monthly automobile
allowance from the campus foundation’s non-General Fund resources.
We also found that management personnel athletic coaches can
receive substantial amounts of supplemental compensation from
AA hheeaadd ccooaacchh rreecceeiivveedd resources other than the General Fund. For example, a head coach
ssuupppplleemmeennttaall ccoommppeennssaattiioonn ffrroomm at the San Diego campus received supplemental compensation from
aa ccaammppuuss ffoouunnddaattiioonn ttoottaalliinngg a campus foundation totaling $505,000 in fiscal year 2006–07. The
$$550055,,000000 iinn fifissccaall yyeeaarr 22000066--0077.. campus foundation also provided supplemental compensation of
$280,713 to another head coach in fiscal year 2006–07.
Management personnel may also increase their total compensation
by accepting additional employment for additional pay. Additional
employment is university employment that is in addition to and
substantially different from the employee’s regular employment.
For example, an academic administrator may assume extra teaching
assignments or other assignments in addition to his or her regular
administrative duties. The additional employment may be funded
through the university’s payroll or by other sources, such as a
foundation that is affiliated with the campus. The university limits
additional employment to 25 percent of a full-time position, for
a total of 125 percent. The salary rate for additional employment
may be the same as that of the primary appointment, although a
different salary rate is permitted if allowable by the funding source.
If the additional assignment is funded by a federal grant or contract,
the rate of pay for the additional work must be the same as the
university’s base rate for the primary assignment. For instance,
the Fullerton campus reported that one of its deans received
$182,520 in base pay and another $26,300 for additional work in
fiscal year 2006–07.
Further, campus presidents have the authority to award merit
bonuses to management personnel. To receive a merit bonus,
management personnel must meet specific measurable standards
that were communicated at the beginning of an evaluation period
or a specific and measurable stated objective that was articulated
in advance. The policy governing merit bonuses for management
personnel states that bonus funding may come from the annual
merit salary increase pool, or the pool may be augmented with
campus funds by an amount not exceeding 1 percent of the pool.
Finally, select police personnel responsible for critical response unit
leadership may receive a 5 percent monthly stipend for a period
determined by the vice chancellor of human resources.
California State Auditor Report 2007-102.1 7
November 2007
Salary Increases for Faculty Are Governed by a Collective
Bargaining Agreement
The California Faculty Association and the board
entered into a new collective bargaining agreement MMeetthhooddss ffoorr IInnccrreeaassiinngg FFaaccuullttyy SSaallaarriieess
(bargaining agreement) effective May 15, 2007,
MMaarrkkeett iinnccrreeaassee:: AAddddrreesssseess mmaarrkkeett ccoonnssiiddeerraattiioonnss
through June 30, 2010. The bargaining agreement
aanndd mmuusstt bbee aaccccoommppaanniieedd bbyy ddooccuummeennttaattiioonn ooff aa
prescribes six ways that the base pay for faculty
mmaarrkkeett‑‑bbaasseedd ssaallaarryy llaagg oorr aa vvaalliidd ooffffeerr ooff eemmppllooyymmeenntt
members can be increased, as described in the
ffrroomm aannootthheerr uunniivveerrssiittyy..
text box. According to the bargaining agreement,
increases in faculty base pay can occur only when PPrroommoottiioonn:: SSaallaarryy iinnccrreeaasseess rreessuullttiinngg ffrroomm aaddvvaanncceemmeenntt
a faculty member receives a market increase; ttoo aa hhiigghheerr aaccaaddeemmiicc rraannkk..
is promoted and receives a salary increase; GGeenneerraall ssaallaarryy iinnccrreeaassee:: AAnn iinnccrreeaassee aaffffeeccttiinngg aallll ffaaccuullttyy..
or receives a general, service salary, equity, or FFoorr fifissccaall yyeeaarr 22000066––0077,, eeaacchh ffaaccuullttyy mmeemmbbeerr rreecceeiivveedd aa
postpromotion increase during the fiscal years 33 ppeerrcceenntt iinnccrreeaassee eeffffeeccttiivvee JJuullyy 11,, 22000066,, aanndd aann aaddddiittiioonnaall
in which the California Faculty Association and 11 ppeerrcceenntt iinnccrreeaassee eeffffeeccttiivvee JJuunnee 3300,, 22000077..
the university specifically agree to provide those
SSeerrvviiccee ssaallaarryy iinnccrreeaassee:: UUppwwaarrdd mmoovveemmeenntt oonn tthhee ssaallaarryy
types of salary increases. The previous bargaining
sscchheedduulleess.. TThhiiss ttyyppee ooff aaddjjuussttmmeenntt iiss ddeetteerrmmiinneedd aannnnuuaallllyy
agreement also prescribed six ways that base pay dduurriinngg uunniivveerrssiittyy nneeggoottiiaattiioonnss wwiitthh tthhee CCaalliiffoorrnniiaa FFaaccuullttyy
could be increased for faculty members; it did AAssssoocciiaattiioonn.. FFoorr fifissccaall yyeeaarr 22000066––0077,, tthhee sseerrvviiccee ssaallaarryy
not include postpromotion increases but did offer iinnccrreeaassee ffoorr eelliiggiibbllee ffaaccuullttyy wwaass 22..6655 ppeerrcceenntt..
merit increases.
EEqquuiittyy iinnccrreeaassee:: EEqquuiittyy aaddjjuussttmmeenntt iinnccrreeaasseess bbaasseedd oonn
bbeenncchhmmaarrkk ssaallaarriieess iinn ddeefifinneedd ddiisscciipplliinnee ggrroouuppss aanndd eeqquuiittyy
Faculty can significantly increase their total
eexxppeerriieennccee ssttiippeennddss ffoorr tthhoossee wwiitthh tthhee mmoosstt sseevveerree ssaallaarryy
compensation by accepting additional employment iinneeqquuiittiieess.. OOtthheerr eeqquuiittyy iinnccrreeaasseess mmaayy bbee ddeevveellooppeedd bbyy
for additional pay. Additional employment, as JJaannuuaarryy 11,, 22000088.. TThhee ttoottaall ccoosstt ooff tthhiiss pprrooggrraamm iiss ggeenneerraallllyy
defined in the bargaining agreement, refers to lliimmiitteedd ttoo $$77 mmiilllliioonn aannnnuuaallllyy ffoorr fifissccaall yyeeaarrss 22000077––0088
any employment that is compensated by the aanndd 22000088––0099..
university or one of its auxiliaries using General
PPoossttpprroommoottiioonn iinnccrreeaassee:: PPeerrffoorrmmaannccee‑‑bbaasseedd iinnccrreeaasseess
Fund money or other funds and is in addition to the
ooff bbeettwweeeenn 22..55 ppeerrcceenntt aanndd 33..55 ppeerrcceenntt aavvaaiillaabbllee iinn fifissccaall
faculty member’s primary or normal employment. yyeeaarrss 22000088––0099 oorr 22000099––1100 ttoo sseenniioorr ffaaccuullttyy mmeemmbbeerrss wwhhoo
A faculty member is limited to the equivalent hhaavvee eexxhhaauusstteedd tthheeiirr eelliiggiibbiilliittyy ffoorr sseerrvviiccee ssaallaarryy iinnccrreeaasseess..
of one full-time position in his or her primary
university employment and up to 25 percent in
additional employment. However, the 25 percent
overage is allowed only if the additional employment is substantially
different from the faculty member’s primary employment, is
funded from sources other than the General Fund, or is the result
of the accrual of various part-time appointments across more than
one campus. Therefore, faculty can accept additional teaching
assignments beyond their regular academic-year assignments,
including state-supported summer sessions, intersessions, and
extension program courses. In fiscal year 2006–07, for example, a
professor at the Fullerton campus received $101,382 in annual base
California State Auditor Report 2007-102.1
November 2007
salary and received another $86,444 in additional pay for performing
grant-related work funded by a school district, teaching summer
session, and teaching in the extension program.
Faculty members also frequently receive compensation for work
related to externally funded grants or contracts. At the five university
campuses we visited, three general methods were used to administer
externally funded grants and contracts. Using one method, a
foundation at the Long Beach campus independently accepts and
administers all externally funded grants and contracts for the
campus. Therefore, any faculty member assigned to work on an
external grant or contract is compensated directly by the foundation
and is not paid through the state controller. Using another method, a
foundation at the Fullerton campus likewise accepts and administers
the grants and contracts that faculty members receive, but the
Fullerton campus initially pays faculty any amounts due under
these agreements through the state controller. The foundation then
reimburses the campus for the assignments, using the external grant
or contract funds. Using a third method, the San Francisco campus
directly administers the majority of external grants and contracts
itself through its Office of Research and Sponsored Programs.
Its foundation administers only the few external grants and
contracts coming from funding entities that require the recipient
to have tax-exempt status under Section 501(c)(3) of the Internal
Revenue Code.
Regardless of how a campus or an auxiliary foundation administers
externally funded grants and contracts, faculty can considerably
increase their total compensation when assignments funded by
external sources are considered to be in addition to their primary
assignments. Appendix A contains various examples of university
faculty members who received compensation for work related to
externally funded grants or contracts.
Recommendations
To provide effective oversight of its systemwide compensation
policies, the university needs accurate, detailed, and timely
compensation data. The university should create a centralized
information structure to catalog university compensation by
individual, payment type, and funding source. One possibility
would be to upgrade and expand the ESP system to make it more
7 Upon our inquiry, the campus acknowledged that the additional payments made to this
employee were, in part, the result of additional work that was greater than 25 percent of
the employee’s full-time appointment. The campus stated that one reason for this overage is
that staff were not aware of this employee’s additional extension program assignments when
other pay was submitted for approval. The campus stated that it has implemented procedures to
prevent these types of overages from occurring in the future.
California State Auditor Report 2007-102.1
November 2007
complete and accurate. The chancellor’s office should then use
the data to monitor the campuses’ implementation of systemwide
policies, such as the prohibition against employees performing
additional assignments that would cause them to work more than
125 percent of a full-time position. Additionally, the chancellor’s
office should use the data to measure the impact of systemwide
policies on university finances.
The board should consider total compensation received by
comparable institutions, rather than just cash compensation,
when deciding on future salary increases for executives, faculty,
and other employees. The university should work with interested
parties, such as the commission and the legislative analyst, to
develop a methodology for comparing itself to other institutions
that considers total compensation. If the university believes it needs
a statutory change to facilitate its efforts, it should seek it.
0 California State Auditor Report 2007-102.1
November 2007
Blank page inserted for reproduction purposes only.
California State Auditor Report 2007-102.1 1
November 2007
Chapter 2
pRopeR AdMINISTRATIoN of poSTeMployMeNT
CoMpeNSATIoN ReqUIReS CoNTINUed oveRSIghT
ANd IMpRoved polICIeS
Chapter Summary
The California State University (university) typically offers its
departing executives a transition program that often provides a
generous postemployment compensation package. This program
is in addition to the standard retirement benefits the university
provides to eligible executives, including retirement income, medical
and dental coverage, and voluntary retirement savings plans.
Although the original transition program has been overhauled a
few times, leaving the university with three transition programs
currently in use, each departing executive is eligible for the program
that was in place at his or her time of appointment. The terms of the
transition agreement offered to a departing executive vary with
the transition program the executive is eligible for but can include
one year of paid leave, lifetime tenure as a trustee professor at a
campus, or an alternative agreement negotiated by the chancellor.
In November 2006, after media criticism of existing postemployment
compensation packages, the board of trustees (board) passed a
resolution requiring the chancellor to provide every board member
with a copy of each final transition agreement and to submit an
annual report summarizing all existing transition agreements.
However, the annual report contains no information on the status
of accomplishments or deliverables that former executives may
have agreed to provide the university as part of their transition
agreements, and disclosure does not occur until after the chancellor
has reached a final agreement with a departing executive. Although
the board has decided not to participate in negotiating transition
agreements, it is important that the board continue to monitor the
chancellor’s administration of the executive transition program to
ensure that the agreements departing employees receive are prudent
and that intended cost savings are achieved for the university.
Finally, although a transition program is offered only to departing
executives, we noted instances in which Management Personnel
Plan employees (management personnel), such as managers and
technical professional staff, received questionable compensation
after they were no longer providing services to the university or
while they were transitioning to faculty positions. For example, we
noted one individual who did not return to the university following
a leave lasting nearly seven years that was paid $102,000 during that
time period.
2 California State Auditor Report 2007-102.1
November 2007
The University Has Generous Postemployment Compensation
Packages for Departing Executives
Since 1981 the university has included an executive transition
program in the standard package of benefits available to its
28 executives, including campus presidents. This program is in
addition to the retirement benefits the university provides to
eligible executives, such as retirement income, medical and dental
coverage, and voluntary retirement savings plans. The university
asserted that the transition program is intended to help recruit
executives, who are not eligible to receive incentive bonuses and
whose salaries are capped for retirement calculations, and to
AAlltthhoouugghh tthhee bbooaarrdd hhaass rreevvaammppeedd compensate for California income and sales taxes, which are often
tthhee ttrraannssiittiioonn pprrooggrraamm aa ffeeww ttiimmeess,, higher than those in other states. Although the board has revamped
eeaacchh ddeeppaarrttiinngg eexxeeccuuttiivvee iiss eelliiggiibbllee the transition program a few times, each departing executive is
ffoorr tthhee pprrooggrraamm tthhaatt wwaass iinn ppllaaccee eligible for the program that was in place at his or her time of
aatt hhiiss oorr hheerr ttiimmee ooff aappppooiinnttmmeenntt,, appointment, not separation. The board approved each transition
nnoott sseeppaarraattiioonn.. program at the time of its implementation.
Until November 2006, the University Had Two Transition Programs but
Also Offered Alternative Agreements
The Trustee Professor Program and the Executive Transition
Program were the first two transition programs created by
the university. On November 18, 1981, the board approved a
proposal under which executives would be eligible for the Trustee
Professor Program. To qualify for a trustee professor position
under this transition program, an executive had to have served
in an executive capacity with the university for at least five years.
The executive would then be eligible for an assignment determined
in consultation with the chancellor and with any affected campus
or department, at a salary established by the board on the
recommendation of the chancellor. To prepare for new duties as
a trustee professor, the departing executive was entitled to a paid
leave of absence for a period determined by the board.
In November 1984 the Trustee Professor Program was revised
for executives with tenure. The resolution for revision does not
distinguish between tenure achieved before the appointment to
the executive position and tenure achieved during the executive’s
term. When tenured executives resign, the revised program allows
California State Auditor Report 2007-102.1
November 2007
them automatic assignment, known as automatic retreat rights, to
faculty positions as trustee professors. Under the revised program,
the trustee professors receive one year of paid transition leave to
prepare for faculty assignments, with salaries set at the midpoint
between their executive salaries and the top of the 12-month
full-professor salary range. Initially, to continue in their positions
after age 70, trustee professors had to be certified for continued
employment; however, that requirement was removed by board
resolution in September 1997. The revised program does not specify
whether the five-year service requirement still applies to executives
with tenure. Executives without tenure would still qualify for the
original Trustee Professor Program.
On November 18, 1992, the board created a new version of the
transition program. Under the new program, initially referred
to as the Executive Transition Program and later called the
Executive Transition I Program, each executive appointed after
November 18, 1992, was entitled to one year of paid transition DDeeppaarrttiinngg eexxeeccuuttiivveess eelliiggiibbllee ffoorr tthhee
leave after vacating the executive position, with a salary paid by the EExxeeccuuttiivvee TTrraannssiittiioonn II PPrrooggrraamm aarree
chancellor’s office and set at the midpoint between the executive’s eennttiittlleedd ttoo oonnee yyeeaarr ooff ppaaiidd lleeaavvee..
highest salary level and the top of the 12-month full-professor
salary range. Executives participating in this transition program
were no longer granted automatic retreat rights to a campus
but were allowed to assume any campus position for which they
had obtained retreat rights. The terms of the Executive Transition I
Program do not expressly state that the individual must have at
least five years of executive service to be eligible; however, the chair
of the board told us that it was implied that five years of service as
an executive were required to participate. The executives listed in
Appendix B (Table B.2) who participated in transition programs all
had more than five years of service as executives prior to leaving
their positions. The Executive Transition I Program did not apply
retroactively to executives who began serving in an executive
position before November 18, 1992; these executives were already
entitled to the Trustee Professor Program. Table 4 on the following
page summarizes these two transition programs as well as the
subsequent program, which we describe later in the chapter.
California State Auditor Report 2007-102.1
November 2007
Table 4
Terms of Executive Transition Programs
TrusTee professor exeCuTive TransiTion i exeCuTive TransiTion ii
program ComponenTs original program 1984 revision 1992 revision 2006 revision
Applicable positions Vice chancellors Chancellor, vice chancellors, Chancellor, vice chancellors, Chancellor, vice chancellors,
and presidents and presidents general counsel, and presidents general counsel, and presidents
Executive service requirement Five years Not specified Not specified Five years
Automatic retreat rights for No Yes; to any campus No; however, executive may No; however, executive may
executives with tenure chancellor and executive elect to exercise any retreat elect to exercise any retreat
agree to rights established prior to rights established prior to
leaving the executive position leaving the executive position
Initial transition period, All negotiated One year to prepare for One year to prepare for future Negotiated
assignment, and salary return to classroom, with professional activities, with
salary set at midpoint salary set at midpoint between
between executive pay and executive pay and top step of
top step of 12-month full 12-month full professor’s pay
professor’s pay
Subsequent years Negotiated Full professor’s pay, top of Position to which executive has Position to which executive has
salary scale retreat rights (if applicable) retreat rights (if applicable)
Board approval Required Not required Not required Not required
Participation in transition No Yes Yes No
program allowed while not
in university employment
Sources: Various documents, such as board agenda items and resolutions.
