The California Bureau of State Audits released a 115-page comprehensive analysis on Tuesday of the California State University’s compensation practices and policies.
The audit revealed that the way in which data is maintained in the CSU does not allow the CSU Chancellor’s Office to oversee exactly how executive compensation policies are being performed in each of the 23 statewide CSU campuses.
The audit found that payroll increased by $225.8 million over the last five fiscal years, with a majority of that increase consisting of executive salary increases.
The methodology used by the CSU Board of Trustees to increase executives’ salaries was based on the fact that they felt they lagged behind the salaries of executives at comparable institutions. Even though many parties disagreed with this type of reasoning, the board granted 11.8 percent raises for executives in September.
The audit also identified the statewide university’s three types of executive transition programs: “one year of paid leave, lifetime tenure as a trustee professor at a campus, or an alternative agreement negotiated by the chancellor,” according to the audit.
These post-employment compensation packages are given to current employees when they leave the university. The programs are offered in addition to the standard retirement benefits provided by the university, which include retirement income, medical and dental coverage, and voluntary retirement savings plans.
The Long Beach Press-Telegram reported that former CSULB President Robert Maxson is currently receiving $277,896 annually in his duties mentoring other CSU campus presidents and helping plan the CSU’s new educational doctorate program.
Even though these transition programs are only offered to executives, the audit found that “questionable transition-like compensation” was given to some management personnel. These management personnel were no longer a part of, or providing services for, the university.
An example of this occurrence, the audit reported, was when one individual received $102,000 of compensation during a seven-year leave. The receiver said he was gaining experience that would benefit the university when he returned. However, the individual never returned for employment at the university.
The audit recommended many ways for the university to keep track of compensation and how they should monitor their executive transition programs. It also recommended that the university should work with parties such as the commission and legislative analysts to come up with new methodologies concerning compensation and future salary increases.
The audit suggested many regulations when governing paid leaves, such as time restrictions and certain criteria, so if one decides not to return to the university, the university will not lose any money.
Press release statements from the CSU Office of the Chancellor said the audit did not find any violations of relevant CSU policies, though “it did find a limited number of cases where exceptions were made to written policies based on the judgment and discretion of either the chancellor or a campus president, which was provided for under the policy.”
“We’re satisfied that this audit was conducted in a thorough and professional manner, and that the findings and recommendations were fair and balanced,” said CSU Board Chairwoman Roberta Achtenberg in a statement. “The audit provides helpful guidelines to better define employee compensation policies and practices, while still maintaining the flexibility necessary to recruit among the best faculty and executives.”
Regarding the exceptions to the written policies, “In these cases, the decisions were made based on what was in the best interest of the university system,” said CSU Chancellor Charles B. Reed in a prepared statement. “Policies require that CSU administrators exercise their best judgment when faced with unique circumstances affecting personnel matters, and are held accountable by the board and other stakeholders for their outcome. We do plan, however, to review areas where the audit recommends greater clarity and consistency to improve our operations.”
In an e-mailed statement to the Daily Forty-Niner, CSULB President F. King Alexander agreed.
“I agree that the State Auditor process was fair and balanced, and I was particularly pleased that they found no CSU actions to be inappropriate, in violation of existing policy or illegal.
“I support the concept that all types of compensation should be accounted for in determining an individual’s total compensation package, and I would include retirement and health benefits in that equation. When comparing our CSU institutions nationally in this area, I believe that we will see some very interesting issues emerge particularly in other states … Additionally, in reviewing the audit document, I was not surprised to see that CSULB is well in line with its peers in terms of compensation across the board.”
California Faculty Association representative and communication specialist Brian Ferguson said the CFA had seen this audit coming for a long time.
“We are happy the audit came out and reaffirmed many of the things we have been saying for a long time,” Ferguson said, “such as the administration mismanagement and disregard for the right thing to do for students and faculty.”
Ferguson said that the release of the audit shows there are far more important things for the CSU to spend money on than its executives, and that the CFA is going to watch very closely for how the chancellor responds to the audit and how the situation develops.
“We are glad that the chancellor will address the issues in the audit,” Ferguson said, “though we would like to see a particular time table for when he is going to do it.”
The audit report was requested by the California Joint Legislative Audit Committee after California State Assembly Speaker Fabian Nunez called for the audit in July 2006. This action followed a San Francisco Chronicle investigation that reported the CSU had given away $4 million to executives who left the university during the past couple years, even though those employees were no longer doing work for the university.
Bradley Zint contributed to this report.