Note: Each departing executive is eligible for the program that was in place at the time of his or her appointment.
Since at least 2001 both the Trustee Professor and Executive
Transition I programs have allowed the chancellor to negotiate
alternative agreements with executives. In fact, 10 of the
11 executives who left under these programs between July 1, 2002,
and August 31, 2007, were provided alternative agreements.
According to the vice chancellor of human resources, alternative
agreements are intended to use the executive’s expertise as needed
and typically provide an overall cost savings to the university. One of
the 11 executives left to work for a humanitarian organization
and received one year of paid transition leave provided under the
executive transition program. One of four additional executives
who departed during this period arranged to exercise her retreat
rights to a faculty position and then immediately retired, allowing
her to take advantage of a faculty retirement incentive program.
Her arrangement also provided for a subsequent return to service
as a retired annuitant at the university. The final three executives
left university service without participating in either a transition
program or the faculty retirement incentive program.
Table B.2 in Appendix B provides more detailed information
about the executives’ departures. For example, instead of a trustee
professorship assignment, a former president of the Bakersfield
campus entered into an agreement to serve as a special assistant
California State Auditor Report 2007-102.1
November 2007
to the chancellor for one year, participating on the president’s
council on underserved constituencies, and to provide coordination
with the Hispanic Association of Colleges and Universities. The
agreement provided him with a $204,156 annual base salary for this
assignment, equivalent to his executive salary. It also provided for
his reappointment to other special assistant positions in each of
the following two years. In another case, the former president of the
Sacramento campus accepted a part-time, five-year position as a
special assistant to the chancellor, instead of a trustee professorship,
at an initial annual base salary of $54,372. During the five-year
assignment, the former president is to write a history of both the
university and public policy concerning higher education.
We also noted that a former chancellor, who resigned effective AAfftteerr aann eeiigghhtt--yyeeaarr aabbsseennccee,, aa
January 1998, returned to the university in 2006 as a trustee ffoorrmmeerr cchhaanncceelllloorr rreettuurrnneedd ttoo tthhee
professor at the Los Angeles campus at an initial annual salary uunniivveerrssiittyy iinn 22000066 aass aa ttrruusstteeee
of $163,776, after an eight-year absence. When he resigned as pprrooffeessssoorr aatt aann iinniittiiaall aannnnuuaall ssaallaarryy
chancellor, he was granted an unpaid leave from the Trustee ooff $$116633,,777766..
Professor Program. Correspondence in the university’s files stated
that he should annually apply for one-year extensions of leave,
which would be granted. In April 2006 he received a tenured
faculty position at the Los Angeles campus, where he was to work
on the urban school leadership program, assist the campaign to
complete an integrated sciences complex on campus, work on
charter school and biotechnology projects, and teach a course in
the English department or “another appropriate” department.
Following Media Criticism of the University’s Postemployment
Compensation Packages, the University Created a New Transition
Program in 2006
Beginning in July 2006 a series of newspaper articles criticized
the university for providing departing executives with undisclosed
postemployment compensation even after some had accepted
employment elsewhere, giving departed executives special
assignments that kept them on the university payroll for several years
and granting tenured professor rights to departing executives with
less teaching experience than the university typically required. The
articles faulted the university for paying compensation that was not
available to other university employees, when student tuition costs
had increased by 76 percent over the prior three years.
For example, one of the newspaper articles noted that a former
president of the Monterey Bay campus received a university
salary of approximately $157,930 after resigning and concurrently
drew a six-figure salary while working for an international
humanitarian organization in Paris. We confirmed some of the
details discussed in the article. The former executive resigned as a
California State Auditor Report 2007-102.1
November 2007
campus president effective June 14, 2005, and his agreement letter
refers to his planned work with the humanitarian organization.
The $157,930 university salary was the midpoint between the
individual’s former presidential salary and the highest 12-month
professor salary. The transition agreement also stated that to
the extent allowed under university policy, the university would
reimburse the former president for moving expenses to relocate
from the presidential residence to the individual’s private residence.
In addition, the agreement specified that at the end of the year
of paid transition leave, the former executive would be granted a
two-year unpaid educational leave of absence, with an option for an
additional two-year extension of unpaid leave. Finally, the transition
agreement required the former executive to either return to the
campus, announce his retirement, or retire before June 15, 2010.
In November 2006 the board created its third version of the
transition program. Called the Executive Transition II Program, the
latest revision applies to executives hired after November 15, 2006.
The new program formally asserts that an executive must have
five years of service as an executive to participate, as was the
case under the original Trustee Professor Program. However, to
be eligible for the Executive Transition II Program, an executive
must have a previously identified position at the university to be
assigned to, must be in good standing at the commencement of the
program, and cannot accept outside employment. In addition,
the new transition program does not include an automatic year
of paid transition leave; rather, the specific terms of a transition
agreement are negotiated between the departing executive and the
chancellor. Board approval of a transition agreement is not required.
The chair of the board negotiates the terms of the transition
program of a departing chancellor.
Unless the chancellor and the executive mutually agree to a
retroactive application, the Executive Transition II Program applies
only to executives hired after November 15, 2006. Executives hired
before that date are still entitled to one of the other two transition
programs, based on their hire dates. Table B.1 in Appendix B
identifies the transition program that each of the university’s
28 executives was eligible for as of August 31, 2007. According to
the vice chancellor of human resources, the board did not try
to apply the new program to existing executives because those
individuals were hired with the expectation of receiving the
benefits of the program in place at the time of their hiring. The vice
chancellor of human resources also noted that making the program
retroactive could have led to employee litigation. The chair of the
board stated that it was important for the university to adhere to
employment agreements as a matter of policy and law, adding that
to do otherwise could have a detrimental effect on the university’s
future recruiting efforts.
California State Auditor Report 2007-102.1 7
November 2007
Board Approval of Transition Agreements Is Not Required
According to its chair, the board has instructed the chancellor to
try to negotiate the terms of the transition agreement for every
departing executive, regardless of the transition program for
which the executive is eligible. Consequently, the chancellor has
a great deal of discretion in negotiating the terms of transition
agreements. Although the board approved the general parameters TThhee bbooaarrdd aapppprroovveedd tthhee ggeenneerraall
of the three transition programs, it does not approve the specific ppaarraammeetteerrss ooff tthhee tthhrreeee ttrraannssiittiioonn
transition agreements the chancellor has negotiated. However, in pprrooggrraammss,, bbuutt iitt ddooeess nnoott aapppprroovvee
November 2006, after the media criticism discussed earlier, the tthhee ssppeecciifificc aaggrreeeemmeennttss tthhee
board passed a resolution requiring the chancellor to provide each cchhaanncceelllloorr nneeggoottiiaatteess..
trustee with a copy of the final written transition agreement for
departing executives and resolved that such agreements would
also be an information item at the next meeting of the board’s
committee on university and faculty personnel. Another resolution
required the chancellor to report annually, in March, on all existing
transition agreements in an open meeting of the board. According
to the university, before these resolutions, the board did not have a
policy requiring disclosure of transition agreements.
The chancellor provided the first annual report in March 2007
at the open board meeting. This report lists all former executives
who were participating in a transition agreement as of March 2007.
It also discloses the names of current executives eligible for future
participation in each of the three transition programs. For each former
executive, the report discloses the transition program the executive is
participating in, the nature of the assignment, and the compensation
for the indicated period. However, the report does not include
information about what the former executive may have accomplished
or what he or she delivered under their new assignments. In addition,
the disclosure does not occur until after the chancellor has entered
into final agreements with departing executives. Thus, the board does
not have the formal opportunity to influence the terms negotiated by
the chancellor.
When we discussed the postagreement disclosure with the chair of
the board, she responded that the chancellor is the university’s chief
executive officer responsible for managing its day-to-day operations,
and that the board delegates many responsibilities to the chancellor.
She further asserted that delegating to the chancellor the authority
to negotiate transition agreements with departing executives is a
sound policy that was properly noticed publicly and is within the
principles of law and the university’s human resource policy. She also
stated that the board has confidence in the current chancellor and
that he has an excellent record of negotiating cost-saving transition
agreements with departing executives.
California State Auditor Report 2007-102.1
November 2007
Specifically, the chair cited the transition agreements the chancellor
recently negotiated with two departing executives, both of which,
she stated, resulted in significant cost savings to the university. In
the case of a president who departed from the Dominguez Hills
campus, the chancellor was able to negotiate a reduced payment.
After accepting a position in Maryland, the former president agreed
to receive a lump-sum payment of $103,460, which was less than
the $182,094 he was eligible to receive during the one-year paid
leave he was entitled to under the Executive Transition I Program.
For the recently departed vice chancellor of human resources, the
chancellor negotiated a five-month assignment as a special assistant
to the chancellor rather than the one year of paid leave she was
eligible for under the Executive Transition I Program, thereby
saving the university an estimated $79,300 based on authorized
salaries at the time the agreement was negotiated.
The board chair also asserted that the new disclosure requirements
included in the Executive Transition II Program improved
previous practices by establishing an institutionalized process
requiring more public disclosure. The chair stated that before the
November 2006 board resolution, no written disclosure policy
existed; rather, the chancellor would consult with the chair and
TThhee bbooaarrdd ddooeess nnoott rreeqquuiirree tthhee vice chair regarding the negotiation of a transition agreement.
cchhaanncceelllloorr ttoo iinncclluuddee iinn aann aannnnuuaall However, as we discussed earlier, the board does not require the
rreeppoorrtt ttoo tthhee bbooaarrdd iinnffoorrmmaattiioonn chancellor to include in his annual report information on the status
oonn tthhee ssttaattuuss ooff aaccccoommpplliisshhmmeennttss of accomplishments or deliverables associated with transition
oorr ddeelliivveerraabblleess aassssoocciiaatteedd wwiitthh agreements. In fact, the transition agreements often do not require
ttrraannssiittiioonn aaggrreeeemmeennttss.. executives to report on their activities and accomplishments.
Although the board has chosen to remain outside the process
of negotiating transition agreements and instead delegates that
responsibility to the chancellor, it is important that the board
continue to monitor the chancellor’s administration of the executive
transition program to ensure that all agreements are prudent and
achieve cost savings for the university. In addition, the board should
require the chancellor to include information in his annual report
on the status of accomplishments and deliverables associated with
transition agreements.
The University Paid Questionable Compensation to Management
Personnel No Longer Performing Services for the University
The paid leaves of absence the university provides as part of
transition programs are intended only for departing executives.
However, we found instances in which management personnel
received questionable compensation after they were no longer
providing services to the university or while they were transitioning
to faculty positions. We also noted that one individual was granted
a future leave of absence with pay to transition to a faculty position.
California State Auditor Report 2007-102.1
November 2007
Title 5, Section 43100, of the California Code of Regulations
governs leaves of absence without pay granted by the university.
The chancellor or campus president, as applicable, may approve
an unpaid leave for a period not exceeding a total of two years.
However, when an individual requests an extension, the chancellor
or campus president may grant one additional year of unpaid
leave. Because regulations do not specify the number of extensions
that may be granted, this decision is left to the discretion of the
chancellor or president.
In addition, the university operates under a very broad policy
for granting paid leaves of absence for management personnel.
Title 5, Section 42727, of the California Code of Regulations, which
addresses professional development, specifies that management
personnel may participate in programs and activities that develop,
update, or improve their management or supervisory skills.
The programs and activities may include “professional leaves,
administrative exchanges, academic coursework, and seminars.”
Management personnel may participate in such programs and
activities only after the chancellor or campus president grants TThhee rreegguullaattiioonnss ggoovveerrnniinngg ppaaiidd
approval and only to the extent that funds are available. The lleeaavveess ffoorr mmaannaaggeemmeenntt ppeerrssoonnnneell
regulations do not sufficiently define the criteria that must be met ddoo nnoott ssuuffifficciieennttllyy ddeefifinnee tthhee ccrriitteerriiaa
before a paid leave will be granted, and it does not establish time tthhaatt mmuusstt bbee mmeett nnoorr eessttaabblliisshh ttiimmee
restrictions for a paid leave. rreessttrriiccttiioonnss ffoorr ssuucchh lleeaavveess..
In contrast, the regulations that govern certain types of leaves
granted to university employees clearly provide such criteria and
restrictions. Title 5, sections 43000 through 43008, of the California
Code of Regulations governs leaves of absence with pay taken by
certain university employees for the purpose of study or travel that
will benefit the university. Specifically, on the recommendation
of the chancellor, the board may grant paid leaves of absence not
to exceed one year to executive employees and those serving in
academic-administrative assignments in the chancellor’s office.
The regulations also permit the chancellor to grant academic
employees, executive employees, and employees serving in
academic-administrative assignments paid leaves of absence from
campuses for up to one year. To be eligible, an applicant must
hold a full-time position and must have served in that position for
six consecutive academic years.
The regulations also specify that final approval of an application for
a leave of absence to engage in study or travel during or for which
the applicant is to receive compensation cannot occur until the
applicant files with the chancellor a suitable bond indemnifying
the university against loss if the employee fails to render service
to the university following the leave of absence. Generally, the
amount of the bond must equal the total salary that the university
expects to pay the employee during the leave. The chancellor can
0 California State Auditor Report 2007-102.1
November 2007
waive the bond requirement if the interests of the university would
be sufficiently protected by a written agreement from the employee
to return to the university at the conclusion of the leave. However,
with the agreement, the employee must provide a statement of
assets showing, to the satisfaction of the chancellor, the employee’s
ability to indemnify the university against loss in the event that the
employee fails to fulfill the agreement.
We asked the chancellor why the university has not established
specific criteria and time restrictions for paid leaves granted to
management personnel. The chancellor responded that because this
provision was rarely used and the circumstances vary significantly,
the university has relied upon the judgment of what is in its best
interest to serve as the criteria. He indicated that working within
the existing regulations regarding lengths of leaves had not posed
TThhee cchhaanncceelllloorr aacckknnoowwlleeddggeedd problems. However, he acknowledged that criteria and time limits
tthhaatt ccrriitteerriiaa aanndd ttiimmee lliimmiittss mmaayy may be helpful in administering the regulations. Nevertheless, the
bbee hheellppffuull iinn aaddmmiinniisstteerriinngg tthhee chancellor believes that a provision in the regulations is needed to
rreegguullaattiioonnss ggoovveerrnniinngg ppaaiidd lleeaavveess allow an exception if the chancellor determines and documents
ffoorr mmaannaaggeemmeenntt ppeerrssoonnnneell.. that it is in the best interest of the university. The chancellor
stated that this would allow the university to deal with an
unusual situation that might not have been considered during
the development of criteria.
Our review confirms the need for the university to strengthen its
regulations and policies. In reviewing a sample of personnel files at
the chancellor’s office and various campuses, we found instances in
which management personnel received questionable compensation
after they were no longer providing services to the university or
while they were transitioning to faculty positions. For example,
we noted one individual who did not return to the university
following a leave lasting nearly seven years and who was paid
$102,000 during that time period. The following sections provide
details on this example and others that highlight the need for the
university to develop stronger polices regarding paid leave for
management personnel.
University Policies Allowed an Employee to Receive $102,000 Over
Nearly Seven Years Without Performing Any Service for the University
In December 1996, the chancellor at that time (former chancellor)
approved the request of the university’s director of governmental
affairs (former director) for a paid professional development leave
of absence from his administrator IV position in the chancellor’s
office. While on leave from his university position, the former
director accepted a full-time position with a legislative committee.
The paid professional leave provided by the university was designed
to close the gap between the former director’s university salary and
California State Auditor Report 2007-102.1 1
November 2007
his new legislative salary. The former director’s new salary was to
provide his benefits. The university believed that the experience
the former director would gain with this legislative committee
would significantly enhance the former director’s abilities in
his management personnel position upon his return to the
university. Although this was the justification for the paid leave,
the university did not ensure that it would receive that benefit by
making the payments contingent on the individual’s return.
The former chancellor and the former director agreed that the paid
professional development leave would be effective January 1, 1997,
to December 31, 1997, with the possibility for a one-year extension.
The employee requested and was granted an extension for a second
year of paid professional leave. In fact, the former director, through
subsequent requests and approvals by the present chancellor,
remained on paid professional leave until November 1, 2001. At
that time, the individual accepted a new position with a nonprofit
association. From January 1, 1997, until November 1, 2001, the
university paid the employee between 14 percent and 23 percent of
the salary he received while in his former university position. The
chancellor stated that he approved the leave extensions based on
his belief that there was a memorandum of understanding with the
Legislature regarding this arrangement. However, he acknowledged
that the university could not locate any documentation of a written
memorandum of understanding.
In a September 2001 letter to the chancellor, the former director
indicated that he was leaving his position with the legislative
committee to take a position with a nonprofit association and
requested that his leave be extended, but on an unpaid basis. In a
January 2002 letter, the chancellor denied the request for additional
leave stating, “Because you left the service of the [Legislature] and
because your cumulative leave was nearly five years, I am unable
to continue the partial pay under the management personnel
plan. Also, staff advises me that further leaves, even without pay,
should not be given in view of the timeframe.” Accordingly, in late
January 2002, the vice chancellor of human resources instructed the
senior director of human resource services to process the former
director’s resignation.
Nevertheless, in an April 2002 letter, the vice chancellor of human
resources notified the former director that the chancellor had
subsequently decided to extend the leave of absence without pay
for a final year, from November 1, 2002, through November 1,
2003. The conditions of the unpaid leave were that the individual
would resign at the conclusion of the leave and would receive a
lump-sum payment equal to three months’ pay at his final partial
2 California State Auditor Report 2007-102.1
November 2007
salary—a total of $5,798. In late December 2003 the former director
submitted a resignation letter effective November 1, 2003, to the
vice chancellor of human resources.
However, there was internal confusion regarding this employee’s
status. The human resources staff who had been instructed to
process the former director’s resignation two years previously were
apparently not informed of the subsequent events, including the
April 2002 letter, until early January 2004, and thus considered
the individual to have resigned. After learning of the final year of
unpaid leave beginning November 1, 2002, the senior director
of human resource services asked the vice chancellor of human
resources if she could “shed any light” on the individual’s
employment status from January 1, 2002, through October 31, 2002.
The vice chancellor responded that “although the paper trail does
not make this clear, the employee was on leave without pay” during
the 10-month period. Consequently, in January 2004, human
resources staff reportedly voided the former director’s resignation
they had processed two years earlier and made his resignation
effective November 1, 2003.
Ultimately, the former director received more than $96,000 in
salary during the paid professional leave between January 1, 1997,
and November 1, 2001. In addition, documents indicate that during
this time period the former director received service credits toward
TThhee ffoorrmmeerr ddiirreeccttoorr rreecceeiivveedd aa ttoottaall his state retirement. Adding the lump-sum payment of $5,798 and
ooff $$110022,,000000 oovveerr nneeaarrllyy sseevveenn yyeeaarrss salary increases, we calculate that this individual received a total of
wwiitthhoouutt ppeerrffoorrmmiinngg aannyy sseerrvviicceess $102,000 over nearly seven years without performing any service
ffoorr tthhee uunniivveerrssiittyy aanndd wwiitthhoouutt eevveerr for the university. Although the employee never returned to the
rreettuurrnniinngg ttoo tthhee uunniivveerrssiittyy.. university, the chancellor could not require him to pay back any of
this compensation because the payments were not made contingent
on his return.
When asked about this arrangement, the senior director of human
resource services said that the regulations related to professional
development leaves do not set any limit on how long that type of
leave can continue and that the employee’s extensions were based
on his annual requests to do so. These requests were approved at
the discretion of the chancellor, and the vice chancellor of human
resources acknowledged that leaves of absence, including those
taken for professional development, are not disclosed to the
board. The vice chancellor of human resources further stated that
management personnel provisions neither require nor prohibit
lump-sum payments similar to the $5,798 that the employee
received. She stated that the payment was made to resolve issues
regarding whether the employee was entitled to continued
employment with the university.
California State Auditor Report 2007-102.1
November 2007
The chancellor added that the university believes that it garnered
some value while the employee was on paid leave, given the
university’s working relationship with the Legislature. Specifically,
the chancellor stated that the value was derived from the
understanding of the major policy issues in higher education that
the employee provided to the legislative committee. However, the
fact remains that the university paid this person $102,000 over
nearly seven years without receiving any direct benefit in return.
The University’s Actions Allowed an Individual to Remain on the Payroll
for Nearly Seven Weeks Without Providing Any Documented Services
In an April 2002 letter, the vice chancellor of human resources
outlined the terms of resignation for the university’s director of
federal relations. The letter stated that the terms reflected the
university’s appreciation for the employee’s service. According
to the letter, the employee’s resignation would be effective
August 16, 2002, which would permit the employee to vest in
California’s Public Employees’ Retirement System. Although the
employee’s last day in the chancellor’s office was to be May 6, 2002,
she was to receive a full salary, amounting to more than $15,000,
between May 6 and June 30, 2002. The terms of the resignation TThhee rreessiiggnnaattiioonn tteerrmmss ffoorr oonnee
provide that the employee would work from home during that eemmppllooyyeeee aalllloowweedd tthhee iiddiivviidduuaall ttoo
time and be available to the university for advice. However, bbee ppaaiidd aa ffuullll ssaallaarryy wwhhiillee wwoorrkkiinngg
when we requested documentation to describe what services the ffrroomm hhoommee ffoorr nneeaarrllyy sseevveenn wweeeekkss
individual provided to the university during the period when she aanndd bbeeiinngg aavvaaiillaabbllee ttoo tthhee
was supposed to be working from home, the chancellor’s office was uunniivveerrssiittyy ffoorr aaddvviiccee..
unable to produce any support for any work the employee may have
completed. Further, the resignation terms called for the employee
to be placed on vacation from July 1 through August 16, 2002, with
unused vacation paid in a lump sum at the conclusion of the time
off. This individual was to continue to accrue additional vacation
through August 16, 2002.
The employee resigned her university position to assume a new
position with another entity. Although the chancellor’s office
could not tell us when the employee began her new employment,
available documentation indicated that it was at least in June 2002
and may have been as early as May 2002. Thus, it is apparent that
the individual began her new employment while the university was
still paying her a full salary to work at home and be available to
advise the university. When we questioned this situation, the senior
director of human resource services responded that the university
has no policy that prevents management personnel from being
employed by an entity outside the university but that appropriate
action would be pursued if such employment interfered with
the employee’s performance of university duties. Further, when
asked about the propriety of continuing to pay the employee’s
California State Auditor Report 2007-102.1
November 2007
full salary from May 6 to June 30, 2002, the chancellor responded
that although regulations governing the university do not require
such payment in the case of a resignation, they do not prohibit such
payment. The chancellor stated that he believed the arrangement
was the best way to attain closure on all employment-related issues
and that it was in the best interest of the university. Further, he
stated that the payment was not disclosed to the board because
disclosure was not required.
The University Granted Management Personnel Paid Leaves to
Transition Into Faculty Positions
We also noted leave arrangements that related to individuals
changing from one university position to another. For example, in
May 2002 the director of academic technology applications in the
academic affairs division of the chancellor’s office resigned to resume
duties in the fall of 2002 as a full-time faculty member at the Long
Beach campus. The employee’s last day at the chancellor’s office was
May 15, 2002, which was followed by 10 days of vacation and nearly
two months of paid administrative leave until August 23, 2002,
at which point the employee officially left the chancellor’s office
position. While on administrative leave, the individual was paid at a
full-salary rate, amounting to more than $23,000. The chancellor’s
office reported that the employee also continued to receive normal
benefits for management personnel while on paid leave. For example,
during the paid administrative leave, the individual received a
monthly salary increase from $8,273 to $8,412, effective July 1, 2002.
In response to our inquiry, the vice chancellor of human resources
commented that the chancellor’s office had no documentation
showing why the individual was granted paid administrative leave.
After looking into the matter, the vice chancellor of human resources
was told by administrators that the leave was granted for the
employee’s preparation to return to the classroom.
AAnn iinntteerriimm ccaammppuuss pprreessiiddeenntt In another case, the interim president of the Monterey Bay campus
wwaass ggrraanntteedd aa ffoouurr--mmoonntthh ppaaiidd was granted a four-month paid administrative leave from July 1
aaddmmiinniissttrraattiivvee lleeaavvee,, rreecceeiivviinngg to November 2, 2006, receiving a total of more than $63,000 to
mmoorree tthhaann $$6633,,000000 ttoo ttrraannssiittiioonn transition to teaching. According to the vice chancellor of human
ttoo tteeaacchhiinngg.. resources, the employee had served in an executive position for less
than five years and thus was not eligible to participate in an executive
transition program. At the time he granted the paid administrative
leave, the chancellor noted the employee’s intent to use accrued
vacation for an additional two months before assuming the faculty
position, resigning the same day and retiring the next. This would
enable the employee to teach part time under the university’s early
retirement program for faculty. The vice chancellor of human
resources indicated that it was not unusual for an administrator to be
granted an administrative leave to prepare to return to the classroom.
California State Auditor Report 2007-102.1
November 2007
Finally, we identified a situation in which the provost and vice AA ccaammppuuss pprroovvoosstt aanndd vviiccee
president of the San Francisco campus (vice president) has pprreessiiddeenntt hhaass bbeeeenn pprroommiisseedd aa
been promised paid leave in the future to transition from an oonnee--yyeeaarr ppaaiidd lleeaavvee ooff aabbsseennccee
administrative position to a faculty position. In the vice president’s ttoo ttrraannssiittiioonn ttoo aa ffaaccuullttyy ppoossiittiioonn
March 2003 appointment letter, the campus president stated that, pprroovviiddeedd tthhee iinnddiivviidduuaall sseerrvveess iinn
in accordance with the Management Personnel Plan, the employee tthhee aappppooiinntteedd ppoossiittiioonn ffoorr aatt lleeaasstt
will be granted a one-year paid leave of absence for the purpose fifivvee yyeeaarrss..
of professional development, provided the vice president serves
in the position for at least five years. According to the letter, the
year of paid leave would be taken during the employee’s final year
before retreating to a tenured faculty position in the department
of economics. When we asked the campus for its justification in
offering the vice president a year of paid leave at the end of this
appointment, the associate vice president of human resources,
safety, and risk management (associate vice president) responded
that the Management Personnel Plan gives the president the
authority to offer professional development leaves. When asked
how the president determined the duration of the future paid leave,
the associate vice president again responded that one year of paid
leave was offered based on the president’s discretion under the
guidelines of the Management Personnel Plan.
The chancellor stated that the university does not have a policy
addressing paid leaves for management personnel who are making
the transition to faculty positions. Instead, the university has
interpreted such leaves as falling within the scope of the existing
administrative leave policy. He explained that absence from active
work in an academic discipline may necessitate significant work to
become current and thus able to teach in that discipline; therefore,
providing time for preparation has been viewed as an appropriate
use of administrative leave. The chancellor further stated that
the need for this kind of leave and the length of the leave would
normally be determined by considering several factors, including,
but not limited to, the length of time the employee has been out
of the classroom, the discipline of study involved, the academic
cycle, and the course load the employee will undertake. Finally, the
chancellor commented that he discussed the paid leave granted
to the interim campus president with the chair of the board
because the individual was leaving an interim presidency. He
indicated that the remaining two leaves of absence granted for the
purpose of transitioning to faculty positions were not disclosed to
the board.
In summary, we recognize that the university may benefit in certain
instances by granting leave to its management personnel, whether
it is for transitioning to faculty positions or for other purposes,
such as professional development. However, it is important that
the university ensure that it is acting consistently and in a prudent
manner that appropriately protects the State’s interests. The
California State Auditor Report 2007-102.1
November 2007
regulations that govern the university’s administration of paid leaves
for the purpose of study and travel contain various provisions, such
as eligibility criteria, time restrictions, and provisions designed
to protect the university from financial loss. Strengthening the
regulations for granting paid leaves to management personnel by
including similar provisions would help ensure that the university
acts in a consistent and prudent manner.
Further, although we recognize the university’s desire to have
flexibility by allowing the chancellor discretion to grant exceptions
to any policy that is established, such flexibility should not be at the
expense of maintaining a consistent and equitable policy. Finally,
because of the potential magnitude of the paid leaves of absence, it
would be prudent for the board to establish a policy that defines the
extent to which it wants to be informed of such leaves.
Recommendations
The board should continue to monitor the chancellor’s
administration of the executive transition program to ensure
that it is conducted in a prudent manner and that intended
cost savings are achieved for the university. In addition, the
board should require the chancellor to include in the transition
agreements clear expectations of specific duties to be performed,
as well as procedures for the former executives to report on their
accomplishments and status of deliverables. Further, the board
should require the chancellor to include information in his annual
report on the status of accomplishments and deliverables associated
with transition agreements.
The university should work through the regulatory process to
develop stronger regulations governing paid leaves of absence for
management personnel. The improved regulations should include
specific eligibility criteria, time restrictions, and provisions designed
to protect the university from financial loss if an employee fails
to render service to the university following a leave. For example,
the regulations should require all employees applying for a paid
leave of absence to submit a bond that would indemnify the
university if the employee fails to render service to the university
following a leave of absence. The university should also maintain
appropriate documentation supporting any leaves of absence it
grants. Finally, the board should establish a policy on the extent
to which it wants to be informed of such leaves of absence for
management personnel.
California State Auditor Report 2007-102.1 7
November 2007
Chapter
CURReNT polICIeS oN MovINg ANd ReloCATIoN
expeNSeS ANd dUAl eMployMeNT ARe INAdeqUATe
Chapter Summary
The California State University (university) exercises considerable
discretion in paying costs related to moving and relocation
(collectively referred to here as relocation) for its employees. The
university’s broad policy provides that incoming employees may
receive reimbursement for actual, necessary, and reasonable expenses
but includes few monetary limits for reimbursable expenses. Further,
although the policy identifies the types of expenses that can be
reimbursed, it contains clauses permitting the chancellor or
campus presidents to grant exceptions. The chancellor determines
the amounts of relocation reimbursements for executives,
campus presidents, and Management Personnel Plan employees
(management personnel) in the chancellor’s office, and the campus
presidents determine the amounts for management personnel and
faculty at their respective campuses. Neither the chancellor nor the
campus presidents are required to obtain the approval of the board of
trustees (board) for relocation reimbursements, and they typically do
not disclose these payments to the board. The discretionary nature of
the university’s policy can result in questionable reimbursements for
costs, such as those for moving household goods and closing costs
associated with selling and purchasing residences.
The university has also established a dual-employment policy
stating that its employees may be employed outside the university
system but that conflicts of interest are not permitted. However,
the policy does not require employees to obtain prior approval for
outside employment, nor does it require employees to disclose
that they have such employment. Thus, the university is unable to
adequately determine whether employees have outside employment
that conflicts with their positions at the university.
The University Exercises Considerable Discretion in Paying Relocation
Costs for New Employees
The university has established a broad policy for reimbursing
employees for relocation costs. The policy provides that the
university may reimburse actual, necessary, and reasonable
relocation expenses for new employees who have been offered
positions within the university and current employees who must
change residences because of changes in assignment, promotions,
or other reasons that are related to the employees’ duties and in the
university’s best interest. For a current employee, the new job
California State Auditor Report 2007-102.1
November 2007
location must be at least 50 miles farther from the employee’s
former home than the old job location to qualify for
relocation benefits.
The policy indicates that the chancellor
determines the amounts of relocation
RReellooccaattiioonn EExxppeennsseess EElliiggiibbllee ffoorr RReeiimmbbuurrsseemmeenntt
bbyy tthhee UUnniivveerrssiittyy reimbursements offered to executives, campus
presidents, and management personnel in
•• PPaacckkiinngg.. the chancellor’s office, while the campus
presidents determine the amounts of relocation
•• IInnssuurraannccee..
reimbursements, if any, for management
•• TTrraannssppoorrttaattiioonn..
personnel and faculty members at their respective
•• SSttoorraaggee iinn ttrraannssiitt ((nnoott ttoo eexxcceeeedd 6600 ddaayyss)).. campuses. The text box lists the types of
expenses that the policy identifies as allowable
•• UUnnppaacckkiinngg aanndd iinnssttaallllaattiioonn ooff hhoouusseehhoolldd ggooooddss..
for reimbursement. The policy does not establish
•• VVaarriioouuss ccoossttss rreellaatteedd ttoo sseelllliinngg pprriioorr rreessiiddeennccee.. monetary limits for several types of relocation
•• RReellooccaattiioonn ttrraavveell,, ddeefifinneedd aass aa oonnee‑‑wwaayy ttrriipp ffrroomm tthhee costs, but it does state that reimbursements for
ffoorrmmeerr rreessiiddeennccee ttoo tthhee ggeenneerraall aarreeaa ooff tthhee nneeww ccaammppuuss lodging, meals, and incidentals will not be paid
oorr ootthheerr jjoobb llooccaattiioonn ffoorr tthhee eemmppllooyyeeee aanndd ssppoouussee oorr for more than 60 days. Further, the policy states
ddoommeessttiicc ppaarrttnneerr.. that a temporary relocation allowance to defer
the cost of housing may be authorized at a daily
•• LLooddggiinngg,, mmeeaallss,, aanndd iinncciiddeennttaallss ffoorr tthhee eemmppllooyyeeee aanndd
rate not to exceed $51, which is 75 percent of the
ssppoouussee oorr ddoommeessttiicc ppaarrttnneerr..
long-term in-state travel subsistence allowance
of $68. Moreover, the policy contains clauses that
permit the chancellor or campus presidents to
grant exceptions. For example, the chancellor or a campus president
can grant an exception to the 60-day limit on the allowance for
lodging, meals, and incidentals if he or she determines that the
employee and spouse or domestic partner might undergo unusual
and unavoidable hardship in their search for a new residence.
Finally, the board is not required to approve these arrangements,
nor is the board typically informed of the payment amounts.
The relocation policy includes a provision stating that an employee
may be reimbursed for actual and necessary costs associated
with the sale of a residence. These selling costs include brokerage
commissions; title insurance; escrow fees; prepayment penalties;
taxes, charges, and fees fixed by the local authority responsible for
finalizing the sale; and miscellaneous seller’s costs customary to
the area. Finally, the policy provides that an employee may receive
reimbursement for the actual and necessary cost of settling an
unexpired lease for a maximum of one year.
The discretionary nature of the university’s relocation policy can
result in questionable reimbursements of relocation costs. In
reviewing the initial appointment letters and other documentation
contained in the personnel files of our sample of 76 highly paid
university employees, we noted that many of them received
employment inducements at the time of their appointments that
California State Auditor Report 2007-102.1
November 2007
sometimes included generous reimbursements for relocation costs.
Additionally, although the policy specifically states that an employee
may be reimbursed for the sale of a residence, we identified
two executives who received reimbursements for costs associated
with the purchase of their residences as well. Appendix A lists the
amounts of any reimbursements received by the 76 employees.
The following examples highlight the need for a stronger policy and
greater board oversight of relocation expense reimbursements.
A Campus President Was Reimbursed for Substantial Closing Costs and
Received a Home Loan
In 2003 the chancellor’s office offered an individual the position
of president of the Sacramento campus. In addition to perquisites
such as entertainment allowances to which executives are entitled,
the chancellor stated that the university would cover the individual’s
reasonable and necessary relocation expenses and reimburse actual
and necessary costs associated with the sale of the individual’s AA ccaammppuuss rreeppoorrtteedd rreeiimmbbuurrssiinngg
current residence. The individual accepted the position effective iittss pprreessiiddeenntt nneeaarrllyy $$6655,,000000 iinn
July 2003. From August 2003 through August 2004, the Sacramento cclloossiinngg ccoossttss aanndd aapppprrooxxiimmaatteellyy
campus reported that it reimbursed the new campus president $$1199,,000000 iinn mmoovviinngg eexxppeennsseess,,
nearly $65,000 in closing costs for his former and new residences wwhhiillee iittss ffoouunnddaattiioonn llooaanneedd tthhee
and approximately $19,000 in moving expenses. In addition, a pprreessiiddeenntt $$223333,,000000 ffoorr eessccrrooww
campus foundation loaned the new president $164,000 for escrow ccoossttss aanndd mmoorrttggaaggee ppaayymmeennttss aatt aa
costs and another $69,000 for mortgage payments. bbeellooww--mmaarrkkeett iinntteerreesstt rraattee..
The chancellor’s office informed us that the new president could
not have sold his former residence at the time he accepted the
position at the university without taking a significant financial loss.
Therefore, the purpose of the loans from the campus foundation
was to enable the new president to cover the costs of his new home
while continuing to make payments on his former house until it was
financially viable for him to sell it. The campus foundation provided
the loans at a below-market annual interest rate of 1.697 percent. The
new president fully repaid the loans, which, including outstanding
interest of $8,000, totaled $241,000, approximately two years and
four months later. The chancellor’s office asserted that the loans were
not typical.
In addition to providing low-interest loans to the new president,
the campus foundation paid more than $27,000 to remodel the
president’s kitchen to accommodate the foundation’s future catering
of presidential guests, such as those attending fund-raising events.
Documentation of the expenses indicates that the kitchen was also
remodeled to meet state health and safety codes.
0 California State Auditor Report 2007-102.1
November 2007
When we asked if the board was made aware of the relocation
expenses, closing cost reimbursements, and housing loans,
the vice chancellor of human resources stated that, in general,
reimbursements of relocation costs, including closing costs on
new and former residences, are within the existing relocation
policy and would not normally be included as an agenda item at a
board meeting. Although the meeting minutes show that the board
approved the president’s starting annual salary of $221,004, as well
as his $36,804 initial annual housing allowance, the minutes do
not mention the relocation costs. The chancellor stated that in this
case, he did not discuss the details of the new president’s relocation
expenses at the time this item was presented to the board, but he
did discuss the details in a closed session with the board.
Although the university’s policy explicitly states that an employee
may be reimbursed for actual and necessary selling costs for the
sale of a residence, it does not include language that addresses
reimbursement for the purchase of a residence. When we asked
the vice chancellor of human resources about the reimbursement
of costs associated with the purchase of a residence, she stated that
the policy gives the chancellor the authority to determine what
costs are reasonable and necessary; therefore, the university has
determined that the policy covers closing costs for both selling and
buying a residence. Similarly, the chancellor responded that the
relocation policy gives him the flexibility to determine what are
“reasonable and necessary” expenses related to the relocation of an
individual accepting an executive position. Finally, the chancellor
contended that the expenses outlined were necessary to accomplish
the president’s move.
The Chancellor’s Office Reimbursed a Vice Chancellor for Significant
Relocation Payments
The vice chancellor of human The chancellor appointed the vice chancellor of human resources
resources was reimbursed for in April 1999, and the chancellor’s office reimbursed her nearly
relocation costs of nearly $62,000, $62,000 to relocate from another state. This included $31,000 in
including $31,000 in closing costs, closing costs on the vice chancellor’s former and new residences,
$18,000 to ship household items, $18,000 to ship household items, $9,579 for temporary housing, and
$9,579 for temporary housing, and the remainder for miscellaneous relocation costs. As in the previous
the remainder for miscellaneous example, the chancellor stated that he believed it was within his
relocation costs. discretion to pay the closing costs on the purchase of the vice
chancellor’s new home because he deemed the costs reasonable
and necessary. Further, although the board set the vice chancellor’s
initial salary and automobile allowance in 1999, the minutes from
that board meeting do not mention the relocation costs.
California State Auditor Report 2007-102.1 1
November 2007
At the time of the appointment in 1999, the university’s moving and
relocation policy set a 60-day limit on allowances for lodging, meals,
and incidentals and a daily rate of $43.50 for temporary relocation
allowances. However, the university paid temporary housing costs of
$9,579 over three months at a rate of $102 per day for this individual
when she relocated to California in 1999. When we asked why
the university would pay costs that were not in compliance with the
policy, the vice chancellor stated that a section in the policy grants
the chancellor the authority to make exceptions to the general rules,
and that this authority applies to both the daily allowance and the
time limit. The chancellor specified that he granted an exception
to the general rule because the vice chancellor could not relocate
until September, but the university needed her to report in June.
Consequently, the chancellor decided to pay for temporary housing
for the vice chancellor for three months.
In addition, the chancellor’s office agreed to pay the relocation
costs associated with the vice chancellor’s recent transition to a
campus. The chancellor’s office reported paying a total of $8,497
for these relocation costs. Although the board was informed of
the vice chancellor’s transition to the campus during the July 2007
meeting, the minutes from that board meeting do not mention
the relocation costs. The chancellor indicated that the agreement
to pay this employee’s relocation costs at the end of the executive
appointment was based on the employee’s intent to teach on a
campus and was discussed with the chair of the board in 2005 when
the commitment was made.
Another Campus Made Relocation Payments Beyond the Terms of Its
Employment Agreement With a Coach
The San Diego campus appointed a new head coach for one of its
athletics programs in March 1999. According to the employment
agreement, the coach was entitled to reimbursements for relocation
expenses consistent with the university’s policy. The campus
travel manual parallels the university’s relocation policy in place
in 1999 and states, “Reimbursement may be allowed for necessary
and reasonable moving and relocation expenses for an individual
who has been offered a position with [the university] and has
accepted such appointment.” Additionally, the coach’s agreement
stated that the campus would provide lodging for a period of
60 days. According to campus documents, the executive director
for intercollegiate athletics and special assistant to the president
(athletic director) promised during the recruitment process that
the campus would reimburse the coach for certain expenses the
athletic director termed “normal moving expenses for someone
of [the coach’s] stature.” Documents also indicate that the campus
subsequently reimbursed the coach’s normal moving expenses,
2 California State Auditor Report 2007-102.1
November 2007
which totaled $10,218. These expenses included transportation for
the coach’s spouse and son to and from San Diego for the purpose
of house hunting, as well as a rental car and housing expenses
incurred before the coach purchased a new home.
In a letter to the campus president, the athletic director stated
that the campus business office took the position that this
reimbursement was reportable income, and the coach was so
advised. According to the letter, the coach indicated that payment
of $4,079 in income taxes was required related to the reimbursed
relocation and transitional housing expenses. The campus’s
policy states, “Some reimbursements for moving expenses will be
reportable to the [Internal Revenue Service] and/or are taxable
to the individual . . . including costs such as meals connected
with a move, pre-move house hunting trips, and travel expenses
incurred with respect to a spouse or other dependent.” However,
the athletic director asserted to the president that the campus had
a “moral obligation” to reimburse the coach for the taxes paid and
the amount of taxes the coach would be required to pay on the
reimbursement for the initial taxes.
After the president acknowledged that any additional payment
made to compensate the coach for the taxes would also be
considered reportable income to the Internal Revenue Service, the
president, on the athletic director’s request, approved supplemental
compensation in the form of a one-time “bonus” payment of
$6,449 to the coach. The bonus was fully funded by a campus
foundation and consisted of $4,079 for the taxes paid on the
initial reimbursement and $2,370 for the taxes the coach would
be required to pay on the bonus. Campus documents indicate
that ultimately the coach received a total of $16,667, including the
original $10,218 in relocation reimbursements from the campus and
its foundation.
The campus’s payment of $6,449 to The campus’s payment of $6,449 to relieve the coach’s tax liability
relieve a coach’s tax liability appears to conflict with the terms of the official employment
appears to conflict with the terms agreement. Specifically, the agreement states, “The coach shall
of the employment agreement be responsible for payment of withholdings and taxes due on
which states that he is responsible applicable bonuses . . . which are in effect during the term of
for payment of taxes due on this agreement.” The agreement also clarifies that “the terms
applicable bonuses. of the coach’s appointment and service are governed by this
employment agreement and the management personnel plan . . .
Any commitment to [the] coach regarding service or appointment
not expressly contained in this employment agreement, or in
the [management personnel plan], is void.” Therefore, any verbal
promises made to the coach during the recruitment process
were nonbinding, and the campus was not required to pay any
tax liability resulting from relocation reimbursements made to
the coach.
California State Auditor Report 2007-102.1
November 2007
We asked the campus president why he authorized the
$6,449 payment to cover the employee’s taxes. The president stated
that he “agreed [with the athletic director] that as a university
and employer, we should do all we could do to fulfill obligations”
and therefore authorized the reimbursement in concept. However,
the president stated that he “then deferred to his staff to work
out the details to effect a reimbursement that was consistent with
the representations [the athletic director] had made.” The campus’s
associate vice president of administration, business, and financial
affairs stated, “The campus has refined the contracts that coaches
receive to clearly state that there may be tax consequences and the
coach is responsible for this at his or her own expense.” Nevertheless,
as previously described, the coach’s employment agreement
clearly stated his obligation to pay withholdings and taxes due on
applicable bonuses.
When we apprised the chancellor of this situation, he stated that he
was not previously aware of the actions taken at the campus. He also
commented that it appeared that the president was using foundation
rather than public funds to honor a verbal commitment to which
he felt bound. However, although the additional $6,449 payment to
cover the coach’s taxes was paid from foundation funds, the original
relocation reimbursement of $10,218 was paid using campus funds.
As we described earlier, the university has established a broad
policy for reimbursing employees for relocation expenses. In
addition, clauses in the policy that allow the chancellor or campus
presidents to grant exceptions to the policy weaken it even
further. Finally, the board is not required to approve relocation
reimbursements, nor is it typically informed of the payment
amounts. Consequently, these conditions create an environment
that allows questionable reimbursements of relocation costs.
The University’s Policy on Dual Employment Is Limited
In 2002 the university issued a policy stating that university
employees may, consistent with campus policies governing
outside activities, be employed outside the university system. The
policy further states that conflicts of interest are not permitted. The university’s dual-employment
However, the policy does not require employees to obtain prior policy does not require employees
approval for outside employment and does not require employees to obtain prior approval for
to disclose that they have such employment. The university does outside employment or to disclose
require employees in specified positions to file annual Statement such employment.
of Economic Interests forms. According to the vice chancellor of
human resources, the form would identify certain types of conflicts
of interest, such as someone having an interest in a business
that offers services the university might need. However, the
form does not include sufficient information about a reporting
California State Auditor Report 2007-102.1
November 2007
employee’s time commitments to an outside business that would
allow the university to identify conflicts with the employee’s
university commitments.
In 2003 the university sponsored a bill to require executives,
management personnel, and full-time faculty to report outside
employment; however, the Legislature did not ultimately pass the
Senate bill. Additionally, the chancellor’s office told us that the
university has sought to establish prior-approval and disclosure
policies for outside employment through negotiations with the
California Faculty Association, the collective bargaining group that
represents university faculty members. However, the university has
not succeeded in its bid to include these policies in the collective
bargaining agreement for faculty. The chancellor’s office has
chosen not to impose a similar requirement on other staff, such
as management personnel, because it believes that it would be
unfair to do so in the absence of a faculty requirement. However,
the university does not currently have enough information to
determine whether employees have outside employment that
conflicts with their university employment.
Recommendations
The university should strengthen its policy governing the
reimbursement of relocation expenses. For example, the policy
should include comprehensive monetary thresholds above which
board approval is required. In addition, the policy should prohibit
reimbursements for any tax liabilities resulting from relocation
payments. Finally, the board should require the chancellor to
disclose the amounts of relocation reimbursements to be offered
to incoming executives.
The university should continue to work with California Faculty
Association representatives during the collective bargaining process
to strengthen its dual-employment policy by imposing disclosure
and approval requirements for faculty. It should also impose
similar requirements for other employees, including management
personnel. If the university believes it needs a statutory change to
facilitate its efforts, it should seek it.
California State Auditor Report 2007-102.1
November 2007
We conducted this review under the authority vested in the California State Auditor by Section 8543
et seq. of the California Government Code and according to generally accepted government auditing
standards. We limited our review to those areas specified in the audit scope section of this report.
Respectfully submitted,
ELAINE M. HOWLE
State Auditor
Date: November 6, 2007
Staff: Karen L. McKenna, CPA, Audit Principal
Michael Tilden, CPA
Michelle J. Baur, CISA
Simi Khangura
Julien Kreuze
Tessa D. Melendez
Anh Pham, MS
Rosa Reyes
Bruce Smith
California State Auditor Report 2007-102.1
November 2007
Blank page inserted for reproduction purposes only.
California State Auditor Report 2007-102.1 7
November 2007
Appendix A
CoMpeNSATIoN ANd eMployMeNT INdUCeMeNTS
foR 7 hIghly pAId eMployeeS
Table A on the following pages details the compensation and
employment inducements received by a sample of 76 highly paid
employees at the California State University (university) during
fiscal year 2006–07. We focused our selection on employees at the
chancellor’s office and the five campuses we visited during the audit:
Fullerton, Long Beach, Sacramento, San Diego, and San Francisco.
From these locations, we selected 30 faculty members and
36 Management Personnel Plan employees (management
personnel), all of whom held administrator IV positions, and we
included all 10 executives working in the chancellor’s office and at
the five campuses.
To select our sample, we used the payroll file maintained by the
State Controller’s Office (payroll file) to identify payments issued
during the first 10 months of fiscal year 2006–07 (July 2006
through April 2007). We then identified the portion of that
compensation received by each employee that related to pay
periods within fiscal year 2006–07, along with the campus at which
each individual last worked and the employee classification under
which each individual last received pay. From this list we selected
executives from all six locations, including five from the chancellor’s
office and the presidents of each of the five campuses. We also
selected the six highest-paid faculty and the six highest-paid
management personnel from each campus. Because no highly
paid faculty worked at the chancellor’s office, we selected only the
top six management personnel from that location.
We later obtained the payroll files for the full fiscal year 2006–07.
The compensation listed at the top of each “report card” in Table A
therefore represents all payments issued during the fiscal year as
reported in the payroll file. The categories of pay shown are those
used in tables 1 and 2 in Chapter 1. As described in the Scope and
Methodology section of the Introduction, we recategorized the
payment types used in the payroll file to present the data in a more
concise form. Further, we reclassified certain transactions, such as
automobile allowances, to more accurately reflect the transactions
when they were included in other categories.
8 We used only 10 months of data to select our sample because information for the full fiscal
year was not yet available. However, the data appearing in Table A represent the full year of
payment information.
California State Auditor Report 2007-102.1
November 2007
Each report card also lists any additional compensation and
employment inducements present in an employee’s campus
personnel file or reported to us by staff at auxiliaries, including
foundations. As we discussed in Chapter 1, the payroll file does not
include compensation paid directly by auxiliaries. Additionally, it
does not indicate that, in some instances, compensation initially
paid by the university was subsequently reimbursed by an auxiliary
or other source. Thus, we had to seek this information from
additional sources. When an employee received a payment from the
university that was later reimbursed to the university by an auxiliary
or external source, we footnote the payment in the report card.
However, because of the large number of auxiliaries and potential
outside sources of income, we cannot be certain that we identified
all additional compensation.
The report cards also do not include standard benefits that
all employees receive, such as health, vision, and dental
insurance. However, they do include life and accidental death
and dismemberment insurance (life insurance) because the
amount of coverage differs by type of employee. Specifically, each
executive receives a $250,000 policy, each management personnel
employee receives a $100,000 policy, and each faculty member
receives a $50,000 policy. Further, when the university did not have
information on the actual amount it reimbursed for relocation or
other expenses that we categorize as an employment inducement,
we present the maximum allowable amount as documented in the
employment appointment letter.
California State Auditor Report 2007-102.1
November 2007
Table A
Dr. Charles B. Reed Chancellor’s Office
Chancellor Executive
Compensation Fiscal Year 2006–07
Base pay $377,000
Additional Compensation
Supplemental* 30,000
Total $407,000
Employment Inducements
The chancellor’s office reports that it paid $29,001 of the employee’s moving and relocation costs, including closing costs of $9,35 and storage
costs of $7,071.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
The university provides the employee with a house that is equipped with an office, a telephone connected to the chancellor’s office, and
appropriate facilities for entertainment and meetings.
The employee’s October 1997 offer letter states that both state and nonstate funds will be made available to the chancellor for a variety of
discretionary purposes connected with the performance of his official duties, and that friends and supporters of the university, including its
foundation, will defray, to the extent possible, the costs, including but not limited to travel expenses, for the presence of the chancellor’s spouse
at official functions using nonstate funds. The chancellor’s office reports that for fiscal year 2006–07, it provided $1,479 from the State’s General
Fund to the employee for entertainment expenses. Additionally, the university foundation reports that it provided $43,786 for the chancellor’s
use for entertainment purposes during the same period. However, only $8,629 of these funds were paid directly to the chancellor. The remaining
funds were used to reimburse vendors and other university employees for hospitality expenses. The foundation also reports that it paid the
chancellor $2,750 for his spouse’s travel expenses.
The university provides a university-owned vehicle and pays for the cost of maintenance, insurance, a telephone, gasoline, and oil. In addition, on
occasion, the university provides the chancellor with a driver service.
Entitled to one year of paid leave of absence under the Executive Transition I Program on leaving the position, at a salary set at the midpoint
between the former executive salary and the top-step 12-month full-professor salary.
The Long Beach campus granted the employee tenure as a professor with retreat rights to its department of teacher education.
* In consideration of the federal Internal Revenue Service cap on eligible California Public Employees’ Retirement System retirement compensation,
the board of trustees approved an executive compensation plan for the chancellor that provides $30,000 in supplemental compensation from the
university foundation.
continued on next page
70 California State Auditor Report 2007-102.1
November 2007
Christine Helwick Chancellor’s Office
General Counsel Executive
Compensation Fiscal Year 2006–07
Base pay $239,202
Automobile allowance 12,000
Additional Compensation
None noted
Total $251,202
Employment Inducements
The chancellor’s office reports that it paid $7,048 in moving costs for this employee’s relocation to Southern California.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
The employee’s March 1996 offer letter states that the general counsel is entitled to perquisites such as entertainment allowances and other
entitlements of executives. The university foundation reports that it provided $1,986 to the employee for entertainment expenses for
fiscal year 2006–07.
Entitled to one year of paid leave of absence under the Executive Transition I Program on leaving the position, at a salary set at the midpoint
between the former executive salary and the top-step full-professor salary.
The Long Beach campus granted the employee tenure as a professor with retreat rights to its department of finance, real estate, and law.
Jackie R. McClain* Chancellor’s Office
Vice Chancellor, Human Resources Executive
Compensation Fiscal Year 2006–07
Base pay $256,033
Automobile allowance 12,000
Additional Compensation
None noted
Total $268,033
Employment Inducements
The chancellor’s office reports that it paid $61,777 of the employee’s moving and relocation costs, which includes $30,688 in closing costs for
her former and new residences and $9,579 for transitional housing costs. In addition, the chancellor’s office reports that it paid $8,497 for the
employee’s relocation costs associated with her recent transition to the Chico campus.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
The chancellor’s office reports that it provided $303 from the State’s General Fund to the employee for entertainment expenses for
fiscal year 2006–07. Additionally, the university foundation reports that it provided $689 to the employee for entertainment costs.
The Chico campus granted the employee tenure in its department of management within the college of business.
* On August 1, 2007, this employee departed her position as vice chancellor of human resources. Refer to Table B.2 in Appendix B for the terms of her
transition from this executive position.
California State Auditor Report 2007-102.1 71
November 2007
Dr. Gary W. Reichard Chancellor’s Office
Executive Vice Chancellor and Chief Academic Officer Executive
Compensation Fiscal Year 2006–07
Base pay $272,88
Automobile allowance 12,000
Additional Compensation
None noted
Total $284,488
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
The employee’s February 2006 offer letter states that the executive vice chancellor is entitled to perquisites such as entertainment allowances and
other entitlements of executives, and that it is permissible to expend state resources and university foundation funds for community relations
purposes under the university’s hospitality policy.
Entitled to one year of paid leave of absence under the Executive Transition I Program on leaving the position, at a salary set at the midpoint
between the former executive salary and the top-step full-professor salary.
The Long Beach campus granted the employee tenure as a professor with retreat rights to its department of history.
Richard P. West Chancellor’s Office
Executive Vice Chancellor and Chief Financial Officer Executive
Compensation Fiscal Year 2006–07
Base pay $291,258
Automobile allowance 12,000
Additional Compensation
None noted
Total $303,258
Employment Inducements
The chancellor’s office reports that it paid $11,787 of the employee’s moving and relocation costs, including closing costs of $6,911.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
The employee’s November 1993 offer letter states that the employee is entitled to perquisites such as access to the chancellor’s community
relations fund and other entitlements of executives. The university foundation reports that it provided $661 to the employee for entertainment
expenses for fiscal year 2006–07.
Entitled to one year of paid leave of absence under the Executive Transition I Program on leaving the position, at a salary set at the midpoint
between the former executive salary and the top-step full-professor salary.
The Sonoma campus granted the employee tenure as a professor with retreat rights to the department of business administration.
continued on next page
72 California State Auditor Report 2007-102.1
November 2007
Dr. Keith Boyum Chancellor’s Office
Associate Vice Chancellor, Academic Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $180,98
Additional Compensation
None noted
Total $180,948
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
The chancellor’s office reports that it provided $123 from the State’s General Fund and $42 from other state funds to the employee for
entertainment expenses for fiscal year 2006–07.
Retains retreat rights as a full-time tenured professor in the department of political science at the Fullerton campus.
David J. Ernst Chancellor’s Office
Assistant Vice Chancellor, Information Technology Services Management Personnel
Compensation Fiscal Year 2006–07
Base pay $188,832
Additional Compensation
None noted
Total $188,832
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
The chancellor’s office reports that it provided $15,947 to the employee for entertainment expenses* for fiscal year 2006–07, of which only
$91 was paid from the State’s General Fund. The remaining $15,56 was generally paid from a special project fund that was established to provide
fiscal support for the assistant vice chancellor of information technology services for such activities as strategic planning, logistics, networking
events, knowledge transfer, travel, receptions, and other purposes in support of university information technology. The special project fund’s
sources of revenue include honoraria, payments for specialized services and commodities, and interest earnings. Additionally, the university
foundation reports that it reimbursed this employee $2,935 for business meals attended by various university employees for fiscal year 2006–07.
* We reviewed documentation supporting a sample of these entertainment expenses totalling $8,59, and found that the payments were to
reimburse this employee for paying for working dinners for the university’s common management system executive committee members.
California State Auditor Report 2007-102.1 7
November 2007
William D. Hordyk Chancellor’s Office
Assistant Vice Chancellor, Financial Services Management Personnel
Compensation Fiscal Year 2006–07
Base pay $19,780
Leave ,93
Additional teaching and
special assignments* ,900
Additional Compensation
None noted
Total $199,614
Employment Inducements
The chancellor’s office reports that it paid $8,800 of the employee’s moving and relocation costs.
Other Benefits
Receives life insurance policy of $100,000.
The chancellor’s office reports that it provided $803 from the State’s General Fund to the employee for entertainment expenses for
fiscal year 2006–07.
* The employee retired from his position on May 1, 2007. The $,900 he received was for work performed as a retired annuitant.
Larry M. Mandel Chancellor’s Office
University Auditor Management Personnel
Compensation Fiscal Year 2006–07
Base pay $20,996
Additional Compensation
None noted
Total $204,996
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
The chancellor’s office reports that it provided $71 from the State’s General Fund and $71 from other state funds to the employee for
entertainment expenses for fiscal year 2006–07.
continued on next page
7 California State Auditor Report 2007-102.1
November 2007
Dr. Robert C. Maxson Chancellor’s Office
Special Assistant to the Chancellor Management Personnel
Compensation Fiscal Year 2006–07
Base pay $277,896
Leave 57,895
Overtime 1,103
Additional Compensation
None noted
Total $336,894
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
In his June 2006 appointment letter, the chancellor’s office offered the employee an annual salary above the maximum range for a management
personnel position at the administrator IV level.
The Long Beach campus granted the employee retreat rights as a tenured professor to its department of educational psychology and administration.
Theresa Mendoza Chancellor’s Office
Senior Advisor, Campus Advancement Programs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $192,679
Leave 19,832
Overtime 70
Additional Compensation
None noted
Total $213,251
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
The university foundation reports that it provided $35 to the employee for entertainment expenses for fiscal year 2006–07.
California State Auditor Report 2007-102.1 7
November 2007
Dr. Milton A. Gordon Fullerton
President Executive
Compensation Fiscal Year 2006–07
Base pay $265,225
Automobile allowance 12,000
Additional Compensation
None noted
Total $277,225
Employment Inducements
The campus reports that it paid $4,519 of the employee’s moving and relocation costs when the president was hired in 1990.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
Entitled to entertainment allowance of $300 per month from the State’s General Fund. Funds are also available from the General Fund for
community relations expenses, and campus foundations may supplement General Fund entertainment allowances and funding for community
relations activities.
Entitled to one year of paid leave of absence at the end of presidency, with a salary at the midpoint between the former executive salary and the
top-step full-professor salary. On completion of paid leave, the former executive is entitled to assume a trustee professor position at the campus,
with a salary set at the top of the salary range for a full professor, academic or 12-month, as elected by the trustee professor. The chancellor’s office
funds the trustee professor’s salary until the individual decides to leave the position.
The campus provides the employee with a donated house.
The campus granted the employee tenure as professor with retreat rights to its department of mathematics and department of afro-ethnic studies.
Robert McKay Burton, Jr. Fullerton
Head Men’s Basketball Coach Management Personnel
Compensation Fiscal Year 2006–07
Base pay $181,88
Additional Compensation
Automobile allowance* 5,000
Total $186,488
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
Receives $1,500 annually in promotional merchandise under an agreement with Adidas for the period of July 1, 2006, through June 30, 2009.
Eligible for bonus pay based on team performance. In addition, the campus will provide airfare and per diem for the employee’s spouse in
the postseason.
* A campus foundation provides accounting services to the campus athletics department. According to this campus foundation, in
fiscal year 2006–07, it wrote checks to this employee for monthly automobile allowances totaling $5,000. The campus subsequently
reimbursed this campus foundation for these payments using nonstate sources such as gate receipts and fund-raising proceeds.
continued on next page
7 California State Auditor Report 2007-102.1
November 2007
Dr. Willie J. Hagan Fullerton
Vice President, Administration Management Personnel
Compensation Fiscal Year 2006–07
Base pay $192,036
Additional Compensation
None noted
Total $192,036
Employment Inducements
The campus reports that it paid $4,653 directly to the employee for moving and relocation costs in July and August 1996. This does not include
any amounts that may have been paid directly to vendors, such as moving and storage companies, because the campus was unable to identify
such payments.
Other Benefits
Receives life insurance policy of $100,000.
Pamela Hillman Fullerton
Vice President, University Advancement Management Personnel
Compensation Fiscal Year 2006–07
Base pay $180,08
Automobile allowance* 7,200
Additional Compensation
None noted
Total $187,284
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
* Employee’s monthly automobile allowance was reimbursed by a campus foundation.
Dr. Robert L. Palmer, Jr. Fullerton
Vice President, Student Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $180,072
Additional Compensation
None noted
Total $180,072
Employment Inducements
The employee’s June 1997 offer letter states that the campus would reimburse up to $5,000 of the employee’s moving expenses. However, the
campus reported that it actually paid $7,900 directly to the employee for moving and relocation expenses. This does not include any amounts
that may have been paid directly to vendors, such as moving and storage companies, because the campus was unable to identify such payments.
Other Benefits
Receives life insurance policy of $100,000.
California State Auditor Report 2007-102.1 77
November 2007
Dr. Anil Puri Fullerton
Dean, College of Business and Economics Management Personnel
Compensation Fiscal Year 2006–07
Base pay $182,520
Additional teaching and
special assignments* 26,300
Additional Compensation
None noted
Total $208,820
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
Retains retreat rights as a tenured professor in the department of economics at the campus.
* The campus reports that at least $11,301 of this employee’s compensation was reimbursed by a campus foundation.
Dr. Ephraim P. Smith Fullerton
Vice President, Academic Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $198,072
Additional Compensation
None noted
Total $198,072
Employment Inducements
The campus reports that it paid $8,000 directly to the employee for moving and relocation costs in November 1990. This does not include any
amounts that may have been paid directly to vendors, such as moving and storage companies, because the campus was unable to identify
such payments.
Other Benefits
Receives life insurance policy of $100,000.
Retains retreat rights as a tenured professor in the department of accounting at the campus.
continued on next page
7 California State Auditor Report 2007-102.1
November 2007
Dr. Victoria Costa
Acting Chair, Department of Special Education; Fullerton
Chair, Department of Secondary Education Faculty
Compensation Fiscal Year 2006–07
Base pay $102,011
Additional teaching and
special assignments* 5,623
Bonus pay 3,108
Additional Compensation
None noted
Total $159,742
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
* The campus reports that $13,751 of this employee’s compensation was reimbursed by a campus foundation using grant funds provided by the
California Postsecondary Education Commission.
Dr. Anthony R. Fellow Fullerton
Chair, Department of Communications Faculty
Compensation Fiscal Year 2006–07
Base pay $109,859
Additional teaching and
special assignments 35,18
Stipends 1,800
Additional Compensation
None noted
Total $146,843
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
California State Auditor Report 2007-102.1 7
November 2007
Dr. Charles T. Grant Fullerton
Professor of Accounting Faculty
Compensation Fiscal Year 2006–07
Base pay $115,128
Additional teaching and
special assignments 1,53
Stipends 900
Additional Compensation
None noted
Total $157,562
Employment Inducements
The campus reports that it paid $3,500 of the employee’s moving and relocation costs in August 2005.
The employee was granted two years of higher education service credit as probationary service at the campus.
Other Benefits
Receives life insurance policy of $50,000.
Dr. Brian H. Kleiner Fullerton
Professor of Management Faculty
Compensation Fiscal Year 2006–07
Base pay $107,78
Additional teaching and
special assignments 1,856
Stipends 1,800
Additional Compensation
None noted
Total $151,440
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
continued on next page
0 California State Auditor Report 2007-102.1
November 2007
Dr. Morteza Rahmatian Fullerton
Chair, Department of Economics Faculty
Compensation Fiscal Year 2006–07
Base pay $105,62
Additional teaching and
special assignments 2,62
Additional Compensation
None noted
Total $148,266
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
Dr. Helen P. Taylor Fullerton
Professor of Secondary Education Faculty
Compensation Fiscal Year 2006–07
Base pay $101,382
Additional teaching and
special assignments* 86,
Additional Compensation
None noted
Total $187,826
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
* The campus reported that $33,286 of this employee’s compensation was reimbursed by a campus foundation using grant funds provided by the
Anaheim Unified School District.
California State Auditor Report 2007-102.1 1
November 2007
Dr. F. King Alexander Long Beach
President Executive
Compensation Fiscal Year 2006–07
Base pay $291,208
Additional Compensation
None noted
Total $291,208
Employment Inducements
The campus paid $12,911 of the employee’s moving and relocation expenses.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
Entitled to entertainment allowance of $300 per month from the State’s General Fund. Funds are also available from the General Fund for
community relations expenses, and campus foundations may supplement General Fund entertainment allowances and funding for community
relations activities.
Entitled to one year of paid leave of absence under the Executive Transition I Program on leaving the presidency, at a salary set at the midpoint
between the former executive salary and the top-step full-professor salary.
The campus provides housing and pays for the cost of maintenance, utilities, and other services, including a housekeeper.
Provided with a campus foundation-owned automobile. The employee’s personal use of the automobile during calendar year 2006 resulted in
reportable income of $2,276.
In January 2007, the campus granted the employee tenure at the rank of professor with retreat rights to its department of educational psychology,
administration, and counseling.
Dr. Dorothy D. Abrahamse Long Beach
Interim Provost and Vice President, Academic Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay* $109,032
Leave 2,007
Overtime 2,118
Additional Compensation
Automobile allowance† 3,600
Total $156,757
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
Retained retreat rights as a tenured professor to the department of history at the campus.
* Reflects six months of salary, as well as $15,80 in wages earned as a retired annuitant.
† Provided by various campus foundation program funds until the employee retired in December 2006.
continued on next page
2 California State Auditor Report 2007-102.1
November 2007
Victor Cegles Long Beach
Director of Athletics Management Personnel
Compensation Fiscal Year 2006–07
Base pay $160,61
Additional Compensation
None noted
Total $160,614
Employment Inducements
In 2006 the campus reimbursed $25,647 of the employee’s moving and relocation costs, including $3,772 for meals and $10,096 for temporary
living expenses. In 2007 the campus also reimbursed this employee $3,704 for expenses related to the sale of his residence.
Other Benefits
Receives life insurance policy of $100,000.
Provided with a donated automobile by the campus foundation. The employee’s personal use of the donated automobile during calendar
year 2006 resulted in reportable income of $1,088.
William H. Griffith Long Beach
Vice President, Administration and Finance Management Personnel
Compensation Fiscal Year 2006–07
Base pay $201,8
Additional Compensation
Automobile allowance* 7,200
Total $208,684
Employment Inducements
The employee’s November 1988 offer letter stated that the campus would reimburse the employee’s necessary and reasonable relocation
expenses in accordance with state regulations. In addition, the campus agreed to reimburse the employee for local living expenses (i.e. lodging
and per diem) for a period of 90 days. The campus was not able to provide the actual reimbursement amount because it maintains these records
only as far back as 1999.
Other Benefits
Receives life insurance policy of $100,000.
* Provided by various campus foundation program funds.
California State Auditor Report 2007-102.1
November 2007
Dr. Michael K. Mahoney* Long Beach
Dean, College of Engineering Management Personnel
Compensation Fiscal Year 2006–07
Base pay $166,50
Leave 2,168
Overtime 60
Additional Compensation
None noted
Total $191,276
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
Retained retreat rights as a tenured professor in the department of computer engineering and computer science at the campus.
* Employed at the East Bay campus as of June 30, 2007.
Dr. Douglas W. Robinson Long Beach
Vice President, Student Services Management Personnel
Compensation Fiscal Year 2006–07
Base pay $186,732
Additional Compensation
Automobile allowance* 7,200
Total $193,932
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
* Provided by various campus foundation program funds.
Andrea Taylor Long Beach
Vice President, University Relations and Development Management Personnel
Compensation Fiscal Year 2006–07
Base pay $171,20
Additional Compensation
Automobile allowance* 7,200
Total $178,404
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
* Provided by campus foundation donated program funds.
continued on next page
California State Auditor Report 2007-102.1
November 2007
Dr. Robert T. Chi
Chair, Department of Information Systems, Long Beach
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $111,21
Leave 9
Additional teaching and
special assignments 5,365
Stipends 1,530
Additional Compensation
Grant* 3,91
Total $171,239
Employment Inducements
The campus initially hired this employee as an assistant professor. The original offer letter, dated May 1991, stated that the campus would
reimburse up to $4,500 of the employee’s actual and necessary relocation costs, including up to five days of lodging and subsistence expenses.
The campus was not able to provide the actual reimbursement amount because it maintains these records only as far back as 1999.
Other Benefits
Receives life insurance policy of $50,000.
Assigned the equivalent of one full-time graduate assistant per year as department chair to enable continuing professional development,
including scholarly and creative activities. In addition, the employee will receive assigned time in the first academic year of his return to full-time
instructional faculty status. This assigned time award will be calculated as three weighted teaching units (WTUs) for every full year (or fraction
thereof) of service as department chair for a maximum of 12 WTUs.
* Provided through the campus foundation using funds from two grants from the U.S. Department of Education.
Dr. H. Michael Chung
Director, Graduate Programs and Executive Education, Long Beach
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $107,517
Additional teaching and
special assignments 52,791
Stipends 900
Additional Compensation
None noted
Total $161,208
Employment Inducements
The campus initially hired this employee as an associate professor. The original offer letter, dated June 199, stated that the campus would
reimburse up to $3,000 of the employee’s actual and necessary relocation expenses, including up to four days of lodging and subsistence
expenses. The campus was not able to provide the actual reimbursement amount because it maintains these records only as far back as 1999.
Other Benefits
Receives life insurance policy of $50,000.
Assigned the equivalent of one full-time graduate assistant each year during his term as program director to enable continuing professional
development, including scholarly and creative activities. In addition, the employee will receive two three-WTU assigned time awards
each semester during his term as program director.
California State Auditor Report 2007-102.1
November 2007
Dr. Steven A. Fisher
Chair, Department of Accountancy, Long Beach
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $117,771
Additional teaching and
special assignments 36,856
Stipends 1,200
Additional Compensation
None noted
Total $155,827
Employment Inducements
The campus initially hired this employee as an associate professor. The original offer letter, dated April 1990, stated that the campus would
reimburse up to $3,700 of the employee’s actual and necessary relocation costs, including up to six days of lodging and subsistence expenses.
The campus was not able to provide the actual reimbursement amount because it maintains these records only as far back as 1999.
Other Benefits
Receives life insurance policy of $50,000.
Provided three WTUs of assigned time every semester for student advising responsibilities. The employee is also assigned the equivalent of
one full-time graduate assistant each year during his term as department chair to enable continuing professional development, including scholarly
and creative activities. In addition, the employee will receive a total of six WTUs of assigned time in the first academic year of his return to full-time
instructional faculty status.
Dr. Sal Kukalis
Professor, Department of Management/Human Resources Long Beach
Management, College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $102,396
Additional teaching and
special assignments 62,715
Stipends 6,765
Additional Compensation
None noted
Total $171,876
Employment Inducements
The campus initially hired this employee as an assistant professor. The original offer letter, dated May 1986, stated that the campus would reimburse up
to $4,000 of the employee’s actual and necessary relocation costs, including up to three days of lodging and subsistence expenses. The campus was not
able to provide the actual reimbursement amount because it maintains these records only as far back as 1999.
Other Benefits
Receives life insurance policy of $50,000.
continued on next page
California State Auditor Report 2007-102.1
November 2007
Dr. Charles Noble Long Beach
Chair, Department of Political Science Faculty
Compensation Fiscal Year 2006–07
Base pay $127,912
Additional teaching and
special assignments 35,52
Additional Compensation
None noted
Total $163,454
Employment Inducements
The campus initially hired this employee as an associate professor. The original offer letter, dated April 1987, stated that the campus would reimburse up
to $3,000 of the employee’s actual and necessary relocation costs, including up to seven days of lodging and subsistence expenses. The campus was not
able to provide the actual reimbursement amount because it maintains these records only as far back as 1999.
Other Benefits
Receives life insurance policy of $50,000.
Dr. Jae K. Shim
Professor, Department of Accountancy, Long Beach
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $95,30
Additional teaching and
special assignments 53,899
Stipends 1,800
Additional Compensation
None noted
Total $151,039
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
California State Auditor Report 2007-102.1 7
November 2007
Dr. Alexander Gonzalez Sacramento
President Executive
Compensation Fiscal Year 2006–07
Base pay $265,225
Housing allowance 60,000
Automobile allowance 12,000
Additional Compensation
None noted
Total $337,225
Employment Inducements
The employee’s March 2003 offer letter stated that the campus would cover the employee’s reasonable and necessary relocation expenses in
accordance with board policy. The campus paid $18,988 for the employee’s moving expenses.
The offer letter also stated that executive benefits include reimbursement for actual and necessary costs associated with the selling of the
employee’s current residence. In a May 2003 letter, the chancellor stated the university would pay between $10,000 and $13,500 in closing
costs resulting from the employee’s purchase of a Sacramento residence. However, the campus actually paid $64,698 to the employee
for closing costs, which included $56,92 for closing costs associated with selling his San Marcos residence and $7,77 for purchasing a
Sacramento residence.
On August 25, 2003, the campus foundation made a housing loan to the employee in the amount of $164,050 for escrow costs. Additionally, the
campus foundation loaned the employee another $68,772 for mortgage payments. The purpose of the loans was so the employee could continue
making mortgage payments on his former residence until it was financially viable for him to sell the property. The campus foundation provided the
loans at a below-market annual interest rate of 1.697 percent. The campus reports that both loans, including interest of $8,12, were repaid in full
in December 2005.
The campus reports that its foundation also paid $27,615 to remodel the employee’s kitchen to accommodate the foundation’s future catering of
presidential guests, such as those attending fund-raising events, and to meet California Health and Safety codes.
Documentation indicates that the campus granted the employee tenure as professor in its psychology department.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
Entitled to entertainment allowance of $300 per month from the State’s General Fund. Funds are also available from the General Fund for
community relations expenses, and campus foundations may supplement General Fund entertainment allowances and funding for community
relations activities.
Entitled to one year of paid leave of absence under the Executive Transition I Program on leaving the presidency, at a salary set at the midpoint
between the former executive salary and the top-step 12-month full-professor salary.
continued on next page
California State Auditor Report 2007-102.1
November 2007
Dr. Richard Brown
Provost and Vice President, Academic Affairs; Sacramento
Special Assistant to the President Management Personnel
Compensation Fiscal Year 2006–07
Base pay $139,888
Leave 15,781
Additional Compensation
None noted
Total $155,669
Employment Inducements
The employee’s April 1995 offer letter stated that the campus would assist with the employee’s moving expenses up to $8,000. The campus was
not able to provide the actual reimbursement amount because it maintains these records for only four years.
The campus granted the employee tenure as professor in its department of educational administration and policy studies.
Other Benefits
Receives life insurance policy of $100,000.
The campus president conferred emeritus standing on the employee at the time of the employee’s April 2007 retirement. Emeritus standing
privileges include participation in academic events, courtesy parking privileges, and the use of the library and physical education facilities.
Stephen Garcia Sacramento
Vice President, Administration and Business Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $179,328
Additional Compensation
None noted
Total $179,328
Employment Inducements
The campus reports that it paid moving expenses of $8,907 for this employee, who was hired effective May 200.
Other Benefits
Receives life insurance policy of $100,000.
Carole Hayashino Sacramento
Vice President, University Advancement Management Personnel
Compensation Fiscal Year 2006–07
Base pay $179,712
Additional Compensation
None noted
Total $179,712
Employment Inducements
The campus reports that it paid $1,672 for this employee’s moving expenses, who was hired effective October 200.
Other Benefits
Receives life insurance policy of $100,000.
California State Auditor Report 2007-102.1
November 2007
Dr. Joseph F. Sheley Sacramento
Provost and Vice President, Academic Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $181,59
Additional Compensation
None noted
Total $181,459
Employment Inducements
The employee’s July 1996 offer letter stated that the campus would assist with the employee’s moving expenses up to $16,000. The campus was
not able to provide the actual reimbursement amount because it maintains these records for only four years.
The campus granted the employee tenure as professor in its department of sociology.
Other Benefits
Receives life insurance policy of $100,000.
Dr. Sanjay Varshney Sacramento
Dean, College of Business Administration Management Personnel
Compensation Fiscal Year 2006–07
Base pay $175,116
Additional Compensation
None noted
Total $175,116
Employment Inducements
The employee’s March 200 offer letter stated that the campus would provide the employee with a moving expense allowance of up to $10,000 to
be used in accordance with university regulations. The campus reports that it subsequently agreed to pay moving expenses of $13,056, and
house-hunting expenses of $2,276, for this employee.
The campus granted the employee tenure as professor in its department of management.
Other Benefits
Receives life insurance policy of $100,000.
David Wagner Sacramento
Vice President for Human Resources Management Personnel
Compensation Fiscal Year 2006–07
Base pay $191,172
Additional Compensation
None noted
Total $191,172
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
Retains retreat rights to a faculty position in the department of communication studies.
continued on next page
0 California State Auditor Report 2007-102.1
November 2007
Keirsten Casey Sacramento
Instructor, College of Continuing Education Faculty
Compensation Fiscal Year 2006–07
Additional teaching and
special assignments $138,150
Additional Compensation
None noted
Total $138,150
Employment Inducements
None noted.
Other Benefits
None noted.
Dr. Margaret A. Cleek Sacramento
Professor, College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $95,18
Additional teaching and
special assignments 33,300
Additional Compensation
None noted
Total $128,448
Employment Inducements
The employee’s May 1990 offer letter stated the school of business administration would provide the employee a moving expense allowance of
up to $3,000 in accordance with university moving expense regulations. The campus was not able to provide the actual reimbursement amount
because it maintains these records for only four years.
The employee’s offer letter also stated the school of business administration would provide $4,000 in research grants in each of the
first two summers of employment as well as a teaching load of nine units per semester for the first two years of the employee’s appointment,
if the employee met certain criteria. The campus was not able to provide documentation to confirm whether these amounts were paid because it
no longer maintains these records.
Other Benefits
Receives life insurance policy of $50,000.
California State Auditor Report 2007-102.1 1
November 2007
Dr. Ernest Cowles Sacramento
Director, Institute for Social Research Faculty
Compensation Fiscal Year 2006–07
Base pay* $13,18
Additional Compensation
Supplemental† 29,689
Total $172,873
Employment Inducements
The employee’s June 200 offer letter stated the college of social sciences and interdisciplinary studies would provide the employee with a moving
expense allowance of up to $13,000 to be used in accordance with moving expense regulations. The campus reports that it paid $13,000 of the
employee’s relocation expenses.
The campus granted the employee tenure as professor in its department of sociology.
Other Benefits
Receives life insurance policy of $50,000.
* A campus foundation reports that it reimbursed the campus $73,02 of this employee’s base pay.
† Provided by a campus foundation. The primary sources of the funds were as follows:
$10,398 from the California Department of Social Services, $10,079 from the college of continuing education and the California Department of
Social Services, $7,525 from the California Respiratory Care Board, and $1,687 from various entities.
Dr. Lindle Hatton
Professor of Strategic Management, Sacramento
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $96,888
Additional teaching and
special assignments 56,383
Stipends 50
Additional Compensation
None noted
Total $153,721
Employment Inducements
The employee’s January 1990 offer letter stated that the school of business administration would provide the employee a moving expense
allowance of up to $3,000 in accordance with moving expense regulations. The campus was not able to provide the actual reimbursement
amount because it maintains these records for only four years.
The employee’s offer letter also stated the school of business administration would provide $4,000 in research grants in each of the first
two summers of employment as well as a teaching assignment of nine units per semester for the first two years of the employee’s appointment,
if the employee met certain conditions. The campus was not able to provide documentation to confirm whether these amounts were paid because
it no longer maintains these records.
Other Benefits
Receives life insurance policy of $50,000.
continued on next page
2 California State Auditor Report 2007-102.1
November 2007
Dr. Chris J. Sablynski
Assistant Professor of Human Resource Management, Sacramento
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $77,292
Additional teaching and
special assignments 83,358
Stipends 5,000
Additional Compensation
None noted
Total $165,650
Employment Inducements
The employee’s December 2001 offer letter from the college of business administration provided the employee with a moving expense allowance
up to $3,000 to be used in accordance with university regulations. The campus was not able to provide the actual reimbursement amount
because it maintains these records for only four years.
The college of business administration also conditionally awarded the employee with $5,83 in research grants for each of the 2003 and
200 summers as well as a teaching assignment of nine units per semester throughout probationary years until tenured. The college of business
administration reports that it actually paid the employee $6,048 for 2003 and $6,045 for 200 for the research grants.
Other Benefits
Receives life insurance policy of $50,000.
Dr. Richard Shek
Resident Director, International Programs in Japan; Sacramento
Professor, Humanities and Religious Studies Faculty
Compensation Fiscal Year 2006–07
Base pay $126,360
Additional teaching and
special assignments 9,267
Stipends 50
Additional Compensation
None noted
Total $136,077
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
California State Auditor Report 2007-102.1
November 2007
Dr. Stephen L. Weber San Diego
President Executive
Compensation Fiscal Year 2006–07
Base pay $272,21
Automobile allowance 12,000
Additional Compensation
None noted
Total $284,214
Employment Inducements
The employee’s December 1995 offer letter stated that the campus would cover the reasonable and necessary relocation expenses in accordance
with board policy, and the university would reimburse travel expenses associated with house hunting. The campus reported that $5,387 was
reimbursed to the employee for moving and relocation expenses.
The employee was appointed as management personnel for approximately one month prior to becoming president in July 1996. His salary
was $10,167 per month for participating in an intensive language and culture institute, in addition to performing other duties in preparation for
the assumption of presidency.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
Entitled to entertainment allowance of $300 per month from the State’s General Fund. Funds are also available from the General Fund for
community relations expenses, and campus foundations may supplement General Fund entertainment allowances and funding for community
relations activities.
Entitled to one year of paid leave of absence under the Executive Transition I Program on leaving the presidency, at a salary set at the
midpoint between the former executive salary and the top-step full-professor salary.
Provided with a house donated by a campus foundation in 2000.
The campus granted the employee tenure with retreat rights to its philosophy department.
Steve Fisher San Diego
Head Coach, Men’s Basketball Program Management Personnel
Compensation Fiscal Year 2006–07
Base pay $208,620
Additional Compensation
Supplemental* 280,713
Total $489,333
Employment Inducements
The employee’s March 1999 contract states that the employee is entitled to relocation expenses consistent with university policies. Campus
documents indicate the campus paid the employee’s relocation and transitional expenses of $10,218, while the campus foundation
paid associated taxes the employee asserted he would have to pay in the amount of $4,079, and taxes on the tax reimbursement in the
amount of $2,370.
Other Benefits
Receives life insurance policy of $100,000.
Entitled to $2,000 per year for air travel of his spouse to games or to other destinations that are part of his coaching responsibilities.
Provided with two automobiles from the athletic department courtesy car program.
* Provided by a campus foundation. Amount includes a $10,000 team performance bonus, $37,000 for the employee’s basketball camp,
and $25,000 provided by Nike, Inc. for shoes and apparel.
continued on next page
California State Auditor Report 2007-102.1
November 2007
Chuck Long San Diego
Head Football Coach Management Personnel
Compensation Fiscal Year 2006–07
Base pay $200,856
Additional Compensation
Supplemental* 505,000
Total $705,856
Employment Inducements
The employee’s July 2006 contract states that the campus will reimburse allowable moving expenses up to $20,000, temporary housing for
up to three months, and travel expenses for the employee and his spouse for two house-hunting trips to San Diego. The campus reports that
as of August 2007, expenses of $16,855 had been submitted for reimbursement.
Other Benefits
Receives life insurance policy of $100,000.
Provided with an automobile through the athletic department courtesy car program.
Eligible for bonus pay based on team performance.
* Funded by a campus foundation.
Dr. Nancy A. Marlin San Diego
Provost, Office of Academic Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay* $208,620
Bonus pay 15,000
Additional Compensation
None noted
Total $223,620
Employment Inducements
The employee’s April 1998 offer letter stated that the campus would reimburse up to $10,000 for moving expenses plus temporary lodging
expenses of $1,000 per month for three months, and that the campus would cover the cost of a trip to San Diego to look at real estate. The
campus was not able to provide the actual reimbursement amount because it maintains these accounting records for only four years.
The campus granted the employee tenure with retreat rights as a professor in its psychology department.
Spouse received offer of employment as tenure-track associate professor.
Other Benefits
Receives life insurance policy of $100,000.
* Includes a $10,000 housing allowance that was reimbursed by a campus foundation.
California State Auditor Report 2007-102.1
November 2007
Douglas L. Myrland San Diego
General Manager, KPBS Public Radio/Television Management Personnel
Compensation Fiscal Year 2006–07
Base pay $192,7
Additional Compensation
Automobile allowance* 11,178
Total $203,922
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
* Funded by a campus foundation.
Sally F. Roush San Diego
Vice President, Business and Financial Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $20,936
Additional Compensation
None noted
Total $204,936
Employment Inducements
The employee’s September 1981 offer letter stated that the campus would cover moving expenses up to $3,000 and the cost of two trips
to the university. The campus was not able to provide the actual reimbursement amount because it maintains these accounting records for
only four years.
Other Benefits
Receives life insurance policy of $100,000.
Dr. Thomas Scott
Vice President for Graduate and Research Affairs; San Diego
Interim CEO, San Diego State University Research Foundation Management Personnel
Compensation Fiscal Year 2006–07
Base pay* $190,000
Additional Compensation
None noted
Total $190,000
Employment Inducements
The employee’s April 2000 offer letter stated that the campus would provide reimbursement for moving expenses. The campus was not able to
provide the actual reimbursement amount because it maintains these accounting records for only four years.
The campus granted the employee tenure as professor in its psychology department.
The employee’s offer letter also stated that his spouse would be appointed as a full professor with tenure in the campus’s women’s
studies department.
Other Benefits
Receives life insurance policy of $100,000.
* Includes $30,000 supplemental compensation reimbursed by a campus foundation.
continued on next page
California State Auditor Report 2007-102.1
November 2007
Dr. James R. Beatty
Professor, Department of Information and Decision Systems, San Diego
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $116,736
Additional teaching and
special assignments 35,668
Stipends 900
Additional Compensation
None noted
Total $153,304
Employment Inducements
In 1973 the school of business agreed to pay half of the employee’s moving expenses up to $1,000. The campus was not able to provide the actual
reimbursement amount because it maintains these accounting records for only four years.
Other Benefits
Receives life insurance policy of $50,000.
Dr. Walter C. Oechel
Professor of Biology and Director of Global Change San Diego
Research Group, College of Sciences Faculty
Compensation Fiscal Year 2006–07
Base pay* $167,592
Other pay 1,000
Additional Compensation
Research grant† 0,677
Research support‡ 13,559
Total $222,828
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
* A campus foundation reports that it reimbursed the campus $7,87 for the employee’s grant-related work. This amount includes $32,587 in
foundation funds provided for research and $1,900 in grants from the National Science Foundation.
† Provided by a campus foundation. The source of those funds was as follows:
$18,6 research grant from the National Science Foundation, Office of Polar Programs; $13,559 research grant from the NASA Goddard Space
Flight Center; and $8,7 research grant from the National Science Foundation, Directorate for Education and Human Resources.
‡ Funded by a campus foundation.
California State Auditor Report 2007-102.1 7
November 2007
Dr. Bruce A. Reinig
Professor and Chair, Department of Information and San Diego
Decision Systems, College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $126,99
Additional teaching and
special assignments 20,702
Stipends 900
Additional Compensation
None noted
Total $148,101
Employment Inducements
The employee’s March 2000 offer letter stated that the campus would pay the employee’s moving expenses up to $3,000. Campus documents
indicate the campus paid $2,996 of the employee’s moving expenses.
The offer letter also stated that the employee would receive research stipends in the amounts of $6,500 in each of the first two summers of
employment. The campus reported that the stipends were paid with state funds.
In addition, the offer letter stated that the employee would receive $2,500 for new office furniture and was guaranteed a minimum of $2,500 for
travel in his first year.
Other Benefits
Receives life insurance policy of $50,000.
Dr. Edward P. Riley San Diego
Professor, Department of Psychology, College of Sciences Faculty
Compensation Fiscal Year 2006–07
Base pay* $160,10
Additional Compensation
Research grant† 76,177
Research support‡ 38,327
Total $274,644
Employment Inducements
The employee’s April 1988 offer letter stated that the college of sciences would pay for the truck rental and incidental expense in moving the
employee’s laboratory equipment and personal goods, up to $9,400. The campus was not able to provide the actual reimbursement amount
because it maintains these accounting records for only four years.
The offer letter also stated that up to $10,000 would be made available to establish a laboratory and 1,600 square feet of renovated space would
also be made available for research.
In addition, the offer letter stated that the college of sciences would guarantee $18,000 for summer support during the first year of employment,
based on certain conditions. The campus was not able to confirm that the employee received the summer support.
Other Benefits
Receives life insurance policy of $50,000.
* A campus foundation reports that it reimbursed the university $105,276 for grant-related work. This amount includes $35,882 in foundation funds
provided for research and $69,39 in grants from the National Institute on Alcohol Abuse and Alcoholism.
† A campus foundation reports that this pay was funded with research grants from the National Institute on Alcohol Abuse and Alcoholism.
‡ Funded by a campus foundation.
continued on next page
California State Auditor Report 2007-102.1
November 2007
Dr. Gangaram Singh
Professor, Department of Management, San Diego
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $109,569
Leave 22,93
Additional teaching and
special assignments 27,012
Additional Compensation
Research grant* 32,51
Total $191,588
Employment Inducements
Campus documents state that the employee may receive $1,500 in moving expenses and summer support of $10,000. The campus was not able
to provide the actual reimbursement amount for moving expenses because it maintains these accounting records for only four years. The campus
reported that the summer research support was provided; however, it was unable to confirm the funding source.
Other Benefits
Receives life insurance policy of $50,000.
* The campus foundation reports that this pay was funded by a grant from the U.S. Department of Education, Office of Postsecondary Education.
Dr. Nikhil P. Varaiya
Professor and Chair, Finance Department, San Diego
College of Business Administration Faculty
Compensation Fiscal Year 2006–07
Base pay $120,528
Additional teaching and
special assignments 2,700
Additional Compensation
None noted
Total $163,228
Employment Inducements
The employee’s February 1988 offer letter stated that all state-approved moving expenses would be reimbursed by the university. The campus was
not able to provide the actual reimbursement amount because it maintains these accounting records for only four years.
The offer letter also stated that the employee would receive $5,000 in instructional-related research support for the first two summers of
employment. The campus reported that the compensation was paid but it was unable to determine the source of funding.
Other Benefits
Receives life insurance policy of $50,000.
California State Auditor Report 2007-102.1
November 2007
Dr. Robert A. Corrigan San Francisco
President Executive
Compensation Fiscal Year 2006–07
Base pay $271,590
Housing allowance 60,000
Automobile allowance 12,000
Additional Compensation
None noted
Total $343,590
Employment Inducements
The campus reports that it reimbursed the employee for relocation expenses in 1989. However, the campus was not able to provide the actual
reimbursement amount because it no longer maintains these accounting records.
Other Benefits
Receives life insurance policy of $250,000.
Provided up to $900 for an annual physical examination at the university’s expense.
Entitled to entertainment allowance of $300 per month from the State’s General Fund. Funds are also available from the General Fund for
community relations expenses, and campus foundations may supplement General Fund entertainment allowances and funding for community
relations activities.
Entitled to one year of paid leave of absence on leaving the presidency, at a salary set at the midpoint between the former executive salary and the
top-step full-professor salary. On completion of paid leave, the former executive is entitled to assume a trustee professor position at the campus
with a salary set at the top of the salary range for a full professor, academic or 12-month, as elected by the trustee professor. The chancellor’s office
funds the trustee professor’s salary until the employee decides to leave the position.
The campus granted the employee tenure as a professor in its departments of humanities and english.
Albert Lee Blitch San Francisco
Vice President, University Advancement Management Personnel
Compensation Fiscal Year 2006–07
Base pay $225,000
Additional Compensation
None noted
Total $225,000
Employment Inducements
The employee’s June 2005 appointment letter stated that the employee would receive an annual salary of $225,000, which was above the
maximum range for a management personnel position at the administrator IV level. The vice chancellor of human resources approved this salary.
Other Benefits
Receives life insurance policy of $100,000.
Provided with an automobile that was purchased with General Fund monies.
continued on next page
100 California State Auditor Report 2007-102.1
November 2007
Dr. John M. Gemello San Francisco
Provost and Vice President, Academic Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $208,620
Automobile allowance 7,200
Additional Compensation
None noted
Total $215,820
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
In his March 2003 appointment letter, the employee was granted a future one-year leave of absence with pay for the purpose of professional
development provided that he serves in the position of provost and vice president of academic affairs for at least five years, with the leave to be
taken during his final year before returning to his faculty rank.
Retains retreat rights as a tenured professor to the department of economics at the campus.
Nancy K. Hayes San Francisco
Dean, College of Business Management Personnel
Compensation Fiscal Year 2006–07
Base pay $187,0
Additional Compensation
None noted
Total $187,440
Employment Inducements
The campus reports that it paid moving expenses of $4,194 for this employee, who was hired effective August 2005.
Other Benefits
Receives life insurance policy of $100,000.
Dr. Leroy M. Morishita San Francisco
Vice President, Administration and Finance Management Personnel
Compensation Fiscal Year 2006–07
Base pay $208,620
Automobile allowance 7,200
Additional Compensation
None noted
Total $215,820
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
California State Auditor Report 2007-102.1 101
November 2007
Dr. Jessellyn E. Saffold San Francisco
Vice President, Dean of Students, Student Affairs Management Personnel
Compensation Fiscal Year 2006–07
Base pay $208,620
Additional Compensation
None noted
Total $208,620
Employment Inducements
The employee’s April 1981 offer letter stated that the campus would reimburse up to 50 percent of the employee’s moving costs with the
maximum payment not to exceed $500. However, the campus was not able to provide the actual reimbursement amount because it no longer
maintains these accounting records.
Other Benefits
Receives life insurance policy of $100,000.
Larry J. Ware San Francisco
Associate Vice President, Fiscal Affairs and Controller Management Personnel
Compensation Fiscal Year 2006–07
Base pay $186,20
Additional Compensation
None noted
Total $186,204
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $100,000.
Dr. Frank T. Bayliss San Francisco
Professor, Department of Biology Faculty
Compensation Fiscal Year 2006–07
Base pay* $156,86
Additional Compensation
None noted
Total $156,864
Employment Inducements
The employee’s May 1975 offer letter stated that the campus would reimburse up to 50 percent of the employee’s moving costs with the
maximum payment not to exceed $500. However, the campus was not able to provide the actual reimbursement amount because it no longer
maintains these accounting records.
Other Benefits
Receives life insurance policy of $50,000.
* The campus reports that $6,873 of this employee’s base pay was for projects funded by the National Institutes of Health.
continued on next page
102 California State Auditor Report 2007-102.1
November 2007
Dr. Marci J. Hanson San Francisco
Professor, Elementary Education and Special Education Faculty
Compensation Fiscal Year 2006–07
Base pay* $168,782
Leave 3,276
Additional Compensation
None noted
Total $172,058
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
* The campus reports that $27,192 of this pay was for a project funded by Indiana University and the National Institutes of Health and $36,722 was
for various projects funded by the U.S. Department of Education.
Dr. Gilbert Herdt
Professor, Department of Anthropology and San Francisco
Director of the Human Sexuality Studies Program Faculty
Compensation Fiscal Year 2006–07
Base pay $151,376
Additional teaching and
special assignments 1,079
Additional Compensation
None noted
Total $152,455
Employment Inducements
The campus reports that it paid moving expenses of $4,500 for this employee, who was hired effective August 1998.
Appointed professor with tenure in the department of anthropology with a concurrent assignment as director of the human sexuality
studies program upon hiring.
Other Benefits
Receives life insurance policy of $50,000.
California State Auditor Report 2007-102.1 10
November 2007
Dr. Mary E. Love San Francisco
Chair, Department of Health Education Faculty
Compensation Fiscal Year 2006–07
Base pay* $131,893
Leave 1,13
Additional teaching and
special assignments† 18,920
Stipends 915
Additional Compensation
Supplemental‡ ,320
Total $157,191
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
* The campus reports that $12,091 of this pay was for a project funded by the U.S. Department of Education.
† The campus reports that $7,091 of this pay was for a project funded by the California Department of Health Services.
‡ A campus foundation reports that it provided this compensation.
Dr. Bruce A. Macher San Francisco
Professor, Department of Chemistry Faculty
Compensation Fiscal Year 2006–07
Base pay* $10,750
Leave 525
Additional teaching and
special assignments† 37,68
Additional Compensation
None noted
Total $178,743
Employment Inducements
None noted.
Other Benefits
Receives life insurance policy of $50,000.
* The campus reports that $61,569 of this employee’s base pay was paid from grants funded by the National Institutes of Health.
† The campus reports that this pay was funded by grants from the National Institutes of Health.
continued on next page
10 California State Auditor Report 2007-102.1
November 2007
Dr. Joel Nicholson San Francisco
Chair, Department of International Business Faculty
Compensation Fiscal Year 2006–07
Base pay $120,190
Additional teaching and
special assignments 31,899
Stipends 1,350
Additional Compensation
None noted
Total $153,439
Employment Inducements
The campus reports that it paid moving expenses of $7,464 for this employee, who was hired effective August 1996.
Other Benefits
Receives life insurance policy of $50,000.
California State Auditor Report 2007-102.1 10
November 2007
Appendix B
poSTeMployMeNT CoMpeNSATIoN pACkAgeS foR
CAlIfoRNIA STATe UNIveRSITy exeCUTIveS
As we described in Chapter 2, the California State University
(university) has typically offered various transition programs that
have often provided generous postemployment compensation
packages to departing executives since 1981. The university
currently has three transition programs: the Trustee Professor
Program, the Executive Transition I Program, and the Executive
Transition II Program. A departing executive is eligible for the
program in effect at the time of his or her appointment. In addition,
the university has often negotiated various alternative agreements
that departing executives have accepted instead of these programs.
We identified the specific transition program applicable to each of
the university’s 28 executives as of August 31, 2007, by reviewing
various documents, including a report submitted by the chancellor
to the board of trustees in March 2007. Other than retired
executives, who receive retirement benefits, the executives in the
program are appointed as Management Personnel Plan employees
(management personnel) and receive the same benefits as other
employees in this classification. As shown in Table B.1 on the
following page, six executives are eligible for the Trustee Professor
Program, 20 are eligible for the Executive Transition I Program,
and one is eligible for the Executive Transition II Program. When
a permanent replacement is appointed to the remaining, recently
vacated, executive position, the executive will be eligible for the
Executive Transition II program.
Through discussions with the chancellor’s office and a review of
past transition agreements, we determined that 15 individuals
departed their executive positions with the university from
July 1, 2002, through August 31, 2007. Besides the initial transition
agreement, subsequent agreements typically provide updates
with more specific definitions of services to be provided and
updated salaries. For convenience, we do not distinguish between
initial and subsequent transition agreements for each individual.
Table B.2 beginning on page 107 shows the results of our review
of the transition agreements for the 15 individuals and identifies
the postemployment compensation they received.
10 California State Auditor Report 2007-102.1
November 2007
Table B.1
Executive Transition Programs Applicable to 28 Executive Positions as of August 31, 2007
program
TrusTee exeCuTive exeCuTive
exeCuTive posiTion loCaTion professor TransiTion i TransiTion ii
Charles Reed Chancellor Chancellor’s Office X
Gary Reichard Executive Vice Chancellor Chancellor’s Office X
and Chief Academic Officer
Richard West Executive Vice Chancellor Chancellor’s Office X
and Chief Financial Officer
Vacant* Vice Chancellor of Chancellor’s Office X
Human Resources
Christine Helwick General Counsel Chancellor’s Office X
Horace Mitchell President Bakersfield X
Richard Rush President Channel Islands X
Paul Zingg President Chico X
Mildred Garcia President Dominguez Hills X
Mohammad Qayoumi President East Bay X
John Welty President Fresno X
Milton Gordon President Fullerton X
Rollin Richmond President Humboldt X
F. King Alexander President Long Beach X
James Rosser President Los Angeles X
William Eisenhardt President Maritime Academy X
Dianne Harrison President Monterey Bay X
Jolene Koester President Northridge X
J. Michael Ortiz President Pomona X
Alexander Gonzalez President Sacramento X
Albert Karnig President San Bernardino X
Stephen Weber President San Diego X
Robert Corrigan President San Francisco X
Don Kassing President San Jose X
Warren Baker President San Luis Obispo X
Karen Haynes President San Marcos X
Ruben Armiñana President Sonoma X
Hamid Shirvani President Stanislaus X
Sources: Various university documents, including appointment letters and March 2007 report to the board of trustees.
* The vice chancellor of human resources left her position on August 1, 2007, and a permanent replacement had not been appointed as of
August 31, 2007. The replacement will be eligible for the Executive Transition II Program.
California State Auditor Report 2007-102.1 107
November 2007
TABLE B.2
Terms and Conditions of Executive Transition Agreements for Executives
Leaving Positions Between July 1, 2002, and August 31, 2007
alTernaTive
exeCuTive program agreemenT Time period provisions of TransiTion agreemenTs
Tomas Arciniega Trustee X July 1, 200– Employee to serve as special assistant to the chancellor, accommodating
Professor June 30, 2005 underserved students; participate on President’s Council on Underserved
Constituencies; and provide coordination with Hispanic Association of Colleges
and Universities. Annual salary is to be $20,156, adjusted by the average
presidential salary increase for fiscal year 200–05. Agreement also provides for a
$750 per month automobile allowance and states he will receive reimbursement
from the San Marcos campus for relocation costs to move to the campus, as well
as operating and clerical support of $36,000 per year.
July 1, 2005– Employee is to assume position of director of leadership at annual $232,128
June 30, 2006 salary, with the chancellor to assign specific services. Provided operating and
clerical support of $36,000 per year.
July 1, 2006– Employee is to assume 5 percent position as special assistant to the chancellor at
June 30, 2007 a $10,60 annual salary. Provided operating and clerical support of $36,000 per
year. Duties are to provide specific services as assigned by the chancellor.
Manuel Esteban Executive X August 2003– Duties as special assistant to chancellor are to provide advice and perform certain
Transition I July 29, 200 consulting assignments determined by the chancellor. Salary is to be $208,28
and an automobile allowance. Agreement indicates his intention to retire on
August 2, 200.
July 29, 200– Agreement also discusses a 5 percent postretirement position as a special
August 1, 2005 assistant with a salary of $93,711 for the period October 200 through May 2005.
Responsibilities include assisting with presidential evaluations and working
with the MacConnell Foundation, Shasta Community College, the University of
California, and the California State University to study how best to serve students
in the northern part of California. The agreement is renewable annually at the
chancellor’s discretion and with the executive’s agreement.
Donald Gerth Trustee X September 1, 2003– Agreement provides for a postretirement 5 percent position as special assistant
Professor August 31, 2008 to the chancellor, beginning September 1, 2003. Primary assignment, which is
expected to last no longer than five years, is to write a history of the university
and public policy concerning higher education. Agreement provides an annual
salary of $5,372 and $36,000 for operating expenses and clerical support
through August 2008.
James Lyons Executive X March 1, 2007 Agreement states that he will receive a lump-sum payment of $103,60; he agrees
Transition I to retire from the university system effective March 1, 2007; and he has accepted a
position in Maryland.
Robert Maxson Executive X January 2006– Agreement provides for a position as special assistant to the chancellor, serving
Transition I June 2008 as an executive mentor and coach for two years at his presidential salary, and
indicates that he would retire at end of the two-year assignment. Subsequent
documentation indicated that his assignment was to continue to June 2008.
Jackie McClain Executive X August 1, 2007– Agreement states that she resigned her position as vice chancellor of human
Transition I December 31, 2007 resources as of August 1, 2007, and will be special assistant to the chancellor for
five months. During that time, she will provide assistance with transition within
the labor relations unit and continue to coordinate the audit of the university
by the Bureau of State Audits. She will continue to be paid at her ending salary
as vice chancellor and, per an earlier memorandum, be reimbursed for moving
expenses to Chico, California. On January 1, 2008, she will exercise retreat rights to
the Chico campus. The agreement also provides for transfer of 10 days of vacation
and payment of her remaining accrued vacation balance up to 80 hours.
Alistair McCrone Trustee X July 1, 2002– Agreement indicates a special assignment at a salary of $203,088 to advise the
Professor June 30, 2003 chancellor on the emergency preparedness of campuses within the university
system. Final transition agreement indicates that he would retire on June 30, 2003,
and be paid a lump sum of $12,79 for accrued vacation and holiday credit, less
the value of any vacation taken between the agreement and retirement dates.
continued on next page
10 California State Auditor Report 2007-102.1
November 2007
alTernaTive
exeCuTive program agreemenT Time period provisions of TransiTion agreemenTs
Norma Rees Trustee X July 1, 2006– She is to assume a position as special assistant to the chancellor, assisting in the
Professor June 30, 2007 process of developing and implementing the Education Doctorate Program and
assisting in the development and work to plan a new 10-year strategic plan for the
university. The agreement states that she will continue to receive her presidential
salary and that she will retire as of June 2007.
July 1, 2007– Agreement indicates a 5 percent position at a salary of $105,900 to
June 30, 2008 continue duties.
Peter Smith Executive June 15, 2005– Agreement states that he left his position on June 1, 2005, and provides for
Transition I June 1, 2006 one year of paid transitional leave at a salary of $157,926 from June 15, 2005,
through June 1, 2006. The agreement also indicates that he will be reimbursed
for relocation costs as a result of moving from the presidential home to a
private local residence and that he took a position with an international
humanitarian organization.
Unpaid leave Agreement provides a two-year unpaid educational leave of absence granted for
June 15, 2006– the period June 15, 2006, to June 1, 2008. After the leave period, he is required to
June 1, 2008, with return to the Monterey Bay campus as a senior tenured faculty member or request
option to extend to a second two-year leave of absence. In any case, on or about June 15, 2010, he
June 2010 must return to the Monterey Bay campus or announce his retirement.
David Spence Executive X August 1, 2005– Agreement provides paid leave from August 1, 2005, to July 31, 2006, at annual
Transition I July 31, 2006 salary of $173,952 for consultation and assistance regarding various academic
initiatives, including the Early Assessment Program. It also refers to his new
position with the Southern Regional Educational Board and his intent to retire
effective August 1, 2006.
Bob Suzuki Trustee X August 1, 2003– Agreement provides for a position as a special assistant to the chancellor at
Professor July 31, 200 an annual salary of $207,68, plus an automobile allowance. Responsible for
providing advice when needed and certain consulting assignments. Agreement
also indicates his intention to retire on August 1, 200.
August 1, 200– Agreement provides for a 5 percent position as a special assistant at an annual
July 31, 2006 salary of $8,93. Also provides for $25,000 annually for operating expenses and
clerical support. The agreement states that he must be available for teaching,
advice, or consulting assignments at the Los Angeles campus. He is also to
assist the chancellor with projects, including serving on a state commission,
development and support of the biological science center at Pasadena,
developing relationships with Vietnamese universities, and developing Asian
Academic leadership.
Executives Without Transition Agreements
Marvalene July 200– The document describing her departure indicates that she will exercise her faculty
Hughes June 2005 retreat rights as of July 28, 200, allowing her to retire as of the same date under
a faculty retirement incentive program. Document also provides for her to be
rehired as a retired annuitant at an annual salary of $20,252, to serve as interim
president of the Stanislaus campus while a new president is being recruited;
continue to receive her housing and automobile allowances; and receive other
benefits, such as dental and medical, as a retired annuitant. Total hours worked as
interim president were to be restricted to 960 per calendar year to maintain her
Public Employees’ Retirement System retirement status.
Louis Caldera The vice chancellor of human resources indicated that because the executive did
not request a transition agreement when he left, he was not offered one.
Robert Caret The vice chancellor of human resources indicated that because the executive did
not request a transition agreement when he left, he was not offered one.
Paul Yu This executive was a president for a very short time and, according to the vice
chancellor of human resources, the university has no documentation of his
participation in a transition program.
Sources: Various university documents, including transition agreements and other correspondence.
California State Auditor Report 2007-102.1 10
November 2007
(Agency response provided as text only.)
The California State University
Office of the Chancellor
401 Golden Shore
Long Beach, CA 90802-4210
October 23, 2007
Ms Elaine Howle
State Auditor
Bureau of State Audits
555 Capitol Mall Suite 300
Sacramento, California 95814
Dear Ms. Howle:
The California State University welcomes the opportunity to respond to the draft audit of various aspects
of university compensation. The Bureau of State Audits’ time and efforts dedicated to the comprehensive
review of the California State University’s compensation policies and practices is appreciated.
The auditor’s recommendations will be helpful to the university in our efforts to improve compensation
policies and practices. We will begin implementation of some recommendations immediately and will be
acting on others as soon as feasible.
The attached document provides responses to each of the auditor’s recommendations.
Sincerely,
(Signed by: Charles B. Reed)
Charles B. Reed
Chancellor
110 California State Auditor Report 2007-102.1
November 2007
California State University Response to Compensation Audit
The California State University (CSU) appreciates the time and effort dedicated by the Bureau of State Audits
to the comprehensive review of the CSU’s Compensation Management. The auditor’s recommendations will
assist us in improving Compensation Management in the CSU. The CSU further appreciates this opportunity
to respond to the draft audit of its Compensation Management. We have reviewed the draft and find that
the facts are correctly reported in the audit. We do however have concerns about the conclusions others
might reach when reading the report.
The CSU agrees in nearly all cases with the auditor’s recommendations and will explore the appropriate
manner to address the issues which have been raised. We will be acting on some recommendations
immediately and on the others as soon as feasible. Many of these recommendations will be discussed with
the Board of Trustees in order to determine whether policy changes will be made and/or whether there
will be additional trustee involvement in the oversight process. We have provided responses to each of the
auditor’s recommendations and have organized those responses in the same order that they were presented
in the audit.
The CSU takes seriously its obligation to effectively manage all aspects of its compensation program. This
audit addresses three general aspects of the compensation program: 1) Monitoring of Compensation
Policy and Practices 2) Administration of Executive Transition and Post-employment Compensation, and 3)
Administration of Moving, Relocation, and Dual Employment Policies.
One issue which is raised throughout the audit report is the decision by the CSU administration to delegate
most of the operational compliance responsibility for various aspects of the compensation program to the
campus presidents and staff. We continue to believe that in a system as large and complex as the CSU such
delegation is the best administrative practice. We do, however, recognize the importance of consistency and
prudent decision making. We are committed to improving the manner in which we monitor compliance
with both legal requirements and policy regarding all aspects of compensation administration.
The majority of the issues raised in chapter two and chapter three of the report involve the exercise of
discretion either by a campus president or by the chancellor within existing university policy. We agree
that more written guidelines would help clarify the scope of such discretion and reduce the possibility that
discretionary decisions are perceived as questionable. However, we firmly believe that not every potential
situation which may arise can be anticipated and covered by written guidelines or criteria. We further
believe that some degree of administrative flexibility must be provided to address these situations. The
administrators exercising such discretion must continue to be held accountable for the decisions they make.
CHAPTER ONE: MONITORING OF COMPENSATION POLICIES AND PRACTICES
•
RECOMMENDATION: To provide effective oversight of its systemwide compensation policies, the
university needs accurate, detailed, and timely compensation data. The university should create
a centralized information structure to catalog university compensation by individual, payment
type, and funding source. One possibility would be to upgrade and expand the Employee Salary
Projection (ESP) system to make it more complete and accurate. The chancellor’s office should
then use the data to monitor the campus’ implementation of systemwide policies, such as the
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California State Auditor Report 2007-102.1 111
November 2007
prohibition against employees performing additional assignments that would cause them to work
more than 125 percent of a full-time position. Additionally, the chancellor’s office should use the
data to measure the impact of systemwide policies on university finances.
o RESPONSE: Agree in concept. The CSU will explore the best way to address these issues
including making appropriate coding changes to improve the accuracy and detail provided
by the existing systems. The central administration will also develop and implement
training to improve the consistency in coding and reporting of compensation matters by
campus personnel. Finally, we will enhance monitoring at the system level through more
frequent review of campus practices and will discuss with the Board of Trustees the degree
to which they want centralized monitoring to occur.
•
RECOMMENDATION: The board should consider total compensation received by comparable
institutions, rather than just cash compensation, when deciding on future salary increases for
executives, faculty, and other employees. The university should work with interested parties, such as
the commission and the legislative analyst, to develop a methodology for comparing itself to other
institutions that consider total compensation. If the university believes it needs a statutory change
to facilitate its efforts, it should seek it.
o RESPONSE: Agree. The CSU will continue to work with interested parties in an effort to
develop a methodology for use of total compensation analysis for executives, faculty
and other employees. We are committed to using the best tools available as long as
lag comparisons for executives, faculty and other employees are all based on the same
compensation elements.
RESPONSE TO CHAPTER ONE FINDINGS:
Figure two accurately reflects the overall growth in compensation for all groups within the system. The
Golden Handshake offered to faculty and which was approved by the state in 2004 had an immediate visible
impact on turnover among faculty. Approximately 700 faculty members retired in 2004. Of those, 432 did
so in response to this legislative action which was intended to reduce the compensation base in a time of
budget crisis. This turnover had a negative influence on overall faculty salary growth because, as intended,
higher-paid senior faculty left and were replaced with lower-paid junior faculty. In fact, in order to garner the
anticipated savings many were replaced with temporary faculty at least for the first year.
In Table three, the audit team shows figures in the final line cited throughout this chapter as the average
compensation increase for various employee groups. Although this figure does represent the average cost
of compensation per employee for each group, the figure is impacted by such factors as the number of
vacancies in an employee group and the replacement of terminating employees by those paid at a different
rate. Thus for faculty as an example, the average increase percentage shown represents neither the percent
of salary pool available for faculty increases during this period nor the actual percent of individual salary
increase for continuing faculty.
It is also important to note that at least half of the growth in Management Personnel Plan (MPP) counts
reflected in the findings was growth in non-state funded positions.
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112 California State Auditor Report 2007-102.1
November 2007
The ESP system does have available both data regarding the type of compensation and the fund source.
This data currently lacks sufficient detail to perform monitoring of every type of pay made to employees.
We will explore the addition of detail as a means of enhancing our monitoring ability. The system has made
a conscious decision to decentralize operational compliance monitoring and while we agree that stronger
checks and balance should be achieved, we believe it should be accomplished through improved coding
and training of campus personnel.
As noted in the audit findings, a variety of reports and audits are currently utilized to monitor campus
compliance with systemwide policies and guidelines. Although we agree that this process can and should
be improved, we would note that the audit did not identify major violations of policy.
Also as noted in the findings, the Board of Trustees currently approves executive compensation. In an
effort to improve management of compensation for highly compensated employees the chancellor will
discuss with the trustees the possible expansion of their approval process to include compensation for vice
presidential level positions at all campuses.
When considering the issue of comparison of compensation increases, factors which must be taken
into consideration are the size of the groups, the “normal” turnover, turnover in response to the Golden
Handshake program, as well as the cost of each percent of increase for each group. Each percent of increase
for faculty results in an increase expenditure of $15,659,000 while one percent for executive results in a cost
of $99,000. Obviously another important factor is the market lag for each group.
The CSU favors use of total compensation to calculate salary lag so long as it is used not only for executives
but also for faculty and staff. In the highly unionized CSU environment, group to group comparisons occur
on a regular basis making apple to apple comparison a necessity.
Although both California Postsecondary Education Commission (CPEC) and the legislative analyst have
expressed concern about the current methodology used for faculty and executive lag calculations; these
criticisms have resulted in neither a legislative mandate for change nor legislative funding to facilitate
achievement of a change in methodology. In fact, the legislature did not even discuss these concerns. We
are, however, committed to continue to work with all concerned parties to develop and implement an
improved methodology.
CHAPTER TWO: EXECUTIVE TRANSITION AND POST EMPLOYMENT COMPENSATION
•
RECOMMENDATION: The board should continue to monitor the chancellor’s administration of the
executive transition program to ensure that it is conducted in a prudent manner and that intended
cost-savings are achieved for the university. In addition, the board should require the chancellor to
include in the transition agreements clear expectations of specific duties to be performed, as well as
procedures for the former executives to report on their accomplishments and status of deliverables.
Further, the board should require the chancellor to include information in his annual report on the
status of accomplishments and deliverables associated with transition agreements.
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California State Auditor Report 2007-102.1 11
November 2007
o RESPONSE: Agree. The chancellor already has begun to include in transition agreements
clear expectations regarding specific duties to be performed by executives. A report of
accomplishments and deliverables will be added to the annual report. The trustees will
consider whether they wish to take specific action on this matter.
•
RECOMMENDATION: The university should work through the regulatory process to develop
stronger regulations governing paid leave of absences for management personnel. The improved
regulations should include specific eligibility criteria, time restrictions, and provisions designed
to protect the university from financial loss if an employee fails to render service to the university
following a leave. For example, the regulations should require all employees applying for a paid
leave of absence to submit a bond that would indemnify the university if the employee fails to
render service to the university following a leave of absence. The university should also maintain
appropriate documentation supporting any leave of absences it grants. Finally, the board should
establish a policy on the extent to which it wants to be informed of such leave of absences for
management personnel.
o RESPONSE: Agree. While balancing the need for consistency with the need for some
administrative flexibility the CSU Board of Trustees will consider actions which can
strengthen the process for granting leave of absences for management personnel. They
will consider development of criteria regarding eligibility, time limitations, and fiscal
protective measures.
RESPONSE TO CHAPTER TWO FINDINGS
Discussion in this chapter reflects the improvements made in the Executive Transition Program over time. In
accordance with the November 2006 action of the Board of Trustees, the university is committed to reducing
the cost of such transitions while honoring the commitments made to executives at the time of hire.
The issues related to the granting of leave of absences is one example of the many situations in which
executives are required to exercise judgment in matters which have financial consequences for the
institution. In these instances executives must balance a variety of factors and exercise their very best
judgment to make a final decision which they believe is the best for the institution.
Three of the instances of administrative leave cited in the findings represented leave for preparation of
academic administrators returning to the classroom. The provision of such leave is utilized throughout
higher education to insure currency of those individuals who may have been away from their academic
discipline for a significant period of time. While we agree that we can and should clarify the criteria and
limitations which apply to such leave, we would note that the leaves granted in these instances were judged
to be in the best interest of the university by the deciding executive based on all factors.
The fourth example of a leave cited in the findings represented a commitment made to the legislature. In
fact, the university responded to annual requests from the chairperson of the legislative committee which
employed this individual in granting extensions of this individual’s leave of absence. Although no direct
work was performed for the CSU during this extended leave, the CSU and other higher education segments
benefited from this individual’s work with this committee.
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11 California State Auditor Report 2007-102.1
November 2007
CHAPTER THREE: MOVING AND RELOCATION COMPENSATION
•
RECOMMENDATION: The University should strengthen its policy governing the reimbursement of
relocation expenses. For example, the policy should include comprehensive monetary thresholds
above which board approval is required. In addition, the policy should prohibit reimbursements for
any tax liabilities resulting from relocation payments. Finally, the board should require the chancellor
to disclose the amounts of relocation reimbursements to be offered to incoming executives.
o RESPONSE: Agree. The Board of Trustees will consider means of strengthening the controls
related to reimbursement of relocation expenses. They will review the amount of discretion
given to system executives and determine the extent to which the board wishes to review
or approve any such expenses. The chancellor will disclose the amounts of reimbursements
offered to incoming executives.
•
RECOMMENDATION: The university should continue to work with California Faculty Association
representatives during the collective bargaining process to strengthen its dual-employment
policy by imposing disclosure and approval requirements for faculty. It should also impose similar
requirements for other employees, including management personnel. If the university believes
it needs a statutory change to facilitate its efforts, it should seek it.
o RESPONSE: Agree. The CSU will continue to work through the collective bargaining
and regulatory processes to strengthen the outside employment policy for faculty. We
strongly favor an information process which will allow for the identification of any conflict
of commitment prior to the start of any outside employment. The CSU will adopt for
management personnel similar requirements to those adopted for faculty.
RESPONSE TO CHAPTER THREE FINDINGS
Although the CSU is committed to making the improvements recommended in the audit, we would note
that in each situation outlined in this segment of the audit, the discretion exercised resulted in a decision
that was in the best interest of the university.
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California State Auditor Report 2007-102.1 11
November 2007
cc: Members of the Legislature
Office of the Lieutenant Governor
Milton Marks Commission on California State
Government Organization and Economy
Department of Finance
Attorney General
State Controller
State Treasurer
Legislative Analyst
Senate Office of Research
California Research Bureau
Capitol Press